 Live from Las Vegas, Nevada it's theCUBE covering EMC World 2015 brought to you by EMC, Brocade, and VCE. It's flagship program. We go out to the event and extract the sizzling noise. I'm John Furrier, my co-student Miniman. Our next guest is a CUBE alumni. I've been on theCUBE many times before. And back again, John Thompson is the CEO of Virtual Instruments and also the chairman of a company called Microsoft. Welcome back to theCUBE. It's nice to be back. Great to see you. In VMworld 2011 we did an interview on Virtual Instruments through the CEO. And we were really riffing on this whole idea of data instrumentation and we was really pre-internative things. So give us the update. What's going on with Virtual Instruments here? I see Microsoft has a conference going on Ignite. Even though you're chairman of the board, you're also the CEO of Virtual Instruments. And you got to do some business here. What's going on? What business are you doing? Well, this is an important conference for Virtual Instruments. EMC is one of our strongest go-to-market partners and candidly many of their customers are Virtual Instruments customers. And so it's an opportunity for me to be here to spend time with our partners and our customers in one venue. Our business is doing quite well. We just had a very, very strong March quarter, which is always a little bit of a down quarter for most tech companies. But we were up 27, 28% year over year for the calendar Q1, so we feel pretty good about that. This is the most important quarter of the year though, which is always the case in tech. So we're hoping that we can knock the ball out of the park again this quarter. We launched our Virtual Wisdom 4 platform in the spring of last year, and it is gaining tremendous traction, certainly in the U.S. and around the globe. It is all about health utilization and performance of the infrastructure. And we've defined a model where you can look at an application inside that infrastructure to monitor its performance and its availability. And that idea is so critical in a world where everything will someday live in the cloud, and you will want to assure a level of performance and, quite frankly, a level of responsiveness to customers as they come on. Well, it just says a reset. Just share the folks out. This is not a new concept for you guys. So we talked about this years ago. It's not like you woke up one morning and say, hey, this Internet of Things is trendy, this data center is vintage. Quickly back, where did it come from? Was it an itch to scratch? What original product did you have? And how does that morph into today's crazy data-driven world where dash boarding, real-time, is actually competitive advantage and now table stakes? Well, if you were to go back to the genesis of virtual instruments, we started as a small technology investment inside a larger company called Finisar that was trying to solve the inevitable performance problem in the fiber channel world. And as the market crashed in 2007, 2008, the team at Finisar had to decide, how are we going to clean up our portfolio? And the result was they sold off the assets where we, in fact, created virtual instruments. So a small group of investors led by Jim Davidson from Silverlake and Michael Marks from Riverwood helped to fund the original investment in virtual instruments. We've been at it now for about seven years. We have clearly evolved the product quite a bit since then. And we've captured a number of very, very strong venture capital investments along the way. As we made the choice that said we need to shift from being a fiber channel company to being an infrastructure performance management company because the inevitable movement to the cloud will drive an opportunity for us. Yeah, and you're a senior executive, private equity. I mean, this is pretty much a big bet and there's a lot of money involved with private equity. So it wasn't like you were throwing the Silicon Valley startup together. It was really like, okay, there's big money behind it. Did you see it turning out this way? What were some learnings that have been magnified from that trajectory? Well, I think in the early days we thought the path was a little different than what we've actually followed. We thought the path was that the fiber channel world was so big and that it needed better visibility that this would in fact give the world better visibility in the fiber channel space. What we have observed, however, is that the entire infrastructure has become more and more opaque and therefore you need to not just drive visibility in the storage layer but across the entire converged stack. And so the platform that we have evolved is all about supporting this converged platform, not just fiber channel but file based storage, not just VMware but all virtualized server environments. And we believe that's a multi-billion dollar market and that's why we were able to attract both private equity initially and venture capital later as we built out the product portfolio. Yeah, it's interesting. You see some of these ideas come around full circle. I'm curious, just an industry trend, your opinion on Veritas being spun out. Yeah, it's both sad for me personally but I think it speaks to how difficult the cultural integration might have been between the two companies. While I really had a vision back in the 04-05 days of security and backup coming together, I think it was a really, really difficult thing to make happen in the context of what has evolved at Symantec. So the fact that they've chosen to spin it out, it's perhaps a little disappointing for me personally but not a surprise. Yeah, so what is your vision of security today? Is my understanding you advise, even sit