 Live from Boston, Massachusetts, it's theCUBE, covering Red Hat Summit 2017, brought to you by Red Hat. Welcome to day two of the Red Hat Summit here in beautiful Boston, Massachusetts. I'm your host, Rebecca Knight, with my co-host, Stu Miniman. We are welcoming Jim Whitehurst, who is the president and CEO of Red Hat. Thanks so much for taking the time to sit down with us. Thanks, it's great to be here. So I want to talk about the theme of this year's conference, which is celebrating the impact of the individual. In your keynote, you talked about the goal of leadership today is to create a context for the individual to try, to modify, to fail, to just keep going. Sounds great. How do you do that? Well, that's what I say. Leadership is about creating a context for that to happen. So you have to create a safe environment for people to try and fail. And you know, this is a tough one because somebody fails 20 times, you know, maybe it's time for them to find a new career. But you have to create the opportunity for people to fail in a safe way that you can actually then learn from that. And one of the things that I talk a lot about, especially CEOs and CIOs, is you got to create that context. The world that we used to live in was all about taking variants out, you know, lean Six Sigma process. Innovation's all about injecting innovation, or variants in. And there's no way to inject variants in without making errors. So how do you, I want to say reward making errors, but you certainly want to reward risk-taking and recognize by definition, some risks aren't going to play out. And that's all about culture. Yeah, it's around process and reward systems, but it's mainly about culture. So reward risk-taking, no blaming. What are some other defining elements of this culture in which individuals can feel free to take risks? Well, I think a big part of it is you have to celebrate the people who try things. And you celebrate taking the risk. You don't necessarily celebrate the successes, right? It's like in school, you miss something that's bad, you get something right that's good. Well, we have a tendency to say, let's celebrate the successes versus actually celebrating the risk-taking. And so there are some processes and systems you have to put in place, like you have to have systems in place to make sure no one can risk $100 million. If every red-hatter could risk $100 million, we'd be in trouble. But you have to figure out how you give enough latitude, enough free time. And just yesterday, talking to some red-hatters who had moved over from IBM, they said, it's great, we can try new things. Now, try new things within a context of a certain amount of budget or a certain amount of time. So there are processes and systems you have to put in place, but ultimately it's culture more than anything else. It trumps anything else. Jim, in your keynote, you said planning is dead in that we're lousy predictors, things are changing so fast. You're a role, though. You're CEO of a public company that has 60 quarters of consecutive revenue growth. Seems you guys are doing pretty well at getting involved in some of the waves that are happening, understanding how to keep growing at a steady pace. Maybe you can reconcile that a little bit for us as to how you're doing that. Yeah, so one of the reasons that I think that we've been able to navigate a whole set of fairly significant transitions in technology is that we don't select technology. We select communities. And I think that's a really important subtlety. So we didn't come in and say, ooh, we like OpenStack more than we like CloudStack or Eucalyptus or the other open source IaaS that were out five years ago. We looked and observed that OpenStack had built the biggest user base. The reason we're significantly involved in Kubernetes today versus Diego or Swarm or the other orchestrators for containers out there is we observed it was building the biggest community. And it's not, we don't just glom on. We actually kind of get in and contribute ourselves, but we look more to say what are the best communities and let's get involved in that. I don't know what the Kubernetes roadmap is for the next five years, but I'm confident that it has the best community that will drive the right direction for... It's probably a little oversimplified to say, you look for the VHS ecosystem versus the Betamax best technology. Not exactly, exactly. But that's what we think we're good at is observing when a community is the best community. And I say that, it's not just a matter of observation whether it's OpenStack or Kubernetes, we get in and help think about governance, right? So one of the things I think really helped OpenStack is we saw it had the best user community, but we helped put together the governance structure which truly made it, neutral made it open. And so we try to actually help in doing that, but it really is about identifying communities rather than technologies. Is it ever possible that you could identify the right community that might have certain elements, but it's got elements that wouldn't quite work for the open source way? Can you change that community? Is it possible to go in and push a new culture into that community? We think we're actually pretty good at that. Now, I think there's a mix of not every community has to be the same. We often talk about there is no open source community. There are literally two million open source communities. And Linux has a culture, many of our projects in JBoss. So Drouals is different than Fuse, that's different than others. And so it's okay that the cultures can be different. The key is they all have to have a common element about being open and committing to being open and truly being a meritocracy, because if the best ideas don't win, that's when communities fall apart. And that's actually one of the biggest places where they fall apart. So I do think we can influence open. And I think just by our contributions, we probably influenced the cultures in some of those communities, but we don't try to say there's a red hat way to do community. There are a lot of different ways. Jim, if we look at the cloud space, open is one of these terms that doesn't necessarily mesh with your definition with what the cloud guys do. You guys, of course, supported red hat Linux in every single cloud environment that I can think of for many years. You have an expanded partnership with AWS, but I was debating with Sam Ramsey yesterday from Google about there is no open cloud. There are clouds that use open source, open scores can live here, but all the big public clouds are built on their platforms and openness is a challenge there. What's your thought as to how you fit there and then we'll want