 Thanks for coming. This panel discussion is meant to be about venture capitalists view on open-stack and infrastructure in general particularly in Asia So I have three distinguished panelists today and we'll all go around and introduce ourselves so go right ahead Hi, I'm a Suzuki from global brain and Global brain the Japanese independent venture capital firm and We manage about 250 million dollars venture fund and we have office in Silicon Valley and Seoul and Singapore and Basically, we have focused on the memory IT sectors and mainly maybe early-stage or middle-stage venture companies both Japanese and also buses venture companies and We have a major LPs like a KDDI which is Japanese number two mobile carriers and also INCG which is a mister in this company and Yeah I'm Hiroshi Baba from entity the conventions actually I was from entity from a venture because and I need to confess that Human resource kind of periodical Can exchange it will blind me to move to the top my headquarter. So after submission to this panel, so Actually, I need to I'm going to introduce entity to conventions entity to conventions operate two funds one for entity and the other for document so as a whole we are kind of corporate venture capital for entity groups and investment has focusing on local Japanese startups and also global exposure and portfolio diversified from applications companies to infrastructure infrastructure companies, so Basically, we have more than 350 US million dollars fund sites. So That's a kind of what we are doing Yeah, my name is the Inoue Tako and on the I'm currently working at I'm CJ That's the subject I mentioned that the I'm CJ itself is the government back investment firm and then we started operation back in 2009 with a 15-year peers and the we We have the investment hours up to 20 billion years to that as a total and The we made we covers the so from the buyout to the venture investment and also we We are doing several fund investment as well And the we we made an invest for 90 company in past past six years and the two side of the investment wasn't to venture in industry and the I think I know I personally share with you that We made an investment for the middle core almost two years ago and the I'm still sitting on the balls and that's the story And I'm Dan Dimitri on the CEO of Mito Kura And I was asked to moderate this panel which is great because I'm usually the one being asked questions by these guys So This is cool. Okay, so forgive me for looking at my phone. I have a bad memory and I have some notes. So My first question is what do you think about the market potential of OpenStack and cloud computing infrastructure? Particularly in Asia because that's where we are here. I Think it's huge and you know from a maybe you know venture capital point of view You know, it has a huge impact for startups and because of basically, you know open stacks or maybe open source Enable maybe stops startups to maybe launch their services with a lower, you know, capital expenditure And which is maybe good for startups and these days Maybe you might you know hear about maybe a high variation of a venture companies these days And I think you know it is it's maybe, you know, it is maybe part of reason is a maybe You know penetration may be open stock open, you know sources because I think you know You can easily maybe create, you know Maybe close beta or commercial service without a maybe a requirement of it. Maybe My huge captains. So maybe, you know after you don't your service Maybe you can go to a maybe investors like us and maybe ask them about maybe investment But at the time you already have your services, you know, which is already launched and you already maybe Can show them a make traction and which maybe makes maybe, you know market value of the companies You know much higher and so that's my idea For me actually from two different aspects one is as kind of open source company Well, I'm kind of previous investment for a US open source database company the track record was very Steadily growing, but it's slow. So one of the can character characteristics for venture company for Infrastructure open source is normally Take some time to really growing up but the good thing is Consistently growing so I think it takes a little while, but the business will go Kind of growing up and up and the other aspects for Asian companies I think the most notable field is commerce because I'm especially for a Southeast Asia and the road construction is getting better and FTA so kind of legal structure infrastructure is getting better And also one more thing is at fintech. Actually, there are many companies focusing on a fintech and The circumstances in a Southeast Asia is a little bit complicated because and different language different currency So technology needs to fulfill the gap between those kind of kind of complexity so I think Cloud systems and those kind of fintech kind of background Connect startups company will be easily Start a business on commerce and then the opportunity is very good So I think I'd like to focus on the kind of commerce area in a South East Asia Especially for a South Asia an agent as a whole Well, I think I have the others Suzuki-san would above us and comment I personally focus on for Japanese market because my company is backed by a Japanese government So we have to have a Japanese story, but I think To if you would like to start the consumer