 From around the globe, it's theCUBE, presenting, Cube on Cloud, brought to you by SiliconANGLE. Hi, everybody, this is Dave Vellante. We're back at Cube on Cloud. And with me is Moodoo Sudhakar. He's a longtime alum of theCUBE, a technologist, an executive, a serial entrepreneur, and an investor. Welcome, my friend. Good to see you. Good to see you, Dave. Pleasure to be with you. Happy elections, I guess. Yeah. Yeah, so I wanted to start, you know, this work from Home Pivot's been amazing. And you've seen the enterprise collaboration explode. I wrote a piece a couple of months ago looking at valuations of various companies, right around the Snowflake IPO, I want to ask you about that. But I was looking at the valuations of these various companies, Spotify and Shopify. And of course, Zoom was there. And I was looking at just simple revenue multiples and I said, geez, Zoom actually might look undervalued, which was crazy, right? And of course, the stock went up after that. And you see teams, Microsoft teams, Microsoft doing a great job across the board. We've written about that. You're seeing WebEx is exploding. I mean, what do you make of this whole enterprise collaboration play? No, I think look, there is a trend here, right? So I think this probably trend started before COVID, but COVID is going to probably accelerate this whole digital transformation, right? People are going to work remotely a lot more. People are not everybody's going to come back to the offices even after COVID. So I think this whole collaboration through Slack and Zoom and Microsoft Teams and WebEx, it's going to be the new game now, right? Both the video, audio and chat solutions. That's really going to the how people are eyeballs. You're not going to spend time on all four of them, right? It's like every day on my consumer side, you're going to spend time on your Gmail, Facebook, maybe Twitter, maybe Instagram, so like in the consumer side and your personal life, you have something on the enterprise, the eyeballs are going to be in these platforms. Well, the winner is going to take everything. Well, so you're right, there's a permanence to this and I got a lot of ground to cover with you. And I always like our conversations, Moodle, because you tell it like it is. So I'm going to stay on that work from home pivot. You've got, you know a lot about security, but you've seen three big trends, like mega trends in security. End point, identity access management and cloud security. You see in this in the stock prices of companies like CrowdStrike, Zscaler, Octa, SailPoint, I mean they exploded, you know, as a result of the pandemic. And I think I'm inferring from your comments that you see that as permanent, but that's a real challenge from a security standpoint. What's the impact of cloud there? Look, first is all these services required to be cloud, right? See the whole idea is for you to collaborate and do these things. So you cannot be running an application, like you can't be running Confluence and SharePoint on-prem and try to collaborate on a Zoom and MS Teams. So that's why if you look at Microsoft was very clever, they went with Office 365, SharePoint 365, now they have MS Teams. So I think the cloud is going to drive all this workload that you have been talking about a lot, right? You and John have been saying this for years now. The adoption of cloud and SaaS services aren't the vehicle to drive this next generation collaboration. Yeah, well, so cloud obviously is the topic. I wonder how you look at the last 10 years of cloud and maybe we could project forward. I mean, the big three cloud vendors, they're like, they're running it like $20 billion a quarter and they're growing collectively at 35, 40% clips. So we're really approaching $100 billion for these three. And you hear stats like only 20% of the workloads are in the public cloud. So it feels like we're just getting started. How do you look at the impact of cloud on the market? As you say, the last 10 years and what do you expect going forward? No, I think they're very fascinating, right? So I remember when the cube, you guys were starting over 10 years back. Now it's been what, more than 10 years, 15 years since AWS came out with their first S3 service back in 2006, right? So I think look, cloud is going to accelerate even more further. The areas is going to accelerate is for different reasons. I think now you're seeing the initial days, it's all about startups, initial workloads, dev tests and QA tests. Now you're talking about real production workloads are moving towards cloud, right? Initially it was backup. You didn't really care for backup that you put there. Now you're going to have cloud have your primary services. Your primary storage will be there. It's not going to be an EMC. It's not going to be a NetApp storage, right? So workloads are going to shift from the business applications. And this business will be running on the cloud. I'll make you understand the prediction. Take customer service and support. Customer service support, again, we should be running on the cloud. You don't want to run that thing on a