 Live from Seattle, Washington, it's theCUBE. Covering DockerCon 2016, brought to you by Docker. Hey, welcome back everyone. We are here live in Seattle for DockerCon 2016. This is SiliconANGLE Media's theCUBE, our flagship program where we go out to the events and extract the signal from the noise. I'm John Furrier with my co-host, Brian Graceley, Cloud Analyst at Wikibon. Our next guest, kicking off day two of coverage is Jerry Chen, CUBE alumni. Great to have him on now in his third year with Greylock Partners as a general partner, managing director, all the fancy titles. But essentially, a key partner. I don't know what you guys call him, partner at Greylock. Welcome back. Hey, it's great to be here. It was good to be on theCUBE. Feels like coming home. Yeah, it's great to have you on. One, it's been fun chatting with you over the years. Now, three years at Greylock. Really interesting, your first investment was Docker, which is Docker Inc. the company that's powering this ecosystem in your first deal. I remember saying, Jerry, what's the sophomore jinx? Is there a sophomore jinx? You're now on how many boards? Give us an update on what you're working on. Obviously, Docker is a big success. We'll get into that in a second. But what deals are you working on now? What's your investment thesis? What's your thoughts? I've been looking a lot at the landscape and we're this part of the evolution where we have these new technology primitives that we talk about and hear about. Things like chatbot or AI or IoT. And there's these buzzwords, I don't think these buzzwords themselves are investable, but I think about how these technologies like IoT and AI really combine to make a new generation of enterprise apps. So it could be a specific vertical construction like Rundix that invested in, or it could be healthcare, it could be rethinking HR, but pretty soon these new apps are going to extend your application to your phone, to your car, to your home. So I've been thinking a lot about that kind of next wave of applications both upon things like machine intelligence, IoT, and obviously mobile. One of the things that we were talking yesterday with Ben Gallup, the CEO of Docker, your investment, I know you sit on the board, was obviously that LinkedIn was sold for $26 billion of great lock portfolio company, went public, great revenue, great team, a great data set, Microsoft saw our value in that, 26 billion. And I was joking, I'm like, you know, Docker, it's worth about a billion kind of unicorn, but it got to be worth at least 10 million. And all joking aside, the point there was LinkedIn was very clear the value, and obviously the premium was paid by Microsoft for the data, how it integrates with Outlook, all that good stuff people are talking about, but people are trying to really understand the Docker magic. Why is that so good? And I said, you have a lot of enterprises, commercialization, stuff going on, you got big names here, you got Google, Cisco, IBM, every HP, a lot of big players, but you also have an entrepreneurial culture. Those two things are really magical. So what is your analysis? How would you explain to folks that might not be able to tease out the value of what Docker has and why it's important to this new era? Because people are using it heavily, 95,000 projects on GitHub, zillions of downloads, it's hot, why is, what is so important about the magic of Docker? I think if you look around you, there's clearly signs that Docker is here, it's not going away, and it's actually gaining widespread enterprise adoption. There's not just the startups out in Silicon Valley or Seattle, it's also the biggest companies like ADP today was on stage talking about using Docker. And I think it's twofold. One, it's becoming the fundamental building block for applications in this next generation of cloud, right? So when you build microservices or a cloud or cloud portable applications, Docker is the enabling technology. And then for the startups and the SaaS comes out there, they come to Docker because of that value. And the larger companies, be it enterprises or guys like HP or Cisco or Microsoft, see the value of Docker in A, a nice transition from the old world to the cloud world. So this on portability from old apps, new apps. And number two, and for these incumbents, the reason why they love Docker is if they want to have a role in IT for the next 10, 20, 30 years of a Microsoft or HP or Cisco, you need to be on the Docker train because otherwise you're not on Docker as one of these large companies, you're no longer relevant. And so I think for these companies like Microsoft to really have relevance for this next generation, you can see that they're really investing heavily in Docker. One of the things that we were talking about on theCUBE this past couple of events was this notion that Peter Burris who heads up our research, and Brian's doing some research around digital business platforms. You mentioned new apps. A lot of disruption in economic values being created right now by these new apps, as you mentioned. But we were kind of putting our old hats on saying, hey, back during the mini computer days, processes were well known, accounting, HR, these things, CRM. But the technology wasn't, so technology was cobbled together to automate known processes. That created the ERP, CRM, all these big