 Live from Mountain View, California, it's The Cube at OpenStack Silicon Valley brought to you by headline sponsor, Mirantis. Here are your hosts, John Furrier and Jeff Frick. Okay, welcome back everyone, live here in Silicon Valley. This is the OpenStack SV event hosted by Mirantis. I'm John Furrier, the founder of Silicon Angle. This is The Cube, our flagship program. I'm going to go out to the events and extract the signal from the noise. My co-host today, all day, wall-to-wall coverage, Jeff Frick, general manager at The Cube, Silicon Valley operation which just kicked off this month. This is kind of our showcase event. And our next guest is Alex Friedland, co-founder and chairman of Mirantis who really, really put this whole thing together. Him and his team who saw, like we can't wait to go to Paris. We got to do it now in Silicon Valley. Alex, welcome to The Cube. Thank you, John. I got to say, props, kudos to Mirantis for one, hosting us to come here and hosting the event because it's a packed house. Silicon Valley is just too big of a market to ignore. And certainly the next show is in Europe so you'd cross the pond for us or across the U.S. and then across the Atlantic. So we know why, wait, was that the thinking? That was the thinking. And now looking back from how many people signed up on the quality of content, we should have done it for two days, right? You could have. You could have, yes. Making our lives miserable here, all these interviews, a good friend of mine. No, in all seriousness, it's packed. This morning, could not find a seat in the keynote. But also the big news is hitting, you saw Martin Fink up there from HP. You saw Martin Meekos talking about the eucalyptus acquisition. And really the community is still growing, every event. But there's growing pains. So I got to ask you, you know, having events keeps it out in the open, forges the relationships. Certainly some good networking going on, people making deals, talking about projects. Still a lot of work to done. What are the key growing pains of the OpenStack community? Well, I mean, there's too many, you know, the cover- Top three. The top three. But the most of the most consequences, the ones that are really important to take care of. Well, so, you know, the cheerleading part has been working well. So the community is growing just because of the marketing and everything else. We're still there to kind of figure out what will it take to get real workloads running on top of OpenStack. And for that, the product needs to work. The usage patterns need to be well understood. And the enterprises need to understand how to adopt it and how to work with the community. So, I think as, you know, as I opened today we have probably in Atlanta was the first time when we kind of realized that it's no longer about whether OpenStack is going to make it or not. OpenStack has made it. So, it's OpenStack 1.0 has ended. Now it's OpenStack 2.0 and that is in what shape will actually drive adoption with real customers in real scale and production workloads. And the community and the customers need to understand how it's going to work. So, this is the focus of the second generation. We have now some very massive players, you mentioned, Martin and Martin. So, HP is kind of showing the world that they're doing it at scale and for real, which means that the Cisco's of this world and EMC's and IBM's, they have to follow suit. There's huge adoption going on in the, you know, telco space and the service provider space. So, this is like, you know, major leagues. And OpenStack hasn't figured out how to play in major leagues yet. So, this is the success of 2.0 is about playing at scale at major leagues. Josh McKinsey was just on earlier talking about kind of like, it's the year of boring. Just start, get the heads down now. Because all the wood is behind one arrow to use the metaphor. OpenStack has kind of done. Eucalyptus has taken care of HP, CloudStack's in its final chapter. OpenStack has clearly the winner. Now it's get down to really serious business. The boring work. I don't know, I'm boring. Okay, so what's your take on that? I mean, it's a build out year, it's exciting. Well, so first of all, I'm predicting that in the next three months we'll see major consolidation where the players who don't have the escape velocity to work on their own will end up being consolidated with major players. And we're seeing this happening not just within OpenStack, but outside of OpenStack. So we saw Eucalyptus, and we saw Martin Mika's actually putting on a, you know, a Miranda's OpenStack shirt, which is kind of saying, okay, happy to join the community. So it's not about Eucalyptus necessarily, but it's Eucalyptus joining OpenStack. And then there'll be smaller players who will also become part, it'll be the same crowd, but different companies. And the end of 1.0 also means that the business models that work for companies who get started will have to change. So 2.0 is not just about execution, but figuring out what the business model should be for the players who are remaining. And we saw HP kind of showing their business model, which is a platform and not necessarily monetizing OpenStack itself. We saw the announcements from Red Hat who wasn't unfortunately one of the sponsors of this event that hopefully will be next time around. But they have a strong enterprise stack and they will play it a lot different from the way HP is playing. And then there are many unknowns like Cisco's and EMC's. And of course there is us, which is the only standing agnostic that will likely, well, not likely for sure, will be a major play in the 2.0 game. And the story we had, which is services and quick products and all that, it can only take us so far if we continue it. So we have to change the focus on the model and that's far from boring. It's a lot of strategy, figuring out how to do it, finding patterns and so on and so forth. And then this customer adoption, right? Beyond, because some of the guys have great traction within those two or three verticals, but it's moving beyond