Dell server or an IBM server or an HP server with your own hosted environment. That model is not because there's no economics of scale. So to your point, what will drive cloud for the next 10 years will be economics of scale. Where can you take the cost? How can I save money? Like if you don't move to the cloud, you won't save money. So all those workloads that are going to go to the cloud are people who really want to save. Like cloud will drive your cost, right? If you stay on the ASP model, a hosted, you're not going to save your cost. Your cost will constantly go up from a SaaS perspective. So that doesn't bode well for all the on-prem guys. And you hear a lot of the vendors that don't own a cloud. They'll talk about repatriation, but the numbers don't support that. So what do those guys do? I mean, they're talking multi-cloud. Of course, they're talking hybrid. That's IBM's big play. How do you see it? I think, look, see, to me, multi-cloud makes sense, right? You don't want one vendor there. You never want to there. Having Amazon, Microsoft, Google, it gives them a multi-cloud. Even hybrid cloud does make sense, right? There'll be some workloads. It's like we are still running on-prem environment. We still have mainframe. So it's never going to be 100%. But I would say the majority, your question is, can we get to 60, 70, 80% workloads in the next 10 years? I think you will, I think by 2025, more than 78% of the cloud, my position by the next five years, 70% of the workload for enterprise will be on the cloud. The remaining 25 may be hybrid, may be on-prem, but at that point, it really doesn't matter. Your 75% of your business is running on the cloud. That's your cost saving. That's where you'll see the economics of scale and that's where all the growth will happen. So square the circle for me, because again, you hear the stat on the IDC stat. IBM, Ginni, Rametti puts it out there a lot that only 20% of the workloads are in the public cloud. Everything else is on-prem. But it's not a zero sum game, right? I mean, the cloud native stuff is growing like crazy. The on-prem stuff is flat to down. So what's going to happen when you, when you talk about 70% of the workloads of being the cloud, do you see those mission critical apps moving into the cloud? I mean, insurance companies going to put their claims apps in the cloud or the financial services companies going to put their mission critical workloads in the cloud or are they just going to develop new stuff that's cloud native that is sort of interacts with the on-prem? How do you see that playing out? Yeah, no, I think, absolutely. I think very good questions. So two things will happen. One thing, like if you take an enterprise, right? Most businesses, what they'll do is the workloads that they should not be running on-prem, they'll move it out. So obviously things like take, as I said, I use the word of SharePoint, right? SharePoint and Confluence, all the knowledge stuff is still running on people's data center. There's no reason. I understand, I've seen statistics that 70, 80% of the on-prem for SharePoint will move to SharePoint on the cloud. So Microsoft is going to make tons of money on that, right? Same thing, databases, right? Whether it's SQL server, whether there's Oracle database, things that you are running as a database, as a cloud will move to the cloud, whether that is posted in Oracle cloud, are you running Oracle or MongoDB or DynamoDB on AWS or SQL server on Microsoft, that's going to happen. Then what you're talking about is really the app concept, the application themselves, the app server. Is the app server is going to run on-prem and how much is going to leverage outside? There may be a hybrid cloud, like for example Kafka. I may use a bus running on Kafka as a service or I may be using Elasticsearch for my indexing on AWS or Google cloud, but I may be running my app locally. So there'd be some hybrid place, but what I would say is for every application, 75% of your components will be on the cloud. So think of it like that there. So even for the on-prem app, you're not going to be 100% on-prem. The component, the billing materials will move to the cloud, your bus, your storage. Because if you put it on-prem, you need to hire all the whole things to buy it and hire the people, so that's not going to happen. So from a component perspective, 75% of your bill of materials will move to the cloud, even for an on-prem application. So, and of course the SaaSification of the industry in the last decade and my three favorite companies last decade, you worked for two of them, Tableau, ServiceNow and Splunk. I want to ask you about those, but I'm interested in the potential disruption there. I mean, you've got these SaaS companies, Salesforce of course is another one, but they started in 1999. Do you, what do you see happening with those? I mean, we're basically building these sort of large SaaS platforms now. Do you think that the cloud native world that developers can come at this from an angle where they can disrupt those companies or are they too entrenched? I mean, look at ServiceNow, I