 Live from Vancouver, Canada, it's theCUBE at OpenStack Summit Vancouver 2015. Brought to you by headline sponsors EMC and Joypling by Red Hat and Cisco with additional sponsorship by Brocade and HP. And now your hosts, John Furrier and Stu Miniman. Okay, welcome back everyone live here at the OpenStack Summit in Vancouver, British Columbia. This is theCUBE SiliconANGLE's flagship program. Go out to the events and extract the signal from the noise. I'm John Furrier, my co-host Stu Miniman from wikibon.com. Excited to for this next guest, Jesse Proudman, Founder and CTO of Blue Box. Welcome to theCUBE because as you know on theCUBE, we have CUBE Madness every year in our second year. And Jesse is the winner of this year's CUBE Madness competition, congratulations. And you have a special presentation for us on theCUBE today. I have created the annual CUBE Madness trophy, delivering it to theCUBE to present year after year. So we're honoring Jason Stowe, the 2014 winner and myself for 2015, congratulations. Okay, we are on theCUBE. This is the new official CUBE Madness trophy. Every year we have the NCAA tournament bracket promotion, fun opportunity that we stack the guests up against each other in a bracket formation where they go head to head on social mojo. And the winner emerges like the final four in the final championship by votes. And the votes in and of itself is fun every year, but now we have official trophies too. Take a look at that. Yeah, so Jesse I have to ask, you know, you've been on theCUBE a couple of times, what does it mean to you to be the CUBE Madness champion and get us, you know, part of your reward was of course, you know, getting a segment here at the open stack summit, it's like a homecoming for you. Yeah, you know, I think it's a, it's just a fun process all around. I think you take 64 incredible technologists from across their industry, you get them together, you get to see their, the social campaigns that everybody is able to assemble. It was really, it was an entertaining process. I was delightful to see that the Red Hat campaign, I think outside of ours, I was most impressed with what they were able to pull together with Jim Whitehurst and we just had, we had an amazing time at the office. You took down the CEO of Red Hat. Yes, well, you know, it's what happens. With a corporate campaign behind it. You know, I think Blue Box will take down Red Hat. Well, you got HDS, as ST was big into it as well. Those guys were fighting to the end. This year, maybe we'll look at the voting, we'll have special algorithms and like actually build in some gamification. Based upon each division, the hack gets harder and harder and harder. We'll put the security provisions in place. That will be an open source project. We should go get some volunteers to put that together, but that would be super interesting. Every year, make each round harder and harder. Yeah, I got like that this year, it was fascinating. So we're so psyched to have you, but let's talk about what you guys are doing. All fun aside, it's great to have the trophy. Thanks so much. I loved your posters as well. Having some fun with it. This industry is all about having fun. People work hard, play hard. Give us the update. What's going on with you guys? You had a nice golf cart out here, Blue Box car. You got some stuff going on here. Give us the, what's going on in your world. Yeah, I think there's too many folks in this industry that don't have fun with their products. So we're happy to take up all their fun. We are announcing a bunch of new stuff here at OpenStack Summit in Vancouver. The primary item for us is our on-prem enterprise product. So we started, if you remember back in Tokyo or in Hong Kong in 2013 with Blue Box Cloud, our hosted edition. So this is a hosted private cloud, runs on hardware in our data center, operated by Blue Box. That was our entry into the market. And on Monday, we announced our on-premises offering. So this is a remotely managed on-premises private cloud powered by OpenStack. We handle all the pain that is associated with OpenStack and really let the customers benefit from working with OpenStack. On top of that, we announced the enterprise edition. So this is a Dell powered bomb. It's twice the compute, twice the RAM, twice the disk profile on the offering. And we're seeing a lot of uptake in customers that have high compute, high performance workloads on that. So two exciting product announcements for us this week on top of being able to bring our A-Team van or A-Team theme, you can see it from the shirt. We got bling at our booth. We've got all kinds of fun stuff. This is the best theme we've had at any summit. So it's been a great week so far. It's doing some biz-deb deals. So you're having a nice lunch meeting. You're in meetings all day long. What are the top conversations that you're involved in this week? Share it to folks out there that may want to join the conversation or participate or just know what you're talking about. What are the top kinds of conversations you're having with partners, employees, customers in the industry, everybody. So we're actively recruiting. I think that's been a big portion of this week. There's a lot of folks. It's been pretty exciting. I think you start a company, you get a couple years in, and you see the trajectory of, for a long time it's outbound recruiting. We're now getting to the point where it's inbound recruiting so people are excited about the way we're delivering OpenStack and they want to come work here with some of the amazing engineers we have. So a lot of conversations around that this week. A lot of conversations around our channel edition. So we have our hosted product today. We have the on-premises product. And we also have, which is not widely publicized here as the target market, but we have a channel product that is targeted towards other data center companies. So somebody that has a data center, has physical infrastructure and is looking to sell hosted private cloud. And so we're getting into a lot of conversations with those organizations who have come to the summit looking for a solution to be able to bring to their customers. So that's been a lot of our interaction. And then other