 Welcome back everyone, we're here live in Las Vegas for day two of exclusive coverage from Silicon Angle, Wikibon's theCUBE. We're here at Amazon Web Services' re-invent conference talking about the cloud, public cloud, and I'm John Furrier, the founder of Silicon Angle. I'm joined by co-host Dave Vellante and our next guest, Theresa Carlson, vice president worldwide public sector of Amazon Web Services. Welcome to theCUBE. Thank you, thank you for having me. So you're in charge of the government sector, state, local, NGOs, universities, education, the whole gamut. All the best, Dave. And so obviously the top news was the CIA contract that you guys beat IBM against. Dave and I have been talking about this for quite some time since we got a copy of the public information about your win against IBM, of which IBM contested. So I know you really can't talk about this, I'm not going to ask you about it, but I'll just say it was a huge win. The judge himself said Amazon clearly a far superior solution. Dave has a chart on Twitter they put up. You guys really, really knocked it out of the park. It was one category under controversy, but the most part, this is really the asset test for success in the marketplace in general, especially IBM involved, but in your area, talk about what's happening in the business because that, your area is really high growth for cloud. Talk about the dynamics of your market. It is, well, it's an interesting market. We really at Amazon Web Services, we started the public sector business at the end of 2010 and I announced at the conference we had in September that we now have over 600 government customers worldwide and over 2,400 educational institutions and that ranges from everybody, from the intelligence community, to the Department of Treasury, to Health and Human Services, to the Singapore government, to the United Kingdom with G-Cloud, to Harvard, Stanford, MIT. It's an amazing portfolio and we've really grown. It's an exciting business. It's a perfect fit really for the folks. Those markets are, I won't say understaffed, but the IT has always been challenged in some of the certain areas, and I'll see Obamacare's website, which couldn't get going, but three kids get it up and running in three days if you saw the news. I heard they added some servers the other day. I was like, well, why don't they just dial up Amazon? It's the deal here. Talk about the dynamics. Obviously, that case of the young kids coming to fix Obamacare is just kind of a side, orthogonal note, but that is really the power of the cloud is a speed game, right? So talk about the dynamics of the customer base that you guys are selling into, and what's their environment look like and why Amazon is so successful there? Well, Amazon Web Services is just a perfect partner for the public sector space. One, because of the way things get vegetated and the ability to really pay for only what they use, and they are very tired of paying for a lot of things that they just don't use. They don't want to pay for high cost servers that are sitting there idly that they're paying for, not utilizing. But the other part is they want to be innovative and agile, and that's not typically something that you think about when you think about governments and education, but today that's changing because they are really trying to let more agile, small contracts that the government can really take advantage of to show successes, but we're really a good partner with them in terms of the ability to walk in, show them how they can create and drive a project home in a very short period of time, with skill, with depth and breadth of that, and to be able to fail fast and recover fast. Talk about the aspect of big data, because obviously on the application side, that really seems to be the hot area in the government since government 2.0, and you have all this data. We've talked to spokes about healthcare data, and also the application is driving it all. What are you seeing for applications? What's it like? What's the developer market like on that public sector? And what are some of the things that they're doing with, say, big data or the applications? Yeah, yeah, well, so there were basically in the US government, we'll talk about the US, there were four phases of actually how they got to the cloud. Phase one was this cloud-first policy. Phase two was NIST to find the cloud. Phase three was this FISMA FedRAMP, the compliance, and phase four is the acquisition. So what are they doing with it? They started with the low-hanging fruit of website hosting. Then they moved into things like collaboration sites, internal and external. Now they're doing things like big data analytics and management of that data from everything to biosense with the health and human services of tracking disease or flu across the US for health officials to doing things like autism research that can be shared with hundreds of thousands of researchers around the world that can crowdsource on that data and change the world basically on how research is getting completed. And they do it fast. They do it very fast at a very, very low cost and they love that. They like the spot pricing too, are they utilizing them? They do, we do have public sector customers using spot pricing, but we also have an ecosystem of partners, ISVs and SIs even, that have figured out how to use spot pricing in their models which helps the public sector customer because they pay a lower fee or cost for those solutions. Dave always jokes about the data center and the enterprise being an API in the future. The government is kind of going that way. So they must love the API approach that you guys have. What are some of the things that your partners are doing? Your channel partners and the API? Okay, good. Well, when Vivek Kundra pushed the cloud first initiative, I was happy because I said, great, finally the government is going to be more efficient with our dollars, right? So that was good. It wasn't without its challenges, obviously, but can you talk about what's different in the government and why Amazon had to create GovCloud separate from AWS? Well, so GovCloud was a model that got created because NASA, JPL actually came to us and said, look, we need an environment for ITAR specific regulatory environment. And ITAR is an environment for, it's a regulation for defense contracting business units. So anything that's ITAR related data, it has to be ITAR. So it's another one of these compliance mandates. And we actually built this environment that's a community cloud really for US federal government and their partners that they select to go into this cloud. And it is not just, it's built like all our other AWS cloud regions around the world with the same level of security, except it's for this community and it's ITAR compliance. So if you have an ITAR workload, you have to go through the same process, background checks and all that for ITAR. And it also has something unique endpoints, FIMS 140-2 endpoints that NIST likes. So we've got those in there as well. And it's really growing. Our GovCloud region has grown over 300% this year. And it's some amazing workloads from the defense aerospace and defense side to rockets and spaceship kind of