 Live from San Francisco, California. Extracting the signal from the noise. It's theCUBE, covering DockerCon 2015. Brought to you by SiliconANGLE Media. With special thanks to Docker. Now your hosts, John Furrier and Jeff Frick. Okay, welcome back everyone live in San Francisco. Here at DockerCon 2015, SiliconANGLES, theCUBE, our flagship program. We go out to the events, and they strike a signal of noise. We're halfway through the year. I think we have Jeff, 40 events under our belt. I'm John Furrier, I'm Jeff Frick, and we have our next guest, CUBE alumni, adventure capitalist, at Greylock, Jerry Chen, former cloud guy at VMware, investor in Docker. It's first investment, looking good off the tee. Welcome back to theCUBE. Hey guys, it's great to be back as always. Yeah, we are obviously always talk about your first investment, Docker. Now you got a few more investors under your belt. But you were making bets cloud early. Cloud is now crossed over, right? I mean, it's no brainer, Amazon numbers are released now, they've broken out, they say seven billion worth, Dave Vellante and I expected it might be more like 10 billion, if not more, huge ramp, no race to zero, certainly some commoditization, but value's shifting. Oracle's releasing numbers at a Larry Ellison event yesterday, their business is booming. So, you know, there's not a race to zero going on. So there is value in those hills. Sure, it's like I always say, you always want to ride a way bigger than you, right? So you're going to fight Oracle in the database market in your cloud era, you ride the big data wave. You're going to fight Oracle's old business or Microsoft or even VMware, you ride the cloud wave. So you look at the SaaS companies like Salesforce.com, Workday, ServiceNow, how do you fight the previous generation? You ride away bigger than your opponents and that's going to be the cloud wave. And so I think what you're seeing is the sea change of how IT is done. And when I say how IT is done, it means how it's purchased, how it's used, how applications are built, how it's deployed. And I think Docker, as you see around you, is really at the center of a lot of this transformation. You know, we had John Willis on earlier whose company was bought by Docker, great guy. He was just rolling on, just great, great plutonium in between the cube. But there's a moment in time now, I think we're BC. Okay, before cloud. Sure. And he made a great point and said, Amazon came out just to say seven years ago, just because a seven year itch is a good thing to look at. So seven years of learning. Yeah. Now people are figuring it out. You were one of those folks who was in there looking at investments post VMware, obviously the VMware visibility at the enterprise. So we're seven years in, people are figuring it out. Cloud is the way. The underlying infrastructure is changing. What is that? Because when the infrastructure has radical changes like this is huge disruption. So I've talked about this in the past, it's something I call a DDI, developer defined infrastructure. So you look at these waves and kind of the 80s and 90s you had physical defined infrastructure. We were dominated by the big system guys like son, deck, digital, right? We debated CPU architectures. And then you had kind of software defined infrastructure where you separated the logical from the physical operating systems, Red Hat, Microsoft, the all took off VMware was kind of pinnacle that software defined world. But what happens is when you define infrastructure and software, you can program it. You make it portable. And that's the beauty of this cloud wave. What I call a DDI is now to your point is every piece of infrastructure from storage, networking to compute has an API, right? And AWS was an early trend where S3, EBS, EC2 had API. And I see- As building blocks too. As building blocks. It's exactly the- Not monolithic. The monolithic building blocks, every little blue and bone block has own API. And just like Docker really is the API for this, you know, the cloud enables developer to define how they want to build their applications, how to network them, you know, as Wells talked about, and how you want to secure them, how you want to store them. And so the beauty of this generation is now developers are determining how apps are built, not just at the end user iPhone app layer, the data layer, the storage layer, the networking layer. So every single level is being disrupted by this concept of a DDI and where how you build, use, and actually purchase IT has changed. And you're seeing the incumbent vendors like Oracle, VMware, Microsoft try to react, but you're seeing a whole new generation of startups. So I got to ask you that. I love this developer driven infrastructure. It's basically software defined, software led, everything's about software and, but software consistency is key. You know, I'm a big bank and I buy drives from XYZ or servers from server Z over there, server Y and XYZ, they have different code bases. They're BC, they're before cloud. What's going to be two years? Everyone's rewriting their code, right? So this is a dilemma. So the question is developers and DevOps assume abstraction from hardware. So there's a lot of hardware vendors out there. Oracle says we're going to engineer our hardware for Oracle. Sure. That's great for Oracle. Sure. But what about the software community out there now? What's their choice? So I think you're seeing that pendulum of like engineer systems, like sun, Oracle, full stack versus, you know, best of breed software elements. I think what you're seeing is this third wave or third way rather in this called developer defined infrastructure. Before you think about it, the same architecture, your X86 plus Windows and Linux ran everything from a web server to your email app, right? The same more or less components. But now all of a sudden you have what I call metal to the management, metal to the pixel. These cloud applications, these cloud vendors are at scale where you can actually build servers, systems, operating