 Live from Dublin, Ireland, it's theCUBE. Covering Hadoop Summit Europe 2016. Brought to you by Hortonworks. Now your hosts, John Furrier and Dave Vellante. Okay, welcome back everyone. We are here live in Dublin, Ireland. This is theCUBE's SiliconANGLE's flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier. My co-host, Dave Vellante, our next guest is David Hill, Business Development Director at Open Energy Hortonworks Customer. Welcome to theCUBE. Thanks for coming on. Well thank you for having me. Open Energy with an I, not a Y, it's the company name. You guys are an economy. The energy economy is the tagline on your site. But I love this business model of arbitraging, pricing of energy, pricing demand, supply and demands, a lot of economics do it. But essentially you're creating a marketplace for energy. Is that right? Did I get that right? Yeah, fundamentally we have built a software distributed energy storage system essentially that is a software that integrates into many different types of an industrial, commercial electricity demand to flex that demand at certain times a day to stop a peaking power plant coming online and to enable the system to work far more effectively. And that's just the electricity systems globally are needing much more flexibility to run as we integrate renewable energy systems, much higher levels of penetration. And so we need more flexibility to operate the system and there's a premium on that. So it sounds like smart energy before we get there I want to ask you, give some examples of where you guys value proposition is, use case of where you guys are practicing your business. So at any given time of day, a system operator in the UK that is called National Grid in the east coast of US that's called PJM need to buy in a certain amount of electricity capacity at certain times a day to deal with unforeseen circumstances. Power station tripping offline for instance or a freak weather event. Traditionally the way you deal with that is you just ramp up a power station quickly to deal with that event. We're looking at doing the absolute opposite on the demand side. Some of our biggest customers in the UK are like water utilities for instance, where a significant amount of water utility demand is water pumping, which is not time dependent. You can sort of modulate the pumps for small periods of time a day without having no impact on the drinking water. So manage energy. Essentially manage energy. But instead of just doing it for energy efficiency purposes, we enable our customers to earn revenue by actually transacting their energy back into the system at certain times a day. So you said, I think I heard you say essentially have developed an energy storage system. Is this through software or? Yes, fundamentally there are thousands of millions of devices out there that have small amounts of storage within them when we heat things, when we cool things, when we pump things, we are fundamentally creating small amounts of stored energy that if you deploy software to aggregate all these small amounts of stored energy you create a sort of an alternative to a battery system that can provide stored energy systems by deferring energy consumption or bringing forward energy consumption for small periods of day. So you ship that energy to a place or you aggregate it through software and then are able to provision it? Yeah, so for instance, if someone needed 10 megawatts of energy for just an hour we could aggregate that 10 megawatts from across the country from thousands of different devices giving us a few kilowatts and minutes here and there and then over that hour you get 10 megawatts and get a whole hour worth of energy from lots of different pumps fridges or heating appliances. And you're buying and selling that too, right? So it's transactions? Yeah, so fundamentally we have to sort of with our industrial commercial customers for the benefit of us deploying our software we give them a revenue stream which we sell into the system and then we take a little cut in the middle. So it sounds like the core competence if your business is option pricing meets technology, meets software is that kind of thing going on? They're math involved, they've got to be some math involved in price supply and charging. I think there's actually, there's an evolution the biggest technological barriers is for us initially is in the internet of things is about actually getting in deploying software, controlling things in a way that makes your customers comfortable. You know, you're talking about assets that is critical to their business process. So it's been a technology play at first then it kind of as you grow your volume then it becomes more of an arbitrage and sort of how can we sort of maximize the value in that in relation to the energy market. Super exciting business. I mean it brings a whole new dimension to surge pricing. Yep. Well, it's a very entrenched business I presume it's highly regulated or maybe not in the UK. I mean one of the reasons why there are sort of interesting software companies emerging like this in the UK is because it's one of the more liberalized electricity sort of markets in the world that enables smaller technology companies to sort of play in the market in a less regulated way than some of the big generation companies. But the big generators are regulated, right? But the laws allow guys like you to come in or is that not the case? Is it free for all? The big generators in the UK are allowed to sort of try and make as much money as possible from that generation stack just like we are in terms of the way in which we interact our flexibility in the market and try and operate, yeah, rather like a power station does. So a consumer in the US though has