companies. Now it's flipped. The technology's well known. The processes are unknown, meaning there's new use cases. This is a thesis that's getting a lot of traction with along with data valuation. Your thoughts on that, because that really seems to be an enabling point for these new entrepreneurs out there that are building companies out of apps where you go back the old days, it's like, oh, that's a feature. That's not really a viable venture-back company. What's your thoughts on this? Because now I want to get your data on the landscape. Is that true? Do you see that same dynamic? And can you give some examples of deals that are growing and taking advantage of the arbitrage of these unknown opportunities? It's hard to say. I don't know what's the second or third industrial revolution they keep saying we're in. So we see the first IT revolution was taking an existing business process and automating with IT. And so now this next industrial revolution, or an IT revolution, is beyond that. So first step was take a process that was all about paper, like order to cash or hire to fire, automate it with bits. And now the next generation is, okay, how can you use technology, cloud, mobile, machine learning to take it one step farther? And that's, I think, the genius and the opportunity this generation startups. It's not looking at an existing process and moving to software, saying, oh great, we've got these great technologies. What can do that's completely going to change the landscape? Yeah, so last year, a lot of announcements that sort of people felt like we're trying to take on VMware. We've talked about using the VMware Playbook. This year, announcements to take on AWS, announcements to take on a lot of the security industry, McAfee, and those. As an investor sitting up, does it ever worry you that they're fighting too many wars, especially as a two or three-year-old company, getting bent so they got 200 people? It's a lot of areas, a lot of irons in the fire. Does that ever worry you that they're trying to spread themselves too thin, or is that necessary? Brian, there's a million things to worry about me about every startup. What's the line that a startup is always in the state of existential crises, right? Which helps focus the mind and actually drives them forward. And so it's a double edged sword. I think that the major thing about Docker and what's going around here is it touches all those things you just said because the market and the opportunity is huge. And you often don't get to invest or see a company that comes around that can touch so many different areas from storage and network security to applications, to cloud, to mobile. So as an investor, even as an entrepreneur, I wouldn't worry about it. For me, you want to be opportunistically or optimistically greedy, saying that just means there's plenty of ways for me to make money. There's plenty of ways for me to innovate. And then it comes down to focus, right? So I think Docker's done a great job, especially with Mariana now running some of the ecosystem is we're going to do these two or three things really, really, really well, kind of like management orchestration security. And then you have 4,010 days and kind of this ballroom of ecosystem partners to do a bunch of other things around them. And VMware did that well, Microsoft did that well. And I think Docker is growing up and learning to do that well. On that point, Mariana was on yesterday, obviously, and Ben also mentioned that their current business model, besides growing the ecosystem was Docker Data Center, yep, product, which is doing well. And then now, he didn't say this, but Mariana kind of teased it out. The HP Enterprise is a royalty-like deal, so there's a revenue model kind of emerging on the alliance side with some deeper integration. So I asked the question, I'll ask you the same question. You know, when you guys are at VMware, you kind of turn the ecosystem around. At one point, I wouldn't say that the ecosystem was that friendly to VMware at one point in time, but the ecosystem radically changed and then all of a sudden, it got very strong. And it is what it is today. And that was because they were clear about their integration points. What would you say to the folks watching is Docker's key integration points? If people are looking for clarity, they love Docker, and they just want to know what not to do. They don't want to get rolled over by the big freight train. They just want to pick a white space. What white, what integration points? You guys are being generously called Docker freight train in this moment, but thank you. It's also, as you said, competitive in the sense a lot of things are moving around, but ecosystem just needs clarity. So how would you clarify that here's the key Docker integration points? So I would say the integration points you can talk about, that's not the philosophy that drives a good ecosystem. What VMware did well, what Microsoft did well, is saying, okay, for every dollar of VMware or Microsoft or Docker that's sold will generate eight to $10 in the ecosystem, right? So the extent that you can do that, there's a one to 10, one to 20 leverage in storage, network security, application services, then you have an ecosystem, because if the ecosystem's not making money, then no, it's making money. Well, that's economic value, that's totally