 Hello, welcome to theCUBE Pod episode 21. We broke through 20, this time it's in the same studio. We were here for SuperCloud Dave. We're rocking and rolling here in the Palo Alto studio for theCUBE Pod episode 21. What a week, we had SuperCloud three event here, stage performance live, great event. I mean, the CEO list is the who's who in the industry. Validating SuperCloud, a hella busy news week, meta news with Elama two and Microsoft deal. And now with Amazon web services, Microsoft launched a $30 a month service for 365 co-pilot to add to Microsoft 365, which is their cloud-based everything now for Microsoft. Broadcom gets the nod that the UK hurdle looks like it will be cleared on their VMware acquisition, which we believe means that they're gonna go immediately into buying and taking over VMware in the US, maybe even before VMware Explorer and just say, hey US, we'll pay the fines or whatever, we'll see you around the corner, catch us if you can. And of course, AWS has the one-palm scanning news that I thought was fascinating. I want to talk about that in my expansion section because I love that product, I used it in Seattle. And just great CEO list here from theCUBE. Vittorio Villaringo, the first industry executive to spot SuperCloud with us, saw it, funded it, sponsored us. Huge shout out to Vittorio, and we had Taui Shu in the studio, Jay Perrick, former Facebook, now heading up LaceWork, G2 Patel, amazing Tom Gillis from Cisco. Doug Merritt comes out of retirement from being the former CEO of Splunk. On the week of .conf Dave, of which theCUBE was not there, they kind of went low-end this year, and they did last year too, but Doug Merritt's now back at the helm of a growing company, the next Splunk. George Kurtz, the CEO of CrowdStrike. And I'm telling you right now, we're going to see some Microsoft conversations come out of that. Jay Chaudhury, CEO of ZScale, the hottest company in SaaS, always at the top of the leaderboard on the SaaS metrics, founder, entrepreneur story for the ages, Matthew Prince, Cloudflare, kicking ass, taking names, just so much of what has happened. And there's so much other news too, Dave. It's like the AI time. Tom Rose, Tom Rose. Apples getting into the chat GPT, Apple getting into the chat GPT game with Apple GPT and AI framework. We expected Apple to get back into that game. And then they're in it. Cloud continues, the cloud wars are at a complete win change. Microsoft putting on a clinic over AWS, in my opinion, on the optics, Amazon continuing to be the best cloud in my opinion. Microsoft's catching up, but I'm telling you right now, Microsoft putting on a marketing clinic. I feel like it's Microsoft's AI world and we just live in it. I mean, it's like unbelievable. There's a Sinatra of AI. They're making moves, but never count out AWS. No, I mean, it's so early, but John, that move that they made with the $30 per user per month for co-pilot on 365, I mean, it's genius. I mean, you do the math. There's like 400 million office 365 customers, commercial customers, users, seats. And so that's, and I know that initially the co-pilot's geared toward 365, not just Office 365, but the TAM is like $140 billion. Microsoft added $100 billion in market cap based on that announcement. Yeah, it's just a smart move. And it's like way, way more expensive than the street thought it was going to be. Like anywhere, like on average, I think $50. We kind of scratch the surface on our super cloud conversation, but you're hitting on something that is where it's right in the middle of the room right now, the elephant in the room. The big incumbents can absolutely kick ass with the AI wave. I expect Microsoft, I expect AWS. Again, AWS, if they don't screw it up, AWS will expect it to grow that business too. It's just going to be the incumbents who are in market who are leaning into AI will reap the benefits as well as the next wave of startups coming in. I'm telling you right now, it could be, it could be some of the biggest whales could get bigger and bigger and fatter and some might not catch up. So it's going to be very interesting to see who's going to be on the right side of this. Will IBM and Red Hat make a play there? Wait, before you change the subject, like network effects, it's still going to matter in this new world and brand and distribution and all those things matter. So you think about Apple. Really, iPhones really not growing, but they're kicking ass because they have this huge install base that with zero cost, they can just deliver new services that suckers like us will pay for all day long and it's pure profit. Now Microsoft's doing the same thing with co-pilot and AI. It's just, I mean, it's massive, these companies. So that's why I think the incumbents are going to do really, really well unless they just eff it up. Yeah, I totally agree. I think the network effect is huge, but the economics favor those incumbents who are in the game and investing and leaning into the flywheel for the network effect. And again, the example of Microsoft adding 30 bucks sounds small, but in the scheme of it, it's huge at the same time. Some other news, there's a passing of the famed hacker, Kevin Mitnick died, he's violent cancer, 59 years old, young. He was the famous hacker who as a young kid was always kind of tinkering around and the poster child for getting slapped around, but he was the ethical hacker in my opinion. I didn't really see any problem, but that's sad news is a lot of tributes going out to him. Other stuff, you're going to appreciate this. Gartner put out numbers on the IaaS infrastructure as a service. Worldwide cloud spending, Dave toppled 100 billion for the first time in 2022. Hold on, that's a legit headline. They put this out like this week. It's July of 2023. First of all, you could debate the number. Well, they're doing a great job calling balls and strikes on the industry, aren't they, Dave? What happened a year and a half ago? Who won the World Series last year? I don't understand why it took so long. I mean, first of all, I think the number is actually larger than that. If you're going to collude IaaS, I think it's probably closer to 150 billion, but I understand Microsoft has some questions about that number. It's stupid that they're reporting. That's like us talking about who won the World Series last year, all right? I mean, it's so dumb. Well, the funny thing is, I might have said this to you, when I was at IDC in the early days, Gartner was kicking our ass. So Gartner came in and it was like two headlights coming at us. We had this user business and it was just not comparable to what Gartner had. They had Wall Street guys that got guys from IBM back in the day was a big company and they were just kicking a crap out of us, right? But there was other company called DataQuest. You might remember that. They own Silicon Valley, but they would do just this. I'll make you laugh with my punchline. So I went to management. I was just a young buck and I said, listen, we're never going to beat Gartner trying to be smarter than they are with better user advice. Why don't we take out DataQuest? Well, how are we going to do that? They're like really strong too. Why don't we just do quarterly numbers? They're so slow. They're fat, dumb and happy. Well, you take them out with doing quarterly numbers and we did and then IDC now is still number one. Guess who bought DataQuest? Gartner. Gartner. It's the same DNA. Six months later, they're publishing reports. It's stupid. It's like the dumbest thing I've ever seen. That's 2023 and that's last year. And the number seems off anyway. Like, isn't that Microsoft's number? No, I know there's some debate about Microsoft's number, but I think they were sandbagging for the FTC. I think Microsoft's number is higher than that redacted document. I'd actually, first of all, I'd like to see the redacted document. You can't get ahold of it anymore. I didn't see it. And I think it's, also, Microsoft claims it has a $20 billion security business. 