those, right? Beyond Telco, beyond service providers. In retail, those are the big three. Well, we have Telcos, we have service providers, we have the Web 2.0, which many of them are doing it yourself for folks who are now trying to understand the building franking clouds, is the way to go, or should they really partner with a provider in a scalable model. Then of course there are enterprises and for now enterprises are doing adoption and they're kind of testing out the waters in a horizontal way. But I bet you that as we develop further, enterprises will also split by industries and financial services will be very different from retail and the like. So all of that is going to be part of 2.0. And for now adoption has been, let's build out the infrastructure and make sure it works. For 2.0, we have the infrastructure that works. It's a hybrid world when we have workloads everywhere. How do I make sure that the workloads and open stack actually come and run and scale? And how do they interrupt with all the other pieces that we have, both technologies and off-prem? And those problems haven't been solved yet. Those are still there. And what about in terms of Randy mentioned, kind of more strategic level of leadership within the functional direction that you want to go versus all the kind of the individual products that then come together at the integration points. Sounds like a real growing pain, especially when you're trying to do it in a real community way. And as Randy said, democracies are messy. They work pretty well, but they're messy. I mean, how do you feel that's kind of progressing along? Well, I mean, what is it? Churchill said, right? Democracy is not perfect, but nobody invented anything. It's better, right? So we are completely in uncharted waters because the size of this community and the reach and the complexity of this community and the speed with which this community has actually formed is unheard of in the industry. We've never seen it happening in four years. This community is already the size of Linux and it's just relentlessly growing. So unlike the Linux community, when we do have a benevolent dictator, it hasn't been the case here. And there's a lot of developers who are doing things their own way. There are customers who are now trying to adopt OpenStack who find themselves in the position of not understanding how to work with community. So we have to bring those things together. And Randy is absolutely correct when he is raising all the right points and making all the right statements. But the only way we can do it if it's done by the community internally because if customers will come in and try to drive the agenda and the community is not going to work, if community will keep ignoring the customers, it's not going to work. So we have to come up with structures that will self-organize in a way that will bridge the agile developers and the less agile, maybe like waterfall customers who are used to thinking in different ways. And there are multiple discussions, both at the board and in the technical committee of how to solve that. And in fact, today a lot of us insiders were together discussing just that. And I was talking to Jonathan about the right way to bring those discussions to the board. And I was talking to Monty Taylor from HP who is both on the technical committee and on the board about how to deal with governance. And so these are discussions that we're focusing on. And there are a number of ideas that are similar to what Randy is saying. You run it as a product, you bring a product management function, but you don't impose it, you bring it from the community and you create a marketplace of ideas and you define the rules of how this marketplace of ideas is being contributed to and you make it transparent so that anybody can see what that is kind of in a similar way. You can see things through stack analytics both in contributions and drivers and all that. You do this with features and ideas and you run it that way. So that's just one of the ideas. There are many that are similar. Yeah, the other thing is you mentioned, right? You've got an increasing presence with the larger companies. And now, as you said, predicting consolidation which is already starting to happen. How does that impact the community and the way the community is built from now compared to how it's going to go forward in kind of a new makeup, if you will, with potentially fewer players, the same people, fewer companies, and really more of a kind of concentration there? Well, I'm not sure it will be like you're suggesting. And there are a couple of trends here. One is in the community and we've seen that pretty consistently that the people, the developers who are actually making the community possible, despite of their affiliation with their employers, their decision making is quite independent. And I mean, we know it from our own experience, the prominent community members who work for Mirantis, we have to work three times as hard to convince them with our, to take our position because they're really, really caring about their independent reputation. So the fact that the consolidation has taken place doesn't necessarily affect community momentum or dynamics directly. That's number one, okay? Number two is if we are seeing consolidation, it will change the board composition and technical committee composition because of the maximum number of affiliated people that can be there. But at the same time, we're seeing a lot of customers who now see OpenStack as instrumental to them in different venues, whether it's service providers or SaaS players or traditional enterprises, they're joining OpenStack Foundation, they're joining the community. And so the diversity of the community will only grow. In fact, in Paris, I believe there's two applications from gold members and these are not vendors, those are customers. So, and they will then contribute to the community tremendously. So what are some of the other kind of markers that you're watching, that we should watch as indicators of moving up in terms of stages of maturation