service based on the crowd As Suzuki-san already mentioned that it's easy to to start and also not made us some scale up and the ice Personally think that state there is another trend that's the In the enterprise IT infrastructure is now using the cloud or the virtualization and the some service shows that in Near future not like in a three to five years period. I think I know most of see I think more than 80% of the company will use the cloud or the hype virtualization in somehow so I It will be a good chance to penetrate into the enterprise market as well So by using open stack, I think an open stack is now becoming a very popular Or the dominant position in the cloud always market so you can access to Your customers and by by by using the open-stack ecosystem and I have to say that's the but the People or the firms the customer point view is they would like to use the cloud not to the open stack I think that you have to careful about those things Thank you. So certainly sounds like the market opportunity is very large across the continent My next question relates to the competition. How does open stack compete with? two traditional forces the the traditional vendors like the Mware Cisco potentially and On the other side the public clouds like Amazon AWS and Azure. How does opens that compete with these forces? Okay, you don't have to answer in order by the way. Yeah, Frank is speaking. So I'm not the engineer So maybe you know, I can't maybe also, you know, maybe you are Okay, but you know maybe a former, you know, no investor point of view. I think you know You know open-stack community needs like maybe brand awareness and the recognition among maybe, you know executives of a maybe big enterprises and also investor communities and that's one of the challenges and Maybe I have to confess but before I came here. So, you know, I talked to my colleagues in my farm and Like I saw I asked question like, you know, do you know open stack? Actually and I asked to Tim You know guys and the two of ten Know about open stocks, but the eight Don't know so that's issue. I mean that might issue our company but actually, you know, ever know about maybe Amazon AWS or but you know, other maybe cloud system, but Open-stack, you know, has a little maybe your short history, you know in comparison with maybe other maybe infrastructure and so maybe It's important for maybe community to maybe educate like maybe mass communication mass media or maybe just normal people and To maybe agree that maybe brand awareness and the recognition. Yeah Answering that question actually I prepared two boring kind of items and one is Ecosystem the other one is customer that in general, but I think the detail is a little slightly different And those two are closely related so I Imagine it is for example, they have a lot of tons of Tools and and documents and everything is up on the cloud on the AWS AWS servers so Developers can easily start and then easily can copy the codes and those things really help other engineers and and developers But for open-stack, I think it's a little bit different way Ecosystems will be more manual and human resource base. I think that's my understanding because then One of the reason is probably their demand from the end user is a more kind of cutting edge innovative idea and the demand is literally higher level so the kind of granularity of Applying those kind of demand AWS is like it's it's kind of peace of kind of stacks but for open-stack community, I think People will support to fulfill those kind of demand and actual core systems So I think in order to evolve open-stack I think Ecosystems surrounding Open-stack community the people system integrators engineers those people are very important and additionally finding cutting-edge customers high-level demand and Sophisticated idea so I think open-stack can support from kind of low-cost and and kind of fast-growing Community ideas, so I think those two things customer end Community is one of the key key components to grow Well, I think in terms of the competitiveness to the other cloud alternatives, I think not as a community We have to think about the the total roadmap For the cloud use case now, I mean it always has a variety of services on their ecosystem But the there is some missing piece in the open-stack ecosystem So what kind of the the feature you have to add in your future with the community or the How do you fulfill those gap? That's the one aspect about the competitiveness as a total ecosystem and the other Point of view is the recognition in the market I think the open-stack is now become very popular, especially for the engineering now thinking about past three years I think there are several other stacks like in a cloud stack or eucalyptus But now become open-stack is no dominant position in the cloud always especially for the private cloud But see so the extent mentioned that's the The recognition in other category right kind of business or the management side. There is it. We have to To show the more notable showcase very easy to understand what kind of features you can provide only what kind The impact to the I.T. I.T. System I think I know of course and there is several session now talking about the use case But see we have to have a more easy to understand notable showcase. That is the next step for the open-stack community So in the US a lot of the big companies I've started developing this Dev Ops