20 billion. How much of that is in their Azure number? Any? Zero? 22? You think Microsoft's hiding the ball on that? I do. I think they purposefully low-balled their cloud number to make it look like they weren't as competitive to the FTC. It's whatever they say it is. They can count in intelligent cloud. They can count in Azure. They can count whatever they want. Yeah, and they're definitely hiding the ball. I mean, they're making moves. And in this environment with the FTC, Lena Kahn, our favorite person, Microsoft's got to be playing in the shadows. I mean, the stuff that they're making decisions on, this is like... Microsoft's like the illusionist. I mean, Lena Kahn's like, you're going 58 miles an hour on the freeway. We're going to pull you over. Meanwhile, Microsoft's doing 200 miles an hour speed, and they just can't catch up to him. I mean, look, the FTC, they're idiots too. I mean, I'm really not happy about all that. Anyway, I think the tech landscape is going to change. I think the policy side is going to change. Even now, Activision's back on the news too. There's more kind of mudraking going on there. I think the extent of the deal, but to give some perspective on the FTC thing, and I don't want to rant yet on it, I'll save that. But Lena Kahn's going after M&A, and we talked last week she whiffed again. She's 0 for 4 in the courts. She's still going after M&A, but Microsoft put Netscape, Lotus, WordPerfect, Novel, Harvard Presentation Graphics, all these companies, you probably never heard of them, but in the PC days, these were the best application PC software companies. You remember that, John. Microsoft put them out of business through bundling, by taking bundling, for instance, Internet Explorer, the browser with the operating system, and it killed Netscape. You remember that well. They took, they created the suite of spreadsheets and graphics and word processing with Word, and put WordPerfect out of business. They put Lotus out of business. Lotus123, the spreadsheet. They killed Harvard Presentation Graphics. Really simple, easy to use, product with PowerPoint by bundling all that together. The point is bundling actually is illegal if you have a monopoly. And it seems like Lena Khan, maybe she's looking at it, but she's not talking about it. And it's interesting that Microsoft is charging $30 per user per month. They could have given it away and completely run the table, but I think somebody, first of all, they thought we can make a lot of money doing this. Second of all, hey, it's not bundling, but they are doing some bundling with Bing Search on Office 365. So there is some bundling going on, but it doesn't appear that the FTC cares because they're so myopically, okay, I will rant, focused on M&A, which really bothers me because they're killing exits. It's trying to keep innovation alive, but she's killing one viable path or trying to kill one viable path for exits for startups and VC funded companies, which is exits through M&A. There's no IPO market. So that constricts innovation, doesn't it? It just doesn't make any sense. It makes no sense. Meanwhile, the rich are getting richer. Microsoft's Satya Nutella has reportedly raked in more than a billion dollars in compensation at the company, a personal fortune, right in time with ChatGPT. The company's shares have risen 1000% over that period, including 50% since the start of this year. Since he took over, obviously they've been doing great, but, you know, billion dollars. What's, you know, what's Balmer worth? Satya has added more value to Microsoft. I mean, you know, Balmer was there early days. Yeah, he's almost a billion. Balmer, he just did everything he could to not succeed. And Facebook open sourcing meta, a little bit caveats there. If you read the terms of conditions, you can't, if you exceed 700 million users, you got to get a license. So they're going to put a cap on this thing. 700 million? That's the cap. That's a lot of users, dude. Kill me with that problem. Hey, silk and angle. We're doing great. Oh my God, Dave, we've got 700 million users now. Oh no. We got to pay. We've already won. I mean, who's going to get 700 million users? So that's really an interesting kind of email or a threshold there. Yeah, but explain the Microsoft angle there, the deal that they did with Microsoft and Meta. I mean, it's not just Microsoft. Meta, Llama too, models are out. They're bigger, better, bad ass models and they're restricted within open source. But you can get that on SageMaker or AWS. It's not just Microsoft. You know what I'm saying? But my point is Microsoft is not just constricting you to open AI. They're saying, come on in. And that's what the cloud does. Yeah, I mean. It's optionality. I asked Matt Garmin directly. He said, I would want open AI to run on AWS. He wants all models to run on the cloud. He said, we'd welcome open AI and open arms. No problem. That's how AWS wins. AWS will sell Redshift or it'll sell Snowflake. It gets paid no matter what. Yeah. When the bloom is off the AI rose, we're going to really tell which cloud did their work. So you have two cultures. Microsoft's the big, you know, scripted culture. Everything about Microsoft's about optics. Look how great we're doing. And they are today, as of today, out marketing and out PRing. No question. AWS, by like, it's not even close. It's like a shutout. It's a 10-run rule in baseball and little league. They're getting killed. 