 Okay, welcome back to VMworld 2013. This is theCUBE. We're live in San Francisco. This is our flagship program. We go out through the events. Extract a signal from the noise. I'm John Furrier. I'm joined Stu Miniman of wikibon.org, as an analyst in the segment. Scott Sanchez, director of strategy at Rackspace. Scott, welcome back to theCUBE. Thank you so much. Obviously we had your CMO on earlier, talking about Rackspace. We've been following Rackspace. I mean, I've been following Rackspace for a long time as a service, but as getting to know the people down there starting back in 2008. What a run for a company. You guys have done a great job. The cloud is booming. OpenStack is on fire. You guys launched that. So cloud is here. It's disrupting. It's no longer, we're no longer in a transformation. It's being transformed in real time. We saw the earnings from HP down. That's a real signal to the marketplace that the old stack and rack gear just isn't it anymore. It's one element. We saw the CEO of Microsoft's designing. The old guard is being disrupted because of the new era. We're obviously, that's a modern era. We've talked about that. I want to talk to you about the challenges that you're seeing in the cloud, specifically with developers. Because you guys do a lot of focus on developers. Yeah, the infrastructure's getting hardening. Assuming that's converges happening. What's going on up above the stack? So if you look up the stack, everyone wants to move up the stack. There's a lot of work to be done. So what's your take on that? And then we can drill into it. I think the best way to put it in perspective is that software has become the new hardware. And all of the limitations, all the limitations that developers had in dreaming up their applications and then actually implementing them back when things were based on hardware, it really was a limiting factor to how fast they can move. And so when you were in the infrastructure business, you worked with the infrastructure teams to meet the needs of the developers, right? We need this many cores. We need this much disk. We need this, right? And that would go to the infrastructure team. They would then go to procurement who would buy something. Today, a developer that's using an open cloud like Rackspace can very easily just dream it up, put it on the whiteboard and translate that into an application that's running 30 minutes later. And so it is a shift to developers, I'll say having the power, but it's finally getting developers to the point where they're able to take what they dream and implement it without any limitations of hardware. Hardware's just become resources that are being provisioned. So obviously one of the things that's come out in the past few years that I'm excited about that's kind of gone mainstream is DevOps. So DevOps has been a trend that was kind of like AlphaGeek, you know, engineer and ops guy in one, not separate roles, you see Facebook, you saw the applications like Facebook define the new infrastructure. The app defines what is assembled for the infrastructure. You know, Facebook is the poster child, there's many more examples. But as DevOps, it became kind of a small pocket, but now it's kind of going mainstream into the IT. And you always can't take a DevOps, there's like a Navy SEAL, if you will, there's special forces. It's hard to turn it someone into a DevOps guy. We're finding, do you agree and what is the mainstream DevOps guy look like? What's that trend? One of the things you need to keep in mind about DevOps is that it's not something you go and buy. It's- It's a mindset. It's a mindset, it's an outcome that you look to achieve as a company. And so there's tools and there's platforms and having things like OpenStack and OpenAPIs and all the abstraction points that you get allow you to move to that model. Rackspace has made that journey ourselves. Not too long ago, we ran our business with screwdrivers and dollies, right? And now we run it with this DevOps mindset. We're pushing code every day into our public cloud. We're following along with Trunk of OpenStack to get that code through the development, testing and delivery process. And the result is we're delivering products faster than we ever have before to our customers with higher SLAs. And so customers talk to us every day about I want to do DevOps, right? They see their smaller startup competitors moving in that model and moving quickly and they say we want to do this. They're trusting us to help them on that journey because we've made it ourselves. We power our business with that model and we're helping our customers consume our services in that same model. So talk about what you guys are doing with Service Mesh. I was talking to Sean Douglas who used to work at EMC Ventures and the CTO office as well. He just reached me over there, got my attention and they're doing some interesting orchestration stuff. What are some of the things you're doing with Service Mesh right now? Especially on the private cloud side, we're seeing demand for Service Mesh and tools that not only help with the automation of configuring your application deployment and getting it through the software lifecycle, but on the governance, right? People are both excited and scared about DevOps. You've got the compliance side that's having like things checked. Compliance is a piece of it security. It's a piece of it and access control and all the things that go along with getting an application from someone's head into production. But it also has to do with the visibility along that process. When we have a customer like HubSpot stand up on stage with us a few months ago and say we can go from idea to production in 30 minutes, that scares a lot of