 Welcome back to theCUBE presents the AWS startup showcase. Next big thing in cloud startups with AI, security and life science tracks, 15 hottest growing startups presented and we had a great opening keynote with luminaries in the industry. And now our closing keynote is to get a deeper dive on cracking the code in the enterprise, how startups are changing the game and helping companies change. And they're also changing the game with open source. We have a great guest, Katie Drucker, head of business development, Madrona Venture Group. Katie, thank you for coming on theCUBE for this special closing keynote. Thank you for having me, I appreciate it. So one of the topics we talked about with Soma from Madrona on the opening keynote as well as Ali from Databricks is how startups are seeing success faster. So that's the theme of the cloud, speed, agility, but the game has changed in the enterprise and I want to really discuss with you how growth changes and growth strategy specifically. They talk go to market, we hear things like good sales, enterprise sales, organic, freemium, it's all kinds of different approaches. But at the end of the day, the most successful companies, the ones that might not be known, that just come out of nowhere. So the economics are changing and the buyers are thinking differently. So let's explore that topic. So take us through your view because you have a lot of experience. First, tell you about your role at Madrona, what you do. Absolutely, all great points. So my role at Madrona, I think I have personally one of the more enviable jobs in that my job is to, I get the privilege of working with all of these fantastic entrepreneurs in our portfolio and doing whatever we can as a firm to harness resources, knowledge, expertise, connections to accelerate their growth. So my role in setting up business development is taking a look at all of those tools in the tool chest and partnering with the portfolio to make it so. And in our portfolio, we have a wide range of companies. Some rely on enterprise sales, some have other go-to markets, some are direct to consumer, a wide range. Talk about the growth strategies that you see evolving because what's clear with the pandemic and as we come out of it is that there are growth plays happening that don't look a little bit differently, and we're obvious now because of the cloud scale, we're seeing companies like Databricks, like Snowflake, like other companies that have been built on the cloud or standalone. What are some of the new growth techniques or I don't want to say growth hacking that kind of pejorative term, but like just a way for companies to quickly describe their value to an enterprise buyer who's moving away from the old RFP days of vendor selection, the game has changed. So how, take us through how you see that secret key and unlocking that new equation of how to present value to an enterprise and how you see enterprises evaluating startups. Yes, absolutely. Well, that's got a question that's got a few components nestled in what I think are some bigger trends going on. AWS, of course, brought us the cloud first. I think now the cloud is more and more a utility, right? And so it's incumbent upon thinking about how an enterprise who's using the cloud is going to go up the value stack and partner with its cloud provider and other service providers. I think also within that, with that agility of operations, you have thinning, if you will, of the systems of record and a lot of new entrants into the space that are saying things like, how can we harness AI ML and other emerging trends to provide more value directly around work streams that were historically locked into those systems of record? And then I think you also have some price plans that are far more flexible around usage-based as opposed to just flat subscription or even these big clunky annual or multi-year RFP tech stuff. So all of those trends are really designed in ways that favor the emerging startup. And I think if done well and in partnership with those cloud underlying cloud providers, there can be some amazing benefits that the enterprise realizes and an opportunity for those startups to grow. And I think that's what you're seeing. I think there's also this emergence of a buyer that's different than the CIO or the CISO. You have things with low code, no code. You've got other buyers in the organization, other line of business executives that are coming to the table making software purchase decisions. And then you also have empowered developers that are these kind of citizen builders and developer buyers and personas that really matter. So lots of more, lots of inroads and places for a startup to reach in the enterprise to make a connection and to bring value. That's a great insight. I want to ask that just if you don't mind follow up on that. You mentioned personas. And what we're seeing as the shift happens, there's new roles that are emerging and new things that are being reconfigured or refactored, if you will, whether it's human resources or AI. And you mentioned ML, playing a role in automation. These are big parts of the new value proposition. How should companies posture to the customer? Because I don't want to say pivot because that means it's not working but mostly extending or iterating around their positioning because as new things have not yet been realized, it might not be operationalized in the company or maybe new things need to be operationalized because it's a new solution for that. Positioning the value is super important. And a lot of companies often struggle with that but also if they get it right, that's the key. What's your feeling on startups and their positioning? Some people will dismiss it like, oh, that's marketing. But maybe that's important. What's your thoughts on the great positioning question? I've been in this industry a long time and I think there are some things that are just tried and true and it is not unique to tech, which is, look, you have to tell a story and you have to reach the customer and you have to speak to the customer's need. So what that means is AWS is a great example. They're famous for the whole concept of working back from the customer and thinking about what that customer's need is. I think any startup that is looking to partner or work alongside of AWS really has to embody that very, very customer-centric way of thinking about things, even though as we just talked about, those personas are changing who that customer really is in the enterprise. And then speaking to that value proposition and meeting that customer and creating a dialogue with them that really helps to understand not only what their pain points are, but how your offering solves those pain points. And sometimes the customer doesn't realize that that is their pain point and that's part of the education and part of the way in which you engage that