10-run rule. Game's over. Game one of the double header. Amazon's good at the long game. So what you're seeing is two cultures, right? AWS is a culture of building, okay, they'll take a couple of hits, you know, but they're not going to get knocked out in the first round here. They're going to absolutely, I expect them, if they can pull it off. Again, this is a leadership question and also doesn't really have the goods to do it. You know, that a lot of churn over there at AWS with personnel-wise, but Amazon is a culture of digging in and getting the job done. Microsoft's the game of optics and sometimes smoke and mirrors, some would say. So, you know, you got to look at this and figure out where's the meat on the bone? Who's going to have the goods from building stuff and deploying it, servicing it, and Amazon's still the better cloud. But again, I got to give you some data. This could be the year that Amazon gets toppled down by Microsoft if this continues. I got to give you some data. All right, go. October 2022, this is ETR's random survey, okay? I mean, it's of, you know, they got like 5,000 IT decision makers and they go and ask them, who are you using for AI? And are you spending more or less? In October of 2022, AWS number one in terms of net score, spending more or less, 54% of the customers said we're spending more. Microsoft was second at 43%, Google 41%, OpenAI didn't even show up, didn't hit the survey. Now, they also collect like how many responses? Microsoft was top, 178, AWS is next to the 150 and then Google 106, OpenAI zero. Didn't even hit the survey in October of 2022. One month later, they announced ChatGPT. In the July survey, just closed, OpenAI net score 87%, okay? The highest of all, Microsoft 68%, AWS 60%, Google 51%. So all four of them went up, but OpenAI and Microsoft right to the top. Here's this mentions and Microsoft number one, 390 up from 178, OpenAI 314 up from zero. Yeah, of course. AWS 262 up from 150 and Google 219 up from 106. So the order change, they all rose, but now the order of horses, they're coming down the back stretch, or maybe not even the first turn, OpenAI, Microsoft, AWS, Google. Again, this is again, a real phenomenon. It's not just marketing and PR, there's real perception. This could influence buyer behavior. This could infect the developer community in terms of who's a leader. Like fashion, if I'm Amazon, if I'm Andy Jassy, I'm saying to myself, I have to get involved because this is the point where if this takes hold, like fashion does, you could be swept away by that sentiment and that could be bad for business. And now, for the first time I'm hearing people saying, yeah, I'm spinning up some Azure servers, get some of that AI, you never would have heard that a year and a half ago. Amazon had such a dominance in cloud. Look at how the industry is responding though. Google puts up the code red, does all the barred announcements, has a couple of stumbles. Amazon announces bedrock and all that stuff. Just look at all the shows we've been to. Dell announces Project Helix with NVIDIA. HPE announces its supercomputer cloud with GenAI inside of GreenLake. Snowflake does, containerizes NVIDIA's entire stack Databricks goes out and buys open ML. Every show we go to, it's like, shit, we got to have our story here. The QBA AI, we have our own. Well, the QBA AI, of course, everybody, if you're not doing AI, you're going to be toast. AI or die. AI or die, Sherry Chen. I mean, it's like the web, we debated this on the QBA many times ago. Like when the web came out, you had to have a website. If you were a modern company, you didn't have a website. Yeah, but it was easy to have a website. We had Dave Butler build our website. We did. No offense to Dave Butler, but he's not a coder, but he built our website to the HTML. Back then, you had to code your own HTML. Yeah, that's what he did. He kind of pointed them and he pulled out the documentation. It was IT centric website. We should have built some apps, low code, no code. Coming in around the corner. But I mean, AI, you have to have AI. I think people don't. It's interesting, because AI is so grounded in data, we've had this debate. Remember the first Hadoop world, data is a new oil, industrial refineries are coming. Yeah, Tim O'Reilly. Those are the models, you know. Habi Mehta. Habi Shek Mehta. Haven't had him on in a while. And so, the first thing to see how people deal with their data now, that data now is the new IP, what people do with it. It's going to be very interesting to see. I'm curious what the data says. What do you see of the data? The data says that AI is taking spending priorities away from other areas, okay? So AI, when after the tech bubble and the Fed started raising interest rates, the trajectory of AI just kept going down. It was quite high during the pandemic, but it kept going down, down, down, down, down. And then, as I just said, after ChatGPT, it started going up, up, up, up, up. And it's definitely impacting other sectors. Even cyber, cloud is being optimized. RPA has come down a little bit, even though it's now ticking up again, automations do a little better. But it came down. I think AI is stealing not only mind share, but also wallet share and resources away from these other projects. People are delaying some of their other IT projects, focusing resources on AI. That's what the data says. And as the cloud players look at that, like do you see cloud spend increasing? We know we talked about repatriation and right sizing, cost optimizations of big, FinOps is a big topic right now. Is that affecting the market? My read on the data says that you're going to see solid cloud numbers. It's not going to rocket back up. But I think this optimization trend and the deceleration that we saw is going to moderate and maybe even turn positive. I think repatriation, I think Charles Fizzi, his blog on this was beautiful. The repatriation index reversed a three-year trend and then he had the smooth as glass lake surfs up. He's the best snarky blogger out there in cloud. I got to say, I do like him. And the fact that he was such a good adversary for us on the super cloud, it was great having debate that he still got it wrong. I mean, he still didn't get it. But I will say this, I will say this, there's debate about, I think it's an equilibrium. I think there's way more workloads in the cloud than the narrative suggests. Everybody's saying 90%, 85% of workloads are still on-prem. I don't believe that at all. I think it's 45, 50% are in the cloud. And so notwithstanding telco, telco is different. And so I don't think there's as much upside momentum in the traditional IT space as the cloud players would like you to believe. I think there's still plenty of room to grow, but that's going to come from other use cases, verticalization, edge. If you look at the Nvidia workloads, they're 99%, all the eggs are in one basket with Nvidia. But now that you're starting to see, like Amazon have GPU in the cloud, centralized cloud computing for workloads are expensive. You've always made a case, we've talked about Bitcoin and we're all both pro-decentralized Bitcoin. There's our case to be made for decentralized processing. Yeah, there is. Does that favor the cloud guys? Favors, AI. But does it favor the cloud? Depends how they approach it. So I mean, I think if, here we go, custom system designs, outposts might be the answer kind of that direction of having that kind of thing. Anyway, that's- Are you bullish on outposts? Not outposts the way it was, but I think the idea of them having an edge component is interesting. I mean, I think this is the edge. I think most of the work is going to be done. AI inferencing at the edge, it's going to be done on ARM-based processors. It's going to be Tesla