cool, but I'm an entrepreneur, I'm like, hey, I just spent a year and a half building out some great kick-ass code, and all of a sudden, boom, Docker just announced that's going to be a key part of, so that's kind of where I'm hearing, and I want to get your thoughts on that, because that's kind of what people are excited. I think they should be excited, and actually Docker's most of the work's done is open source, so they shouldn't be too surprised that Swarm has been out there for a year and a half, two years. The fact that Docker 112 has some built-in orchestration, that's been clear in terms of, okay, this is the evolution of the things we care about, we're going to take the core engine, add things to orchestration, add things like security around the containers, and evolve this kind of enterprise product. So you see open source as the equalizer, really to kind of balance that ecosystem check. And Solomon said this multiple times, I think he says batteries included, but swappable, and so there'll be a bunch of components in the Docker ecosystem, like Swarm, like security, like the registry, that they're going to sell as a commercial product, but it's open source. If you want to replace one component with something else, your own registry, for example, that's totally doable. You wrote a great piece, I think it was about a year ago, it was about sort of escape velocity and business models, and essentially said, if your model is, if your 10 cents are a penny, and you can do a billion of them, that's great. If you can do, I don't know, $100,000 and above, that's great, but you don't want to be in the middle, you don't want to be a $10,000 deal. Is Docker getting outside of that area where you didn't want to be, do you feel like they're getting to the higher end of that? I think Brian's referring to my unit of value framework, where I said that every company has a different unit of value, if you're small, like a single container, single VM, or if you're large, like HR software, it's the entire darn company. And then in the middle, Brian's point, this is kind of zone of death, where you're not small or big, and what happens is your cost of sale is economically not viable. I think Docker, just like a lot of companies, like VMware included in some other ones in the platform space, often have both ends of the spectrum of what you want. You have kind of a low cost self-service model on the cloud, so like download Docker, Docker for Mac, Docker for Windows, easy for developers to adopt, and then you have kind of large enterprise deals, like these ADP deals that are going to be six, seven figure deals. And so I think to the extent that Docker can focus on both those polls, bottoms up developer adoption, top-down CIO adoption, that's a great business model. I think if you're stuck in the middle, and there's kind of 10, 15,000, and it changes from time to time, then it's just not a viable business model going forward. So how about both scaling in the enterprise? I want to get your thoughts on it. We've talked about it before. Enterprise is different, but the consumerization of IT, and you mentioned, these new apps are really consumer-like, but the agile aspect of it is really kind of a big part of it. The workloads themselves are driving it. DevOps has kind of won. Infrastructure as code is out there. But the ops is changing too, right? So now you know ops, which was the IT operation before, they say no to everything, they joke no ops. So if DevOps won, if you believe that DevOps has won, infrastructure is programmable. That now means the operationalizing of that paradigm is in play. So we're kind of seeing that. Your thoughts on that, what's going to happen operationally because if the apps are front and center on the workloads value, that means IT operations has to move to 2.0 or to a whole other level to support the composable infrastructure-like paradigm that's evolving. I think they've gone hand in hand. So I think the framework that I was thinking about this space and what I've been calling like DDI, developer-defined infrastructure, to your point that infrastructure is programmable with an API. So if you're going to move to this DevOps world where you have to automate everything from storage to networking, it has to have an API, it has to be programmable. And so what's happened is this traditional ops tools that you had in the past run by your system admin have kind of gone in, not thrown out, but they need to evolve or change. And thank God, if you take away core operations, but you got to give it something, right? In this case, Docker has given you an API for everything or DDI has given you an API for everything. And so once you can program your infrastructure, you can write a program to do operations, to do page duty, like alerts, to do updates, to do security. I think that's the change. Like operation is now in software. So just like we saw earlier, business processes like HR or CRM are now an app, a business process like IT management is now an app. What are you currently looking at for investments now for deals? Obviously the landscape's changing. You've always had that your eye on the next Amazon. You mentioned that to me a few years ago at Amazon re-invent. Certainly Amazon, I was just watching Andy Jassy this morning in DC. He still is talking about that in the future, there'll be no data centers now. There has to be a data center somewhere that might be the cloud. Okay, I love that rhetoric. That's cool. But certainly Amazon has been a direct threat to the enterprise. So you see Docker kind of having a Linux-like moment where there's kind of like Amazon against the rest of the world, right? I know that's me saying that. You may or may not be able to say that, but that's essentially the dynamic. We're here and we're seeing HP and Microsoft's, Google, all looking at it and saying, hmm. We talked about this in the past, like is cloud a winner take all? Is Amazon going to be an agile monopoly in the cloud or not? I think Azure and Google and even IBM and VMware to some extent, they all have different poxes of cloud and I think Docker is, to your point, the Linux moments can be kind of the great equalizer. That A, it creates portability between clouds, between Google and Amazon and Microsoft and VMware. And so the extent that you have better cloud portability helps remove you from this kind of fear of a single cloud lock in. I think Amazon's going to be tremendous successful and they're just doing all the right things right now. But I think Docker as a strategic technology and also as a company is going to enable kind of this multi-cloud world, which I think everyone in this room and everyone globally will benefit. Hey, what was the last time you signed a term sheet? Maybe fairly recently. As you know, term sheets are not allowed to be talked about. It's like kind of like the fly club. The first little fly club is you don't talk about it. Okay, so you're doing deals. Obviously you're in three years. What are you looking for right now? Share with the audience. Take a minute to share your vision for all the entrepreneurs watching. Jerry Chen, notable, V-Mafia, former VMware player. Are you looking for certain things in particular security? I flip it all the time. You have to be smart about the markets like apps, security and data and storage. But the way you look at it is you find these special founders or entrepreneurs, right? And so what happens is, I don't go out saying like, oh, I got to find the right storage deal, the right security deal, the right CRM deal. What happens is I go try to find who's the great person in this space and could be apps, could be networking, could be whatever, databases. And you start with the person first. It's not surprising that VC firm that vested in LinkedIn and Facebook, we really care about people first. And so we find these great founders and they're exceptional and then they kind of lead. They bring the metadata to you. So okay, so given that, what are some of the founders talking about these days? I mean, I'm not trying to get a trend out there, but in general, they're usually the canary and the coal mine, if you will, on the kind of the disruption points. What are you hearing, top conversations you're involved with entrepreneurs? So I think you'd go up and down the stack. Next generation enterprise apps that look at things like IoT, chat and machine learning, AIs is a bad term, like how these technologies rebuild enterprise apps, one. Number two, this continuing intersection of cloud and security, right? So obviously the perimeter is disintegrated completely. The way you think about application security, network security is very, very different. There's something else there. And Amazon and Google do a lot better in security, but it's not all Amazon, it's not all Microsoft. So I think this intersection of cloud security continues to fascinate me. And then sharing and consuming data, right? So we talked about this earlier. How do you find data? How do you build upon data? How do you share and consume data? And so even today, with all the NoSQL databases, all the APIs we have, sharing, consuming and using data still is very, very difficult. So I'm so fascinated about technologies that enable that. And then obviously in the Docker ecosystem, there's still a lot of white space around rethinking storage, rethinking networking, rethinking management. Awesome, Jerry Chen here inside theCUBE, sharing his insight. Thanks for spending the time. Final question for you. When you're at the board meetings at Docker, what are the top three KPIs key performance indicators that you look for to kind of gauge the landscape and the overall performance of Docker? Number one is like how many times does John Ferrier and the Keeb talk about Docker at all the conferences? Your eye on that one. You're winning. We track that conservatively. It's both the combination. Again, the bombs up the developer usage. I guess first and foremost, we care about what the developers want, what the developers think. And then number two, we track the customer's usage trial of technology because at the end of the day, Docker's growing up, becoming a very successful business in my mind. And so it's developers first. And then after that, we see how we're going to monetize the enterprise products we're working on. Awesome. Jerry Chen with Greylock Partners. I'll see the big LinkedIn deal. I'll see the investment in cloud error, pure storage, a boatload of great companies. I'll see Docker, Jerry's first investment now. A slew of others. Congratulations to your success. Jerry Chen with here on the side of the cube. I'm John Furrier with Brian Grace Lee. You're watching theCUBE. We'll be right back.