very few choices. We're here, she can buy energy. You're saying the UK consumer has- Yeah, they have a complete option. They can choose which supply they get their energy from and that supply can choose which generator they buy their electricity from. Likewise, consumers can choose to work with us to see if they can realize some potential of the flexibility of their energy. So the dynamics of the market from a public policy standpoint are much more receptive to what you guys are doing. Very much so, because we are all about transferring value from the old traditional supply side model back to the consumer. We're all about making energy more affordable, more reliable and fundamentally cleaner. And that's a market solution that was not a- No, not a substitute, that thing. Can you export that model to the United States? I mean there are certain areas in the United States where it's pretty big, so PGM on the East Coast of the United States there are some big companies who are doing similar type applications that we're doing in the UK. Yeah, so there are certain areas of the United States. Yeah, but it's pockets, it's sort of state by state. Yeah. Right? I think it probably is state regulated anyway in the United States. Okay, so- So it's a big data angle, I guess. Yeah, right. That's what I'm trying to get at. What's the secret data source? You know, not the geeky stuff, but at a high level. So I mean, fundamentally, our currency is data. Fundamentally, our ability to sort of monitor the health of the grid in real time and then sort of interact with the machine in real time. That's how we make our money by fundamentally shifting data around by sort of changing consumption for small periods of the day in relation to market signals. Our ability to compete with other energy sources like traditional power stations or battery technology is because of the dramatic cost reductions in data, communications, technology, storage, analytics. Those cost reduction curves allow us to basically do what we do at a much cheaper level than building a power station. But when your founders were starting the company back in whenever it was 2005, I mean, the state of the art was to take a pipe, stick it into a big Unix box or a Linux box, you know, buy some Oracle licenses, get a database. And if you had any money left over, you'd do some analytics on it. Fundament, yeah. So you kind of the formation of a company predated Hadoop generally, but then you sort of fell into it, right? Yeah, fundamentally. I mean, the reason I'm here, we're so excited is because we've adopted the Hortonworks technology and I see there's a huge leap in the way we do our business because when we first started out, you're right, we were an internet of things business before we even knew what the internet of things was. We knew that there was flexibility and energy in the way energy was consumed that could change the way the energy system worked. So we had to build a whole infrastructure, sort of bespoke infrastructure from the way we connected to things, the way we shipped that information into the database we built. So we knew it was not necessarily the scalable way we were going to change the world, but it was the way we had to prove the concept worked and get some more VC investment in us to then we began to sort of make the product more scalable and adopt certain technologies. How much capital do you guys raise? Over the last, I think, probably seven years, probably in the region of 30 to 30 million pounds. That's not that much cash. Considering Silicon Valley companies, I mean, Macs from PayPal just raised 100 million, some fintech startup. You guys are doing energy. Yeah, but I mean. But you're a software company, right? Yeah, essentially, and also, America tends to raise a little bit more money because the American market's a little bigger than the UK market. Well, plus it's spending all the money on promotion and sales and marketing, right? So software should be a pretty capital efficient business, but it seems to not be anymore because people have to raise so much to compete with the big dogs. But I wanted to ask you about sort of the, he said you're an IoT company before anybody was talking about IoT. John and I have talked a lot on theCUBE about the IoT fever, but slow down, folks, the things that you have to do to actually take advantage. Everybody says instrument the windmills, or instrument, in this case, the grid. But you talked about connectivity as a key first step. So talk a little bit more about the steps that you had to take. What were some of the prerequisites that you had to encounter? I mean, it was difficult, right? I mean, in the context of energy, some of the biggest energy consuming machines out there are old and not very smart. Little story is we once went to a port in the UK where there was a huge two megawatt-sized water pump that when the tide went out, it pumped water back into that port to keep the water level high so the boats didn't hit the ground of the port. Now that two megawatt pump is an amazing storage of energy. I could sort of, when surges of demand, I could turn that pump off and the water's going to stay there for a certain period of time. And we can deal with that with that water pump. But fundamentally, there was no control system at that water pump. The way that water pump was controlled was a guy sat at the end of the port and he watched the water level go down and he cranked that whole thing up when he needed to go. It's hard to automate that. So it's hard to connect that thing to the internet. So fundamentally, the internet of things, there's a lot of very old things that are tough to connect to the internet. And we had to spend a lot of money sort of instrumenting these things up