mean, I don't know, $80 billion market cap or where they are, they're bigger than workday. I mean, just amazing how much they've grown and you feel like, okay, nothing can stop them, but there's always disruption in this industry. What are your thoughts on that? No, very good, but I think they'll be disrupted. So to me, actually to be to your point, ServiceNow is now close to $100 billion now, $95 billion market cap, very crazy. So from a valuation perspective, so I think the reason they'll be disrupted is the SaaS vendors that you talked about, ServiceNow and all this plan, most of these services, they're truly not a multi-tenant, what do you call the cloud native and that is their ecclesia. So because of that, they will not be able to pass the savings back to the enterprises. So the cost economics, the economics that the cloud provides because of the multi-tenancy ability will not. The second reason they'll be disrupted is AI, right? So far we have, we've talked about AI is the core. So it's not only cloud native, Dave, I look at the AI native piece. AI is going to change. See, all the SaaS vendors were created 20 years back, if you remember, was an operator typing it. Like I remember SpunkAdministered will type a Spunk query. I don't need a human to type a query anymore. System will practically find it. That's how the whole security game has changed, right? So what's going to happen is if you believe in that, the AI at its core will disrupt all the SaaS vendors. So one angle SaaS is going to have is the cloud. That's why you, to me, the cloud will take out because the SaaS application will be cloudified. Being SaaS is not cloud, right? Second thing is SaaS will be also, I call it will be AI-fied. So AI and machine learning will be trying to thrive at the core so that I don't need that many licenses. I don't need that many humans. I don't need that many administrators to manage or I call them the tuners. Like once you get a driverless car, you don't need a thousand tuners to tune your, your Tesla and Google WebO car. So the same philosophy will happen is your DevOps, your administrators, your service management, people that you need for service now and these products then there's, with AI will tremendously will disrupt. So you're saying, okay, so I was going to ask you, won't the SaaS vendors, won't they be able to just put, you know, inject AI into their, their platforms? And I guess you're, I guess I'm inferring saying, yeah, but a lot of the problems that they're solving, you're going to go away because of AI. Is that right? And automation and RPA and things of that nature. Is that right? Yes and no, I'll tell you what, sorry, you're asked a very good question. Let's ask that, let me rephrase that question. What you're saying is why can't the existing SaaS vendors do the AI? Yes, right. And there's a reason they can't do it is their pricing model is by number of seats. So I'm not going to come to you, Dave and say, come on, come pay me less money. It's the same reason why a Ford and General Motors never build an electric car. They're selling 10 million car gasoline cars. There's no incentive for me. I'm not going to, any AI I'm going to put, I'm not going to come to you and say, hey, buy me 100 less licenses next year from me. So that is the reason why AI, even though these guys do any AI, it's going to be just what I call the, they're going to, what I call a whitewash, kind of like you put some paintbrush on it, trying to show you some AI you did from a marketing dynamics. But at the core, if you really implement the AI with, you take the driver out, how are you going to change the pricing model? And being a public company, you got to take a hit on the pricing model and the price and it's going to have a stock impact. So to your earlier question, will somebody disrupt them? A person who's going to disturb them will disturb them on the pricing model. Right. So I want to ask you about that because we saw Snowflake, you know, and it's IPO, we were able to pour through its S1 and they have a different pricing model. It's a true cloud consumption model. Whereas, of course, most SaaS companies, they're going to lock you in for at least one year term, maybe more. And then you buy the license, you got to pay X if you, if you don't use it, you still got to pay for it. Snowflake's different. Actually they have a different problem that people are using it too much and the CFO, driving the CFO crazy because the bill is going up and up and up. But to me, that's the right model. It's just like the Amazon model, if you can justify it. So how do you see the pricing, that consumption model? Actually you're seeing some of the on-prem guys at HPE, Dell, they're doing as a service. They're kind of taking a page out of the last decade SaaS model. So I think pricing is a real tricky one. No, you nailed it. No, you nailed it. So I think the way in which the Snowflake did, how they disrupted the data warehouse, they disrupt the open source vendors too. Snowflake disrupted, imagine the playbook. You disrupted something is the $0, right? It's an open source with cloud era, hot