 Welcome back everyone to theCUBE's live coverage of RSA Conference 2023. I'm John Furrier, I was here with Dave Vellante. Four days of wall-to-wall coverage. We're in broadcast alley where the top publications are here in the security industry that have been known and covering all the best angles. Of course, SiliconANGLE on theCUBE is here. And this is our wrap-up of day two. We're bringing the insights and try to wrap up kind of our observations, analysis, commentary, the big news, the keynotes, and all that's happening in the security industry. Sarbjeet, Joel is with us, he's an influencer, part of theCUBE team, always coming on as a guest analyst on his own business. Sarbjeet, good to see you. Thanks for coming on. Good to see you, John. Yeah, good to see you, John. I mean, Sarbjeet. Good to see you too, John. Haven't seen you all day. He's always the other name you want. So, Sarbjeet, you and I were on the floor. We checked out the Palo Alto Network's tenable, all the top boots. It's packed. Floor's unbelievable. Floor's unbelievable. Action is popping here. Day two, I'll say, yesterday was kind of day one officially, but the keynotes were at the end. It was kind of a kickoff day. This is kind of day one, I call it the day one, yesterday was day zero. Today is full throttle. What are you seeing? Yeah, actually, it was super busy when I came at 11 o'clock. There's so many vendors, like we know that, like the security is one of those areas where the number of vendors is like, long sort of sprawl. So... 4,000 plus, I'm hearing, right? And they have divided, like normally they do on the south and the west side, right? So, those two halls, and in between those few sort of cubes, you can call it. It's like wallpaper. Yeah. All the small startups. Few vendors in between, they are benefiting from it. It used to not be the case. It used to be empty in between north and south, and now it's just full. That wasn't connected before. That was not connected. There's only one little tunnel on the other side. Now they blew it up open. For the last two times I was here, like it was connected, but there were vendors there. There were, okay. There were vendors. And FBI saw FBI and NSA there as well. So, like, they are country-specific areas. Spain is there with big presence. Well, let's get it. We don't have a lot of time. I want to get into the meeting. You guys are the analysts. I'll ask the question. What do you think is the most important story that you've seen here in day two, Dave, and Sergeant Chief? I mean, for me, it's like the more things change, the more things stay the same. The one big difference is obviously generative AI, but nobody has been able to confirm when you talk to the threat intelligence folks at whether it's Mandiant or Unit 42 from Palo Alto or anybody. There's no clear evidence that generative AI, large language models have been, that there's clear signatures in recent hacks. I mean, we know what's happening. We know when people on the dark web, they're saying they're talking about it. What's best practice? How are you using it? But there's no clear evidence in the signature yet. Yet. Yet. The keyword yet. What's your thoughts on the most important analysis? Yeah, I think yet, that's a keyword right there. Like, for how long do we have the chat GPTO, like a couple of months, right? 150 days, maybe. Yeah, so the bad guys, they got their hands on when everybody else got their hands on, right? So they didn't get their hands on to it like before like two months ago. So they will catch on. And also actually I was thinking when I was coming here, like I think the bad guys are very busy with crypto side. Like that was their low-hanging fruit. They were hacking. You mean covering their tracks? Yes. Yeah, like will you rather go for big crypto money or these small little like, you know, deals with hacking school district or something, right? So I think as crypto winds down, which I think it will, US is after it, you know, and so many other countries. Well, we saw the Coinbase news. Crypto is not going to go down. We know that. Okay, I am in the other camp. You're saying crypto's dead? Not dead, but it will gradually sort of go down. Even the stable coins are suffering. Let me ask you a different question. Will Bitcoin 10 years from now have a larger or smaller market cap? Smaller. Yeah, I would, what do you want to bet? If I'm still around, we'll bet that nice dinner. Nice dinner, yeah, that's great. If the loser has to pay in crypto. Yeah, but I also spoke to a few people here. Like I was off the view that we will use our relational data. Like you can call it on threat intelligence and all kinds of data is sitting in relational databases as well as well as it's sitting in our logs. But I am learning that the chat GPT-like models are not very good with relational databases. They are good with the conversational sort of text if you will and or images and or, you know. Yeah, but that's chat GPT, right? There's going to be other foundation models that perhaps, you know, are going to be able to solve that. But also chat GPT is only one form. There was hackers, we had some guests on earlier I asked a question and there was other machine learning in AI prior to this. So the hackers probably had their hands on it at least six to eight months earlier. At least some of the primitives on the foundation. But I said to Wendy Whitmore, I said, AI was invented in November of 2022. No, no, actually it has been there for a long time. Of course, of course, right? And then this gang which came from University of