capability in-house and I know traditionally that has been less so in the big Japanese companies Babasan, you know you're working at at Dokomo and a greater reliance on vendors or system integrators Do you think that's going to be a hindrance to adoption of open-stack in across Asia? Yeah, I think I Don't know about I don't know really about in Asia as a whole but for for Dokomo actually we have several options to on On the cloud systems including AWS and open-stack so So entity as a whole actually we have several options and then It depends on what kind of businesses we would like to focus on for example It's a more application side then AWS may be handy and more for enterprise businesses open-stack will be Probably appropriate. So I think it depends on The aspect but I think it's we can be flexible to adopt those new technologies Can I add one thing? I think that we have to think about the market by country or the region because there is different structure in each economy or each nation for example in Japan We have strong SIRs and the most of the engineering I hear that the So three out of the four now so more than 70% of the engineer is working in the System integrators. So but in the US, I think that the number is totally different I think more than 70% Engineer is working in the user side. So we From if you have an engineer within your organization, it's easy to deploy the open-stack within your organization, but if you don't have the engineer or the Capable CIO in your organization, you have to rely on the SIS I think it's like in a Southeast Asian country or the East Asian country has its different structure in the engineering Ecosystem. So we have to care about the what kind of the market you would like to penetrate into and it Totally depends on the country or region. So that's my point So speaking of the open-stack itself and the ecosystem, how much do you think that open-source is a helpful driver for penetration in these organizations? I think it's a very, you know important and maybe you know Even in Japan, maybe big companies, they already maybe are you know utilizing maybe open-source maybe software maybe Regulary and so you know So I think there is a maybe a possibility in maybe Japanese big enterprise which can maybe easily or maybe Shift to or maybe open-stack based on the fact that they already maybe utilize the open-source, you know internally For using open-source space There are I think two things is really two things two difficulty actually To adapt one is the reliance and reliability because and normally open-source is new technology and large corporations Very risk averse to adapt to new those technologies. So truck record example case studies are huge huge things and the second item is probably Especially for adopting new technology by way of a sire the price gap really matters for example kind of established company already have customer-based ecosystems and vendors relationship and the merging for these kind of sires are relatively higher and then open-source is Basically from zero. So the merging of relatively is kind of small so the motivation for a sire to adopt open-source based technologies Normally is less than kind of established kind of system. So those two things kind of price point and truck record those two things are very kind of Key issues for for open source That's very that's very interesting because you said that actually the the low cost of open source Or the perceived low cost of open source can actually hinder adoption in that sense That sounds like an opportunity though Maybe something for you guys to fund new sires that are building things on open source Kind of types of the sires and customers. So that actually exactly happening Okay, yeah, they're interesting So if some Here we are we're in Japan and I think a lot of the visitors at the open stack are from Japan and some of the vendors as Well, so if some entrepreneur approaches you with some idea For infrastructure for an infrastructure product or service How do you evaluate that? What do you want to see normally in their in their presentation in a pitch? I think you know, it's a very simple and basically we review Firstly team and the secondary maybe technology and maybe business model and the salary about maybe a market opportunities and Regarding maybe our investment in Infrastructure type venture companies Frank speaking, we just have a few you know portal companies, you know We just have one, you know software defined storage venture company and also we have a you know some other companies, but Also, you know, we have some you know captives which have maybe background engineers and So that's important point and actually so I'm not the engineer So maybe it's hard for me to maybe I believe it might be a such a companies in terms of technology But we have such a maybe team especially focus on now. Maybe it new genius and they can read a source code and kind of things and So maybe we review you know from such a maybe aspect. Yeah in order to evaluate Infrastructure company I think from the VC point of view. It's similar to other other startups company but a more focus on the scope and more focus on the people and scope really matters because Kind of it's kind of historical legacy systems really focus on a switch switch is switch But for a newer kind of frontier businesses switches not just a switch. It's changed a little bit kind of entire kind of ecosystems and