in the car, self-driving vehicles, real-time AI inferencing, low power, low cost, super high performance. That's where I think in aggregate, most of the action is going to be. And a lot of guys are looking at that going, eh, how do I make money at that? Somebody's going to figure it out. Just like, eh, PCs, they're toys. Mobile, it's really not that big a market Intel. We'll pass. Then all of a sudden it changes the economics. Boom, overnight, oops. So big security flaw in Microsoft's authentication software happened. They have a cloud security problem. That happened this week. Super cloud was this week. That's my other rant. So Microsoft announces all these secure edge products and all the cyber stocks get crushed. Zscaler, CrowdStrike, Octa, they all got slammed because Microsoft made a security announcement. I'm like, wait a minute. Microsoft's going to be competing with CrowdStrike on Endpoint and Octa in identity forever. And those companies do just fine. So Zscaler, that was a buying opportunity. In my mind, Palo Alto Network, same thing. They tried to not announce it, but it was not, Microsoft didn't announce it. They were called out. They tried to bury the story, but it was revealed that a China-based actor managed to steal a key that created multi-factor authentication codes and broke into Microsoft 365, belonging to like a ton of organizations and the government had confirmed that they had undetected access to accounts by several departments, including commerce and state for a month. So my point is. The Chinese were in for a month. My point is, Microsoft is going to do great inside of Microsoft, but this is a whole huge other opportunity out there for companies like these disruptors, like the ones we had on SuperCloud, Cloudflare, Cloudflare got crossed, Zscaler, Palo Alto, and of course they all came back the next day. Roaring back. Zero trust, token, and validation. They just got killed. I mean, Microsoft's security just got called out. That's why the stocks were down. No, the stocks were down because Microsoft made a security announcement that was competitive. And then you see shit like this. And it's like that. People realize, oh, there's a lot of money to remain in security. We better buy those stocks back and they all bounce back the next day. Let's get into a SuperCloud. I want to talk about some of SuperCloud three highlights. This week we had two days. We had Doug Merrick kick off the keynote coming out of retirement. Matthew Prince of Cloudflare, George Kurtz, CEO of CrowdStrike. Go to supercloud.world and you'll see the agenda. Jay Chaudhry, the CEO of Zscaler and the CESA Deep and Desai. Kit Colbert, CTO of VMware. John Rose, CTO of Dell Technology, who I thought nailed the future of Dell. And G2 Patel, EVP of security at Cisco. I think Cisco is a security company. I think they could be a real player. And their numbers don't reflect, in my opinion, their footprint opportunity. They already have an incumbent advantage. And they're one of those incumbents that actually could get the network effect. Literally speaking. Their problem is the momentum. They have a presence for two reasons. One is they have a $4 billion security business. The other is they got networking and people think networking, there's all kinds of security inside the network. What they don't have is the momentum. And that's what G2 has a plan to fix. I have no doubt. And he and Tom Gillis are all over that. And he loved our studio G2. If you're watching, listening, WebEx Studio, we're going to follow up. Andrew and I are going to come over there. You know, do you know that Cisco has? No more Zoom, we're going to retire Zoom. Go WebEx. Depends what G2 brings to the table, you know, for resource and sponsorship. Now, but they have a backend. Remember, they had the telepresence. Oh yeah. They have a huge infrastructure. They actually should be powering, in my opinion, the VIP digital TV operations like theCUBE as a business model. I think, you know, G2 gets it. And what I want to do is get theCUBE on that backbone because what's going to happen, like you saw in blogging these VIP services, you know, WordPress runs one of the most prolific VIP blogging service in FoxVox publication, just announced they're moving off their proprietary CMS business. Oh, that's a shock. They're shutting it down and moving to WordPress. That didn't work for them. And moving to WordPress. That was the dumbest thing I've ever seen. Okay, we're going to have one customer ourselves. Now they sold with other people. Yeah, okay. But what kind of volume did they have compared to WordPress? It's just not their business. You know what I mean? Yeah. They sell a hundred. Well, but they're not running their own WordPress. They hired the VIP WordPress, which is that service that was run out of the WordPress, kind of like their cloud. So very interesting to see that come back. I don't know why I got this. No, no, there's got to be a VIP service for video. Yeah. So I said to G2, why don't we take the cube and make that the backbone? So I think we might see WebEx links. People misunderstand Cisco. I misunderstood it for a while. I was like, G2 Patel, he's running security. And he's running collaboration, which includes WebEx. I didn't make sense. And you helped me squint through that. And you're like, Dave, they're both platforms. They're both platform plays. He's a platform guy. He's a platform guy. Yeah, he is. It's not about the products. I mean, it is, but it's about adding value on top of a platform and getting that flywheel effect. Actually, David Strom, who was on of our new writers, he's heading up for our security. Check out SiliconANGLE.com. David Strom's writing some great stories. He had an interesting take on this online collaboration this week. He wrote a story, State of Collaboration. It's the title on SiliconANGLE.com. State of Collaboration. It's the people, not the tech who make it all work. If you look at the people and tech angle, there is interplay, but it's the people, not the tech. Both security and collaboration, it's people-centric. The hardest nut to crack right now is the phishing, is social engineering. You're going to start to see personalization around people, not just for targets, but defencing. So the defense side of it on security is going to have to protect individuals, because that's where the action is. Oh, you run the service? Ooh, I want to hack you. Zero trust, I get your laptop. We heard that story in SuperCloud. And of course, security is people, and collaboration is people-centric as well. So the- Well, in SuperCloud 3, we asked David Strom, Rob Hove, Paul Gillan. We're doing a lot of the journalism beforehand. And us at SuperCloud 3 asked a lot of the guests, ultimately, who benefits? And I got two polls right now. I got one on Twitter and one on LinkedIn. Who ultimately benefits more from AI? Attackers or defenders? And it was interesting. So John Rose basically said, if it's you against a bunch of machines at scale, you're going to lose. You made the point, which I agree with, it's machines plus