Toronto, they have been working on that for a long time and Google research has been working on for like years if not decades. So AI is not a new thing and Amazon has been using AI to throw products at us for, you know, almost two decades. Well, I think I like to get your thoughts on because one of the things we've been talking about on theCUBE and I've been interviewing on my one on Wednesday asking the question, what's going to be disrupted? This is a show that I won't say is old but it's been around for a while. Supercomputed's been around since 1988. But I think there's going to be a handful of these vendors out there that it won't be around a couple of years. You got to get it right here. I mean, you got to be on the right side of history. Get vendor consolidation for the supplier side. So we heard that. No question, yeah. Okay, spending's down as you reported in your breaking analysis. And just some technology architectures might be wrong. I mean, we just had Cripple on. They're doing a deal with CrowdStrike. They're the best data connector in the planet right now. They're eating Splunk's lunch on XDR, at least CrowdStrike's SDR package. Yeah. A nurse is a tough thing to move, but yeah. I mean, I think there is this one. What are the signs that people aren't going to make it? I think the signs are this, that if you're still singing the same song what are you saying like five years back, then you're dead, right? So you have to move with the time. Even if you don't have the products in that bucket yet, you have to show the market that we are working on it or we have this point of view about AI, about ML, about all sorts of intelligence and newer paradigms, right? The newer kind of database, vector databases that are coming into the play, like how you will leverage that for security in this case, right? By and or a transactional, you know, like a business transaction. Well, the narrative right now is you guys, Silicon Valley growth capital is dried up, right? And so you're saying, not true. Well, the numbers show that C rounds are down. Like way down. It's not true, it is drinking from the trough. It's still funding, good funding. No, but I was just saying for growth capital, for, you know, series C is way down and money shifting to series C'd and early stage. Okay, here's my question to you guys is, will we see a transition? Because in the last five, six years, it's been a ton of funding into cyber security companies. You saw it in 2020, 2021. Is that now going to shift to other areas like AI? You've been saying cryptos shifting the developers all around to AI. I think the AI. Okay, and then let me just finish this up. And then will it come back in the form of AI for cyber? And is that going to be the disruptive to answer your question? Yeah, the answer is yes, yes, and yes. So I'll start with the first yes. The startups are going to get funded out of the gate. If anyone has any pedigree in security, a VC in Silicon Valley and around the world should seed finance that person. Seed capital is not a problem. It's the growth capital as you pointed out. So I agree with you on that. That's going to basically, as Michael Dell says, the rain will wash away some of the dirt on the street. So some startups are going to die because of it. And so that's going to happen there. Silicon Valley growth equation is going to come down to the alpha engineers who will use data to either be a pure play data element in some sort of new stack that's emerging. You see a structural change in just foundation models. You have platform, cloud platforms, you've got tools, you've got apps, so a stack is forming in the AI side. So they'll either play as a supplier in that or use AI to refactor something in cyber. So that's an AND equation. So they'll either be a supplier in cyber and then someone might use data in cyber to refactor either an incumbent, slow moving, large market opportunity and take down a big whale here. So I think there'll be whale hunting going on for startups looking at the big, incumbent, slow players that they'll be more faster. So I think there'll be cyber security aspect there absolutely and you'll see the platforms get bigger. I think the big players cannot be taken down because they're part of the ecosystem. The medium size, the second tier players, they are in danger. Yeah, the big players. Like who's a big player? The big players are like Google. Oh yeah, they'll never get taken down. They have Manian, like on Microsoft, they have good security platforms for you. Tenable is a big player, they're a whale. Palo Alto Network's a whale. But Palo Alto Network's a whale. Yeah, Palo Alto Network's a whale, technically. Yeah, so it's a blunt country case. All I'm saying is I'm not saying that Palo Alto will be taken out by a startup. I'm just saying it's possible that an innovative entrepreneurial team could put together a killer product with AI that changes the value proposition that will eat away and ultimately mean we put down a whale. Or the whale will buy them out and take it over. But in the bad market, when money is expensive, the MNA goes high up and even the good companies which are smaller startups, right, they want to be acquired. They don't want to go public because that road is so long. I mean, look it, basically, virtually every Israeli company in the space where they're some of the most innovative problem solvers in the world, they all end up getting acquired. Yes, yeah. I mean, look at the guys at Iguazio, right? We're going to take over there. We used to challenge them on that. Of course they end up getting acquired. Because... Who bought them? I forget. Is it really? Okay, by the way, is it really? Do you scale it? Like nobody else does. Yeah, because they were born with security. It's in their DNA. It's from day one. I actually, when I was working at AMC, Mackenzie bought Iguazio. It was good enough. Right, interesting. So there's a case of Mackenzie transitioning into more of a software company. I'm sure it's doing some acquisition too. So the M&A did, you pointed this out, I highlighted it on my post, but you pointed out in your breaking analysis, there are a lot of emerging companies today that's solving these new challenges and they're going to be hot targets. So I expect that in the next 24 months, and the first 12 months leading up to the 24 months, will be a massive M&A activity because no way else is going to let some startup take them down. They probably know that they're on the wrong side of history relative to their slow position or their girth. And I think they will make a move to try to figure it out. But I think this is where the leadership will make a huge difference, right? So some leaders see that as these new vendors are threat and then they bring them quickly and sort of create a narrative around that, but some, they just sit there and wait. This is the classic CUBE conversation we've had, Dave. So many times, organic versus acquisition. Do you grow organically or do you go outside? I'll tell you, I'm looking at the survey data right now. So you've got Symantec, which now owned by Broadcom, doesn't have a lot of momentum, but it's Broadcom, so you know they're sort of doing their integration thing. That's a PE play, so I don't count them out. Well, we'll see. Blackberry, of course, pivoted, but the traditional momentums of ArcSight, which is now owned by Microfocus, Sonicwall, Trellix, which is used to be McAfee, and FireEye, IBM, their security business doesn't seem to have a lot of momentum, even though their big secure works, RSA, Trend Micro, Checkpoint, these are all the ones that are sort of in the red in terms of spending momentum, right? And if you flip that, there's a lot of folks in the green, you know, CrowdStrike, Zscaler, Octa, Microsoft, obviously, CyberArk, SailPoint, Illumio, Cloudflare, Datadome, Palo Alto, this is Fortune Ed, that's where all the momentum is. These are companies, according to my sources that are telling me, there was two companies on there, I won't say their names, but you mentioned them, you don't have to say them again, can keep a look at the tape. Two of those companies have spending slowdown per year data, also going back to their customer base with an inferior product and charging more, okay? So this is what's happening. They're on a death spiral, okay? They're trying to pimp up their numbers so they can get brought out by private equity. So they got to charge more for a customer base that doesn't want their product. When you have alternative products on the market that cost less and perform better. So this is a classic market transition death spiral. And so you to watch when spending slowdown or what you call deceleration, that's a sign of an implosion. What do we call it, a radical, unassembly, what did mucks call it? What did mucks call it? Strategic ambiguity. When SpaceX blew up, rapid, unassembly. A rapid plan of deceleration or something, or disaggregation. Brandon, we can help us out with this. We can't talk about these things in the absence of cloud. So today, two cloud players earnings today, Microsoft. Yeah, what's up? Okay, Microsoft grew at 27%. It actually fell to 27% growth from 31. Okay, so 27. Yeah, it's not bad. Not bad. I thought it would be like. And who else announced it was the Google? It was called a rapid, unscheduled disassembly. That is the term that Elon Musk PR team used. But still fast. SpaceX. So you're talking Azure? Azure actually grew at 27%. 27. It fell from 31. And what was Google? Let's take a look at the Google one. So remember, you remember while you're looking that up. So what happens is Google will report Google cloud, but not GCP. And then they'll make statements about GCP. And they used to say GCP grew, you know, significantly more than Google Cloud. So Google. Guys, we got to wrap it up right there. We got a clock, five o'clock, hard stop. So thanks for coming on. Thank you. Oh, bummer. Google did actually a little lower. What was the number? It was a 7.45 billion. What's the 7.49? 7.49. So lower than 7.45? What's the 7.49? Get 30 seconds. It's about flat. Okay, so you're basically flat. Bottom line, last 30 seconds. What do you got? So listen, cloud decelerating growth. And where does Amazon's going to come in? Next quarter around 10% people are forecasting. But as we talked about, they're going to customers being proactive, locking in the long-term value. That's their play. And you see the same for security. I think cloud is slowing down, but it's faster, still faster than on-prem. And the security, it changes the security posture and a lot of companies which used to provide on-prem security, they need to rethink. All right, that's day two. We are here in the broadcast alley. The top publications come here. Of course, we're the last ones. We're going to go to the last second. Everyone else is left early to go to happy hour. Not theCUBE. We will do whatever it takes to get that story. Check our podcast out. Check out the breaking analysis. We'll go to the last second possible to get the stories to bring to you. Keep watching theCUBE. We'll be back tomorrow for day three. Thanks for watching.