partnerships around hardware suppliers and the like. Yeah, so Jesse, when I got to walk around the show floor, one of the things I love to see is it's the we're hiring sticker up all over the place. Definitely, it's hot technology here. How is the job market out there for those people looking and from your standpoint, are there enough of the people with the right skill sets to help move you and the rest of the community forward? Oh, not at all. I mean, I think there's not nearly enough engineers in the world that have capabilities and the experience that any of the organizations involved this project need. And I think to some extent that's what makes our business so great in the way we're delivering OpenStack to our customers. To another extent that makes it very frustrating. So you look at how you look at the competitive landscape. So many organizations are focused on delivering OpenStack as a software distribution. If I'm a customer and I buy a software distribution that means I actually need to have somebody in my company that understands OpenStack and knows how to run it and knows how to take that distribution and make it work. And those people are rare, expensive and hard to retain. The way we sell OpenStack is as a service. So we're handling all of that for customers which really means that's our specialty, our focus, our expertise. And that's I think that the shortfall in talent really drives the value in the way we've chosen to distribute OpenStack. You then look at the educational opportunity over the next couple of years. It's going to take some time to get more and more folks trained on this technology and up to speed. And I think over time we'll start to see that become less and less of an issue but man, right now it's certainly a tight pinch. Yeah, actually you bring up a real good point, something we've been poking at from the Wikibon standpoint, not just for OpenStack but in the industry in general, we need to change to really the marginal economics of software. If it requires services to be able to deploy this and it's not something that's repeatable, we can't really scale and grow and to drive that new innovation. So it's when we can bake more of it into software, it's something that's much more easily consumable. And cloud in general should get to that model and OpenStack needs to get there. Yeah, and so I think when you look at any other type of software, Salesforce is a great example. You don't download Salesforce as a piece of on-premises software and install it and have a Salesforce expert that runs it. You consume it as a service. There's no reason OpenStack can't be delivered, consumed and operated that way. Whether it be in a hosted model like our original product line or now ultimately on-premises like we've announced on Monday. And we think that's the winning combination for this type of technology. It's not right for everybody but for 80, 90% of the marketplace, that is the way to consume OpenStack. So talk about the funding. You guys, you know, obviously started, self-funded, started the company. Talk about the funding. Who's now invested? Talk about the working capital you have and some of the growth, growing pains and opportunities you are experiencing. Obviously you're hiring, which is great. Inbound means that people want to work for you. So what's the status? I mean, you've got some fresh financing. Almost a last round. Give us some numbers. I mean, the company would be 12 years old here in August, which is an eternity in this space. A literal eternity. And so we grew up for the first nine years as a bootstrap company. I funded it from my dorm room to raising the Series A. And we really are a managed hosting company competing with Rackspace. Raised the $4.3 million Series A in December of 12. And then we raised $14 million in December of 14, January 15. And so for us, that gives us quite a bit of runway into the next start of 18 months. And it's really, it was a validation of the business model, right? I think you look at, like Matt Weinberger talks about how the venture community has really began to ignore or be ashamed of the OpenStack investment. And that's not at all the case for us. I think we found a very profitable niche, a niche that is growing, one that we can really deliver a premium service and we were able to raise capital on that. And that capital is giving us the opportunity to be incredibly successful. But you guys are already profitable prior to funding. No, no. I mean, we're investing heavily in OpenStack. So we're burning cash just like every other startup, but we're doing that intentionally. And the nice thing is because we've had a business line prior to OpenStack product, we have cash flow that sustains our operations. Yeah, so you had cash. It's always like you're running out of cash, but you're burning to grow. To grow. We're burning to invest in a future product that we think will be wildly successful. But you have a business model that you're executing on. You're just burning for extra growth. Classic case of working capital. Talk about the growth model. I'm the business model. Talk about how that's going. Certifications, certainly we're hearing a lot of that. Is that something that you guys will do differently in context with the community or both? Will you add on your own? People want to know if it's going to work. Yeah, sort of the interoperability work that was announced this week is that, yeah, so we were early in on the interoperability story with OpenStack. Big believers in that requirement. I mean, you think about the vision and the story that is OpenStack, and it really originated around this ability to move workloads from cloud to cloud. And for a long time that didn't exist. When you weren't deployed on Rackspace, and you deployed on Morantis, and you deployed on BlueBox, they were all largely different OpenStack versions, different OpenStack APIs, and you couldn't expect that call to be consistent. With the interoperability of work that was released at the summit, starting to see certification, actual tests that are ran against each one of the installations that say, hey, this API call that I make will work the same way on each installation. And that's been so desperately needed. You know, I