humans that are ultimately the right answer. So that was, so he said, attackers are winning today. Jay Chaudry said basically the same thing, attackers are winning today. And he said it's because of inertia. Now granted, it's self-serving for Zscaler to say that because he didn't want people to move, but it's true. What he says, people are like, eh, we'll just do the same old, same old. And then George Kurtz, I thought had great line. I sort of, I'm paraphrasing here, but he basically said, you know how there's patch Tuesday every month from Microsoft? And then 24 hours later, you get patch Wednesday. Now with AI, patch Tuesday is hack Tuesday. The same day hack. Now you're not to wait 24 hours. So he's saying it's the attackers are have the advantage now because they can compress patch Tuesday to hack Wednesday into hack Tuesday. So like there's no doubt. There's no doubt that the, although the politically correct answer is the saying, we're all equal level. The attackers have the advantage. There's no doubt. I think there's no doubt. There's no doubt in my mind. But it's interesting the survey that I got going. People want to believe that they have a chance. And the fact of the matter is based upon everyone we talked to and my squinting through the tea leaves on this one, no doubt attackers have the advantage. We're playing defense and that's the game we're playing. And there's no offense at all. But it is interesting. I got over a hundred votes right now. And it's basically most, I say it's, it's weighted toward equally both. And then attackers over defenders, three to two to one, three to one. So it ends up, most people think equally to both. I don't know. I tend to agree with you. I think attackers are going to have the advantage. I think they always have the advantage because they only have to win once, right? Well, I think, I mean, one of the things that's going to come up is more complexity. We always said that the one thing about the cloud is you can create all kinds of barbed wire if you will create some complexity around the hackers. And I think the game is going to come down to, it's like football. It's like you're playing against Tom Brady, you got to score 40 points to be competitive. Like, okay, remember when there was a, when it's heyday, that was the argument. It's true. Not going to win on defense. He's going to score a lot. So you better score a lot. They would, they won all those games. Yeah, you can't be beaten with field goals. Yeah. You got to. Exactly. And so like, I think now it's, the defense is just going to, they got to hold the line and go blow to blow and try to hold the, keep the score down. That's the best they can do. And I think that's the best they can do now until the game gets changed. Okay. And I think the game needs to change until, until that does, that's the state of the word it's at. And I don't see any change. No, there's no AI short-term pop in favor of the defense. Here's my take on that. I agree. And here's why. First of all, you got cross-cloud complexity. That's what super cloud is, you know, set out to solve, but it's early days. So you got all this cross-cloud complexity. You have chaos in terms of security, the number of security players out there. You have tons of AI washing, which is confuses customers. And then you have large language models and generative AI, which is, as Jeff Jonas points out, it's generative means it's going to give you a different answer every time. And you have the diversity of LLMs that you can choose from and the open source community, which has responded with all kinds of vector databases and graph databases and other open source options and all these LLMs and the complexity of the ecosystem has just increased by an order of magnitude or two orders of magnitude. And that's chaos. And chaos is cash for criminals. Chaos equals cash, opposed to you wrote years ago, but remember, Andy grows favorite line, let chaos rain, rain into chaos. So that's what's happening. I think that's happening now. And I think what's interesting is that you got digital transformation. Just think about this for a second, Dave. We've been talking about digital transformation for the past decade in the past, say five years, it's been business transformation. Yeah, yeah, rah, rah, rah. You combine the fact that we just came out of a pandemic, hybrid work is happening. People are now just getting back on the opposite. And then boom, huge recession. And then all of a sudden out of nowhere pops the AI wave, okay, which creates a tailwind for some, but not for most. So most of the markets got a headwind. And so now you have this holy shit moment where it's like, I got to reign in all the chaos, crowd optimization, get my business model, all I got sprawl everywhere. I got open S3 buckets. I got too many EC2 servers. I got all this, I got cloud everywhere. I got to reign that in. And then you got the AI thing happening, which is then feeding open source and the cost there, got GPUs and all that stuff goes with it. The psychology of the enterprise IT department. I mean, this is a step function of IQ needed to execute. And so are there enough managed services? Who's going to execute on the skills gap? So I believe that there's a huge potential sinkhole coming for enterprise, where if IT doesn't get their shit together talent-wise, you got all this work to be refactored on, re-right sizing, and you got a position for the next wave of AI. They might not have the ground to stand on, it might just collapse. So there's, I mean, I know it's, I'm not normally gloom and doom, but like really, who's going to execute all this? I think, you know what it's like, you know the Cape, you know where I am in the Cape and Chatham, when the Mayflower came in, it came at the Chatham, and they tried to go up the Hudson. And when they tried to go up the Hudson, the Riptides were too crazy. So they turned around and ended up in Provincetown and then ended up in Plymouth. But so, well, the reason I tell you this, and you know the Cape, I don't know what it's like out in California, but when you go out to the sandbars, like out by Chatham, you look out and there's these tides and these waves and they're going every different direction. There's no pattern. You really can't discern it and it changes all the time. You're like, what is that? What's going, the birds are flying, they're getting the baitfish and it's chaos. And I feel like that's what it's like right now. You know? And you know, out there, it doesn't really calm down. I don't know if it will calm down in our market. Well, I mean, there is, you know, out here, they have rogue waves. I'd like, you know, that's why it's a while, big waves. It's like, whoops, that's not what this is. The Pacific Ocean is really bad too. But I think I hear your point, but that's the point. There's so much change. If you look at cloud native, the promise of cloud native, virtual machines to now microservices, you know, and containers, that's happening. So that's a skill shift. So it's going to be interesting to see that's why the super