whole systems so wider view perspectives really Chained the kind of business structure. So kind of scope is important and the people actually have some background on specific area engineering server side anything's related to those kind of infrastructure has some Issues or problem that those problems issues Has generated the idea to the new frontier. So I think the kind of experience or can people and the scope and Mitochrist probably a little bit different because that's a kind of outlier because and just curious how new kind of new technology emerging technology Network virtualization is really new new word in 2010. So I was just curious curious to kind of made the investment So it's an outlier Well, no, I just want to share with you about the different point of view I'm trying to ask During the business plan discussion, I'm trying to ask the two question one is the how do you compete against the AWS? Because I already mentioned that the cloud user would like to use in a cloud not to the open stack. So If so, you have to think about the what kind of a service many Related service many is the AWS is preparing whether they start the operation and the Question is the how do you take a position? if they got on or IDC now make a report on Relate industry because as I already said that's the now The total cloud ecosystem is becoming a rallied The industry so you have to find your position Or the your body body proposition, you know, what kind of position you have to take? That is the question I tried to ask Actually, I need to connect Me too crazy not outlier in addition to those things and I was curious Thank you. Thank you So I said I wasn't gonna ask any I'm gonna ask a harder question just for the just for fun What one of the one of the difficulties? I think as I hear, you know for startups particularly infrastructure in in Asia is the exit the exit opportunity You know if you start a small company in Palo Alto, it's quite likely or possible to get acquired by you know somebody down the road How are the exit opportunities in Asia? How have how are they now and how do you see that evolving? I? Think it as you may know so in the states Maybe your major exit, you know is a man a by a big companies and but in Japan situation is totally different And we have just a quite maybe your less maybe Enterprises which are willing to maybe a great venture companies. Unfortunately, and but I like to maybe emphasize that baby But I think so we have very good maybe IPO market in Japan especially maybe mothers which is maybe operated by a Tokyo Stock Exchange and It's not like a maybe not stuck but the incompetence there may be other, you know emerging market in the Asian countries, so Japanese mothers market is doing so so and Actually, so every year maybe some good to maybe venture companies You know go public and so maybe if you have a good technology and so also, you know Even, you know, even if it's small, but you have a good chance but to go IPO in Japan and So basically, you know Japanese market mothers is very first rule so even, you know, you just have a maybe you're reading But you know if you have a maybe growth story and if you have a strong technology, maybe you can maybe try IPO in Japan So that's my answer In addition to IPO opportunity actually I'd like to answer to your question by the ask from the aspect of a money well To be honest, there are two types of companies in Japan one is Legacy company the other one is fast-growing companies for example Rakuten or Yahoo Japan is a kind of fast-growing company and DNA agree and They'll go like us kind of kind of legacy companies. So legacy companies has historically Kind of we like to be in a neutral position. So that is in other words. We like to choose Several options and pick up one of them and then next year we could we'd like to choose some other kind of options so We would like to keep away from committing to one thing. So we we'd like to be in a kind of neutral position that's really matters to to do the M&A for for infrastructure so Emerging companies fast-growing companies has no hesitation to acquire those kind of new technology emerging Technologies, so I think Over a year's maybe five years ten years M&A M&A opportunity will be getting higher So that's my expectations. I Think that I totally agree with the purpose and that's the country the first growing company Tristan in Japan the Rakuten or Yeah, who is very active for my for M&A, but say some legacy company is still seeing the how How they Co-operate with the startups. So now from acquire point to I think that there is three stages For the start of company one is the seeing the technology So it's kind of very Small numbers like a Rest in ten digits and if you have a product in the market, maybe you can Reach to the hundred million as a total and once you can become a profitable I think they could buy a profit So what kind of revenue do you like to reach or what do you like to achieve now during your company? That is the The target you have to set Just a small follow-up on that Good some comment are you know based on my experiences and I'll say so we work with a KDD I which is a Japanese big technical company and We launched a corporate venture capital fund for KDD I you know two years ago and since then so while we have invested in maybe more than 20 or 30 venture companies in Japan and also overseas and actually KDD I Directly acquired maybe several companies