think it's taken a number of years to get us there, but I'm so thankful that we're finally there. And we'll continue to actively be involved in that process and that community and that technology testing stack. Because I think it really is a key. It's a key component of what we're trying to do here. Yeah, so Jesse, that interoperability mature, how does a company like yours differentiate? You know, if many things work kind of the same, you know, and you've got a lot of big companies coming into the space, you would think some of them would deploy OpenStack as a service. How do you continue to push the envelope, innovate and separate yourself from the past? Yeah, but they're not. I mean, I think that's the funny thing. You look at all the big companies entering the space, and they're trying to treat this just like Red Hat treated Linux as a distribution. Everybody's trying to ship this as a disparate piece of software. And that's not how OpenStack can or should be consumed. I think that the challenge is when a single Red Hat guest or physical piece of hardware goes down, that takes down a small portion of your infrastructure. When your entire cloud goes down, you don't just want to pick up the phone and call support. Like you've got way bigger problems because your entire business is offline. And so really what companies that are consuming OpenStack need is an organization that is focused on the operational reliability and the service aspect of that product. They want to know that they're consuming a private cloud with the same level of reliability and consistency that they can get out of a public cloud. And you're not going to get that out of software. So on the engineering build out, one of the things Stu and I were talking about is that we're in a revolutionary utopian idea of this huge amount of energy going at the build out. I mean, engineering across the board, software, UX, everything, ops, huge growth. I mean, people sitting in the sessions on the floor. So huge onboarding of new blood. What you're taking, how are you handling that? What would you say to folks out there that are coming into the community with full gear ready to build out stuff? I mean, you're seeing this transformation happening and we're now going to a matured path and people are building. I mean, it's like construction time. It's like people are rolling out cloud in a big way. Yeah, so the breadth of services is I think the biggest challenge, right? You look at what OpenStack has become. You've got 20 plus different services that all do different things. They all provide different capabilities to the end user. They're all installed differently. They're all configured differently. They all have different parameters. And that really is challenging. Like how do you take a brand new person to this space and get them familiar with the 20 different code names that exist on all these projects, let alone what the projects do, let alone the minutiae about how do you install and operate those. And so I think a lot of the work that Foundation is doing around actually defining that core set of services what is the raw pieces that make up OpenStack at its core. That's critical. And then we've got to figure out, again, I think it goes back to training. How do we get more and more people in this industry up to speed with everything that's going on and the pace of change that's going on because it's moving so fast. Do you think that the industry will move quickly where vendors will go and adopt their own certification on top of existing deaf core stuff or do you see it all kind of coming together under the Foundation? What's your take on that? Yeah, I think it will continue to come through under the Foundation. I think it needs to come through under the Foundation. I think the moment we start to get individual vendors saying this is sort of my certified offering and it differs from that core, we're starting to get the forks and the splintering and nobody in the community wants that. I think that interoperability story, that ability to say, look, everything, it's sort of this worldwide global cloud. I mean, you look at the keynotes this morning, that was the message that was pounded and repeatedly yesterday continue to be pounded in today. Like that is, it's a critical component for all of our success. So Jesse, the maturity message is getting better. What do you see as kind of the big challenge for more mainstream adoption? I know we talked about kind of the consumption model from your standpoint, but just kind of step back without the blue box hat on. What do we need to do as a community and open stack? Yeah, I was reading an interesting article earlier today that was on the same topic and they're basically saying, look, this cattle versus pets argument is interesting and yes, everybody thinks that the cattle should be the appropriate methodology, but the reality is the enterprise has a ton of pets, they will have a ton of pets and they will, those aren't going away. If you look at the TD Bank presentation, I think it was yesterday morning, I said, look, we're trying to get, our workloads move to cloud, we've got 20% move now, we're trying to get to 80% in the next five years. Like we're so, so early in this transformation. And so to just say, hey, put all your greenfield things here, like, yeah, that's interesting and yes, new things will end up on open stack. They also could end up on Amazon or Google or Azure. But we have an opportunity to actually pay attention to what the enterprise is saying, like, look, we've got these things that are stuck, we want to move them, how do we do that? And so that's where I think like the win the enterprise working group that the board created, those types of initiatives and projects are so vital. And I think we can see a lot of success out of that longterm. So in the news today, Gartner analysts are saying that, open stack is great for private clouds, but if you're doing private clouds, it's a science project that was on the register. He does acknowledge that, you know, it's great for infrastructure. He's really talking about the management piece of it, kind of when you deep, deep below the headline. What do you take on all this? I mean, obviously the