dialogue. That doesn't change a lot, just generation to generation. I think the modality of how we have that dialogue, the methods in which we choose to convey that change, but that basic discussion is kind of what makes us human. What's your great, great, great insight. I want to ask you on the value proposition question again. The question I often get and it's hard to answer is, am I competing on value or am I competing on commodity? And depending on where you are in the stack, there could be different things. Like for example, land is getting faster, smaller, cheaper as an example on Amazon. That's driving down to low cost, high value, but it shifts up the stack. You start to see in companies this changing the criteria for how to evaluate. So an enterprise might be struggling and I often hear enterprises say, I kind of don't know how to pick who I need. I buy tools, I don't buy many platforms. So they're constantly trying to look for that answer key, if you will. What's your thoughts on the changing requirements of an enterprise and how to do vendor selection? Yeah, so obviously I don't have, I don't think there's a single magic bullet. I always like just philosophically to think about, I think it's always easier and frankly more exciting as a buyer to want to buy stuff that's going to help me make more revenue and build and grow as opposed to do things that save me money. And just in a binary way, I kind of like to think which side of the fence you're sitting on as a product offering. And the best ways that you can articulate that, what opportunities are you unlocking for your customer? The problems that you're solving, what kind of growth and what impact is that going to lead to? Even if you're one or two removed from that. And again, that's not a new concept. And I think that companies that have that squarely in mind when they think about their go-to-market strategy, when they think about the dialogue they're having, when they think about the problems that they're solving, find a much faster path. And I think that also kind of speaks to why we're seeing some of the explosion on the line of business, SaaS apps that are out there. Again, that thinning of the systems of record, really thinking about what are the scenarios and work streams that we can have happen that are going to help with that revenue growth and unlocking those opportunities. What's the common startup challenge that you see when they're trying to do business development? Usually they build the product first, product led value, you hear that a lot. Then they go, okay, we're ready to sell, hire a sales guy. What does that, I mean, that seems to be kind of shifting away because the go-to markets are changing. Have you seen any, what are some of the challenges that startups have? What are some of the things that you're seeing? Well, and I think the point that you're making about the changes are really almost a result of the kind of trends that we're talking about. The sales organization itself is becoming, these work streams are becoming instrumented, data is being collected, insights are being derived off of those things. So you see companies like Clary or Highspot or two examples or Tesorio that are in our portfolio that are kind of looking at that action and making the art of sales and marketing far more sophisticated overall, which then leads to the different growth hacking and the different insights that are driven. I think that, I think the common mistakes that I see across the board, especially with earlier stage startups, look, you gotta find product market fit. I think that's always, you start with a thesis or a belief and a passion that you're building something that you think the market needs. And it's a lot of dialogue you have to have to make sure that you do find that. I think once you find that another common problem that I see is leading with an explanation of technology. And again, not focusing on the buyer or the sale, sorry, the buyer about solving a problem and focusing on that problem as opposed to focusing on how cool your technology is. Those are basic and really, really simple. And then I think setting a set of expectations, especially as it comes to business development and partnering with companies like AWS, the resourcing that you need to adequately meet the demand that can be turned on. And then I'm sure you've heard about from Databricks from an organization like AWS. You have to be pragmatic. Yeah, I mean, Databricks gone from zero software sales a few years ago to over a billion now. It looks like Snowflake, which came out of nowhere. They had a great product, but built on Amazon, they became the data cloud on top of Amazon and now they're growing just whole new business models and new business development techniques Katie, thank you for sharing your insight here on theCUBE's closing keynote. Thanks for coming on. Appreciate it, thank you. Okay, Katie Drucker, head of business development at Madrona Venture Group, premier VC in the Seattle area and beyond. They're doing a lot of cloud action and of course they know AWS very well and investing in the ecosystem. So great, great stuff there. Next up is Peter Wagner, partner at wing.vc. Love this URL. First of all, because of the VC domain extension. Now Peter is a long time venture capitalist. I've been following his career. He goes back to the old networking days back when the internet was being connected during the OSI days when the TCPIP Open Systems interconnect was really happening and creates so much wealth. Peter, great to see you on theCUBE here and congratulations with success at wing VC. Yeah, thanks John, it was great to be here. I really appreciate you having me. Reason why I wanted to have you come on. First of all, you had a great track record in investing over many decades. You've seen many waves of innovation, startups. You've seen all the stories. You've seen the movie a few times, as I say. But now more than ever, it's really kind of enterprise wise. It's probably the hottest I've ever seen it. You got a confluence of many things on the stack. You were also an early seed investor in Snowflake well regarded as a huge success. So you've got your eye on some of these awesome deals. You've got a great partner. Over there's got networking experience as well. What is the big aha moment here for the industry because it's not your classic enterprise startups anymore. They have multiple things going on and some of the winners are not even known. They come out of nowhere and they connect to enterprise and get the lucrative positions and can create a moat and value out of nowhere. It's not the old way of going to the airport and go in RFP and going through the stringent requirements and then you're in. You get to win the lucrative contract and you're in. Not anymore. This seems to have changed. What's your take on this? Because people are trying to