systems for purpose-built functions. It could be big data, like Hadoop, right? It could be photo archiving your Facebook. So you look at the web giants, Google, Facebook, they build whole data centers to the dirt, right? Cooling power, optimized for a single type of application. So what I believe is the third way of this new infrastructure is you have best of breed software, mostly open source like Docker, then you can actually engineer your systems for the type of application on a ride. And look at Intel's participation with Cloudera and Hadoop community. They believe that big data applications engineered around their architecture will drive a whole bunch of usage of new server units. So I think you're seeing this third way evolve. I think it's an opportunity. I mean, you see the success of say in Nervonix out there. You're seeing the hardware guys who were young and smart and look at the integrated stuff and say, hey, you know what, if I align, it's not just about running great on VMware anymore. It's about running great on everything. So there's going to be an opportunity for the HPs, for the IBMs and the Dells and the pure storages and the EMCs out there. So those guys are the one spectrum of the metal or end-to-end. So on the end-to-end, what's your take on that piece? End-to-end architecture software running across for performance reasons. For performance reasons, there are, you know, I like to say, I think within certain functions, there's room for an end. So pure storage is a great example, right? They've architected all flash array with proprietary software around how to store and dig deeper data and they're just killing it, right? They are taking market share away from the common vendors and then probably the best kind of tier one storage solution out there, end-to-end for storage. With that said, on top of pure storage, they support VMware virtualization. They're going to support containers. They support databases, open source, closed source. So they've engineered something in their world end-to-end that far exceeds in price, performance, any incumbent, but they're still enabling your selection of technology above their stack. So this is where Docker kind of comes in because you just brought up a good point. Pure is a great example. They're a storage-only vendor, but they have hardware, but their software vision is compatible with what the world's moving to with kind of DevOps and they explain that with the folks out there, like there's this whole enablement piece so you can survive in a hardware world, if you will, if there's a good software model. Sure. I think the enablement is the right word, right? So I think the vendors who enable choice from the developer point of view, the application architecture point of view, enable choice will win and thrive, right? The vendors that restrict choice and you have to use our system, our hardware, our software, those guys will probably find some relevance in their install base, but I wouldn't bet on them the long run, right? I think that world is slowly receding and the ability to enable choice at every layer of the stack is kind of where developers are going. So are we in one BC or zero BC before cloud? We're, I mean, would you make this year the flash point last year or is it not yet here? I would say, I like to say 2015 is the beginning of the developer-defined infrastructure age, right? That this year going forward for the next 15, 20 years, kind of beginning of this new generation of how you think about developers, operations, applications and everything before this was, hey, we're enabling everything in software and that's great because that whole enablement of software and separating the physical and logical and that flexibility was useful. But again, if you're a developer, the true power of software and software-defined infrastructure is programmability and portability, right? I can now program my hardware like I do like my calculator, my computer and that's beautiful, right? Because you can all of a sudden reduce costs, increase speed, you know, like the networking stuff we were talking about earlier, now that your software is programmable and developer-defined, the agility around networking just goes through the roof. So your cohorts at VMware, Steve Herrod, Pete Sancini, yourself, all ex-VMware guys are kind of this new school. So what are you investing in? Because you guys are all making pretty good bets right now. So these looking good, Pete's also got the Cal connection. Yeah, yeah. He's in Databricks and a bunch of other deals he's got going on. You've got Docker, you're at Greylock, all tier one VCs, all kind of sharp focus on this new generation. What is your investment thesis today? Obviously, data-driven infrastructure, we heard that. What are you looking for? You're always out pounding the pavement. Yeah. Pressing the flesh, getting deals. Let's talk for you right now. You make it sound so easy. So for sure, the DDI world, there's a bunch of stuff we talked about, I'm thinking about, but likewise in the data layer, right? So Greylock's invested in Cladera, we're investors in Delphix, we're investors in Tumologic and Trifactus. We spend a lot of time in the data space and we've been super fortunate to be invested in generational apps like Workday, LinkedIn, Facebook on the consumer side. And so for sure, I'm looking at two other areas. One, it's another generation of SaaS applications, like again, what's the next generation of CRM? What's the next generation of Salesforce? Next generation of SAP or any of those apps out there because what's transforming those guys, again, you got to ride away bigger than you. The cloud wave has come, right? So they're being disruptive, but data mobility are also transforming how we think about these next generation applications. So I'm spending a lot of time on how data and analytics at that data tier will transform your enterprise applications. Could be ERP, could be CRM, could be anything and above. So you've been a couple of years in as a VC, certainly Greylock's a great firm