mainstream is saying, we want more open stack, there's demand there. Where are the science projects? Where are the real deals? What are you seeing? Can you share just your experience and insight into where the action is and where the science projects are? Because there are legitimate science projects. There's things out there. Any new technology is full of science projects. I legitimately don't understand Gartner's position on open stack. And they've, for a very long time, for a long time presented it didn't exist, then pretended it didn't work. And now that it works, they're pretending it's a science project. And it's really, it's frustrating. Like I laugh when the Gartner sales rep calls our office and say, look, your analysts don't, they don't acknowledge the product I sell is actually a product. So how am I going to buy your analyst services? You look at every other analyst in the industry and they all say phenomenal things about open stack. They're able to track the progress. Lauren Nelson from Forrester did a great report that said open stack is ready this week. It came out I think on Monday. For whatever reason, Gartner has like a personal vendetta against open stack. And I get it. It's not. That might shift now that the big whales are in the market, Oracle, IBM. I mean, that's good. Yeah, but they've been in the market for a while. Like I think the challenge is, Gartner is so focused on this public cloud story, right? The Magic Quadrant gets released last night or today, this morning. And it's all about Amazon Azure and Google. Those are all fascinating technologies. They're moving very quickly. They don't involve open stack. They're an important piece of everything that's going on. But that doesn't invalidate everything this entire community is doing. And I think they struggle on that fact. So it's a really, it's a head scratcher for me. I don't understand the positioning. Yeah, I mean, maybe it's lack of understanding in the actual market. I mean, enterprise is kind of like a nuanced business and this is everywhere. It's like, I mean, open stack spreads. If you look at open stack, what it does, I mean, it spreads across a lot of enterprise touchpoints, so it's hard to put it in a box. Look at the keynotes this morning. I mean, you had hundreds of thousands of cores of compute discussed from company to company to company. You know, actually, I think a very fascinating thing would be for the foundation to put together a count of total number of hypervisors, a total number of cores running, operating under open stack, whether it be public or private. I guarantee you that number is much, much larger than anybody recognizes. But Jesse, it's very clear. We know what's going on open stack. I'll tell you right now, we see it. You're talking about a new architecture around services, resource management, it's not just the layers and boxes, putting things into quadrants, whatever they do, Gardner and others. But the fact of the matter, it's an absolutely disruptive marketplace. And the enterprise is now settling into almost vertical sectors, but you can't put people into boxes. So, open stack is confusing to most people because you can't put it in a box. Right, because it's not a product, it's a project. Like, I think we stuck on that as well. And it touches every aspect, so if you're an analyst, the work required to understand open stack would be, in their mind, horizontally scalable across every sector. You almost need an analyst dedicated just to the project to be able to translate its capabilities, its technology developments to the rest of everything your analyst community is doing. Yeah. What do you think about the Big Tent and all this stuff going on? We talked to some folks earlier about, you know, this now, Big Tent is the new messaging around how they roll out and vis-a-vis the old way, which kind of got its own name through just ongoing, you know, integrated, something like evolutionary, whatever I've got the term they call, but now it's all going on to the Big Tent. What's your take on this release cycle? Yeah, you know, I think it's good to see progress and change there. At the end of the day, what the community is asking for, what the operators are asking for, they're looking for a stable platform. And whether you call that Big Tent or you call that integrated release or you call that or use the tagging methodology, like we just need to be able to define what works in open stack, what's new, and how that's progressing over time. I do like the idea that we're opening up the world to a lot more competitive projects. I think that's very helpful. I think for a long time you would have sort of a definitive open stack project. This would be the way to do things. And that might not be the best way to do things. And so the work that's happened over the last six months and a year gives more competition. It makes it open stack more of a free market, a free market software economy, which I think is phenomenal, but it's a great trajectory. Jesse, we're getting tight on time here. But I asked you the last question. What's up next for you guys? What's on the horizon? Shoot the arrow forward. Where do you guys want to be? What's the outlook from your standpoint in the industry? Yeah, great question. So the last six months have been really fun. We've sort of been lining up partnership after partnership after partnership after partnership. And we're getting that they're all in different stages. We've actually have five massive projects that we're undergoing all at once. And we sort of look at the calendar between now and Tokyo. We're realizing sort of every 45 days we're going to have a really cool piece of news. So the next one looks like it'll come out in early June and we're tuned up for that. All right, Jesse Prebb and CTO and founder of Bluebox Cloud. They got funding, they're burning cash, they're growing, they're hiring. Every 45 days they got news. They won the Cube Madness. Indicator of big things going forward. Yeah, congratulations and thanks for the trophy. We right back. Cube Madness here live in Vancouver, British Columbia. I'm John Furrier with Stu Miniman. And shout out to Jeff Frick and Dave Vellante. Yeah, we got the hardware. We right back.