to fundamentally bring these things into our internet of things infrastructure. It's worthwhile doing when you've got a two megawatt pump. It's not so worthwhile doing when you've got a two kilowatt kettle or something. So you pick your low-hanging fruit, knock those down, and then hope all new devices get instrumented from day one. Totally. So this leads on, that's a funny anecdote I guess, but this leads me on to the fact that we are beginning to look with some of the Hortonworks data flow services because that's a really exciting thing for us. Because it means we might be able to start integrating with the machines in a much more efficient and less costly way. Because previously, when we were interested in how much flexibility a certain type of asset had, a fridge or a boiler, we had to sort of hard code that information in that machine to start off with. Now, we can't change every single controller in the world, so we have to sort of work how can we do things on a much more machine learning basis? How can we sort of predict how much flexibility this asset has in real time without having to sort of change the way all these controllers work? So securing a data center is hard enough. People would dig a moat around the data center, try to secure it. Securing the grid is a whole different situation. Can you talk about security and how you guys think about it? Oh, I mean, it is at the heart of what we do. Fundamentally, we are connecting many different bits of critical national infrastructure. We're working with the grid, which is critical national infrastructure, and say, what are utilities? Also critical national infrastructure. So when you're connecting to these two things that you're creating, you're connecting up two pieces of critical national infrastructure. So it is at the heart of everything we do. Traditional sort of very strong firewalls and VPNs. But I mean, one of the reasons we started working with Hortonworks is because of the, it came enterprise-ready. Some of the security systems were very well thought of in terms of the way they were deploying their products in terms of some of the other sort of more off-the-shelf open-source things that might have not been just as ready as it should have. And given its IoT, the service area, obviously for a tax is significant. Yes, very much so. So you need to make sure you have these systems that are secure, and we sort of worked with other companies like Dark Trace as well, to sort of really sort of make sure that our systems are incredibly sort of learning about behavioral pattern changes so we can spot anomalies before they happen. What's your experience with Hortonworks? Obviously your customer, you guys like those guys, you like good experience with them? A happy customer? Yeah, I mean, it's, you know. You guys are talking to the press, so you've been cleared by their, their PR guys and folks over there. Yeah, I mean, I think we are, I think with all these kind of good client-customer relationships, it's definitely more of a partnership with these mutual benefits in us, both growing and learning. How do they help you? A good example. Folks are trying to figure out the, you know, selecting vendors, Hortonworks on point versus others. Because when you're trying to put a new data, sort of a new software infrastructure into your company, you know, you need to make sure the adoption of that is wide-scale to make sure you can really see the benefits of it on a large scale, and they've been incredibly helpful in terms of any of our data scientists, when they've got any sort of queries or problems. So it's a support. Support's been huge. Code reliability. Code reliability. Even when we found any like little bugs, they'll get in contact very quickly and help solve that sort of, they've been incredibly supportive. You don't want to have a patch to load, some cloud flaws. No, exactly. And I mean, they've also been incredibly supportive of us, you know, trying to make our business grow. They've been incredibly supportive of them, you know, wanting to see how we can sort of develop. And you bring all this up back into a data hub of kind of centralized respond when you act on the data. Yeah. Okay. Thoughts for this show and just the industry in general. You guys obviously at the front end of a pretty exciting opportunity. Really fascinating business. I'm really intrigued. I love what you guys do. Congratulations. I mean, I just think it's amazing. Naturally, when you see something that's an exciting concept, like I did many years ago when I joined the company and you realize as this industry grows, as the internet of things and so it grows, it's amazing how all of a sudden the big problems that you had, someone comes along and says we've kind of fixed it and you just, these things, it's amazing how these things naturally happen. It's a brand new opportunity. Yeah. And it's very exciting. The data drives that, that's what we're seeing. Very much so. Complete these green fields, they call them, but. Yeah. Well, thanks so much for sharing the insight. Open energy, David Hill, business development, energy with an eye at the end. Open energy, great business model, love the multifaceted, data driven, option pricing stuff. Reminds me of when I was in business school, Dave. Those days is like, these market places are hard to crack the code on. Yeah. If you can get the data, you can make it work. Totally. David Hill, here inside theCUBE, we're live in London, in Ireland. He said London again. Dave's getting late in the day. We're in Dublin, Ireland, not London, England. You'll know when you're sipping that Guinness tonight. We'll get his factory tonight. Here at the Hortonworks show, Hadoop Simon, we'll be back with more after this short break.