 Live from the BuildGram Auditorium in San Francisco, it's theCUBE, covering Pure Storage Accelerate 2018. Brought to you by Pure Storage. Welcome to theCUBE. We are live at Pure Storage Accelerate 2018. I'm Lisa Martin, also known as Prince for today, with Dave Vellante. We're at the BuildGram Civic Auditorium, really cool, unique venue. Dave, you've been following Pure for a long time. Today's May 23rd, they just announced FY19 Q1 earnings a couple days ago. Revenue up 40% year over year. Added 300 new customers this last quarter, including the Department of Energy, Page AI, bringing their customer tally now up to about 4,800. Just came from the keynote. What are some of the things that you've observed over the last few years of following Pure that excite you about today? Well, Lisa, Pure has always been a company that has tried to differentiate itself from the pack. Largely being EMC at the time. And what Pure talked about today, Matt Kicksmuller talked about, that in 2009, if you go back there, Fusion I.O. was all the rage. And they were going after the tip of the pyramid. And everybody saw Flash, as he said, in his words, as the tip of the pyramid. Now, of course, back then, David Floyer in 2008 called that Flash was going to change the world, that it was going to dominate. He forecast that Flash was going to be cheaper than disk over the long term. And that is playing out in many market segments. So he was one of the few that didn't fall into that trap. But the point is that Pure has always said, we're going to make Flash cheaper then, or as cheap as spinning disk. And we're going to drive performance. And we're going to differentiate from the market. And we're going to be first. And you heard that today with this company. This company has accelerated to a billion dollars. The first company to hit a billion dollars since NetApp. Eight years ago, I questioned if any company would do that. If you look at the companies that exited the storage market, that entered and exited the storage market that supposedly hit escape velocity, 10 years ago it was three par hit 250 million, I salon, data domain, compelling. These companies sold for between one and two and a half billion. None of them hit a billion dollars. Pure is the first to do that. Nutanix, which is really not a storage company. They're hyper converged infrastructure. They got networking and compute sort of hit a billion. But Pure is the first pure play, no pun intended storage company to do that. They've got a five billion dollar valuation. They're growing, as you said, at 40% a year. They just announced their earnings, they beat. But the street reacted poorly because it interpreted their guidance as lower. Now Pure will say that we know we raised our guidance but they're lowering the guidance in terms of growth rates. So that freaks the street out. I personally think it's pure conservativism. And I think that they'll continue to beat those expectations. So the stock's going to take a hit. They'll say, okay, if you want to guide lower growth, you're going to take the hit. And I think that's smart play by Pure because if and when they beat, they'll get that updraft. But so that's what you saw today. They're finally free cash flow positive. They get about a billion dollars in cash on the balance sheet. Now half a billion of that was from a convertible note they just did. So it's really not coming from a ton of free cash flow. But they've hit that milestone. Now the last point I want to make, Lisa, and we talked about this is pure storage at growing at 40% a year. It's like Amazon can grow, even though they make a small profit, the stock price keeps going up. Pure has experienced that. You've certainly seen that with companies like Workday. It's certainly Salesforce in its ascendancy, ServiceNow in its ascendancy. These companies are all about growth. The street is rewarding growth. Very hard for a company like IBM or HPE or EMC when it was public, when they're not growing to actually have this stock price continue to rise, even though they're throwing off way more cash than a company like Pure. Also today we saw for the first time the new CEO. It's been Charlie Giancarlo, been the CEO since August of 2017, sort of did a little introduction to himself. And they talked about going all in on shared accelerated storage, this category that Gartner's created. Big, big focus there. Yeah, so as interesting, when I look at so-called shared accelerated storage, it's 2018, Gartner finally came up with a new category. Again, I got to give credit to the Wikibon guys. I think David Floyer in 2009 created a category. He called it server sand. You know, no offense, David, but I think maybe shared accelerated storage a better name. Maybe Gartner has better VP of naming than they do at Wikibon. But he forecast this notion of server sand, which really it's not Das, it's not sand. It's this new class of accelerated storage that's flash-based, that's NVME-based, eliminates the horrible storage stack. It's exactly what Pure was talking about. Again, Floyer forecast that in 2009, and if you look at the charts that he produced back then, it just, it looks like you see the market like this going zoom, the existing market, and the new market just exploding. So Pure I think is right on. They're targeting that wide market. Now what they announced today is this notion of their flash array for all workloads, bringing NVME to virtually their entire portfolio. So they're aiming their platform at the big market. Remember, Pure's ascendancy to a billion really came at the expense of EMC's VMAX and VNX business. They aimed at that and they hit it hard. They positioned flash relative to EMC's either spinning disk or flash-based systems as better, easier, cheaper, et cetera, et cetera, and they won that battle, even though they were small. I mean, Pure's a billion EMC at the time was 23, 24 billion, but they gained share very rapidly when you see the numbers. So what they're doing is basically staking a claim, Lisa, saying we can point our platform at the entire 30, 40, 50 billion dollar storage time and their intention, and we're going to ask Charlie Giancano and company, their aspiration is to really continue to gain share in that marketplace and grow significantly faster than