on the board of Alumeo a company we've talked to? Cool company, really. So what's happening with security? So if you think about how security has evolved, once upon a time it was about protecting the device. Candidly in a cloud based world it's going to be more about protecting the workloads as they move around. And that's one of the elements of what Alumeo does in fact provide. Furthermore, I have believed for a very, very long time that as time goes on security will have to get closer and closer to that which is deemed to be most critical. In other words, you can't protect all of the data, you can't protect all of the instances that are on the web, but you can identify those that are most critical and therefore need a level of protection beyond what the standard would be. And so my belief is that companies like Alumeo and others that will evolve will get closer to the workload and will get closer to the data that's most critical. And so data classification and things of that nature will become much, much more important than they have. Now you're an investor in Alumeo. Yes, I am. Are you on the board? Yes, I am. Okay, so you're on the board of director and investor. We covered their launch. Great company. The Kraken is low as Alan Cohen would say. But phenomenal funding round. They've gone from stealth two years and now the big $100 million funding round. Massive. Gorilla marketing is still going on at ARSA. It was kind of clever. The perimeter-less cloud is a factor. And what tech-enabled do you see the key thing? I mean Alan Cohen describes it as, you know, 1,000-foot-should soldiers protecting assets because there's no more perimeter, there's no front door anymore. What is the technology driver for that? Well, the whole idea behind Alumeo is to have what I would call a portable policy enforcement engine that can move as the workload moves around the cloud. So policy management, security policy management has been a very, very difficult task for most large enterprises. So if I can define security policies for every server of where workloads can go to and from on that server and make sure that nothing violates that policy, hence I enforce it routinely, Well I can change the dynamic of how security gets delivered in a cloud-based world because no workload is going to run in any single place in a cloud world. That workload is going to move to where there is capacity to handle it. Sean, I've got to ask you because we have a lot of people out there that follow the tech business, tech athletes that you are. But also you're a senior executive who has a lot of experience and we could be presenting to Harvard Business School, Stanford Business School. I want to get your kind of business mind out to the audience. And that is that as an executive who's seen the big companies, the big battleships, the big aircraft carriers from the IBM days to the M&A world of the 90s and the transformation of the internet now in a complete shift and inflection point with things like Alumeo and cloud and virtual instruments and the new Microsoft and the Silicon angles and the crowd chats out there. What do you advise managers out there to operate from a management perspective? I mean, there's a classic business school, you know, numbers, quarter, there's challenges of going public, managing enormous dynamic technology change. So every theater is kind of exploding, the technology theater, the business theater, the social theater. As an executive, how would you advise someone as a CEO or rising, growing startup how they should stitch themselves together if you can draw in from previous experiences or is there a pattern recognition you can share? Well, it's never simply about the numbers. Well, the numbers are always important and the numbers will always be the underpinning of the valuation or whatever. In reality, it's about having a team that is able to rally around a leader with a vision that says, here's how we're going to change the world. Here's how we're going to make an impact as this industry goes through the natural inflection points that it always does. And if you look at what has occurred in this industry about every eight to ten years, something significant changes. And so a company that may have missed an opportunity six or eight years ago has another shot at it six or eight years later because of the inflection points that we go through. So it's important for the leader of a company to believe that I can change the world based upon the industry that I'm a part of and have a compelling point of view about what changing the world means for that company and that team. And if you can get the team together around that idea. What about cloud and big data and mobile, these dynamics that you would, if someone just wants the roadmap or navigation or what deck to go after? What would you say, you know, get it all in the cloud or go poke at it, do a little R&D, new agile management, things are happening? Well, I think it starts with what are the core competencies that you have as a team or a company? I can't say, gee, I'm going to go and do cloud. And oh, by the way, I have no competency in the management infrastructure for large enterprises. Or I'm going to go do mobile and I really have no experience in the mobile space whatsoever. And so core competencies matter and leveraging the core strengths of the company matters. Now, oftentimes what companies will do is supplement their core strengths through M&A. They'll go out and acquire something and bolt it on. The hard part of M&A, which is what we were referencing earlier around Veritas, is can you integrate it? Can you really make it work after you've bought it? Buying it is the easy part. Integrating it and making it work