to get into some of the discussion of the AWS announcement? Yeah, sure. So in defense of the public clouds, it's impossible to offer a physical offering that has hardware and a software stack without it having some of your technologies that don't make it totally open. Is this why we never saw a red hat open cloud? Well, it doesn't quite make sense in our context for that reason as well. So the role we try to play is we do try to play the abstractor role and we do that at multiple levels. So Red Hat Enterprise Linux runs across a physical data center, virtual data center and the major clouds and that's an abstraction point that we think adds value. It goes all the way back to 15 years ago, Red Hat Enterprise Linux meant that you could run the same application on a Dell server or an IBM or an HP blade, right? And so we're working to apply that at the cloud level, certainly at the operating system level, but because of all the services and the growth of containers, we needed to do it at another level and that's what we're doing with OpenShift. So OpenShift allows you to run on physical or on virtual in your own data center, on the major public clouds and take advantage of the services underneath but do it in a little bit more of an abstracted way. All right, so we had Optumon yesterday who was also part of the keynote. He's using OpenShift, he's using AWS. He was very excited about the opportunity of OpenShift being able to extend those Amazon services. You had Andy Jassy doing a video this morning. Give us a little bit of the inside look. How long did it take to put this together? My understanding it's not shipping today but coming a little bit later this year. Give us a little bit behind what happened. Yeah, so this really started off with a breakfast Andy and I had in January where we said, look, our teams are working really well together and we've been partners since 2008. But kind of from the bottom up, I think we were taking very much an incremental approach of what we could do together, what customers could work with. And I think it's a little bit in the context they've announced some other, kind of big deals with some other vendors. I said, why don't we think about what's a true net new offering? So let's not just talk about running it on Amazon's lower cost. I mean, clearly there's a cost thing there but what can we do that's like, wow, actually changes the life of some of the people who are using our technologies. And so what we decided is, well, wouldn't it be amazing, and literally at breakfast we're talking about it, if OpenShift, which is used by enterprises all around the world, could actually leverage the thousands of services that AWS is putting out, right? So right now if you want to use all of these services, you have to be on AWS, which is great, but there are a lot of customers for whatever reasons, for regulatory reasons or just by choice or economics, have decided to run on-premise or elsewhere. And so by making those thousands of services available, it's a win-win all around. For Amazon it's a ability to expose some really amazing innovation to many, many thousands, hundreds of thousands of developers. And for us it's a way to expose all this innovation to our developers without kind of forcing someone necessarily to go all in on cloud. Now I'll say if you can get that, we were literally, you know, Sunday night still getting the final contract done, but I would say when you have a really clear, differentiated source of value for customers, the deal came together I think relatively quickly. Yeah, it's a true, one of the things we've been trying to reconcile a little bit is when you talk to customers about where their applications live, that hybrid or multi-cloud world versus the offerings that are out there, it was a mismatch because they were like, oh, I'm using VMware in one place and I'm using Amazon somewhere else or I've got my SaaS in a different place. We're starting to see Amazon mature their discussion of hybrid through partnerships of yours, OpenShift looks like something that can really help enable customers to kind of get their arms around those environments in many locations. Well I think so, one of the things if you really go and talk to developers, developers really don't care that much about infrastructure software and they shouldn't care and it's interesting, I think developers right now are really enamored by containers because containers somewhat makes their life easy but I was talking to some of the folks in Red Hat that deal out with developers, they say ultimately developers shouldn't want to care and don't want to care about even containers. They just want to write code and they want code to work, right? And one of the cool things about OpenShift is that's kind of what you're doing, is you're saying write code, yeah use any of the services you want from anywhere you want to use it. They're all there, they're all available, you don't have to worry about, ooh I want this service so I have to run this on Amazon or hey I got my database on premise so I got to run here, let's just make it easy. And I think that's one of the cool things about this announcement that's cool for developers but it's also unique, that's something that only we could bring together. Yeah, serverless is something that's been gaining a lot of buzz to kind of say right, it's underneath there, there's probably going to be containers but my people writing applications don't want to worry about that. Speak to, it's the application affinity and that tie to kind of modernization of applications that seems to be one of the biggest challenges we've been facing for the last couple of years. Why are companies coming to Red Hat working across your solution set to help them with that challenge of their older applications but also kind of building the new businesses? Well I think for a couple reasons. So first off if we really think about what Red Hat is we call ourselves a software company but we give away all our IP so that's a stretch, right? When we think about our overall mission is we think there's enterprise customers here with a set of challenges and there's all this phenomenal innovation happening in open source communities. How do we build a bridge between those? So certainly that's products so we create open source, well products out of open source projects. It's about architecture and then it's about process and we talked about open innovation labs but in part of thinking about that's what we do we obviously start off saying what are enterprise problems and what are technologies that help solve those problems? So one of the things that we've driven so hard into our container platform is the ability to run stateful applications, right? So