clouds resonating with this new category of worker. And as Vittorio said, super clouds, the next 10 plus year career for the VMware practitioners. It's a natural progression for them. And cloud or IT person. Because with AI, the human capital is going to be available. So if people have data in their brains, okay? So AI can help that too. So if you're a human, your angle with AI is to be augmented with more intelligence of the data you have on your head. That's intellectually scaling with other data. So, you know, I just think that IT is going to be a completely different animal in the next five years. I think we're going to see a complete change over of what used to be IT. And to now you're already seeing it with security teams, with shift left, seeing the open source with the AI Lama 2. I mean, it's like throwing red meat into a cage of hungry animals. Like, AI is just open source. It's just, it's revitalized. It's a Cambridge explosion of action and new apps are going to come. It's just, it's so obvious to me that the dynamic of open source, cloud next gen and this changing landscape of the operations is a perfect storm. And there's going to be losers. Yeah, there's going to be a lot of winners, but there's going to be some boats that will crash on the sandbar and we'll sink. Your point about, you know, when you're talking about Vittorio, he said, you know, he's right. The history of IT is the abstraction layer after abstraction layer. That's what virtualization was, you know, Kubernetes cloud was an abstraction layer. Now, you know, AI is automation. Super cloud is an abstraction layer. Point being, you know, you used to have to, you know, plug all the stuff together, configure it manually, you know, physical storage, logical unit numbers and managing all that stuff. And that got simpler. And from a career path, you had to follow that abstraction layer. And then of course, you know, people complain about complexity of Kubernetes, right? You know, that, that tweet meme, you know, just deploy Kubernetes, you know? And so the more things simplify, the more, the more we can do. And then that brings in more complexity. Well, a lot going on. Super cloud is a huge success. What was your big takeaway from super cloud three? I mean, our super cloud three is our third episode. Super cloud four is coming up in October. It's going to be either the week of or the week after DockerCon, which could be in LA. Cube, super cloud one was great. She bucked two grades. It's going three with massive momentum in just the execs. The list goes on and on. Two days, great founders. Merritt Bears now at Lacework. She gave a keynote. She was in the office of the CISO. Big news issue left to AWS. She's now at Lacework. We had Lacework's CEO, Jay Perrick and we had a bitpole from Rubrik. David Flynn got a new startup. Fusion IO disrupted flash industry, okay? And now you're going to see the NAS market potentially get disrupted by David Flynn's hammer space. And you got Crowdstrike, CTO came on. That guy was awesome. Elia, Zetsev was amazing, okay? He was solid talking about the culture of security and just how AI is just going to unleash and that. And again, my big takeaway was that I was a little bit naive on the security market in one area and this is what I learned. Like sports, the pro game in security is a speed game that's not like college ball. So, you know, in sports, they say, oh yeah, you know, you were starring in high school, varsity star in college, D1. And then they say, when you go to the pro game, it's a whole, no, everyone's a spigger and faster, right? Well, that's security. You can't just walk in and fake it until you make it in security. The game right now is a game of the defense is under siege by the attackers, okay? And the technology is changing and the game is fast. And you could be a pretender instantly washed out of that business. So, you know, that skills gap is not so much, do you know the tech? It's can you keep up with the pace of play? Yeah. I mean, this is a whole nother level of things. And then the other thing, so in Super God 3, we also had a, we had a number of CISOs on and chief security officers. Minyana Kote from NetApp. We had Jaya Baloo from Rapid7. We had Alvina Antar, who's the CISO. Maybe she's CSO at Okta. We had Phil Venables from Google Cloud. Mario Duarte, who I called the de facto CISO at Snowflake is actually vice president of security and some others. And so they were all talking about a couple of things. The challenges of actually achieving zero trust. David Strom wrote an article about this, like talk a lot about it. But he's marketing it, but it's really hard to do. And Mario Duarte basically said, oh, here's how you break that zero trust, right? I mean, you know, you get the enclave down at the semiconductor level and the operating system, but you kind of go outside of that and you're in trouble. You start putting your data outside the corporation. That's a problem. And the other thing- Well, he gave an example of the SAML token being compromised. And then the other thing is, how do you build security conscious cultures? It sounds like motherhood and apple pie, but it's really critical. Security went from just the IT sec ops team had to worry about it, it's their problem. And then kind of filtered up to the boardroom because they realized, well, this is becoming a real strategic issue and then it's on the agenda every quarter. What are we doing in cyber? And now it's filtering out, then it filtered out with the cloud. It became the first line of the fence and then developers, cloud became code. So developers became more responsible for security and we all know that bad user behavior beats good security every time. So now it's filtering out throughout the organization. So building strong security cultures is really, really important. And so we talked to CISOs about, well, how do you do that? You know, what's your technique for doing that? You can't talk in terms of security mumbo jumbo because the eyes glaze over. So it's like, don't click on links. What do you mean? Well, if you're going to click on a link, you better be 100% certain that that's a safe link. Oh, yeah, I guess. Yeah, we all still click on links. Just don't click on links, okay? You gotta click on links, but it makes you think, right? That's the kind of language. So again, as much of a bromide as that may sound like, it's a really, really important factor because of the vulnerabilities really lie with the user. So there's a lot of conversation about that. And then I think the other big thing is the diversity of choice that people have with AI generally and large language models specifically. I think the industry is still trying to figure out, I know the industry is still trying to figure out what exactly are we doing here? Everybody says, oh, we've had AI for a long, long time. And then all of a sudden, everybody's talking about AI. So it's like, okay, new game. Well, I think the ML conversation is what everyone's talking about. Machine learning has been around for, we've been doing machine learning