 Live from San Francisco, celebrating 10 years of high-tech coverage, it's theCUBE. Covering VMworld 2019, brought to you by VMware and its ecosystem partners. Welcome back to theCUBE, two sets wall-to-wall coverage our 10th year. We actually called this one the Valley set. Over on the other side, it's in the middle of a meadow and this wasn't in the Valley. I'm Stu Miniman, my co-host for this segment is, of course, John Furrier, the founder of SiliconANGLE and joining us, the quintessential Valley guest that we have, Jerry Chan, longtime participant in the program, climbing up the leaderboard here of theCUBE Times at VMworld. Jerry, thank you so much for joining us. Stu, John, thanks for having me back. All right, so we knew you back when you worked for VMware. You're now a partner at Greylock. We watched some of your amazing startups. We've had many of them on our program. Just a little bit going on in your world this day. Maybe we'll start there. Sure, it means to me both being at VMworld 10 years since you guys started covering for me. I joined VMware back in 2003. So I was at the first VMworld through everything in one of them and seeing this ecosystem reinvent itself. And juxtapose that with every other conference at Moscone. So Dreamforce, Oracle Open World, VMworld. And I would say five years ago, no one thought like Dreamforce itself or Salesforce or the ecosystem big enough for investors. But yes, now you can invest in startups, all they do is sell to the sales or ecosystem. You can always invest in a startup. All they sell to is the VMware ecosystem. And for sure, when you and I, three of us go to Amazon or event, that ecosystem just continues to grow exponentially year over year. And there's some of the highlights, the data dog we were talking about before we came on camera. They always had a big booth. They bet on the AWS ecosystem. Not a lot of data dog here, but monitoring turns into observability, a key component, which basically was a white space. I mean, monitoring was boring, a little sector, but because of the nature of the data security, auditing, this has become kind of a killer category. I think last week you saw SignalFX get acquired by Splunk, which is another huge enterprise company, and data dog followed their S1. No one thought monitoring would be a big enough market to support multiple billion dollar plus companies. And what we've learned is making a bet on just cloud native companies like data dog date, purely in the Amazon ecosystem was a great bet because they've grown super fast and that market turned out to be very big. In addition, it could be Splunk make a bet on logging for mostly on-premise companies, that turned out to be a large market. So I think five, 10 years ago, no one thought that these markets would be so big and so gigantic that cloud itself, you can have a multi-billion dollar company like data dog purely on cloud native application, cloud native companies, if you will. It's interesting, you're a VC in enterprise, enterprise specialist at Greylock, consumer used to be all the rage and venture, oh, I'm going to go consumer, Facebook, Facebook, breaks democracy, all kinds of problems being regulated, but enterprise became really hot with the cloud and then you have an interesting dynamic. Now a thousand flowers are blooming on the startup side, so yes, there's a lot of action in startups, but the buyers of startups and the IPO market is where the liquidity happens, which you care about, right? So now you have liquidity options as an IPO for fast-growing blitz scalers, as you guys call it, and then the M&A market are buying the companies. So I got to ask you, we're seeing Splunk as a great example where they own the log market, log files, bring SignalFX in, former VMware guys and Facebook guys, comes in, they add some servability piece to it. Splunk's got more power now because of the acquisition. It's not just a token acquisition. This is the market, product market slash M&A market. What's your thoughts on that? Because that's a key exit opportunity and the numbers are pretty sizable. When you think about it. I think just going back to the opportunity, the market is so big that you have multiple multi-billionaire companies. So like Splunk's a huge company, great company. We're investors, companies that seem a logic. That's also going to be a successful company and also a big- And file for IPO. And a big company that's always an Amazon, a VM world. So I think what you have here is each of these markets are monitoring, APM, log, infrastructure, are turning out to be multi-multi-billion larger than we anticipated. So I think before, to your knowledge and the consumer, we always knew consumer markets had huge tans. Like how many billion people are on Facebook? How many billion people are on Twitter? What we're learning now is the market and the tan for these enterprise software companies, be it SaaS, be it log, be it metrics, be it security, those tans are actually bigger than we thought beforehand as well. And the driver of that is what? Cloud transformation, just replatforming, modernization, which the businesses are businesses. I think the