and stages of market penetration? Well, I mean, on the technical side, you want to see the workloads that are running at scale. So, you know, we've all heard stories of, you know, people kind of, you know, putting their toe in the water and trying to, you know, to run a certain type of workload. Test and death has been kind of the the general area where people have been doing adoption. Well, so you want to see more traditional enterprises that are less technical, adopt, test and dev. Then you want to see real production workloads running at scale, you know, thousands or tens of thousands of virtual machines. And when you see a critical mass of those use cases coming in, that will usher, you know, the new era of scale. So right now I think it will still go linearly, but once you see maybe 10, 20, 30 stories of tens of thousands of VMs running in production and different industries, from there you can see exponential growth. So that's how you kind of measure it. So let's talk about the show summary. Let's do our wrap up here. So I want to first thank you and your team, Boris, and just putting this together for the community. Pleasure, I mean, really excited. You know, we do a lot of events and I'm not stroking you because you're on the queue, but seriously, we see people land, grab these events. You guys did it for the community. You were very, you know, polite and open how you handle this. So very, very much a class act. You know, my only complaint is the food trucks should not be when the cube takes their break. So the line is too long for us to get food. So the next thing we need to make sure that they bring you food from the truck. The talent needs, the talent needs, the talent needs. You guys are working on stuff, so breaks won't happen. We got to get a runner, we got to step up for a runner. But no, seriously, great job with the event. You guys organized this, you brought the community together and that halo effect will certainly help your business, but also the community in doing it in Silicon Valley. So what's your take, okay? Big news right up front, packed keynote, 9 a.m. I think you started it by saying, whoa, it's nine o'clock. Nice job, Silicon Valley. It's Silicon Valley, who would have thought, right? Yeah, no one gets up at nine o'clock to work. But here, packed house, I think the Martin Fink, Martin Miko Sting, and the fact that it's like a friend network here. It's like, it's a short concentrated environment where people are seeing each other. Well, I mean, there is that. So yes, there is open stack has been newsing itself. So again, after Atlanta, it became obvious that it's not just insiders anymore. And today's event is showing it again that there is plenty of insiders. And because it's a community event as opposed to a vendor sponsored event, all the people who matter really showed up. And we're seeing thought leaders from different companies and we're seeing developers and we're seeing business leaders all coming together because this community is a real community. And I'm really glad to see this. And this is by the way, the reason we're kind of doing it this way because you get a lot more traction if a community is working as a community. And then if a vendor is taking advantage of a growing community, we'll find the way if we add value, we'll find the way to monetize this. But ultimately want to make sure that the whole industry is growing. So what's your take of the show? So what's your assessment? Give us your analysis. Pretend that you're a cube host for a minute. Now that you are doing the wrap up, I want to get your perspective. Are you happy? Are you happy with the outcome? Yes, I'm very happy. So first of all, the amount of content we had is probably enough for two days. So if we were to think about how we're going to do it next time with this kind of content and this kind of environment, we need a little bit larger venue and we should probably keep it for two days so that our discussions are back to back to back, not enough time for Q and A. So I think that's one thing is there is more interest than we anticipated considering it's inaugural event. It's not bad at all. It's phenomenal. The ratio of insiders to users is very atypical for a conference like this. A lot of users, a lot of people who are here to learn about OpenStack, the educational track that we have is over-packed as always. So you're saying more users, less than insiders? Plenty of insiders, but a lot of users. How about customers? Well, customers are users, right? Okay, all right. Yeah, and people are coming to understand what it takes to use it. People understand what the usage patterns are and people come and the customers come to learn the internals of OpenStack. So got that. There is a huge rumor mill activity about the M&A and consolidation and who is going to next and that was always fun. That's fun. We like that. When the insider is there, you guys can benefit from that. We love it. We want to get to the truth. The problem is those who know the truth and they can not talk about it and those who don't can, you know. It's our job to get it out of your head, don't worry. The timing of the eucalyptus thing worked out pretty well for the promotion of the event. Well, I tell my wife, I stay out drinking. I mean, with all these late nights, getting all the data, someone spills their guts. It happens, just wait for it. What else? I mean, so M&A is fun, but the speculation is legit. I mean, there are growth prospects and some acut higher opportunities to just people who need to have a soft landing. Correct. The good news is that for everybody who is an insider at this point, I don't see anybody who will just disappear because people who are left, even if they get a soft landing, it's going to be a very soft landing. Well, let's play this out, because this is important. In my experience, and you share your perspective, it's not a shrinking market. So the consolidation is not so much a bloodbath. It's more of just a natural evolution. So this is an industry that's early, four years old. Okay? Yes. And yet it's an