at VM where you're on the other side of the table, you're in the industry, so you got, had a lot of experience. What's your advice to the entrepreneurs out there because a lot of noise out there, there's a lot of hype in the blogs and usually people are reading press release, I should be doing this, there's always that fear of an entrepreneur, am I doing the right thing? What should I be betting on? Where's my validation? It's usually heads down in this world of this new order, the new cloud. What's your advice to them in terms of staying the course? Sure. You've seen success and other companies out there succeed and some fail. You've seen a lot of deal flow. What could you advise for entrepreneurs? So the highest level again, pick a wave bigger than you, bigger than your opponents. All right, so if you pick the Docker wave, container wave, you're gonna do well because this is an edible gonna be how applications are built going forward. So pick a mobile wave, right? So if you're like Facebook or finding Google, you pick the social wave. Your Instagram and photos, trying to fight Facebook and photos, you do the mobile first wave. So pick a wave bigger than you, number one. Number two is- A trend, not so much a category. Not a category, a trend, right? And you can argue security is a trend now because it's always gonna be bad guys at your front door. So that's an edible place to invest in. Number one, so pick a trend that's gonna be larger, more powerful than your incumbents because they have a hard time changing the time. So pick a trend, a wave that's counter to what the incumbent's gonna do. Number two, especially on the enterprise side, I would say this, it doesn't matter if you're the fourth or fifth best thing they've seen all day, they're only gonna have a bunch for one or two things. So how do you make sure that the one thing you're selling hits our top to-do list in terms of priorities because if you don't have time or budget for 20 things in a year, how do they make sure they're gonna spend money on whatever you're selling? And the third thing is always, we spend a lot of time on the technology and the product, we're gonna spend enough time thinking about how to get the products into the hands of our customers. So distribution is key, right? And- On to a solution map that's pinpoint. Well, yeah, how do you reach the buyers? And, you know, my partner Neil, like to say, in the battle between your startup versus your incumbent is the battle between technology and distribution. The startups have better technology, the incumbents, you know, have better distribution, install basic customers, a sales force, a channel. So how fast can the startup build distribution, a channel, a rocket market, partnerships, you know, open source adoption of love versus how fast can the incumbents buy or build that technology? And that's the race and that's, you know, why I have a job. It's like, let's bet on great technology, but let's also think about what are the one or two or three things we need to do to enable us to get that product to market, right? Is that direct sales, is that open source, is that partnerships, that OEMs, and you know, there's no magic bullet there, but for the entrepreneur out there, let's be thoughtful about how to sell it as well. But there are so many options on distribution because distribution needs to be such a hard barrier to breach, it was such a lock-in. Correct. No further than Shadow IT and Amazon and Atlassian is down the road. They had the greatest thing, I think ever, John, you spend 10 bucks, it goes to schools in Africa and you get 10 seats. I mean, they got it everywhere with that model. It's really interesting how that distribution barrier is just not looking publishing. I mean, you had to have somebody printing your papers and a bunch of guys throwing it on herbs every day, right? And I think there's not one to your point, Jeff, there's not one path to heaven, right? I call this the unit of value. Depending on what you're selling, you got to pick the right channel, the right pricing. So if you're selling something like ERP software, or the unit of value, you sell the whole company, right? Or you're selling big data or like a juke distribution, you're selling like large systems, a lot of software for a lot of data. So that, you got large unit of value, price enough, get the right direct sales force. If you're selling something like that's an individual developer, Atlassian, right, Slack, or a drop box, where one person can use it, then your unit of distribution, your unit of value is smaller, so you can distribute through open source via the web, through the app store for some of these consumer apps. And then the question becomes, are your economics right? And how do you scale it from small to big? And it's something like a Docker, the unit of value can be very small because you get value from a single laptop, a single container. But what you saw today with Project Orca and the trust registry, you saw how they're taking that small unit of value, a single container, putting them together saying, hey, look at swarm, look at pose, look at orchestrate, look at Project Orca, we're going to add value from the small to the big. And I just love that because I think they have a, they're unlocking value all along the way from the small developer to the large enterprise. And if you can do that, you're going to build something very special. And they're also eliminating friction and the growth. So that's really a double win. It's a smooth path. And if you can make that frictionless, unlock that path, then there's a lot of value you're going to create. All right, here's a question for you. So entrepreneurs always, sometimes the ones that are nervous and don't have imperfect information, sometimes zig when they should zag. So what's your advice to them and to when not to, sometimes the best move is not to move, stay on the course, trust your gut. We've heard that advice many times from many folks, but a lot of times is always in fighting amongst teams. When should I