move to cloud is accelerate. I think your last line, businesses are businesses is what's keys. Like every business now is being touched by software. They all got to go cloud. So I'm an investor in a company called Blend that does mortgage software. So the entire financial services industry, from mortgages to car loans, consumer lending, that's all going digital. That's all going online. Jobs that were like mortgage brokers are going to be an app on your phone now. So finance, retail, healthcare, construction. So all these markets now are going to the cloud, going digital, so these tans are expanding exponentially. Terry, want to get your take on the ecosystem? Sure. We look at VMware, they built a big ecosystem. The end user computing space, you've coined the term, the virtual desktop infrastructure from that environment. There was the ecosystem around there. I see VMware at a lot of shows and they have a good presence there. And there's some overlap between the public cloud space. Like when I go to this show and I walk through the X-Ball, oh my gosh, data protection is everywhere. And all of those companies are at all of the cloud environments. But do you see a transition from where VMware is and kind of the cloud native space? Is there a lot of overlap or what's your thinking on those kind of dynamics? I think all above, I think VMware, VMware at VMware and like all these tech companies are constantly reinventing themselves and expanding. And so you have, as a VC say, is this company I'm looking at when it's two individuals and a dog in PowerPoint, is it a feature, is a product, is a company? It's a feature, it's okay. You know, it's probably not worth the investment, but it's worthwhile or get acquired for something. Is it a product? And some companies are just one killer product, right? And you can ride that product for the arc of the company. But then some startups turn out to be companies, multi-product companies. And they always have one or two great products and then you start adding new things as the market evolves and VMware has done that. And so as a result of adding server virtualization, desktop virtualization, cloud foundry, which I helped build, adding the Kubernetes stuff. So they're adding multiple products to their company. I think the great companies can do that. Look at Amazon, they keep launching 10 new products every single month. Microsoft has done a great job reinventing themselves. So I think the great companies can reinvent but not transform because they just add to what they have and just be a multi-product family. All right, so you mentioned cloud foundry. Pivotal of course is now back in the mothership where it started there. When cloud foundry first started, it was, well, we're not going to take the hypervisor and put it all of these places. We needed a slightly different footprint. Well, five years later, we're talking about, Kubernetes is going to be baked into vSphere and vSphere is going to be a main piece of VMware's cloud native strategy. Has the market changed or some of those technology pieces still a challenge? What's your take there? It's a great question because I think what we're seeing is there's never ever in technology, as you guys know in platforms, there's zero-sum games. It's never always going to be all mainframe, all client server, all VMs, all microservices, all serverless, right? And I think we're seeing is also never going to be all Amazon is never going to be all Google. It's never going to be all Azure, right? I think we talked about early days is not a winner take all. It may be one-third, two-thirds or something or 25, 40% market share, but it's not going to be all or nothing. And so we're seeing companies now have architectures on multiple clouds and multiple technologies. And so just like 10 years ago, you had a mainframe team, you had a Windows team, you had a Solaris team. Remember Sun and Spark and a Linux team. Now you have a Google team, an Azure team, an Amazon team, an on-prem team. And so you just have these different stacks evolve. And I think what's interesting to see is like we've kind of had this swing of momentum around Docker, containers, Kubernetes, serverless. But at the same time, you see a bunch of folks realize, okay, what's happening is I'm choosing how much I want to consume, like an API, a container or a whole VM, right? And people realizing, yes, maybe consuming APIs to write level consumption, but quite frankly, Stu, John, buying whole VMs also what I want. So you see a bunch of companies, I'm going to build better monolithic applications around VMware. I'm going to build better market services around Docker and Kubernetes. And then when you serverless, what I think I need to serverless. Yeah, that's a good point. One of the things we hear from customers we talk to, and there's two types of enterprise customers, at least in the enterprise infrastructure side. Classic CIOs and then CISOs, two different spectrums. CIOs, old traditional multi-vendor means a good thing, no lock-in, I know how to deal with that world. CISOs, they want to build their own stacks, manage their own technology, then push APIs out to