applications like the Mars Curiosity that we work with NASA on. But that's the real reason that it is built and it has a lot of the same services. But it also, one other unique element, it has to have US persons. So we roll out our services a little bit delayed because we want to make sure it's a service that this community wants and we have the right US persons and it can be ITAR compliant when it comes in. When you say US persons, you mean US persons managing the infrastructure, is that right? Right, that's correct for them. Amazon employees, they have to be based in the US, US citizens, I mean all. US persons, not citizens. Not citizens. It's US persons, that's the ITAR mandate. What's a US person mean? I mean, physically they're in the US? Well, and that they have a work visa that they can be or they're legal to be in here. Andy this morning was rattling off like dozens of certifications that you guys had, including FISMA and FedRAMP and there were many, many, many others. So are those are unique to GovCloud? Is that correct or not necessarily? So FISMA and FedRAMP are both, and Dicab are things that are government related. And FedRAMP is like the sister to FISMA for cloud. So the federal government after you said the cloud first policy earlier, I was just saying there are four steps to that. It was the cloud first policy, the NIST definition, and then it was FedRAMP, which is the compliance module that we have to meet to do business in the cloud and the US federal government. And we have two packages at AWS for FedRAMP. We did GovCloud and we did all the other infrastructure in the US as a separate package. So if a federal government customer asked us, we would support them by giving them this package through FedRAMP for either GovCloud or US East or West within our regions in the US. So you obviously had customers on AWS, government customers, prior to GovCloud, right? That's right, yes. So what's happened now? Did all those customers have to move to GovCloud or is it that they encouraged to do so or they're required to do so? What's the- It's a great question. It's actually their choice. We've found that there's a lot of US government customers that based on the architecture and design they put together, they are fine with US East and West. There are others that really want that workload in GovCloud and some they need to have it in there because of ITAR. Like the NASA example, they have ITAR requirements or someone like State Department or DoD. They have workloads that are ITAR mandated, they have to be in an ITAR location. So that increased your market, obviously, doing the GovCloud. And we really built that based on our customer requests. Like we do many things that you heard Andy talk about today. Air requirements are 90% of these new features and services come or built because of the customer request. So it's really not, you're not really doing a, you are doing in a way a special for the government but it's not dramatically different than your traditional AWS cloud. Is that right? No, absolutely not. It is the same services that they would get in any cloud. It's just a special community with this special regulatory environment. And we're really committed to public sector around the world. And as Andy talked about today, if there are these other requirements that come up, we're going to work hard to meet these. And we're already doing that in like Australia and Singapore and Japan. So we're going to work hard to make sure that we can meet our customer's requirements. You're saying essentially exporting the model. Right, absolutely. So if they, and especially on the compliance side because when you work with public sector, especially governments, they have environments and they have compliance controls that they want you to be able to meet. And that's just part of doing business in that environment. And if you're committed to that sector, you're going to have to step up and do that. And we want to do that for our customers. We may not get everything done or not. We're going to do it in the right way. It makes sense also for Amazon Web Services. But the other important part, I think, for this broadcast is that we're also educating a lot on the new ways of doing things. Because you can't always, if you're handed compliance requirements that are about traditional old data centers with an old structure, that doesn't make sense for a modern cloud environment. So just like with GSA and the US federal government, we worked really jointly with them. And I think FedRAMP is a great example of how you can do that together and have a really positive end result. Teresa, I have one final question. I know you got a tight timeline. Talk about what's changed over the past few years in terms of contract, contract compliance. I mean, Amazon is a little different animal compared to the old school. I don't know, the old guard as Andy was saying on stage today, I mean, it's like a groove swing. Here's the price, the bid process and the procurement is changed. So what's changed? What have you learned along the way to get Amazon really in that position to win these big contracts and be successful? Well, I think there's two things that are really important. One is that we really do, we are committed to saving the customer money. Number one. Number two, we are committed to giving our public sector customers those price drops. So the things that are changing in government contracting and Department of Interior just let a $10 billion, 10 year contract for cloud with 10 vendors and five of those were Amazon web servers. Five of those partners bid Amazon web services. But what they're already seeing in the task orders that are coming out, we're getting feedback from the customer. They love it because the agility of how quickly these contracts are actually not just coming out, but the results. It's the results that they're getting. And when they get a result and they see the cost and value margin, then they immediately go out for another one. So it's just sort of rapid transformation. So did you have to wrangle the GSA? I mean, how did it, was there a lot in the trenches digging around and changing contracts? It's a big culture change. It's a lot of education on what cloud is and you can see the aha moments in the early days when they see that you can go to literally a console and spin up instances and you're not waiting six months to buy servers and then four more months to configure them and test them and get them ready to go. And the good thing about what we were talking about on the Fed ramp, when you spin up instances and you have, they're ready to go. They've already been, they're under the compliance review. It saves so much time. Yeah, and people want to see immediate results these days with government. So like you see them getting those apps out there certainly on the big day, it's fantastic. Teresa, thanks for coming on theCUBE. We're getting the hook from your handlers here. Great to have you on theCUBE. Really appreciate it. We're here live, exclusive coverage, Silicon Angles theCUBE. We'll be right back with our next guest here at Amazon Web Services re-invent conference live from Las Vegas. I'm John Furrier with Dave Vellante. We'll be right back.