and works, map are, that whole big data that you and me talk, that market is decimated. They're disrupting data warehouses like NetEase, Terrarata, buy it. And they're charging more money. They're making more money and disrupting the $0 because the pricing model is by consumption that you talked about. The same thing is going to happen in the ServiceNow, Zendesk world because their pricing model is by number of seats. People are going to say, however my users are going to ask, right? If you're an employee help desk, back to your original, how collaborate. I may be on Slack. I could be on Zoom. I'll maybe on MS Teams. I'm going to ask by using usage model on Slack to my employees to service now. Is the pricing model that people want to pay for? The more my employees use it, the more value I get. But I don't want to pay by number of seats. So the vendor who's going to figure that out. And that's where I look. You know me, I'm right over at the CU at Isla. That's what I'm trying to push that model look. I love that because that's the core of how you want to change the new game. I agree. I say kill me with that problem. I mean, it's, some people are trying to make it a criticism, but you hit on the point. If you pay more, it's only because you're getting more value out of it. So I wanted to flip the switch here a little bit and take a customer angle, something that you've been on all sides. And I want to talk a little bit of strategies. You've been a strategist. I guess once a strategist, always a strategist. How should organizations be thinking about their approach to cloud? It's of course different for different industries, but back when the CUBE started, financial services cloud was a four letter word. Of course the age of company is going to matter, but what's the framework for figuring out your cloud strategy to get to your 70% and really take advantage of the economics? Should I be mono cloud, multi cloud, multi vendor? What would you advise? Yeah, no, I mean, I'll give you my, I mean, I actually call it the tech stack. Actually you are, John taught me that to remember we used to talk about what was the tech stack, like the lamp stack. I think there's a new cloud stack needs to come in that. I think the bottom layer should be is, first of all, anything with storage should be in the cloud. You should not be, I mean, if you want to start, whether you're financial doesn't matter. There's no way I come from cybersecurity side. I've seen it. Your attackers will be more with insiders than being on the cloud. So storage has to be in the cloud. Then companies compute, Kubernetes. If you really want to use container and Kubernetes, it has to be in the public cloud leverage that, have the compute run there. Databases, that's where it can be like, if your data is so strong, maybe run it on-prem, maybe have it on a hosted model for when it comes to database, but there you have a choice between hybrid cloud and public cloud choice. Then on top when it comes to app, the app itself, you can run locally or anywhere, the app and database. Now, the areas that you really want to go after to migrate is, look at anything that's an enterprise workload that you don't need people to manage it. You want your own team to move up in the career. You don't want 1000 people looking at a, like you don't want to have a, for example, IT administrators to call central people, to people to manage your compute storage. That workload should be more, right? You already saw CRM moved out to Salesforce. We saw collaboration already moved out. Zoom is not running locally. You already saw SharePoint with knowledge management moved out, right? With a box, dropbacks, you name anything. The next workload will move out is SaaS workloads, right? I think workday itself is running there, but workday itself will go into the cloud. I bet at some points, Zendes, ServiceNow, either they run it on the public cloud or they have to create a product on public cloud. To your point, these public cloud vendors are like, they're $2 trillion market cap there. They're bigger than, I call them nation states. Yeah. So I am ServiceNow. I mean, that's a $2 trillion market cap if I'm Amazon and Azure, I'm not going to compete with them. So I want to take this workload to run it there. So all these vendors, if you see that's where Shantanu from Adobe is pushing this, right? Adobe, Workday, Anaplan, all the SaaS vendors will move them into the public cloud between these vendors. So those workloads need to move out, right? So all those things will start, then you start migrating what I call your procurement. That's where the RPA comes in. See, the other thing that we didn't talk about, back to your first question, what is the next 10 years of cloud will be is the RPA? The third piece to cloud is RPA because if you have your systems on-prem, I can't automate them. I have to do a VPN into your house there and then try to automate your systems for your procurement, et cetera. So all these RPA vendors are still running on-prem. Most of them, whether it's UI path, automation anywhere. So the cloud should be where their brains should be. That's where the, I call them like the octopus analogy. The brain is in the cloud, the tentacles are everywhere, they should manage it. But if my tentacle has to do a VPN, go into your house to manage it, I'm always will have a failures. So if you look at the why RPA did not has the growth, like the snowflake, like the cloud, because they're running it on-prem, most of them still. 