industry. And the actors, the people who are the founders, the people like us who are there from the beginning, are part of this growth. So some people call it a family. Josh McKinney thinks like a family. So they're not going anywhere. They're going to a new home because of the growth. Yes, because of the growth. The industry is growing, not shrinking. So that's, some people need to understand that. It's not so much, hope it's not failing. It's just growing rapidly. Yeah, it's just some people who created value early were able to prove that the value existed, but they didn't have the escape velocity necessary to attract the capital and scale that's necessary to succeed at the 2.0 game. And that means that there will be spot places where they cannot mend other people's portfolios, either with product or capabilities or people, and all that is accretive. So investors will make money, the founders will make money, which is actually a wonderful story. How does Docker make money? Docker has escape velocity. I don't see Docker consolidating anytime soon. Well, they certainly got $40 million in fresh financing today in a series C. So they're not going to run out of money anytime soon. So they have an escape velocity, they have the flywheel, but how are they going to make money? Just being successful on a critical mass basis? Do they sell something today? They don't, it's free. You know, it's, you know. I'm not a nasium, bringing up what people say. Yeah, yeah, so. I love Docker, I love Jerry Chen. Yeah, yeah, no, Docker is a great story. I mean, we're using Docker internally and it just came out of nowhere. You know, so I go back to the old social network, the movie, remember that? When Zuckerberg in the movie was sitting there and his partner was suggesting that it's a good idea to start selling advertising. And the consultant said, don't worry about this, you know, just figure out who you're going to be. Monetization will come. So I don't know how they're going to make money, but. That was Sean Parker, by the way. That's a consultant. Yeah, that was Sean Parker, yes. And the other guy was the co-founder. Yes, yes, and we all know the story there. But so it's funny that a similar thing is applicable in enterprise space, which only used to be applicable in the consumer space, which means the speed of change and the way technology- Critical mass is a wonderful thing. Yes, the speed with which technology has been adopted now in enterprise, especially using open source, is becoming as fast as what we're used to in consumer, which is actually a disruptive change, right? But if you are as important as Docker is becoming to enable all those trends, Monetization will come. And look at self-store. I mean, how much revenue did stuff have and how fast it took them to get the adoption and $7 to $200 million later, people are like, what happened? Right? So I wouldn't worry about Docker. The other thing though is that it really speaks to the creation of value, massive amounts of value, as opposed to saving some money or selling something a little bit. Yes, exactly. To get that type of valuation, for them to get a return on that money, they see tremendous generation of value, creation of value in the use of that at scale in big enterprises. And the answer is yes, it does happen, right? Because you have to worry about interoperability, you have to worry about being able to scale in different environments. You know, you have to worry about what you do in platform to kind of encapsulate your loads and how to do it in an open fashion way and how not to deal with contention with what you've got. So there's a huge amount of value that you create by using Docker and whether you choose to monetize this by enabling all this and monetizing on the workload efficiency or you monetize it by selling the subscription, that's a whole different story. If there is value, there are ways to monetize it. They'll figure out the way to monetize it. So, final comments on the show, any other observations, anecdotal things that you are really pleased about, things you'd need to work on next time? Will you do another event? Will you want an independent firm like SiliconANGLE to do the event? Will you do it in every city? This is a one-trick pony for Maranthus. Will you want to continue to do it? I mean, we're very active in the community and we do a lot of events. We do events at all the summits. We are the founder of Silicon Valley Meetup and we do events with that. So we're very much used to events. And we have, I mean, we have, well, this event was underwritten by a lot of community players and Boris remembers who the people were actually helping us to stage it. So we do a lot of this and there are people who are helping us in different places. So I can see us kind of spreading out and if this is successful, taking it to different geographies and partnering with you guys or anybody else. I mean, whatever makes sense, right? It's a very good event. I think you hit lightning in a bottle with this. I think you probably do micro events, but the community is obviously starving for information and content. So congratulations. Jeff has been great co-hosting you. Thanks to the team. Thanks to the Morantis for really funding the staff and the operations. And again, they passed the hat around to the community with some contribution from others, but really Morantis put it together. Alex will say thanks to you and your team. Thank you. It's fun from Silicon Valley, it's my home, the innovation and just the energy. It's certainly, it's like, you know, bringing hockey to Canada. You know, it's like, it's no, no brainer, right? So whatever sport I met before, you want to use. So it's fun here and everyone's happy seeing friends. And it's a great community, like a family. Congratulations. Okay, then continue to change the computing landscape. This is theCUBE wrapping up OpenStack Silicon Valley, OpenStack SV here at the Computer History Museum and live from Mountain View. That's a wrap. Stay tuned and keep watching theCUBE. We'll be somewhere near you sometime soon.