people in the enterprise world. Well, when you have tools like Service Mesh and other governance that you can wrap around that, you can really start to see a progression of mindset change that's happening in the compliance departments, in the audit departments, in the testing and QA departments whose, you know, their role is to make sure things are only making it there when they're ready. And so Service Mesh really helps customers visualize that and manage that with a platform that feels like the enterprise solutions they've been using but works in the new model of applications. So Scott, can we drill down a little bit on that? You know, when I think about enterprise IT, we're here at VMworld and you hear people talking about we need to get away from, you know, scripting out of your CLI and how do we optimize my configuration and all that manual labor that they do. You know, there seems a huge air gap between that and somebody that, you know, going to puppet comp and, you know, doing all their customer configuration. So how do you bridge that gap for the enterprise customer? What's that progression? What kind of, you know, training that they need to do to be able to take advantage of these solutions? Well, having been at puppet comp a few days ago and looking at the enterprise customers that are there and have really started to embrace that model, I do think that the way this happens at an enterprise is that you have to have top-down leadership that's willing to break glass, that's willing to talk to those teams and tell them, hey, the way you've been doing this for 15 years needs to change so that we as a business can do things differently, right? And so once you get to that point where you've got the leaders willing to put their job and their reputation and their career on the line to say, I believe so strongly in this that we're going to change how things work. We're going to work with the teams, we're going to talk to our regulators that govern our business or our customers that govern our policies and explain to them, we can help do things better, we can help you move faster, we can help give you more visibility if you let us move to this new model. And so it's this push-pull, but you really do need strong top-down leadership to say, we're going to change how we do things. If it's purely developers or infrastructure people hacking on it and trying to push that up, it becomes a very hard, painful process. And so what we do is we talk to our customers at both levels, we have the architects, but we also have the C-level advisory and services folks that can go have that top-down conversation about transforming their entire model. Scott, I just want to follow up on some of that Rick Jackson mentioned. He said, open source kind of all paraphrase, decimates is a pre-existing, either proprietary or vendor solutions. He was referring to J Boss being taken out, taking out a bunch of other existing solutions. We had a crowd chat around Oskon and Josh McKenzie said in our chat room, the Nirvana, I want to get your comment on this, the Nirvana of Hybrid Cloud that people actually want is still five years out. I give even odds that OpenStack gets there before any single vendor. So it's a Rick's point about OpenStack. What do you see, I want you to react to that comment. Hybrid Cloud is what everyone wants. It's basically enterprise extension. I call it the DMZ zone for the old school guys, but that's what they want. So it's still five years out, that's what he says. Do you agree? And then why does OpenStack get there and what needs to get done in the stack to make that happen? So I'll point to a couple of blog posts that I put out over the past few years. One I think is almost three years old that what people really want, and this hasn't changed in three years and it might not in five, is that they just want something to make all the decisions based on rules as to where their work lives, right? And so, things like Service Mesh really help get us there in that you can define workloads and you can define targets and you can define rules and governance around it, right? So it's starting to move us in that direction. On the other side, I think it comes down to the strategy that especially enterprise customers that I think he's referring to are looking for, which is I think they need to have one cloud strategy. They don't need to look at it and say, oh, we have a private cloud in two different regions and we have a couple of public clouds and we have this and we have that, right? They just need to look at it as we have one cloud. And that's the hybrid model that people are looking for. They're looking, a developer doesn't want to think about, am I getting this right by putting it in the right region or zone or category of cloud? I just want to put it in our cloud. Sub-clouds, right? And the same way the infrastructure teams in years past have said, well, this is going to go on this fast, expensive storage and this is going to go on this cheaper commodity storage based on what they're asking me for, that needs to start to happen at an abstraction level that is not burdening either the infrastructure teams or the developers, right? And that to me is the hybrid cloud panacea that I think we're all looking for. Where we are today is that customers that want that are, we're working with them to build that layer to meet their business needs. There is no one platform that you just plug into and it works in a hybrid environment. And so I mentioned HubSpot, right? They built a control plane, essentially, that ties into all of our services that allows them to do that transparently, right? And so we're working with a number of other customers to do the same thing. Just look at that