80% of the RPA revenue is on-prem, running on-prem. That needs to be called cloudified. So AI, RPA and SaaS are the three reason cloud will take out. Awesome, thank you for that. Now, I want to flip the switch again. You're an investor, multi-tool player here. So if you're, let's say you're an ecosystem player and you're kind of looking at the landscape as you're an investor, of course you invest in the cloud because the cloud is where it's at. But you got to be careful as an ecosystem player to pick a spot that both provides growth but allows you to have a moat. And that's why I'm really curious to see how snowflake's going to compete because they're competing with AWS, Microsoft and Google. Unlike Frank, when he was at service now, he was competing with BMC and with on-prem and he crushed it, but the competitors are much more capable here. But it seems like they've got, maybe they've got a moat with multi-cloud and the whole data sharing thing we'll see. But what about that? Where are the opportunities? Where is that white space? And I know there's a lot of white space, but how do you, what's the framework to look at from an investor standpoint or even a CEO standpoint? Where do you want to place your bets? No, very good question. So look, I did something we talked as an investor on the board with many companies, right? So one thing that, see, as an investor, if you come back and say, I want to create a next generation Docker or a compute, there's no way nobody's going to invest. So that brick and mortar of, even if you want to do a object storage or a block storage, I mean, I've been an investor board member of so many storage companies. There's no way as an investor, I will write a check for a compute or a storage, right? If you want to create a next generation network, like Ethernet switch between Arista, Juniper, Cisco, there's no way. But if you come back and say, I want to create a next generation Wi-Fi for remote working environments where AI is at the core, I'm interested in that, right? So if you look at how the packets are dropped, there's no intelligence in Ethernet switching today. The packets come, I do it. The intelligence is not built into the network with AI level. So if somebody come with an AI, what good is all this NVIDIA, GPUs, et cetera? If you cannot do wire speed, packet inspection, after looking at the content and then route the traffic. If I see, if it's a video packet between you and Boston, there's a high interview there, they should be routing our packet faster because you're a premium ISP. That intelligence has not gone there. So you will see, and that will be a bet people will happen in the network switching, et cetera. So that is still an angle. But if you move up, then comes the platform services. Remember when I was at Pivotal and with VMware, Paul Moritz was my boss, that whole PS as a platform service is a game already won by the cloud guys. So Silicon Valley investors, I don't think you want to invest in past services, right? You don't want to, I mean, you might come with some next generation database to do some optimizes could be some game. Let's say you want to do a time series database or some metrics database. There's always some small angle, but the opportunity to go create a next generation database there, it's very few. So I'm kind of eliminating all the black spaces, right? Where the white spaces that comes in is the SaaS level. Now, to your point, if I'm Amazon, I'm going to compete with Snowflake, I have Redshift. So this is where at some point, these cloud platforms, I call them aircraft carriers. They're not going to stay as aircraft carriers. They're going to own the land as well. So they're going to move up to the SaaS space. The question is you want to create a SaaS service like CRM, they're not going to create a CRM like service. They may not create a sales force and service now. But if you are going to a data warehouse, I can very well see Azure, Google and AWS going to create something to compete with Snowflake. Why would I not? It's so close to my database and data warehouse. You already have Redshift. So that's going to be like same reason to look at Netflix. You have a Netflix and you have Amazon Prime. Netflix runs on Amazon, but you have Amazon Prime. So you have the same model here, you have Snowflake and you'll have Redshift. They both will help each other. There'll be what you call the coexistence will happen. But if you really want to invest, you want to invest in SaaS companies. You do not want to be investing in a company and players. You don't want to be a feature. Yeah, that's great. I appreciate that perspective. And I wonder, so obviously Microsoft playing in SaaS, you know, Google's got G Suite. And I wonder if people often ask the Andy Jassy, you're going to move up the stack. You're going to be an application, you know, SaaS vendor and you know, you never say never would they do this. But I wonder, and we were talking to Jerry Chen about this years ago on theCUBE and his angle was that Amazon will play, but they'll play through developers. They'll enable developers and then, you know, they'll participate, they'll take their, you know, lick off the cone. So it's going to be interesting to see how directly Amazon plays. But at some point you got TAM expansion, you got to play in that space. Yeah, it is. So I'll give you an example of knowing, I don't know if I've ever told you, I got acquired by a couple of times by EMC. So I learned a lot from Joe Tucci and Paul Moridge over the years. See Paul and Joe, what they did is, if you look at how 20 years, and they're very close to Boston in your area, Joe, what EMC did is they used to sell storage, but you know what he did? He went and bought the apps to try them. He bought Legato, he bought Documentum, he bought Captiva. If you remember how he acquired all these companies as services, he bought VMware to try them. So I think the good angle that Microsoft has is, I'm a SaaS player, I have dynamics, I have CRM, I have SharePoint, I have collaboration, I have Office 365, I have MS Teams for users, and then I have the platform as Azure. So I think if I'm Amazon, I'm missing that. I got to own the apps so that I can drive these workloads on my platform. Interesting. Just going to developers, like I know Jerry Chen, he was my peer at VMware. I don't think just living to developers and that model works in the open source, but the open source game is pretty much gone. And not too many companies made money. Most open source companies pretty much gone. Yeah, he's right. Even Red Hat's not part of the idea, but it's very interesting what you're saying there. And it's like, hey, it's why Oracle wants to have TikTok running on their platform, right? I mean, it's going to drive that vertical integration. I wanted to ask you something you were talking about. You wouldn't invest in storage or compute, but I wonder, and you mentioned some commentary about GPUs, of course, NVIDIA has been going crazy, but they're now saying, okay, how do we expand our TAM? They make the acquisition of ARM, et cetera. What about this DPU thing? Have you followed that? The data processing unit where they're like, hyper disaggregation and then they re-aggregate as an offload and really to drive data-centric workloads. Have you looked at that at all? I did, I think, and that's a good angle. So I think, look, it's like it goes through it. I don't know if you remember our career, we have seen it. I used to get Silicon Graphics. I saw the first graphic GPUs, right? That time, GPU was more graphic processor units. Right, yeah, workstations. It's more NVIDIA time, you got 3D effects. So then become NPUs, effort processing units, right? There was a TCP offload engines. If you remember, right? There was like vector processing unit. So I think every once in a while, the industry, we create this separate unit as a co-processor to the main CPU because main CPU is inefficient and it makes sense. And then Google created TPUs and then we have the new world of the NVIDIA's GPUs. Now we have DPUs. All these are good, but what's happening is all these are driving for machine learning AI for the training period there. The training period sometimes is so long with the workloads. If you can cut down, it makes sense. But the question is, these are so specialized in nature, I can't use it for everything. I want ideally the algorithms to be paralyzed. I want the training to be paralyzed. I want so having DPUs and DPUs are important. I think where I want to see them is more the algorithm. There should be more investment from the NVIDIAs and these guys taking the algorithm to be highly paralyzed them. And then the DPUs, and I think that still, they has not happened in the industry yet. All right, so we're pretty much out of time, but what are you doing these days? Why are you spending your time? Are you still in stealth? You give us a little glimpse. Yeah, no, I'm out of the stealth. I'm actually the CEO of ISRA now. ISRA is obviously, I invested with them, but I'm the CEO of ISRA. It's funded by Menlo Ventures, Northwest, True, along with Coastal Ventures. And Ram Sriram is a big investor. Ram is on the board of Google. So these guys, look, we are going after the collaboration game. How do you automate customer service and support for employees and end users, right? In this whole game, we talked about the Zoom, Slack, and my MS Teams. That's what I'm spending time. I want to create next generation service now. Fantastic. Mudo, I always love having you on. You don't pull punches. You tell it like it is. And you're a great visionary technologist. Thanks so much for coming on theCUBE and participating in our program. Yeah, it's always pleasure speaking with you, sir. Thank you. Okay, keep it right there. There's more coming from Cubon Cloud right after this break.