 Welcome to Amsterdam and KubeCon, CloudNativeCon 2023. Join John Furrier, Savannah Peterson, Rob Streche, and UPSCOT. As the Kube covers the largest conference on Kubernetes, CloudNative, and open source technologies together with developers, engineers, and IT leaders from around the globe. Live coverage of KubeCon, CloudNativeCon 2023 is made possible by the support of Red Hat, the CNCF, and its ecosystem partners. Okay, we're back everyone. Live coverage here on the floor. I'm John Furrier, host of the KubeCon, EU 2023. My guest analyst host is Rob Streche here. Megan Reynolds is our guest. She's a venture capitalist with Vertex Ventures. Vertex Ventures is a Palo Alto, Silicon Valley based VC. They invest in technical founders. Sometimes they go outside the board and hire non-technical, but mostly technical founders, great firm. Megan, thanks for coming on theCUBE. Appreciate it. Thank you so much. I'm very excited to be here, feeling the energy. Instruct's been on before. Jonathan's not been on, so we've got to get him on. Jonathan, if you're watching, make sure you come on. Take a little bit of time to explain what investments you have here. What's your thesis? How do you see the landscape? How does Vertex look at this? Because I'll see, it's very technical. It's infrastructure, software, AI's right here, all the buzz, Kubernetes containers. I know Docker was a big investment for you guys, and they're kicking ass, everyone knows that. They are kicking ass. They're kicking ass, I'm very lucky there. Yeah, I can give you a bit of an overview. So I know you know INSIC, and maybe to just share a little bit about the DNA of Vertex as a firm. Both INSIC and Jonathan are the founding partners. INSIC was the co-founder of a, co-founder and CTO of a company called Loud Cloud, which became Opsware. Jonathan was the first hire at that business on the infrastructure side. He then went and built the infrastructure team at Facebook from 2007 to 2012. So between the two of them, the partners at Vertex, they've really built a percentage of the internet and have been doing that for a long time. And so really, the DNA of our firm is very heavily swayed towards infrastructure and really a strong empathy for technical founders because they really, as a team, and there's five of us across the team, but really the core of us is really understanding that journey. And so that's why we're best. The more practical stuff, we're five people, we're investing typically, anything from seed to series A, so all things early and predominantly infrastructure software. Though as you say, we do do more, we do go outside of that sometimes and I'd say the key is technical enterprise software. So that's kind of the core of Vertex. I think in terms of companies that we have here, obviously Docker has a big presence. We came into that round relatively recently, which was a slightly adjacent for us. We also have a lot of earlier stage companies, like Gitpod, for example, which is actually the reason that I know the Vertex team is I led that investment at my last firm. I did that together with Vertex, saw the way that they worked and the way that they really helped build companies and that was what really, really, it was special. By the way, we have Justin McCormack coming on from Docker at one to do a Watson WebAssembly panel. Rob, the thing about the Vertex, I want to get your thoughts and chime in here because she mentioned it, well, kind of a nuanced point, but Facebook, when Jonathan was there, Loud Cloud was the first real cloud before cloud. Basically it was a data center and they had to do all those heavy lifting things. They're large scale thinkers. Observability, you're in observability deals. You got code, auto-coding, you got Docker, obviously containers, Kubernetes. So it's a scale thing. So how do you guys see the scale piece emerging because speed and scale seem to be the new competitive advantage. Yeah, I think that's the interesting thing is where you're making the investments is about ease of operating, right? And I think how do you make the infrastructure run itself to a certain extent? Is that really the founding type people you're looking for is going after those types of problem sets? Is that? Yeah, it's a great question and what are the areas I love to invest in or where I meet founders and I'm like, take my money, let's go. It's really in that idea of usability or developer experience, but particularly as that ties into the scale question so where you can take maybe a manual piece of application development or infrastructure development that maybe is not that hard to do but it's just something that developers don't want to work on. You take that piece, you make it an exceptional developer experience. You make it like a joyful experience and by doing that you get embedded in critical path infrastructure. So it's almost like the, flippantly say like the gateway drug, like developer experience is the gateway drug to like critical infrastructure software and when I find companies in that space and obviously there's not lots that can make that transition but when I do, I take, you know, let's go, like get pods sort of as a example of that. I mean that's a huge point here in the open source community. The things that's changed the most is exactly what you said. The old way of just I built a tool, market it is over. The developers have to adopt it as a community. Whoever gets that early flywheel going. So I totally agree with you on that. So the question to you as a VC, how do you squint through and predict what's going to be the next flywheel? It's, again, it's the challenge. It's kind of the million, multimillion dollar question. If I had a really consistent way of doing that, I think, you know, I'd be in a very different position. I do think it's almost, but almost more the bigger challenge is, you know, early on you can see where companies are creating magic, like where you have, maybe it's a small group of developers at first or, you know, infrastructure engineers, but you can see where, you know, that in using this product, they have this moment where they're like, wow, I didn't think you could do that. And that's like, that's the core thing. And so like kind of creating the flywheel, I think that's almost maybe a little easier to see early on. I think that the real challenge is how far can you take that flywheel? You know, you start with this, and like, you know this very well, like creating products and building product teams. You know, like, when you get that love and adoption, you're like, yes, we've really triggered something, but how do you take that further and how big is that market, I think is always our challenge in infrastructure. So we, I live in Palo Alto, they call it nerd nation because Stanford's there, but Berkeley might have a different view on that. The alpha nerds and the geeks are all gravitating towards AI right now. And that's just a renaissance of software and machine learning. Machine learning's been around. We just had Portwick, CEO on now, part of Pure Storage. A lot of the best people doing infrastructure have been doing machine learning at some level. So AI actually is part of machine learning. What is your thesis on AI? How is that going to come in? Because there's a lot of things around monitoring, instrumentation that could be automated with bots, self-healing networks. Consets have been around for a while. How is AI going to impact the infrastructure? How do you look at that as a firm? What's the thesis around AI? Yeah, it's developing so rapidly that honestly I don't have a hey, this is exactly where this market's going to go. And I think if you have anyone telling you that right now, they're not necessarily telling the truth. So I'll be very open about that. But I do think fundamentally where we're investing in infrastructure and software infrastructure, you know, the workloads are only increasing. Like the complexity of workloads are increasing. The sheer amount of data is increasing. And so everything that we've been kind of early investing in, I think it's only accelerating. Those markets are only accelerating. And so if anything, we're more bullish on our existing pieces. I think what we're seeing right now in investment sentiment is predominantly around application AI. So where like generative AI is in the application layer for like sales, marketing. And I think I'm not as bullish there, but I do think that the impact that has on infrastructure will be important. Yeah, and I think we've been talking about this all day, but I think part of it has been that you have to know the data set to be able to use ML or AI or something to that extent. And I think what you hit on is there's more and more. And I think the data infrastructure and how you move that data around, how do you get and utilize that data, that has to be one of the spots that you're looking at pretty heavily when you're- For sure. And I think what we're seeing a lot is where that's moving from like purely data use cases or data team use cases to actually how do you enable developers to use data more effectively? And we're seeing that in the Rust ecosystem, particularly there's a lot of tooling being built in the Rust ecosystem for to help developers basically do what you would want to do with Python, but in a more efficient way. So yeah, we're definitely seeing that a lot. Megan, I love your earlier comment. Take my money. People want to hear more of that. So let's get to that yes. So how do you get to yes, if I'm an entrepreneur or they're watching, they want to get to that yes, you want to get to that yes spot where, and the guys say no a lot, I know VCs do that. That's understood. Where are you focused on people that are watching that are entrepreneurs? There's a lot of people looking at the market saying, I see clear line of sight onto some opportunity that they're recognizing. They want to go capture it. Where are you going to be hanging out and looking at? Let me say infrastructure. Is that going to be plumbing, cloud native networking? Is it going to be more? I mean, what would be your, where are you going to be focused on? Yeah, it's a big question. And, you know, we really span across the infrastructure landscape. But I think for me personally, it's exactly what we spoke about earlier, which is who are the companies creating like exceptional developer experiences? And specifically, I think when we get really excited as a team, is when it's like, when companies are building proprietary technology. I think we see a lot of, we see a lot of like iterations on technology. I think especially in the observability space. You know, it's like, Hey, we do it a little faster. We do it a little cheaper. We, you know, and we hear a lot of that. And, you know, it's, you know, these spaces as well as I do. And I think where it's, Hey, like we've really identified a technical innovation in this space. And we are the team, we are the one team that can build this product. Do you see overcrowding in certain areas that you're staying away from? What would be that like? For sure. Observability, at one point it was like, what, 20 venture backed observability companies? I remember, I remember coming to the last KubeCon and I kind of walked into a similar, into the similar conference space. And at one point I was standing there and I kind of scanned around and it was observability for, like serverless observability for this. Observability needed. And I was like, wow. Like, and yet, you know, exactly what we said earlier around, you know, work loads increasing, data's only increasing. And so like, it's a very crowded market. But I think a lot of the stuff we're seeing right now and open telemetry developing, there are still challenges with using that. And like, the cost is coming down dramatically, especially with Generative AI. And so like, we've gone through, there's definitely like a generational shift in observability. I mean, you've got a lot of kernel programability going on. You've got security challenges inside the containers. A lot of infrastructure software like issues that are going on. So I would say it's crowded, but we're still actively looking in those spaces. And I, you know, obviously for any investor, it's always team led. You know, why is this the right team and why is this the right time to build this company? And it's always the same thing. Rob and I were just talking about code pollution, where as chat GPT comes in, we were talking about this earlier, more code is going to come in. Who's going to watch the code being coded? So if you have code coming in, it's like, okay, that's going to change the observability landscape big time. A hundred percent. And we're already starting to see this a lot in like CICD, like what's happening in CICD right now. You have the kind of first generation. You obviously have the get labs, the get hubs and the harnesses. But exactly like as that like deployment phase, like code build phase gets more complicated. You have more actors building code. You know, how do you build the system so that before you deploy anything, you know you're working on the right things and like testing everything within that. So it's an area we're excited about and we're actively digging in. Well, Megan, thanks for coming on. Tell Insta, I know he's in Thailand. Insta, if you're watching, I know you're in Thailand. Have a good time. Yeah. We wrap up, how do people get a hold of you? What's the pitch? What do you, how do they get your attention? Oh, I'm very available. You can find me on Twitter, Megan Reino. You can also email me Megan at VVUS.com. Yeah, but we'd love to, we'd love to hear from more people. All right. She's ready to give her money away. She said, take your money. You got to hit that. Take my money. That's the hashtag. Develop her productivity, gel up or IP. Good thesis. It's theCUBE. We're back with more live covers. Day one of wall-to-wall three days coverage. I'm John Furrier with Rob Stretcher. We'll be right back.