the overall market. So they also talked about the data-centric architecture today and gave some great examples of customers. I love the Domino's Pizza example that they talked about. I think it was here last year and how they're actually using AI at Domino's to analyze the phone calls, using this AI engine to identify accurate order information and get you your pizza as quickly as you want. So not only do we have pizza, but we were showered with confetti. Lot of momentum there. What are, what is your opinion of Pure and what they're doing to enable companies to utilize and maximize AI-based applications with this data-centric architecture? So Pure started in the, what's called block storage, really going after the high volume transaction, OLTP business. In the early days of Pure, you'd see them at Oracle Open World. That's where the high volume transactions are taking place. They were the first really, by my recollection, to do file-based flash storage. Back in the day, you would buy EMC for a block, you'd buy NetApp for file. What Pure did is said, okay, let's go after the biggest market player, EMC. We'll gain share there in block, and then now let's go after NetApp's base and file. They were again the first to do that. And now they're extending that to AI. Now AI is a small but growing market, so they want to be the infrastructure for artificial intelligence and machine intelligence. They've struck a partnership with NVIDIA, they're using the example of Domino's. It's clearly not a majority of their business today, but they're doing some clever things in marketing, getting ahead of the game. This is Pure's game. Be first, get out in the lead, market it hard, and then let everybody else look like they're following, which essentially they are, and then claim leadership position. So they are able to punch above their weight class by doing that, and that's what you're seeing with the Domino's example. You think they're setting the bar? Do I think they're setting the bar? Yeah, in many respects they are, because they are forcing these larger incumbents to respond and react, because they're in virtually all accounts now. You know, the IT practitioners, they look at the Gartner Magic Quadrant, who's in the upper right, I got to call them in for the RFP. They get a seat at that table. I would say, you know, it was interesting hearing Charlie speak today and the rest of the executives. These guys are hardcore storage geeks, and I mean that all, you know, with all due respect. They love storage. You know, it kind of reminds me of the early days of EMC, they are into this stuff. Their messaging is really toward that storage practitioner, that administrator, you know, they're below the line, but those are the guys that are actually making the decisions and affecting transactions. They're touching above the line with AI messages and data growth and things like that, but it's really not a hardcore CIO, CFO, CEO message yet. I think that will come later. They see a big enough market selling to those IT practitioners, so I think they are setting the bar in that IT space. I do. One of the things I thought that they did well is kind of position the power of data. You know, people talk about data as fuel. Data is really a business catalyst that needs to be analyzed across multiple areas of a business simultaneously to really be able to extract value. They talked about the Gold Rush OG of 1849 and now kind of in this new Gold Rush, enabling IT with the tools. And interestingly, they also talked about a survey that they did with the C-suite who really believed that analyzing data is going to be key to driving businesses forward, identifying new business models, new products, new services. Conversely, IT concerned, do we have the right tools to actually be able to evaluate all of these data to extract the value from it? Because if you can't extract the value from the data, it's not useful. Yeah, and I think, again, I mean, Pure are great marketing and a lot of what they're doing, it's technology, it's off the shelf technology, it's open source components, so what's their differentiation? Their differentiation is clearly their software. Pure has done a great job of simplifying the experience for the customer. No question, much in the same way that 3PAR did 10 or 15 years ago, they've clearly set the bar on simplicity. So check. The other piece that they've done really well is marketing and marketing is how companies differentiate today. There's no question about it that they've done a great job of that. Now, having said that, I don't think, Lisa, that storage, I think storage is going to be table stakes for AI. Storage infrastructure for AI is going to have to be there and they talked about the gold rush of 1849, the guys who made all the money were the guys with the picks and the axes and the shovels supplying them and that's really what Pure Storage is. They're a infrastructure company, they're providing the pickaxes and the shovels and the basic tools to build on top of that AI infrastructure. But the real challenges of AI are where do I apply it? How do I infuse it into applications? How do I get ROI in that? How do I actually have a data model where I can apply machine intelligence and how do I get the skill sets applied to that data? So is Pure playing a fundamental catalyst to that? Yes, in the sense that I need good, fast, reliable, simple to use storage so that I don't have to waste a bunch of time provisioning lones and doing all kinds of heavy lifting that's not differentiated, not differentiated, but I do see that as table stakes in the AI game, but that's the game that Pure has to play. They are an infrastructure company, they're not shy about it and it's a great business for them because it's a huge market where they're gaining share. Partners are also key for them. There's a global partner summit going on. We're going to be speaking, you mentioned NVIDIA. We're going to be talking with them. They also announced the Airy Mini today. I got to get a look at that box. It looks pretty blinged out. So we're going to be having conversations with partners from NVIDIA, from Cisco as well and they have a really diverse customer base. We've got Mercedes, AMG, Paternas, Motorsport, Formula One, we've got UCLA on