crack the code here sometimes you don't have to be well-known. Yeah. Well, and thank goodness the game has changed because that old game was brand exploiting anyways. So I for one don't miss it. You know, there's a modernization movement in the enterprise. I mean the modern enterprise is built on data powered by AI and structured as an agile workplace. I mean, these are all three of those things are really transformational. There's big investments being made by enterprises. A lot of receptivity and openness to how technology can enable all those agendas and that translates good prospects for startups. So I think as far as my career goes, I've never seen sort of a more positive or fertile ground for startups in terms of penetrating enterprise. It doesn't mean it's easy to do but you have a receptive audience on the other side and that hasn't necessarily always been the case. Yeah. I gotta ask you, I know that you're a big sailor and your family and Frank Slutman's also has a boat and sailing metaphors are always good to have because you got to have a race that's being run and they have tactics and this game that we're in now, if you see the successes, there's investment theses and then there's also actually bets, okay? And I want to get your thoughts on this because a lot of enterprises are trying to figure out how to evaluate startups and startups also can make the wrong bet. They could sail to the wrong continent and be in the wrong spot, right? So how do you pick the winners and how should enterprises understand how to pick winners too? Yeah, well, you know, one of the real sort of important things right now that enterprise-facing startups are learning how to do is they're learning how to leverage product-wide growth dynamics in selling to the enterprise, right? And so product-wide growth has certainly always been important consumer-facing companies and then there's a few enterprise-facing companies, early ones that kind of cracked the code, as you said. And some of these examples are so old-fashioned and think about it, you know? Like the ones that people will want to talk about, they want to talk about it last year and they want to talk about Twilio and these are of course iconic companies that showed the way for others. But even before them, you know, folks like SolarWinds, you know, they'd go to market models, clearly, product-led bottoms up, you know, back when we didn't even have those words to talk about it. And then some of the examples are so enormous, you don't even think about them, like the right front of your face, like AWS, you know? Pretty good PLG company, right? But it's targeted builders, it's targeted developers and flipped over the way you think about enterprise infrastructure, you know, as a result. And so now, you know, every company, even if they're harnessing a relatively conventional sales and market emotion, they need to think about product-led growth as a way to kick that emotional. And so it's not really an either or. You know, the right thing to OPLG that means there's no sales people in the company? Not true. I mean, you know, but OPLG is a way to set the table so that you can very efficiently use your sales and market resources only on the most attractive targets and ones that really can then accelerate each thing. You know, I love the product, I love the product-led growth. I ought to ask you, because in the networking days, I remember the term inimitability was used being nested in a solution, in addition to Cisco router and firewalls, one you can unplug and replace with another vendor. Cisco, you'd have to go through, you know, no, I mean, switching costs were huge, right? I mean, so when you get into the cloud, how do you see the competitiveness? Because we were riffing on this with Ali from Databricks, where the lock-in might be value, right? The more value you provide is the lock-in. Is there nestedness? Is there inimitability as a competitive advantage for some of these startups? How do you look at that? Because, you know, startups, they're using open source. They want to have a land position in an enterprise, but how do they create that sustainable competitive advantage going forward? Because again, this is what you do. You bet on ones that you can see that could establish a mode or whatever we want to call, but a competitive advantage, an ongoing, a nested position. Sometimes it has to do with data, John. You know, and so he mentioned Snowflake a couple of times here, you know, a big part of Snowflake's strategy is, you know, what they now call the data cloud. You know, one of the reasons you go there is not to just be able to process data, to actually get access to it in exchange with the partners. And then, you know, that, of course, is a great reason for the customers to come to the Snowflake platform. And so, you know, the more data we get to more customers, we get to more data. You know, the whole thing starts spinning in the right direction. You know, that's a really big example, but all of these startups that are using ML in a fundamental way, applying it in a novel way, you know, the data modes are really important. So getting to the right data sources and training on it and then putting it to work so that you can see that there's this process better and doing this, you know, sort of earlier on that scale. I mean, that's a big part of success. Another company that I work with is a good example of that called GOM, which works in the sales technology space, really crushing it in terms of building better sales organizations, both at the performance level in terms of deal intelligence level and just overall revenue attainment using ML and using building novel data sources like, you know, the previously lost data or phone calls or Zoom calls, as I know. So I think the data advantages are really, are really big and smart startups are thinking through it early. It's interesting. When they're planning, by the way, it's not too long, they're embedding that in their PLG strategy. So their land motion is designed not just to, you know, to be sort of an interesting way to gain usage, but it's also a way to gain access to data that then enables, you know, the expand in a compelling way. I mean, that's a huge call out point there. I was going to ask another question, but I think that is the key. I see it's a new go to market in a way. I mean, product led with that kind of approach gets you a beach head. You get a little position, you get some data. That is a cloud scale model, right? It means variable, whatever you want to call it, the variable value proposition, value proof or whatever, getting that data and reiterating it. So it brings up the whole kind of, you know, philosophical question of, okay, product led growth, I love that with date, product led growth with date, I get that. Remember the old platform versus a tool? That's the way buyers used to think. How has that changed? Because now, almost, this conversation kind of throws out the whole platform thing, but isn't, like, building some platforms? I mean, everything has to look like a tool. You can build a platform, go to get it. You know, you can reveal that later, but, you know, you're looking for adoption, you know, so if it's a down stack product, you're looking for adoption by, like, developers or DevOps people or SREs, and they're trying to solve a problem, you know, and they want rapid, you know, gratification. So, you know, they don't want to have an architectural lobotomy, you know, placed in front of them. And if it's an up stack product, an application, you know, then it's sort of a user, a lot of business user or whatever that is adopting the application. Again, they're trying to solve a very specific problem instant and you get obvious time to value. And now, now you have a ticket to the dance and you build on that and maybe the platform strategy can gradually take shape. But, you know, you know, who's not in this conversation is the CIO, right? You know, it's like, I'm always the last to know. You know, so- That's a CISO though, they're on the firing lines. I mean, CISOs are like buying tools like it's nobody's business. They need everything they can, they'll buy anything. Or you go in with sand, they'll buy it. You make it sound so easy, you know. We do a lot of security, if only, if only. Yeah, I'm a little bit over the top. But I mean, CISOs are under a lot of pressure. I mean, I would talk to the CISO at Capital One and he was saying that, you know, he's on Amazon, now he's going to another cloud, not as a hedge, but he doesn't want a focused development team. So he's making human resource decisions as well. Again, back to what IT used to be back in the old days where you made a vendor decision you built around it. So again, clouds play that way. I see that happening, but the question is, is that I think you nailed this whole idea of crosshairs on the target persona because you got to know who you are and then go to the market. So if you know you're a problem solving and a lower on the stack, do it and get a beachhead. That's a strategy. You could do that. You can't try to be the platform and then solve a problem at the same time. So you got to be careful. Is that what you were kind of getting at? Well, I think you just understand what you're trying to achieve in that land option. And how those dynamics work. And you just can't drag it out and make it too difficult. Another company I work with is a very strategic cloud data platform. It's a company called Clientone Systems. We are not trying to foist that vision though on adopters today. We're solving some phony problems for them in the short term, rapid time to value sort of operational ease and scale. And then yeah, once they've had success with Clientone there is an opportunity to be increasing the platform and then allow obstacles for those types of customers. But we're not talking about that. Well, Peter, I appreciate you taking the time of coming out of a board meeting. I know that you're super busy and I really appreciate you making time for us. I know you got an impressive partner in Gargharve who's a former Sequoia, but Redback Networks part of that company over the years. You guys are doing extremely well. You've been a unique investment thesis. I'd like you to get the plug in for the firm. I think you guys have a good approach. I like what you guys are doing. You're humble. You don't brag a lot, but you make a lot of great investments. So could you take them in to explain what your investment thesis is? And then how that relates to how an enterprise is making their investment thesis. Yeah, yeah, for sure. Well, that concept that I described earlier, the modern enterprise movement has a workplace built on data powered by AI. I mean, that's what we're trying to work with founders to enable. So we're investing in companies that build the products and services that enable that modern enterprise to exist. And we do it from very early stages, but with a long-term outlook. So we'll be leading seed in series A rounds of investment, but staying deeply involved both operationally and financially throughout the whole life cycle of the company. And then we've done that a bunch of times. Our goal was always the big independent public company and they don't always make it, but enough of them do to have it all be worthwhile. You know, an interesting special case of this, and by the way, I think it intersects with some of the startup showcase here, is in the Life Sciences. And I know you were highlighting a lot of healthcare and Life Sciences deals. And that's a vertical where you just have tremendous impact of data, both new data availability and new ways to put it to use. I know several of my partners, Rick, focused on that, they call it BioX data. It's a transformation all on its own. That's awesome. And I think the reason why we're focusing these verticals is if you have a cloud horizontal scale view and vertically specialized with machine learning, every vertical is impacted by data. And it's so interesting that I think, for a startup, it's probably the best time to be a cloud startup right now. I really am bullish on it. So I appreciate you taking the time, Peter, to come in. Again, from your board meeting popping out. Thanks for coming back. Go back in and approve those stock options for all the employees. Thanks for coming on. Appreciate it. All right, thank you, John. It's a pleasure. Peter Wagner, Premier VC, very humble. Wing.VC is a great firm. I really respect them. They do a lot of great investments. They invest in the snowflake. And we have Dave Vellante back who knows a lot about snowflakes been covered like a blanket in Sarpichowall. Cloud influencer, friend of the cube. Cloud commentator and cloud experience. Built clouds, runs clouds now, invests. So I'll be Dave, thanks for coming back on. You heard Peter Wagner at Wing VC. These guys have their roots in networking, which networking back in the day was a, Dave, you remember the internet Cisco days? Remember Cisco, Wellfleet routers? I think Peter invested in Arrowpoint. Remember Arrowpoint? That was about in the 495 built, where you are. Was it that Lynch's company? That was Chris Lynch's company. Wasn't he a sales guy? Yeah, that was his first big hit, I think. All right, well guys, let's wrap this up. We've got a great program here. Sarbhi, thank you for coming on. No worries, glad to be here, guys. Yeah, first of all, I really appreciate the Twitter activity lately on the commentary, the observability piece on Jeremy Burton's launch. Dave was phenomenal. But Peter was talking about this dynamic and I think kind of ties this cracking the code theme together, which is there's a product-led strategy that feels like a platform, but it's also a tool. In other words, it's not musically exclusive. The old methods thrown out the window. Land in an account, know what problem you're solving if you're below the stack. Nail it, get data, and go from there. If you're a process improvement up the stack, you're going to have to have more of a platform, longer term sale, more business oriented. Different motions, different mechanics. What do you think about that? What's your reaction? Yeah, I think, I was thinking about this when I was listening to some of the startups that pitching, if you will, or talking about what they bring to the table in this cloud scale or this cloud era, if you will. There are tools, there are applications, and then there are big sort of monolithic platforms, if you will, and then they are part of the ecosystem. So I think the companies need to know where they play. A startup cannot be platform from the get-go, I believe. Many aspire to be, but they have to start with tooling, I believe, and especially in B2B, sort of a side of things, and then go into the applications. One way is to go into the application area, if you will. Like very precise use cases for certain verticals and stuff like that, and the other part is going into the platform, which is like horizontal play, if you will, in technology, right? So I think they have to understand their sort of age, like how old they are, how new they are, how small they are, because when their size matter, when you are procuring, as a big business, procuring your technology, vendor size matters, and their economic viability matters, and their proximity to other vendors matter as well. So I think we'll jump into that and other discussions later, but I think that's key, as you said. I would agree with that. I would phrase it, in my mind, somewhat differently, Sargeet, which is you have product-led growth, and that's kind of your early phase, and you get product market fit, you get product-led growth, and then you expand, and there are many, many examples of this, and that's when you, as part of your TAM expansion strategy, you're going to get into the platform discussion. There's so many examples of that. You take a look at Allie Goatsy today with what's happening at Databricks Snowflake, is another good example that started with product-led growth, and then now they're like, okay, we got to expand the TAM octaves, another example that just required OTH0. That's about building out the platform versus more of a point product, and there's just many, many examples of that, but you cannot, to your point, very hard to start with a platform. I mean, ARM kind of did it, but that was like a one in a million chance. Yeah, I mean, it's just harder, especially if it's new and it's not operationalized yet, so one of the things, Dave, that we've observed, the cloud is some of the best-known successes were nobody's, not known at all. I mean, Databricks we've been covering from the beginning, because we were close to that movement when they came out of Berkeley, but they still were misunderstood, and they just started generating revenue in on a tear. So again, only a few years ago, zero software revenue, now they're approaching a billion dollars. So it's not easy to make these vendor selections anymore. So, and if you're new and you don't have someone to operate it, or there's no department, or the department's changing, that's another problem. These are all kind of like enterprise-y problems. What's your thoughts on that, Dave? Well, I think there's a big discussion right now you've been talking all day about, how should enterprise think about startups? And think about most of these startups, they're software companies, and software is a very capital efficient business. At the same time, these companies are raising hundreds of millions, sometimes over a billion dollars before they go to IPO. Why is that? A lot of it's going to promotion. I mean, I look at it as, and there's a big discussion going on about, well, maybe sales can be more efficient and more direct and so forth. I really think it comes down to the golden rule. Two things really matter in the early days of the startup, it's sales and engineering. You probably say engineering and sales, you start with engineering and then you got to figure out your go-to-market. Everything else is peripheral to those two. If you don't get those two things right, you struggle. And I think that's what some of these successful startups are proving. Sarbhi, what's your take on that point? Can you repeat the point again? Sorry, I lost my mic. As CloudScale comes in, this whole idea of competing, the roles are changing, right? So I mean, look at IoT, look at the Edge, for instance. You got all kinds of new use cases that no one actually knows is a problem to solve. It's just pure opportunity, right? So there's no one's operational. I could have a product, but if no one can buy it yet, it's a problem. Yeah, I think the solutions have to be point solutions and the startups need to focus on the practitioners. Number one, not the big buyers, not the IT, if you will, but the line of business. Even within that sphere, like just focus on the practitioners who are going to use that technology. I thought that, I think it was a Fiddler, or no, it was Coralogs, Coralogix. I think that story was great today earlier and how they kind of struggled in the beginning. They weren't trying to do a big bang approach as a startup, but then they almost kind of stumbled and then they found their motto, if you will. They went to down the market. Actually, that's a very classic theory of disruption, like what we study from Harvard School of Business, that you go down the market, go to the non-consumers, because if you're trying to compete head to head with big guys, right? Because most of the big guys have a lot of feature and functionality, especially at the platform level. And if you're trying to innovate in that sort of space, you have to go to the practitioners and solve their core problems and then expand, sort of land and expand kind of thing. So I think you have to focus on practitioners a lot more than the traditional, what are called buyers. You know, Sarge, we had a great thread last night in Twitter on observability that you started. And there's a couple of examples there. I mean, you know, Chaos Search is, you know, relatively small company right now, they just raised some dough when they're part of this startup showcase. And they could have said, hey, we're going to go after Splunk, but they chose not to. They said, okay, let's kind of disrupt the Elk stack and simplify that. Another example is a company observed, you know, you mentioned, you know, Jeremy Burton's company, John. They're focused really on SaaS companies. They're not going after initially these complicated enterprise, you know, deals because they got to get it right or else they'll get churn and churn is that silent killer of software companies. Well, the interesting other company that was on this showcase was Tetra Science. I don't know if you noticed that one on the life science track. And again, Peter Wagner pointed out the life science. You know, that's an under-recognized in the press vertical that's exploding. Certainly during the pandemic you saw it. Tetra Science is an R&D cloud, Dave. R&D data cloud. So pharmaceuticals, they need to do their research. So the pandemic has brought to life this now notion of tapping into data resources. Not just data lakes, but like real deal. Yeah, you and Natalie and I were talking about that this morning and that's, you know, one of the opportunities is for R&D. And you have all these different data sources. And yeah, it's not just about the data lake. It's about the ecosystem that you're building around them. And I see, it's really interesting to sort of juxtapose what Databricks is doing and what Snowflake is doing. They've got sort of different strategies, but they play a part there. You can see how ecosystems can build. It's not one company is going to solve all these problems. It's going to really have to be, you know, connections across these various companies. And that's what the cloud enables and ecosystems have all this data flowing that can really drive, you know, new insights. And I was, I want to call your attention to a tweet, sorry, you wrote about Splunk's earnings and, you know, the data, their data company as well. We've got Teresa Carlson there now from EWS as the president working with Doug. That should change the game a little bit more. But there was a thread underneath there. Andy Thurai says, to replies to Dave, you are subject you. If you're on AWS, they are a fine solution period. The world doesn't just revolve around AWS, smiley face. Well, a lot of it does actually. So nice, nice point, Andy. But he brings up this thing and I'll put it up too. Hybrid now is a new operating system for what now Edge does. So we got Mobile World Congress happening this month in person. This whole telco 5G brings up a whole nother piece of the cloud puzzle. Okay, Jeff Barr pointed out in his keynote, Dave. Guys, I want to get your reaction. The Edge now is, I'm calling it the Super Edge because it's not just Edge as we know it before. It's, you're going to have these pops, these points of presence that are going to have wavelength, Azure Spector, whatever they have. I think that's the solution for Azure. So you're going to have all this new cloud power for low latency applications, self-driving delivery, VR, AR, gaming, telemetry data from Tesla. I mean, you name it, it's happening. This is huge. What's your thoughts? Sorry, we'll start with you. Yeah, I think Edge is bound to happen. And for many reasons, the volume of data is increasing. Our use cases are also sort of expanding, if you will, with the democratization of computer. And also specialization of computer, actually Dave wrote extensively about how Intel and other chip players are sort of gearing up for that future, if you will. The end, most of the inference in the AI world will happen in the field close to the workloads, if you will. That can be mobility, the self-driving cars, it can be AR, VR, it can be healthcare, it can be gaming, you name it. Those are the few use cases which are in the forefront, and a lot more use cases will come into the play, I believe. I think Edge, I have said this many times, Edge I think will be dominated by the hyperscalers, mainly because they are building their metro data centers now and with a very low latency in the metro areas where the population is. We're still serving the people still, not the machines yet, or the empty areas where there's no population. So wherever the population is, all these big players are putting their data centers there and I think they will dominate the Edge. And I know some Edge lovers, they don't like... Edge huggers. Edge huggers, yeah. They don't like the hyperscalers story, but I think that's the way we are going. Why will we go backwards? I think, well, you're right, first of all, I agree with the hyperscalers, Donna, you look at the top three clouds right now, they're all in the Edge, hard core, it's a huge competitive battleground, Dave. And I think the missing piece that's going to be uncovered at Mobile World Congress, maybe they'll miss it this year, but it's the developer traction. Whoever wins the developer market or wins the loyalty winning over the market or having adoption, the applications will drive the Edge. And I would say, I would add the fourth cloud is Alibaba, Alibaba is actually bigger than Google and they are crushing it as well. But I would say this, first of all, it's popular to say, oh, you know, not everything's going to move into the cloud, John, Dave, Sargeet. But the fact is that AWS, the trend center, I mean, they are crushing it in terms of features and you look at what they're doing in the plumbing with Annapurna, I mean, everybody's following suit. So you can't just ignore that, number one. Second thing is, what is the Edge? Well, the Edge is, where's the logical place to process the data? That's what the Edge is. And I think, to your point, both Sargeet and John, the Edge is going to be won by developers. It's going to be won by programmability and it's going to be low cost and really super efficient. And most of the data is going to stay at the Edge. And so who is in the best position to actually create that? Is it going to be somebody who's taking an x86 box and throwing over the fence and giving a fancy name with Edge in it and saying, here's our Edge box? No, that's not what's going to win the Edge. And so I think there's so much huge, it's wide open and where's the innovation coming from? I agree with you, it's the hyperscale. I think the developers, as John said, developers are the king makers. They build the solutions. And in that context, I always talk about the skills, gravity, you know, like a lot of people are educated in certain technologies and they will keep using those technologies. The proximity to that technology is huge and they don't want to learn something new. So as humans, we just tend to, you know, go what we know, how to use it, you know? So from that front, I usually talk about the consumption economics of the cloud and Edge. It has to focus on the practitioners and in this case, practitioners are developers because you're just cooking up those solutions right now. We're not serving that huge sort of quantity right now, but- Well, let's unpack that, sorry, because I think you're right on the money on that. The consumption of the tech and also the consumption of the application, the end use, end-to-end use, all right? So if, and I think the reason why hyperscales will continue to dominate besides the fact that they have all the resource and they're going to bring that to the edge is that the developers are going to be driving the applications at the edge. So if you're low latency Edge, that's going to open up new applications, not just the obvious ones I just mentioned, gaming, VR, AR, metaverse, and or, you know, other things that are obvious. There's going to be non-obvious things that are going to be huge that are going to come out from the developers. But the cloud native aspect of the hyperscalers, to me, is where the scales are tipping. Let me explain. IT was built to build a supply resource to the businesses who were writing applications, business applications, mostly driven by IBM and the mainframe, the old days, Dave, and then IT became IT. Telcos have been OT, closed, this is our thing. That's it. Now they have to open up. And the cloud native technologies is the fastest way to value. And I think that path, Sarpeet, is going to be defined by this new developer and this new super edge concept. So I think it's going to be wide open. I don't know what to say. I can't guess, but it's going to be created. Let me ask you a question. Let me ask you a question. You said years ago, data is the new development kit. There's low code and no code to Sarpeet's point. Change the equation. In other words, putting data in the hands of those OT professionals, those practitioners who have the context, there's low code and no code enable, you know, more of those protocols. I know it's a bromide, but the citizen developer. And what impact does that have and who's in the best position? Well, I think anything that reduces friction to getting stuff out there that can be automated will increase the value. And then the question is, that's not even a debate. That's just fact. That's going to be like massive rise. Then the issue comes down to who has the best asset, the software asset that's eating the world or the tower and the physical infrastructure. So if the physical infrastructure, AKA the telcos can't generate value fast enough, in my opinion, the private equity will come in and take it over and then refactor that business model to take advantage of the over the top software model. That to me is the big, you know, stare down competition between the telco world and this new cloud native, whichever one yields in value is going to blink first, if you say, and I think the cloud native wins this one, hands down, because the assets are valuable, but only if they enable the new model. If the old model tries to hang on to the old hug, the old model, as the edge hugger, as Sarvith says, they're just going to slowly milk that cow dry. So it's like, it's over. So to me, they have to move. And I think this Mobile World Congress, Dave, we will see, we will be looking for that. Yeah, I think that in the Mobile World Congress context, I think telcos should partner with hyperscalers very closely like everybody else has, they have to sort of cave in. I usually say that, I'm like, the people came in, okay, IBM tried to, you know, fight and they came in. Other, you know, second-tier vendors try to fight the big cloud vendors like top three or four, and then they came in, you know, okay, we will serve our stuff through your cloud. And that's where all the buyers are sort of congregating to, they're going there to buy stuff. Along with the skills, gravity, the feature proximity, like another sort of term I'm trying to coin, matters a lot when you're doing one thing and you want to do another thing, when you're doing all these transactional stuff and regular stuff, and now you want to data size, where do you go? You go next to it, you know, wherever you have been, you know, your skills are in that same sort of bucket, and then also, you don't have to write a new contract with a new vendor, you just go there. So in order to serve, this is a lesson for startups as well. You need to prepare yourself for being in the cloud marketplaces. You cannot go alone independently, you know, like- Cloud marketplaces is going to have replaced procurement for sure, we know that. I mean, and this brings up the point, Dave, we talked about years ago, remember on theCUBE, we said there's going to be tier two clouds, I use that word in quotes because nothing, what does it even mean, tier two? And we were talking about like Amazon versus Microsoft and Google, we said at the time, and Alibaba, because they're in China, we'll put that aside for a second, but the big three, they're going to win it all and they're all going to be successful to the relative terms, but whoever can enable that second tier, and it ended up happening, Snowflake is that example, as is Databricks, as is others, so Google and Microsoft, as fast as they can replicate the success of AWS by enabling someone to build their business on their cloud in a way that allows the customer to refactor their business, we'll win. We'll win most of the lion's share, in my opinion, so I think that applies to the Edge as well, so whoever can come in and say, whichever cloud says, I'm going to enable the next Snowflake, the next enterprise solution, I think takes it. Well, and I think that it comes back to, oh, every conversation comes back to the data, and if you think about the prevailing way in which we've treated data, with the exceptions of the two data-driven companies and air quotes, is we've shoved all the data into some kind of single repository and tried to come up with a single version of the truth, and it's adjudicated by a centralized team with hyper-specialized roles, and then guess what? The line of business, there's no context for the business in that data architecture, data corpus, if you will, and then the time it takes to go from idea for a data product or a data service to monetization is way too long, and that's changing, and the winners are going to be the ones who are able to exploit this notion of leaving data where it is, point about data gravity, you're corning a new term, I like that, it was, I think you said skills gravity, but in then enabling the business lines to have access to their own data teams, that's exactly what Allie goes to you was saying this morning, and really having the ability to create their own data products without having to go bow down to an ivory tower, that is an emerging model. All right, well guys, I really appreciate the wrap up here, Davis, I'd love to get your final thoughts, I'll just start by saying that one of the highlights for me was the luminary guests besides the 15 grade companies, the luminary guests we had from our community on or keynotes today, but Allie Goshi kind of said don't listen to what everyone's saying in the press, that was his kind of his position, he says you got to figure out where the puck's going, he didn't say that, but that's what I'm saying, I'm paraphrasing what he said, and I love how he brought up Sky, SkyNet Dave, SkyCloud, I called it SkyNet, that's an interesting philosophy, and then he also brought up that machine learning auto ML has got to be table snakes, so I think to me that's the highlight walk away, and the second one is this idea that the enterprises have to have a new way to procure, and not just the consumption, but vendor selection, I think it's going to be very interesting, as value can be proved with data, so maybe the procurement process becomes, here's a beach head, here's a little bit of data, let me see what you can do. I would say, again I said this this morning, that the Big Four, last year they spent $100 billion more on CapEx, to me that's a gift, but so many companies, especially the folks trying to hang on to their legacy business are saying, well, not everything's going to move to the cloud, whatever, the narrative should change to hey, thank you for that gift, we're now going to build value on top of the cloud. Alligoti laid that out, how Databricks is doing it, it's clearly what Snowflake's doing with the data cloud, it basically a layer that abstracts all that underlying complexity and add value on top, eventually going out to the edge, that's a value added model that's enabled by the hyperscalers, and that to me is, if I have to evaluate where I'm going to place my bets as a CIO or IT practitioner, I'm going to look at who are the ones that are actually embracing that investment that's been made and adding value on top in a way that can drive my data-driven, my digital business, whatever buzzword you want to throw on. Yeah, I think we're talking about the startups in today's sessions, I think for startups my advice is to be as close as you can be to hyperscalers and anybody who avoids them, they will cave in at the end of the day because that's where the whole sort of spend gravity is, that's where the innovation gravity is, that everybody's gravitating towards that, and there's, I would say that quite a few times in the last couple of years that the rate of innovation happening in the non-cloud companies, whenever I talk about non-cloud means the non-public cloud companies, I think it's sort of like diminishing, if you will, as compared in cloud, there's a lot of innovation, the cloud companies are not paying by power people anymore, they have all sophisticated platforms, and leverage those, and also leverage the marketplaces, leverage their buyers, and the key will be how you highlight yourself in that cloud marketplace, if you will, it's like a necrostic store where your product is placed and you have to sort of market around it, you have to have a good storytelling team in place as well after you do the product market fit, I think that's a key, I think, yeah, just being close to the cloud providers, that's the way to go. Okay, real quick, each of you talk about what it takes to crack the code for the enterprise and the modern era now, Dave, start with you. What's it take? Well, you got to have, I mean, as you're old, you got to be solving a problem that is 10x better, one-tenth the cost of anybody else if you're a small company, you know, that rule, number one, number two is, you obviously got to get product market fit, you got to then figure out, and I think, and again, in your early phases, you have to be almost process builders, figure out, you know, your KPIs should all be built around retention, what, how do I define customer success, how do I keep customers, and how do I make them loyal, so that I know that my cost of acquisition is going to be, you know, at least one-third or lower than my lifetime value or that customer, so you got to nail that, and then once you nail that, you got to codify that process in the next phase, which really, Tub G, gets into your platform discussion, and that's really where you can start to standardize and scale and figure out your go-to-market and the relationship between marketing spend and sales productivity, and then when you get that right, then you got to move on to figure out your moat, moat might just be a brand, it might be, you know, some sort of secret sauce, but more often than not though, it's going to be the relationship that you build, and I think you got to think about those phases, and in today's world, you got to move really fast. So I'll be real quick, what's the secret to crack the code? I think the secret to crack the code is partnership and alliances, as a small company selling to the bigger enterprises, the vendor size will be one of the big objections, even if they don't say it, it's on the back of their mind, I don't know what if these guys disappear tomorrow, what will we do if we pick this technology? Another thing is like, if you're building on the left side, which is the developer side, not on the right side, which is the operations or production side, if you will, you have to understand the sales cycles are longer on the right side, and left side is easier to get to, but that's why we see a lot more startups on the left side, if you have DevOps kind of space, if you will, because it's easier to sell to practitioners and market to them and then show the value quickly. And also understand that on the left side, the developers are very know-how hungry, on the right side, people are very cost-conscious. So understanding the traits of these different personas, if you will, buyers will, I think, set you apart and as Dave said, you have to solve a problem. Focus on practitioners first, because you're small, you have to solve political problems very well and then you can expand. Well guys, I really appreciate the time, Dave. We're going to do more of these. Sorry, we're going to do more of these. We're going to add more community to it. We're going to add our community rooms next time. We're going to do these quarterly and try to do them as more frequently. We learned a lot and we still got a lot more to learn. There's a lot more contribution out in the community that we're going to tap into. Certainly the Cube Club, as we call it, Dave. We're going to build this actively around cloud. This is another 20 years. The Edge brings us more life with cloud. It's really exciting. And again, enterprise is no longer the enterprise. It's just the world now. So great companies here. The next Databricks, the next IPO, the next big thing is in this list, Dave. Hey John, we'll see you in Barcelona. Looking forward to that. Sir, I know in the second half, we're going to run into each other. So it's like the same group. Take some time. Yeah, travel has started. Great talking to you guys today and have fun in Barcelona and keep us. Thanks for coming on. I want to thank Natalie Erlich, who's in Rome right now. She's probably well past her bedtime, but she kicked it off and MCing and hosting with Dave and I for this 8 of us startup showcase. This is batch two, episode two, Dave. What do we call this? It's like a release. It's the next 15 startups are coming. So we'll figure it out. Thanks for watching everyone. Thanks.