zig? When should I zag? What's your take on that? What's your advice when you're on the boards of these companies or just in general, what's your philosophy? You know, I, there is no right answer to zig or zag. When or what, when do you do it when you don't? I mean, sometimes when you zig or you pivot like a doc cloud to a docker, you unlock something that wasn't there before. Sometimes staying the course and being patient having a vision like Reed Hoffman, when he started LinkedIn, he had a vision of what he wanted to build LinkedIn into and he didn't, he stayed the course for five, six, seven years. He could smell the opportunity. He knew it. He had that fundamental insight of where he wanted to go. You look at folks like the Airbnb folks, they knew exactly what they wanted to do from the very beginning, pure storage. They knew exactly what they wanted to do, cladera. They knew what they wanted to do. So in some cases, you stay the course despite the market dynamics, the competitive dynamics. In some cases, you need to be agile and nimble. And so I think the question is not do you zig and zag or do you never or when you do it is what signals do you need to watch? And I think the great entrepreneurs and the great investors and board members can help by saying, okay, we've seen this story play out. We can pattern match, let's stay the course because we understand what's real here because we're creating real value or we're creating a deep competitive mode or saying, you know what, we've seen this before, we're reading the tea leaves that doesn't seem right. We should kind of move over something else. So sometimes you can connect the dots and see that. Good advice. Okay, what are you excited about this show? What's going on here for you? You know, I'll see you proud papa with the investment in Docker. The team's amazing, Salmon was on earlier. You saw that. Yeah, Salmon's great. You know, and he says it's about peace and love. It's not about war and destruction. It's a really happy community. I mean, you know, what's your takeaway? What's your, what are you excited about for here at DockerCon this year? Well, I mean, I think the top line is just the growth not to the conference, but the customers, the partners, the users. I mean, you guys see this every conference, right? I'm sure not just DockerCon, but almost every other conference you go to, people talk about Docker, right? And from the operating system application. Number one, the uses and the growth of the technology has really crossed the chasm, leave the hurdle, whatever, you know, metaphor and algae cliche you want to use, way faster than expected. So number one, the growth out there, just makes me excited because I know and I believe when you have that kind of growth, there's opportunity. There's opportunity for Docker, there's opportunity for everyone, these other vendors or the companies, companies that are here because when you have that kind of growth in the market, there creates opportunity, right? What about the money making? Because you got to see an investor, you want to get liquid. See, there's a nice private equity market going on now for public. So maybe you can take a little bit off the table, but in general, Docker has to make some business model decisions. Not now, down the road, what's your signals that you're looking for? Kind of the business models, when to monetize, how to monetize, how to look at the value opportunities? Well, I think what you're seeing here, this morning at the keynote, two areas that they're looking at monetizing. The first and foremost, you see them talk about Docker trusted registry, right? So Docker Hub, Docker Enterprise, the hosted version of private cloud version of Docker trusted registry, starting to monetize kind of the core concept of collecting managing to playing your Docker containers inside and outside enterprise. So that's, I think, the first step. And then I think what we did, what we saw on the keynote, is this project oracle, which is basically putting Docker as a platform. And Docker really is a platform. You look at the runtime itself, the container format itself, project swarm, or the swarm project for orchestration and deployment. So if you look at swarm and Docker, compose all those open source projects, collected together, Docker really becomes this cloud platform. And they saw with the project oracle, they're announcing how they're going to basically put a bunch of these components together and make it this, I think an incredible system, an incredible platform for build, ship, and running your applications. All right, final question. We're getting out of time here. Tell the folks who are watching what's happening at the show? What's the vibe? What are they missing by not being here? So first and foremost, if you're not here, number one is optimism and energy, right? It reminds me of just so many of these great communities have been likely part of that, A, the energy, the interest of every developer, every customer, right? Oh, normally I think customers versus developers, vendor versus customers, they have this antagonistic, you know, like, hey, why don't you charge me? But this conference right now, if you're not here, that A, optimism between all the parties involved is pretty amazing. And so I think for me, that's the best thing about being part of communities is why I'm a venture capitalist, right? That's why I love to be around entrepreneurs is that, like, limitless fountain of A, brilliant insights, but that optimism with these COs and entrepreneurs, I deal with. It's a wealth-creating opportunity, innovation here. It's that, you look at Solomon, he's the most optimistic person in the room, in the planet, because he only sees the potential, where things can go, and just, I just feel lucky to be around guys like that. Jerry Chen from Greylock here inside theCUBE, sharing his thoughts, commentary, vision, the investment thesis, and then Vice Entrepreneurs here inside theCUBE, live in San Francisco, and we'll be right back with more coverage after this short break.