the CIO of UCLA Medicine. So that diversity is really interesting to see how data is being, value rather from data is being extracted and applied to solve so many different challenges, whether it's getting a race car around a track of 200 kilometers an hour to being able to extract value out of data to advance healthcare. They talked about Page AI, a new customer that they added in Q1 of FY19 who is able to take analog cancer pathology looking at slides and digitize that to advance cancer research. So a really cool kind of variety of use cases we're going to see on the show today. Yeah, I think, so a couple thoughts there. One is, again, I keep coming back to Pure's marketing. When you talk to customers, they cite, as I said before, the simplicity. Pure's also done a really clever thing and not a trivial thing with regard to their Evergreen model. So what that means is you can add capacity and upgrade your software and move to the next generation non-disruptively. Why is this a big deal? For decades, you would have to actually shut down the storage array, have planned downtime to do an upgrade. It was a disaster for the business. Oftentimes it turned into a disaster because you couldn't really test or if you didn't test properly and then you tried to go live, you would actually lose application availability or worse, you'd lose data. So Pure solved that problem with its Evergreen model and its software capability. So it's simplicity, the Evergreen model. Now the reality is, typically you don't have to bring in new controllers but you probably should to upgrade the power. So there are some nuances there if you're mixing and matching different types of devices in terms of protocols. There's not really tiering. So there's some nuances there but again, it's both great marketing and it simplifies the customer experience to know that I can go back to serial number 0001 and actually have an Evergreen upgrade is very compelling for customers. And again, Pure was one of the first, if not the first to put that stake in the ground. I know, here's how I know it's working because their competitors all complain about it. When the competitors are complaining, wow, Pure storage, they're just doing X, Y and Z and we can do that too. And it's like, hey, look at me, look at me. I do that too. And Pure tends to get out in front so that they can point and say, that's everybody following us, we're the leader and that resonates with customers. It does in fact, before we wrap things up here, a lot of the customer use cases, as I read in prepping for the show, all talked about the simplicity, how it simplified the portability, the Evergreen model to make things much easier to eliminate downtime so that the business can keep running as expected. So we have a variety of use cases, a variety of puritans on the program today as well as partners who are going to be probably articulating that value. You know, and I really didn't address the partner issue. Again, having a platform that's API friendly, that's simple, makes it easier to bring in partners to integrate into new environments. We heard today about integration with Red Hat. I think they took Airy. I think Cisco's a part of that partnership. Obviously the NVIDIA stuff, which was kind of rushed together at the last minute and got it in before the big NVIDIA customer show. But they, again, they were the first, really made competitors mad. Oh, we can do that too. This is no big deal. Well, it is a big deal from the standpoint of pure. It was first, right? There's value in being first from a standpoint of brand and mind share. And if it's easier for you to integrate with partners like Cisco and other go-to-market partners like the backup guys you see, you know, Cohesity and Veeam and guys like CataLogic are here. If it's easier to integrate, you're going to have more integration partners and the go-to-market is going to be more facile. And that's where a lot of the friction is today, especially in the channel. The last thing I'll end with is we got a reign of confetti on us during the main general session today. The culture of pure is one that is pervasive. You feel it when you walk into a pure event. The pure tens are very proud of what they've done, of how they're enabling so many, 4,800 plus customers globally to really transform their businesses. And that's one of the things that I think is cool about this event is not just the plethora of orange everywhere, but the value and the pride and the value of what they're delivering to their customers. Yeah, you're right. It is orange everywhere. They're fun. It's a fun company. And as I say, they're alpha geeks when it comes to storage. And they love to be first. They're in your face. You know, the confetti came down in a big firecracker boom when they announced that NVME was going to be available across the board for zero incremental cost. Normally you would expect it to be a 15 to 20% premium. Again, a first that pure storage is laying down the gauntlet. They're setting the bar and saying, hey guys, we're going to quote unquote give this value away. You're going to have to respond. Everybody will respond. Again, this is great marketing by pure because they're going to do it and everybody's going to follow suit and they're going to say, see, we were first. Everybody's following. We're the leader. Buy from us. Very smart. There's that buy. Another first is, this is the first time I've actually been given an outfit to wear by a vendor. I'm the symbol of Prince today. I won't reveal who you are underneath that, Superman. Okay. Exterior. Stick around, you won't want to miss a reveal of the concert tee that Dave is wearing. Very apropos, of course, for a Bill Graham auditorium. Exactly, exactly. We both said it was very hard to choose, which we got a list to pick from and it was very hard to choose, but I'm happy to represent Prince today. So stick around. Dave and I are going to be here all day talking with Puritans from Charlie Jean Carlo, David Hatfield. We've also got partners from Cisco, from NVIDIA, and a whole bunch of great customer stories. We're going to be right back with our first guest from the Mercedes-AMG Pertunas Motorsport F1 team. I'm Lisa Prince-Martin. Dave Vellante will be here all day. Pure storage, accelerate.