the suppliers and re-change the supplier relationship because security is so important, they're forced to the cutting edge. So I look at that as kind of canary in the coal mine, I want to get your thoughts on that because we're seeing a trend where enterprises are building software. They're saying, hey, you know, I want a stack internally that we're going to do for a variety of different reasons, security or whatever. And that doesn't really blend well for the multi-cloud team approach because not everyone can have three killer teams building stacks. So you're seeing some people saying, you know, I'm going to pick a cloud here and go all in on certain things, build a stack and then have a backup cloud there. And then some CIOs say, you know what, I want all the cloud guys in there negotiating at a price maybe or whatever. I think it's a great nuance, you pointed out. Just like we had a Windows team and a Linux team, you still had a single database team that ran across both or storage teams that ran across both. So I think the nuance here is certain parts of the stack should be Azure, Amazon, VMware. And certain parts of the stack should be, I think the ultimate expression is just an API service area. So one of the companies you guys are familiar with Rockset, it's a search and serverless analytics company. It's basically an API in the cloud, multi-cloud to do search and analytics. And just like you had a data team, the database team is independent across all these stacks. For certain parts of the architecture, you're going to want something like Rockset that's going to be independent of the architecture stacks. And so it's not all isolated, it's not siloed, it's not all horizontal. Depending on the part of the stack, you're going to either want a horizontal cross-cloud solution or a team that's going to go deep on that. So it's really a conjectural decision based on what the environment looks like or business. And there's certain areas of technology that we know from history that lends themselves to either full stacks versus horizontals. Just like I said, there was a storage team and a database team, this Oracle, or something that ran across Windows and Linux and Sun, you're going to see something like Rockset become this search and serverless analytics team across multiple cloud stacks. This is why the investment is such a great, I think great opportunity for the enterprise VCs right now because there's so many dimensions of opportunities for companies to grow and become pretty large and the markets are shifting. So the team is pretty big. Michael Dell was just on the other side, I interviewed him. He says, you know, he was getting kind of in Dave's grill and saying, well, the TAM for enterprise is bigger than Cloud TAM. I go, well, that TAM is going to be re-platformized. So like that's going away and moving shifting. So the numbers are big, but they're shifting. So tons of opportunities. It depends if you're a big company like Dell versus a small startup. Oftentimes, it's true that the TAM for enterprise is still much larger than Cloud. But to your point is what's shifting were the dollars growing faster. The TAM for horses was huge at one point and then cars came along, right? Every startup, you want to attach to a growing budget. You want to attach to a flat to shrinking budget. And so right now, if you are a founder and say, okay, where are the budget dollars flowing to? Everyone's got a kind of a cloud strategy just like they had a VMware virtualization strategy. So if I'm like a startup doing metrics or data analytics, I'm going to try to attach to where the dollars are flowing. That's a cloud strategy. It's an AI application strategy, you know, security strategy. So let me ask you one question. So I've got a startup, it's a hypothetical startup. Startup's got an opportunity. It's a SaaS based startup. They say, you know what? This is a feature in the market that's part of a bigger system, but I'm going to innovate on that. I think that with a market shift and that could evolve into a large TAM to your point about data dog. What's the strategy from an investment standpoint that you would take? Would you say go all in on the single product? Do you want to have one or two features? What's the makeup of that approach? Because you want to have some maybe defensibility. Is it go all in on the one thing and hope that you'd be turned into like a sales force? Then you bolt stuff on or do you go in and try to do a little platform play underneath? It depends where you are in the startup world. We're in the life cycle. Look, startups succeed because they do one thing better. Right? And so focus, focus, focus. And you have to have something that's like 10 times faster, 10 times better, 10 times cheaper, or something different. Something the world hasn't seen before. But if you do that one thing well, either A, you're taking budget dollars from incumbents, or B, you're something net new that the world hasn't seen, people will come to you when you see utility. As an investor, I like to see that focus. I like to see some founders say, hey, Stu, think bigger. Some founders like John think smaller. