 interacting the signal from the noise. It's theCUBE, covering VMworld 2015. Brought to you by VMware and its ecosystem sponsors. And now your host, John Furrier. Okay, welcome back everyone. We are live here in San Francisco, at Moscone North Lobby for VMworld 2015. It's our sixth year here doing theCUBE at VMworld. The new innovation is that we're in the directors so that we have the full CUBE, my co is Dave Vellante, interviewing all the top thought leaders. I'm doing the venture capital segment here on Tuesday morning, leading up to all the big dogs at VMware. And I'm proud to have VMware alum here. Pete Sunstein is also now a general partner at NEA, New Enterprise Associates. Big Time VC in the Valley, Cal alum, Berkeley. A lot of stuff going on at Berkeley. We'll get to that in a second. Welcome back to theCUBE. Thanks so much for having me. Great to see you. So NEA, huge fund. You guys have billions. What's the number? Like two, three billion dollars. What is funds? Three billion. Three billion dollar fund. So you got to put a lot of that cash to work. Obviously, you got to write big fat checks. You still got some seed fund out there. But you're doing a range from seed to the big A's and B's and follow on. So enterprises rocking and rolling, right? And you're seeing huge disruption. We heard from Pat Gelsinger today, total seed change. All VCs would agree. Obviously this marketplace is on fire in the enterprise. Bubbly on the consumer side, no doubt about it. But in the enterprise, there's real underlying technology change happening. I mean, you were there at VMware early on. Virtualization changed the game. Now big data, spark, stuff coming out of Cal. All this stuff is a perfect storm. DevOps, front and center, cloud. What do you make of this as an investor? You got to write checks. So you have to kind of look at the trends, meet good people. How do you tackle that? Well, so no question, amazing things going on in terms of major disruption. You can talk about microservices. You can talk about private cloud. You can talk about container orchestration. The velocity is amazing. I mean, there's just no question about it. The deals that are coming out are amazing. The opportunity's incredible. I think we definitely are looking at it all, see a major seed change in each of these categories. And so we look at each and look for the winners and make evaluations as to when it's gonna really be a reality. And I think the big thing is, when are these things gonna be a reality? When are they gonna be, everybody likes to talk about the vision, the way the world could be. And it's very intoxicating to think about these visions. But I look at when is that gonna happen and how do we get from here to there? And so we look at a lot of these deals. Certainly we make many investments that are at the cutting edge of a wave that may happen or may not. But today I'm kind of looking at, okay, how do we get from here to there? How do we make use of existing infrastructure, existing applications and really connect that from the kind of old world to where the world is headed. And so that's kind of what I'm focused on is how you get from here to there. So pragmatic approach, you're not a momentum investor. Momentum investor, someone says, hey, I'm going to jump on that train, see how it lands. Sometimes you got to say, hey, we're not exposed. This is a very real trend. We got to just, we got to get involved. I mean, look at whether it's virtualization. I mean, you want to, back then. Back then you wanted to kind of, we jumped on Zen source and nothing worked out and there's, I got early on Tin Tree and Tin Tree's doing pretty darn well. We got several kind of virtualized networking things. So you see a trend, you want to jump on it and sometimes you miss it and you've got to scramble and you got to catch up. I mean, containers kind of took the world by storm. Nothing has quite had the growth in the enterprise of the container movement. And there's a lot of venture firms out there who obviously didn't see that, didn't make that happen early enough. And yeah, you maybe got to do play catch up a little bit and scramble. And the result of that is that you pay higher valuations and you got to kind of take the medicine. But the things that are really going to happen, then you're not going to get a movement. Well, the valuations is an interesting conversation. So let's talk about that for a second because I remember when people were betting on Twitter, Facebook on the social side, oh my God, that's a huge valuation. How can they pay that? As it turns out, look at Facebook's valuation, it is what it is. If you came in on the back end of that deal, you still made a lot of cash. Yeah, no doubt. But I can tell you a lot of things that we may have looked that we weren't in, that we moved on quickly and they kind of went, they kind of fizzled out. So that's just the venture business sometimes and where we get paid is to certainly get in deals early. I mean, it's a lot easier when you get in deals early and we as a firm with NEA are very active with early stage investments. We do more early stage investments than anybody. Probably 70% of our investments are early. So you get in early and you have obviously, when those work out, then you're ahead of the game. Well, one area you're in right now that I've been watching is data. Talk about that, that's a hot trend. Obviously, it's pretty obvious that that market's growing, right? And you don't have to be a rocket scientist to connect the dots on that. I mean, we speculate all the time at Wikibon that what Spark's doing and its relationship to Hadoop has obviously changed. We just had Ping Lee talking about Cloudera, one of his successes. Still, that's Spark's changing that. So there's our new, there's new stuff happening. What's going on in that area? I'll see that coming up Berkeley and other computer science trends. Oh yeah. Big data, what do you see? Well, so we're investors in MapR, which is Hadoop distribution, very focused on the file system, the storage layer. And they're doing great. I mean, they're very focused enterprise functionality, focusing on HDFS and their HBase product with their M7 products. So obviously Hadoop is real. MapR is doing great. So we're very thrilled to be involved with that when we got in early. Databricks, Spark is very much going to happen. Now, how are you going to debate as to where it sits relative to Hadoop? Whether Hadoop just becomes more storage oriented. You know, when Spark- Well, that's kind of shaking out now. I mean, Spark is looking good off the tee as they say. Correct, correct. So Spark is, I think both of these things are clearly going to happen and how they exactly pan out, I don't know. I mean, we're fortunate to be in both Databricks and MapR, so we feel good about that. But there's other things going on. I mean, there's data ingestion. There's a lot of things with how you, there's all these different diverse data sources and how do you get data in and how do you get a cleanse? I mean, there's talk about data drift and so there's some new early things we're looking at along that line of diverse data sets, data drift, how you get data in is an area which kind of next generation ETL which hasn't been really shaken out yet. So that's something that we're excited about. We've got a company in that area that hasn't been announced that we think is going good. So certainly a lot of legs with data and these things that involve through time. So, I mean, I can go on, I can say, yes. All right, so what are your hot deals? Give us your hot deals. Do you mention Tintry? They're here. Hot deals, so Tintry's here. They announced their Flash product. They, you know, 100,000 VMs on a single rack. First investors in Tintry, you know, my friend, Kieran Hardy, who was ran engineering at VMware, of course, started that company. He was the first really in, you know, storage for VMs and they're really being, you know, rewarded handsomely in the market for that. So certainly Tintry, you know, hot company here. We talked about MapR, we talked about Databricks. Nginx is a major high flyer in the making around microservices. You know, certainly microservices trend and, you know, as it fits into containers, very much working hand in hand. Those, that's a very real opportunity. And Nginx with its, you know, 150 million websites powered by Nginx are really the, you know, great role in making all microservices work in the enterprise. Well, web-scale guys like Nginx made a lot of things happen. Now that's the whole software trend. Software defined. Yeah, yeah, yeah, exactly. So Nginx is software, right? And they are being used because of the dynamic routing capability of the software. It's using so many different applications, so many different areas to deliver applications. It's load balancing, caching, media serving and whatnot. So Nginx is replacing the appliances with software, basically. So the traditional appliance companies, whether it's F5 or whatever, Nginx is software and, you know, that obviously plays in that trend of software eating the world. So, you know, anything that's appliance purpose built is really exposed to this software trend, which Nginx is moving very nicely into. So, certainly, I mean, first of all, I love all my companies. A Databricks, right? You're into? Yeah, Databricks. So, yeah, so Databricks map are, certainly in the big data category. I talked about Nginx, we talked about Tintry. You know, all my companies, I love them. I could go on and on about each one of them. The VC mafia right now out of VMware is you, Chen and Herod, top three. And there's some new guys coming in out of the woodwork. Who's that? We'll see how he is going to be on this. I shouldn't say that, I'm not allowed to announce it. So, yeah, I was early VMware, so I don't know, I don't know some of the later VMware guys this much. They're junior to you, but that's okay. But certainly Jerry and Steve, and I'm sure you're a good guy. I don't want to take any away from it, but. What about VMware now? I mean, looking back when it was a small company, virtualization was very disruptive technology. It was the real enabler. How do you see VMware now disrupting the ecosystem? And also you're investing in the ecosystem, so you're out there writing checks. What's your view on it? What's your take? Thumbs up, thumbs down, like the federation thing going on? Opportunities for them to. They're trying to do a lot. I mean, you know, cloud, we're talking, you know, container. You know, there's obviously. Open stack. Open stack. Look at everything going on. You know, what they're doing with data center OS stuff. I mean, they're, you know, Ragu, you don't love them. I mean, he's taken on a lot, which is what they should do. And, you know, obviously, believe VMware and VMware, and very bullish. And I don't believe the containers are going to wipe them off the map. I mean, it's just, they're, you know, I'm, you know. They're entrenched in a huge market share. Yeah, they're entrenched. But there are no question taking on a lot. And, you know, I wouldn't, I wouldn't hold back from investing in a company that competes with VMware. I mean, with all that said, they certainly have their exposure areas, like any other major incumbent in a very dynamic market, which we have today, which is not changing anytime soon. So, you know, very bullish. But with that said, I'm looking at opportunities, you know, anything, if somebody comes in and say they want to knock off VMware, I'm listening. Yeah, and also that's, you know, going back down the investment thesis. Singles, doubles, home runs, as I always talked about in the metaphor of venture investing. A lot of companies, we were talking about the storage presence here. A lot of these companies, a lot of storage DNA in this show has a lot of action going on in storage. But, you know, 99% of the storage companies become R&D for the big guys. And we was the last, the last big escape velocity storage company. That was NetApp. I mean, Pure's trying to nibble at the heels of EMC, but- Well, nibble was pretty good, you know, obviously. Nimble, but I mean, this- Yeah, there's been- Doubles, if they get bought, that's an M&A. If they get bought, right. Where's the big home run? Yeah. Where's the home run in this ecosystem? That's what everyone wants to know. Well, I mean, we believe that with Flash, and with virtualization, talk about containers, that these new technologies catch these people flat-footed, right? And so, these people being the big incumbents NetApp, EMC. And these are big trends. We all can't ignore them. And there's going to be a big company or two or three that will be independent companies that will plan to those trends. So, you know, you talk about Pure going publicly later this year, Tintry will go public next year. You know, obviously there's nimble. I mean, there's a handful of others. I mean, it's not going to be five, but there's probably going to be, you know, two or three that are standalone. Because these things are, we feel these are really big, these are big changes. If you're one of the best investors in the enterprise, and I want to get your perspective on something. Thank you. What is NEA, yeah, I've been watching your work for many, many years, as you know. Chen's new guy in the scene, he's taking some ass. He got his first hit with the doc and his first investment out. So, he's going to be on next. We'd love him. He's a great investor. XBMWare as well. But I want you to share with the folks out there, the Pete Sunsini DNA and the NEA. What is NEA's identity? If you had to kind of say, you know, as a firm, you know, what are you guys all about? I mean, you got three billion dollars. So, it's not like you're screwing around, throwing darts at the board. You probably have a lot of systematic kind of research, but three billion's a lot of cash to deploy. What is the identity of NEA? Identity is we are, we have a, we're a big firm with a big network, but we operate as a very small nimble team. So, that's what you got to remember about NEA. The culture of the place going back to my partner, Dick Cramick, made it a very tight knit group that is, that can act very nimble and at the same time have a very, very broad breadth with, you know, tentacles in the market that can help our portfolio companies. So, we're all about using our network to help our companies, be good investors for LPs, of course, but that's what's different. To operate at scale and to really bring the resources of the firm to make good investments as well as to help our portfolio companies, that's hard. So, having a good network is your key. Yeah, but it's a good network, but it's how do you, how do you have a, I mean, how do you have 60 investment professionals and harness all of the power of them to make fast decisions? Okay. It's very difficult to do that. How do you do, you can't just start, you know, I mean, it takes, because these are venture guys with egos. There's the like, you know, different investment focuses. I mean, they're compensation. I mean, the whole thing to make it all work, it takes a model. Right now we're investing in our fifth fund that's over two and a half billion dollars. So, we kind of have it down. And what you don't see with NEA is a lot of, you know, front and center. Behind the curtain. Yeah, well, yeah, I mean, right. There's a lot of stuff going on that people don't see. Yeah. That teamwork. No question about that. And, you know, we could do a better job of maybe, you know, the banner ads or whatever to get our name out there, but we think it all just goes down to our investment track record. And if you look at the companies we've invested in, you know, it's, you know, Tableau. Speaks for itself. Speaks for itself, exactly. Pete Sancini, general partner at New Enterprise Associates NEA, as they're known, NEA, VC, is their Twitter handle. Pete, great to see you. XBMWare here inside theCUBE doing deals. He's got a lot of cash to deploy. So contact Pete Sancini. These guys are all looking for hot deals. And if you want to compete with VMWare, he said he's listening. So, Pete, thanks for sharing. We'll be right back with more after this short break. On the director's set live in San Francisco.