plug and play. I call it the Lego design, but really it's a manifest or as Chuck Wallace says. Yeah, if you tie hybrid back to the electric grid that sometimes gets brought up as an analogy to cloud, when you plug into your outlet, you don't know if that's coming from a wind farm, from a, you know, a coal, from nuclear, you just don't know, right? The grid behind you is taking care of figuring that out and you can buy credits and you can do things to offset, but when you plug it in, it just works. And that is... If there was corrupted electricity, we would care. I mean, that's the data issue, right? It comes back down to that. It either works or it doesn't really is how you think about it. And behind the scenes, there's a lot of people making sure that that hybrid collection of power is working for you. And that's really where that five year vision that Josh talks about, I think it's happening way quicker than he anticipates because we're working with customers every day that are doing it. You guys have built your own cloud. I remember, you know, and watching you guys do some acquisition, but you've added staff, you've got the open source project with OpenStack. What have you guys seen and experienced firsthand and what have you guys innovated on that you kept in rack space and that you've moved into OpenStack? One of the things that really draws customers to us is a product we have called RackConnect, which is a key portion of our delivery of a hybrid outcome for customers. And so it's essentially a service network behind the scenes that allows a customer to take their dedicated hardware or their virtualization or their public or private clouds and start to put them together behind the scenes, right? With their own private networks delivering that outcome that they're looking for, that transparency of a hybrid environment. And what we've done is to make it easier, especially around the software-defined networking projects and other things like Neutron in OpenStack to utilize those types of models. We have a unique position in the OpenStack community in that we are a very large operator, right? There's a lot of people that are software companies or hardware companies. We operate a very, very large cloud and have for a long time, right? And so we understand some of the challenges in a different way than a networking vendor, a storage vendor, a compute vendor, right? You mentioned service mesh. What do you guys value about those guys? What's the big value of service mesh to rack space? Service mesh accelerates how a customer can use more of our portfolio and get to that hybrid outcome that they're looking for, right? So HubSpot, very developer-driven organization, they had the expertise and the time to go build that control plane. It gives them exactly what they need because they know what their business is, right? They're in this segment. We have a lot of customers that are in a whole bunch of different segments, don't want to invest the time or have the know-how today to build a cross, and they want to rely on a commercially supported solution to help them consume all these resources, to help them use the public cloud, the private cloud, the virtualization, right? All the pieces to deliver that hybrid solution to them and service mesh really accelerates that because they can deliver something on day one that plugs in and is integrated with our full suite. That kind of orchestration and tracking is just critical for like, you mentioned compliance. You can just see the hassle on some DevOps, ah, compliance, what a pain in the butt. You know, I mean, that's, but it can't be that. It's got to be mandatory. It's table stakes, right? You've got to have that. If you have, if you work in a pharmaceutical where you have things like validated systems that you have to prove are the same 12 months from now as they were today, you want something that is more of a package solution, right? It's much harder for you to try and write that control plane than it is to take someone else's documented deployment, management, automation, compliance system like service mesh and actually deliver that to your audit department. Well, we got a break, but I want to ask you one final question, give you the last word. What are you doing these days? What are you up to? And are you going to the open stacks summit abroad? Is it Singapore, right? This year? Hong Kong. Hong Kong, okay, Hong Kong. Hong Kong in November. Hong Kong, are you going to Hong Kong? And what are you doing these days? What's up with you? So I'm doing a lot of this, right? I'm out spending probably half my time talking to smart folks like you, to customers and really understanding what people are doing, what their challenges are, how they're adopting or not adopting all these technologies that we and others in the industry are delivering. And then working back with our product teams and Rick and our marketing teams and really making sure that we're delivering the right things in the right way to the right people. And so that's been my focus. Kind of a strategic view. We need more because there's a cultural shift going on. Obviously DevOps is going mainstream. That's going to be a cloud style kind of mindset and the younger generation, they don't want to install Linux patches. They want a complete automation. IT guys want to push buttons, make stuff work, assemble infrastructure on demand, all that stuff, manage all the in-between-the-toes details of like appliance, that's the future. I mean, that's what it was all about. So really appreciate you taking the time to talk to you. Thank you so much. Scott Sanchez, Director of Strategy at Rackspace. We'll be right back with our next guest after this short break. Thank you.