from funds portfolio and I think you know maybe Even KDD I which is a you know, maybe legacy big companies But you know, they are maybe are really changing these days and maybe they are very much Interested in open innovation with the venture companies or maybe some companies are maybe you know willing to maybe Some venture companies. So yeah stations are a bit changing. I think That sounds that sounds good sounds like good prospects for for the future great Actually Takasani in KDD I really has great exposure to the venture community and So far entity groups and document groups are not like Takasani people so But for to be honest For kid even though for KDI The acquisition is more focusing on application side or service side. So infrastructure is still difficult for KDI I think that's my sense and I To be honest, I one of the things I like to mention for Dokomo is actually about network function but virtualization Dokomo is historically has kind of option to communicate with the vendors Already existed, but last year and actually this year we opened up the opportunity for everybody to Proposal for for network function virtualization open tender. Yeah, so slightly different But so talking about infrastructure in general IT infrastructure that those companies typically have been the legacy NEC Fujitsu Hitachi, etc Do you see them changing? Well, I think Actually, it's a very difficult question for Dokomo It's not just a kind of systems and switches. So, you know Communication is for devices itself five years ago Fujitsu Panasonic and NEC Everybody there and Now we have Galaxy and Apple. So, you know, the basic trades and communication changed changed and also kind of network systems also have kind of slightly different types of communications and Even Dokomo actually recently we have It's not really open yet, but we like to be open for everybody and It's not it's not open innovation but kind of idea for open innovation the idea of an agile development has gradually Kind of recognizable in in Dokomo's wall I think in jail The legacy company trying to change then they adapt the new technology from startups Let's say there is several discussion within their organization because in most cases they have a several Resembling research project within their organization. So you have to think or the you have to find a supporter with With the potential partners, I think because In case of the entity group as a total that really a huge investment for the R&D and I think you know, they cover almost all the topic Relating the network with related business over technology. So you have to To make a differentiation In the internal project or that in some cases you have to support the internal project as well That will be approached because they try to adapt the new technology because they they have to compete in the world market So that is a very difficult difficulty in infrastructure business So I think maybe, you know Regarding big guys like maybe fully to NGC or even IBM, you know, you know, basically they have a very high cost of structure And the based on legacy technologies and also bunch of senior guys and so even IBM, you know Has suffered from maybe a decreasing of the maybe a revenue continuously and because of the penetration of a crowd and so there is a cannibalization Clearly and so, you know, it's tough time for maybe big, you know, IT enterprises, you know, to adopt this, you know, new era Well, I will point out IBM did shed a lot of businesses in the last few years, right? Okay, thank you very much. I that's the list of my questions. Are there any questions from the audience? I will bring them. Hey, this is Deepak from India. So I just want to ask Christian What about the strategy or that somebody is interested in opening a company startup in India, right? Or some other determinations. So what is your strategy to invest or how should we approach to you? I was a crusader, please. Yeah, so how do other country people in Asia will approach to you for investment? Okay Actually, you know, okay, you're from India, right and actually we have one portal company in India based on Bangalore which is not a you know infrastructure based company, but which is at the company but My recognition is so India is a market is a growing rapidly and you have a maybe large population and also, you know economy is growing rapidly and but this is just my personal opinion, but these days, maybe your Indian ventures valuation is so high and they're very expensive to us and Because of it, maybe some investment from like a maybe sort of banks, you know They invest in maybe some venture companies in the venture companies with a very high valuation and So, you know, it's hard for us to maybe follow, you know, such a maybe high variation. Yeah But generally speaking, I think the question was How does someone from outside Japan go about approaching you for for an investment? Actually, you know Regarding our firm, we have also in Singapore and Singapore is covered basically India and other region, you know and so and also maybe sometimes maybe I Was contacted by through maybe a wrinkling or maybe as a method and Basically as in that case, maybe we have a maybe a conference call with them and Maybe in some case, maybe we can meet directly face-to-face. Maybe in Singapore or maybe India. Yeah, so No other questions. Okay. Well, thank you very much and enjoy the rest of the day. Thank you. Thank you