at theCUBE for since 2012 when we started tickering with it. The generative of AI is what the hype is. That's the hype. And that's the large language models which scales up a lot of that ML work. So the people that are kind of caught flat-footed by the quote trend, trend is your friend or the fashion wave of tech, are just retooling and taking some of the ML, they're going to throw out something out. They throw a product. That's, I would call level one, a little bit of cloudwashing, but they're showing some chops. They got an app like what we did with thecubeai.com. You know, we obviously moved pretty quickly and showing some AI, oh yeah, we got it. Clips, automatic clips on the videos, we got it. So we're showing our chops, but it's fully not AI. It's going to be more. I think that was a very key piece. The other thing that came out on the security thing that kind of you mentioned, I want to kind of just add to your list is the security AI additional piece to the businesses, it kind of shed some lights into the conversation that we had at RSA, which is in security is platform better than tools. And that's tools versus platform question. And the next thing is to say best of breed or more robust enabling platform, where you plug in best of breed. So how often networks was went through the platform approach, others are going the same way. So our platform is the new tool like experience where the platforms have a best of breed feature. So that's a new dynamic. So I walked away going, okay, you can't have a platform that doesn't have best of breed everything. Well, you got to have best of breed everything. This is the conundrum I think, and something that is really, you bring it up a really good point. So you take Palo Alto and they're the biggest out there, notwithstanding Microsoft. And their whole play is consolidation, right? I'm going to consolidate because there's too many tools. And it's a very powerful narrative. Then you got Jay Chaudry, who was here yesterday or Tuesday, and he was saying, you got to be best of breed. So can you be best of breed and have a vast portfolio? Zia's Carrivala would say, someone like Palo Alto doesn't have to be. Jay Chaudry would say, oh yeah, you do. And I asked Jay Chaudry, are you saying that the consolidation play narrative is not a correct one? He said, no, no, I'm not saying that. He's saying within large pockets of opportunity, the consolidation makes sense. But we Zscaler, cloud security, we're not, we're going to network, we're going to, right, you're going after Palo Alto firewalls, but we're going to partner with Okta for identity, because they're really, they're best of breed at identity, right? Crowdstrike at end point. So he's basically saying that there are these large swaths of opportunity that can be consolidated, but you've got to, to your point, you've got to be best of breed within that large swath. Again, and he's saying, if you just buy companies and bolt them in, you're going to have a hard time. Palo Alto is executing on that strategy of buying companies. And we heard Howie Shoe yesterday. Here's Howie Shoe. He's the vice president of engineering at Palo Alto and for AI. NML. NML. And he's basically, I think their vision is to turn Palo Alto into an AI company. Due to Palo Alto, what Satya did, in a smaller scale, obviously, at Microsoft. So it's really interesting opportunities, but like I said, all the other stuff still matters. Network effects, product market fit, go-to-market fit, branding, your data, that's the, you know, the data is going to be an important mode, obviously, but all those other things too. The interesting story is hitting, and this is going to come back down, one thing we flagged in the SuperCloud 3 event was the impact on startups. My SC scalers, CEO J, the same thing. Where's the white space? And he says, build on my platform. So that's kind of, okay, that's not white space. That's cool. No, but he's a good pitch man. It's called an ecosystem. I'm going to get him proud for that. He and Jay Shree. I would have to hit him up for some sponsors from there. No, but he was awesome. But the funding market right now is not strong in certain areas. Even security, never really that low compared to other sectors, but lower where it was before. And now the story is coming out on the web and watching a story go around about how VCs are not profitable that through that wave of new VCs is crashing. So you have a lot of LPs who've been spraying cash around. And then the quote here is that 95% of VCs aren't profitable. Okay, so. In what timeframe though? Over 12 years. And they have all this kind of the VC kind of language. The point is. Really? That a lot of these VCs. Really? Just saying, yeah. Only 5% return more. The VC return on investment, okay. Only 5% return more than 3x their capital. That, that way. Well, interesting. Well, 10% return 2 to 3x, 35% return 1 to 2x and 50% return less than 1x. The capital from the limited partners. Okay, 50%. Well, you know my. Less than 1%. You know my rap on this. What percent of series A, B and C companies fail to return, you know, funded companies. Series A, B, C funded companies fail to return 1x to their investors. You would think series A is higher than B is higher than C, but they're all 70%. 70% across the board, series A, B and C fail to return 1x. So the industry has failed from that standpoint, right? Cause, you know, you always see, hear these VCs talk about, we're founder friendly. We're entrepreneur friendly. Well, if the industry were entrepreneur friendly, 70%, you know, wouldn't fail to return 1x or more, you know, more than 1x to their investors. So, and you know, the game, you know, better, much better than I do. It's like, spray it and hit a big one. And who cares about the 90% that they fail? It's 80s, 20 rule, if not higher. You know, you just need one big one. But John, what's, I mean, if you're an investor, you're a big time investor, what's wrong with that formula? Look, it sucks for an entrepreneur. If we were investors over the past 13 years, we would have done well. I mean, we would have at least. That's shocked. Two or three unicorns over a billion dollars. That's like, we saw companies, saw Databricks when they was just like three people. Remember that? How could we not be in that round? Well, how could you lose money in the stock market between 2010 and, you know, 2019? I mean, a blind squirrel will find a nut in that market. I mean, come on. So, again, but the impact is much more about the collateral damage of, you know how they say, it's like, you know, the failure's result is becomes fertilizer for the next wave, right? So, the next crop. So, wonderful rationalization, right? Your manure of the next crop. Great idea. Let's go beat on that. I mean, I still love the social cam app that one of the Justin Khan and this guy made, Tom Siebel made from the Justin TV guys. I use it all the time. You know, it was too early. It was a great app. No, it wasn't Justin Khan. It was Siebel, the other founder of Justin TV. He ran YComedy for a while. It was the best