is the really, really tough part. And arguably we didn't do as good a job as I would have liked with Symantec. And so basically you're saying as an executive, you want to look at the winds of change and get the sales up, if you will, to use the metaphor and get into that slipstream so you can actually drive and you can't be an amateur. You've got to actually have some competency. You've got to have a leverage point. Look, one of the great things about this industry is it doesn't take some brilliant business leader to create a new idea. I mean, no one ever would have viewed Zuckerberg as a business leader or some of the young, really, really powerful CEOs that have built phenomenal, phenomenal companies in this industry. But they had an idea and they were able to create a team around that idea and go change the world. And that's what's so powerful about this industry that I've had the pleasure to be a part of for 40-some years. So speaking about CEOs that changed the industry, John Chambers announced that he's, you know, stepping aside from the CEO role this morning. So, you know, when you look back, you know, John was one of the four horsemen of the Internet era. And 20 years there, you know, Chuck Robbins is coming in. He's been there since, you know, I think 97. So, you know, what do you think of that move and, you know, what's happening with Cisco and, you know, leadership for the big companies? Well, John's a really, really good friend and I admire him for all of what he's done at Cisco. And I wish him well as he makes this transition. Interestingly enough, the transition is to executive chairman with the new CEO stepping in. So what that says is that John plans to have a little more involvement perhaps in what goes on at the company than I do at Microsoft. My title is not executive chairman at Microsoft. Thank goodness. I wouldn't want it to be either. But it also speaks to the fact that John's been the CEO at Cisco since 1995 or something like that. It's amazing. And so he has an enormous amount of knowledge and insight about the company, the industry, its customers, partners, culture, all of those, the culture. And so all of those things will be valuable and important to the new CEO. And I think him stepping into that new role is trying to leverage that. Satya Nadella came in and made his voice heard really instantly and Microsoft has been a great company to watch since he's came on board. Does Cisco need to make some bold moves or are they pretty stable where they are as kind of a dominant player? That's a better question for John and the new CEO. I think what is clear is that all companies at some point have to find a way to redefine themselves. And Satya's role at Microsoft, he has redefined Microsoft as a cloud-first, mobile-first company. And that's all about recognizing where apps are going to run on what devices and what kind of services. And that redefinition, I think, is important for any industry leader regardless of how long they are. You just brought us to the tagline of this show, EMC World is redefined. So, you know, any comments? How's EMC doing at redefining themselves? I think EMC is a terrific company. Joe's a longtime friend of mine. I've known Joe forever. And it's been amazing to see how it's gone from being a storage company to this federation of companies that have capabilities that are so broad and so diverse. I hope they don't get pushed to do something that isn't in the best interest of customers but may be enamored by some investors. I hope that does not happen. You're talking about the activist pressure. Yeah, that's unfortunate. But I think they have a nice balance now. You just all base, and there's competitive pressure. So they got to push that. But I have to ask, because I was getting some tweets earlier about Microsoft, and I know you're only chairman of the board, not an executive chairman. But you were involved in a very historic part. You were on the executive search committee for the CEO replacement for Steve Ballmer, of which they chose Satya Nantella, a CUBE alumni we interviewed at the Excel Partners Innovation Summit in Stanford. That's about culture. That's about transitions, about inflection points. Stu mentioned Cisco, not similar situation, but Microsoft is a legend company. In the computer industry like in Apple, Microsoft was there. Big part of the computer revolution. Big seismic change, and you were right there. Just share some color on what that whole experience is like for you personally. And if you can share any insights to the audience, I know it might be a sensitive topic. But what was that like, and the outcomes looking good? Obviously Satya is doing great. What can you share? Well, I think it would be fair to say that it was a more consuming process than I ever thought it would be. I went from being a new board member at Microsoft in the spring of 2012 to being the lead independent director in the fall of 2012 to leading the search starting in the summer of 2013. I mean, I never could have imagined my involvement there changing that dramatically. Nor would I have imagined that searching for a CEO of a company would consume 80% of my time when I was also running a company. So for a period of about six months... That's a tech athlete right there. Lastly, I had two full-time jobs where I was on the phone all day every day trying to get something done for VI and on the phone all day every day trying to get something done for Microsoft as well. It was, I would also have to say, an incredibly, incredibly exhilarating experience. I talked to some phenomenal leaders from around the world. We had Card Blanc to look anywhere we wanted at any CEO or candidate that we wanted. And we settled on someone