it's great to talk about scale out and cloud native and we certainly do that but go talk to NECIO and 99.9% of their application portfolio is stateful and so we think about that and we drive those needs and the reason why the second largest contributor to Kubernetes isn't just because we're nice people, it's because we're trying to drive enterprise needs into these projects and so I do think the technologies that ultimately emerge and the products we're able to put out help enterprises consume open source in a way that actually is value adding. I wanted to ask you about the examples that you used in the keynote today. The three that you highlighted were governments and I think that that was really interesting because you're showing how open source is bringing new innovations and ideas into government and agencies not necessarily known for innovation. Where do you see the future of technology and government coming together? Well, one of the reasons I wanted to use government examples is that I actually wanted to highlight, well, what's the role of government when you start thinking about innovation? So certainly we could have brought up a lot of examples, yesterday the Optum folks, they're big users of our platform and they've kind of created a context for innovation among the developers but the reasons I wanted to highlight governments and really tried to do it from regions around the world was to say there is a role for government when you start thinking about what is the new system underneath the economy? So in the 1940s and 50s in the US the interstate highway system was an important piece of infrastructure. We've always thought about roads and bridges and airports as important for creating the underpinnings for an economy and that's really, really important in a world of physical goods and it's not that we don't have physical goods now but more and more we have to start thinking about information assets. And look, I've gone and seen the FCC and advocated for net neutrality and all that stuff and so certainly broadband as a fundamental infrastructure is important but I think the government plays a more important role whether that's education and we can spend two hours on education but even kind of creating these contexts where you make data available, that's what I loved about the British Columbia example but broadly it's like how do you create a context for more citizen participation? I think it's just as important in the 21st century as roads and bridges were in the 20th century. Jim, you mentioned net neutrality. I'm curious your take on just kind of the global discussion that's going on. A lot of your customers here are international. You've got open communities. The question about net neutrality, trade. It feels like many people, we interviewed the president of ICANN a few years ago and was worried about are we going to have seven internets, not one internet because there's certain Asian and even like Germany worried about cutting things off. How does that impact your thinking? Do you guys get involved in some of those governmental discussions? Well, we do. Matter of fact, we actually do have, I'd say a small government affairs team that advocates around these issues because we see it too even with open shift where you start saying well, different privacy laws in Europe versus the US but what if someone's running open shift in Europe but it's actually instantiated in the US and who can get access to what data. Those are really, really important issues and it is a little bit like, we got to pick the same railroad gauge, right? And to some extent we need to have a set of consistent policies, not necessarily in every area but enough that you can actually have the free flow of information without worry about oh my God, I'm like exposing myself to felony privacy issues because I'm hosting this application on a cloud that happens to be in the US and so there's some real issues that we have to work through and they're so bleeding edge and so complex, I'm not sure that we're quite ready to get those done but these are going to be critical, critical to the economy of the 21st century. The other thing, I can't let you go without asking you about just the open source kind of business models itself. Been listening to podcasts, we had a couple of companies go IPO recently that are involved and they're all like oh wait, I'm an enterprise company, I'm a software company, VC shouldn't invest in open source because they can't monetize what they're doing. What's your take on the investment and business prospects for the other companies that are not red hat? Well look, I'm thrilled to see Clodera going public, obviously Hortonworks public, Mulesoft recently and I know some of those are hybrid models, they have an open core and they have some other proprietary around it but look, it's still dollars that are getting invested in open source software. I think we've clearly proven a model that you can have 100% open source and build a successful business. For a whole set of technologies, it's clearly a better innovation model. The thing that I can continue to push people is don't think about it as selling IP and this is, I've actually had conversations with several university presidents about the same issue, a university education is more than about the content, don't be scared of MOOCs, right? Because, and most people kind of get that, a university education, yeah, content's a part of it but there are 50 other things that make up an education so that's what I always come back to open source companies and say, assume the content's free because it's going to be better if it's totally free and now think about how do you build a model around the fact that content's free and I think education's a great one, your industry and media is certainly one that needs to continue to innovate around business models as well. So, rather than saying, let's take a development model that's superior in a number of regards for a set of technologies, especially around infrastructure and say, let's hamper it and make it work in the old school business model, let's continue to work to innovate business models that allow the innovation to happen because it's going to happen, right? You do have to recognize that so much of what you're seeing in open source is really a byproduct of what Google and Facebook and others are doing and that's going to continue so the best innovation's going to come there, you got to figure out business models that work for it. You got to figure them out. Thank you so much, Jim Whitehorst. We appreciate your time. It's great to be here. Thanks so much for having me. I'm Rebecca Knight for Stu Miniman. We will return with more from the Red Hat Summit.