video sharing app ever. I've ever used. We started on this. I love that app. Social cam should have been back. So much. Cube started on Justin TV. Cube started on Justin TV and Twitch. I love those guys. That's awesome. And then I follow Emmett Schmier. He's on Twitter, Gray entrepreneur. He just stepped down from Twitch, Kevin Lin. He's been gone for a while and they all moved on, you know? And what a great success story. And they're now the senior guys in the industry. We're like the old poobos, like, get off my lawn. That's the way I feel like I'm threads these days, you know? Still going on threads? I've been out not as much. The first week, I was on it all the time and I just lost interest, you know? So some fun, fun snark on there. And there was some clever threads, but just I just lost the engagement for some reason. I just wasn't seeing anything good. And I like reposting on threads because there was some good stuff on there, but haven't been a big user. And that's kind of my rant is that, you know, I've always said threads is like a nightclub. It's a hot until it's like, then it winds down, everyone's been there and they saw it, okay, we saw it, move on. You know, just another Twitter. The user experience isn't blowing me away. Love the UI. I thought they did an exceptional job of the onboarding. The team did an exceptional job on the UI. It's just, it's Twitter. Twitter's more flow on my side. I got more flow. I am getting more rebound followers from my old days, from like 15 years ago when we were in the web 2.0. A lot of folks are on threads that were kind of got fatigued from Twitter. So I saw a bunch of old colleagues and friends on threads. It was awesome. Hey, good to catch up. Hooman Radford was on there. He's the early social guy. Bunch of old folks on there from the podcasting movement. It was awesome, fun to see. Yeah, but all good. Yeah, I mean, I go on, I come in and out, lurk a little bit. I see a ton of Chris Selland threads. I reconnected with him on threads. Never saw him on Twitter. Not that he wasn't on there. I just didn't see him because there's so much noise, right? I think it became a much more intimate graph. And again, maybe because I wasn't really an Instagram user. I was like, I kept Instagram different than my Twitter. Twitter, I'd follow everywhere. Well, yeah, it's connected. A lot of IO going on on my Twitter. Instagram, I kind of kept very intimate. It mines all personal, right? I mean, yeah, I really use Instagram for business. I am now, because we got the Kube signal handle doing well with it. Well, yeah, it's Kube signal, but I watch it. Maybe I... Well, we're going to get the Instagram handle going for the Kube and SiliconANGLE and TikTok. So look for those new content. The Kube signal on Instagram is awesome. The team does a great job, like with clips and highlights and it's really interactive and the music's good. I really enjoy it. Well, Dave, what's your rant for the week? Let's get into the rant section of the podcast. Well, my rant for the week is that Lena Kahn should look elsewhere. Instead of focusing on M&A, she should look at things like bundling. I think Microsoft, like you said, they're pulling them over for going 58 and a 55 and they're driving 120 down the back roads. And it seems like she doesn't even see it, but I think there is a method to her madness. And I think it's even more insidious. I don't think they're idiots. I think she's just dogmatic and she's trying to change the law. And the way she's trying to change the law is to get lawmakers' attention. Like, Amina's just keep suing these people and losing in court so you can see the laws don't support the agenda. And she's trying to rally the troops for that agenda, which is not the one that I agree with. I have a pro-business agenda. And to try to get the laws changed. I think that's what she's doing. And I think she's really going outside of her jurisdiction, outside of that swim lane. If she really cared about competitiveness, she wouldn't be attacking tech the way she is because tech is highly competitive. It lowers prices. It helps consumers. It gives tremendous value. It's got great customer service. But monopolies in tech do exist and she should be looking at things like bundling more carefully. You know, not really a new rant but a little bit more stayed than my normal Lena Khan sucks rant. My rant. Rant. Lena Khan, again, she's your best friend. She's definitely in my headspace. I gotta say. I can't. Someone DM Dave and give him a hug. What's your rant? My rant is, I'm gonna flip my rant around and make it more of a kudo. Amazon's Palm scanning is fricking awesome. I was in Seattle. I experienced it myself. They just announced that they've been doing it in some Starbucks. You basically put your hand over there. It scans your hand and it basically deducts it from your prime account. It's like when you go to clear and you do the retina, you scan your eyes. You're buying a coffee. You put your hand over like the thing like that and you get your scan. This is not the grab-and-go. This is something different. This is a payment system. Yeah, I've had this for years in Seattle. Grab-and-go is like all the things you just walk out. Yeah, yeah, okay. This is different. Instead of waving your Apple phone or a Starbucks card, just put your hand over it. Knows your fingerprints? Your handprints? Yes, approved. Put your hand out, scan it, done. This is cool. This is kind of password-less, right? Biometrics soon be voice. Well, but voice can be hacked. Well, John Chambers, we had a great chat about John Chambers, at RSA of Cisco. Voice has some signs of not hacking. Signature, the voice signature can be detected accurately, but I don't know. I noticed after a night out, Siri doesn't respond to them, I think. Say, Siri, can you, like... Voice does Siri. Apple, talk about Apple getting into AI? Yeah, I think Apple's gonna- Siri sucks. I'm sorry. Apple's gonna get into- It's so bad. Apple GPT, they got an AI thing, so we'll see how that works. Siri's listening to me all the time. Like, why does Siri suck so bad? She's listening to you all the time. Yeah. You're welcome to that. Siri, why do you suck? That's not nice. All right, this is episode 21, long week, SuperCloud 3, obviously a little fatigued here this week. Dave, great to see you in California next week. Next week, back out here. You're gonna see a lot more SuperCloud-like events, which by the way, just one kind of point before you end, doing the live events virtually makes a big difference. Audiences are responding to it. Thanks for everyone who listened or watched the event. There's that adrenaline rush too, right? It's tight. All the top executives- Everything's got to be timed. Top executives coming in, sitting down. I really kind of felt like it was just great conversations and people were just sharing a lot of content. Content is data, we love sharing that data. So let us know what you think about the podcast, DM us, I'm John on Twitter, Furrier at Twitter, and hit us up on LinkedIn. Thanks for listening and watching.