who was a tech athlete. We believed that the company was at a really, really important inflection point where over the course of the next 12 to 24 months we were going to have to make some really, really important technology decisions that would set the course for Microsoft for many, many years to come. And so while there was much speculation in the press about this person or that person and what a great business leader that person was, what we as a board concluded was that what our company needed at that moment in time was a true technology visionary who could drive the strategy of the company. Because they had assets. I mean, they had the whole search thing that they missed on paper, but they had, like you said, they had come back at it again with Bing. They saw a lot of assets there. Cloud was built out. Everything was kind of like in place for that tech athlete. Yeah, sure. And I think Satya's done an amazing job. I'm quite proud of him. I'm happy to say I had some small part in that, but I'm more happy for the way he has executed in the job. I mean, he steps into the job with a level of humility but confidence. It is so important for the CEO of a company of that size. And to maintain that cultural DNA because you have one of the most competitive companies on the planet. Oh, no question about it. To the point where they had to be almost broken up by the DOJ from the Bill Gates kind of the DNA and Balmer to continue to be competitive in this new era. Yeah. It's a really tough challenge. Well, he's a bright guy. He, as I said, has great humility and has the respect of the team. And it's been interesting to see the internal shift in behavior and attitude with a guy who, I jokingly say, he has two ears in one mouth and he uses them proportionately. And that's a very important lesson for someone trying to transform a company. You must listen more than you talk. And I think he does a great job of that. Well, we try to do that at theCUBE, but we talk all day long and we do interviews. But I got to ask you back to Virtual Instruments. Okay, you got some good biz dev going on with EMC. You could go to Margaret Partner. How about VMware and the Federation? Are they partnering with you as well? Our essay? Is it all Federation? It's mostly through EMC. And while VMware is a small BI customer, we don't do much with them on the go-to-market side. On the go-to-market side, we rely more heavily, if you will, on EMC. That partnership has evolved. I mean, from the early days it was viewed as, gee, we're not sure who you are and what you do and whether or not you're competitive with us. Today, we have very, very common go-to-market processes around the globe. I'd love to see them stronger. I just left Tucci's office and saying, gee, Joe, we can do more. But when it's all said and done, this is one of the strongest go-to-market partners we have. That's awesome. And share to folks out there what they might not know about Virtual Instruments that you can share. They're hearing this now for the first time and they're getting on the radar. Future of your business, your division, product extensibility, future of Internet of Everything, future of Internet of Things, whatever you want to put on a big data and the data center. And the migration to the cloud is all here. At our core, we believe that every large enterprise will inevitably have some, if not all, of their work in the cloud. So the question is, how do you help them manage that inevitable migration to the cloud by de-risking the migration and ensuring appropriate infrastructure performance management once you arrive there? We focus on the largest enterprises in the world. So unlike many tech startups that will start with a midsize or small company and work their way up, well, the largest banks in the universe, the largest insurance companies in the universe, the largest of every sector in the universe is a customer of the eye or will be someday. And that notion of solving very, very complex problems is something that our team has great pride in our ability to do that. I want to get philosophical with you if you can for a second. We'll kind of sit back and have a glass of wine and kind of talk to the younger generation out there. With all your history and experience, how great of an opportunity is it for the young entrepreneurs and CEOs out there right now? Given the confluence of the shift and inflection points, can you compare this to an error? I mean, we in the Cube say it's like the PC revolution bundled them with the client server and the internet all kind of at once. Do you agree and how would you say, hey guys, you have an amazing opportunity out there? Well, I think the example of just how crazy it is. I was driving through the airport this morning and what I thought would be an hour-long drive took two hours because there's so many people on the road in the valley going to work. There's just so much going on in Silicon Valley right now. It is amazing. And for anyone who has a really, really great idea, the thing that's equally amazing is there's lots of capital out there to support those ideas. And so I would encourage any young entrepreneur who has a thought, socialize your thought, get it out so people can learn about it and then go get money to support and back that thought. There's lots of money out there for good ideas, lots of money. John, we appreciate you taking the time coming out of your busy schedule. CEO of Virtual Instruments, chairman of Microsoft here inside the Cube. Tech athletes is a big deal. You are one of those. Great to always have a conversation with you. Thank you so much. This is the Cube. We'll be right back with more insights and the signal from the noise after this short break.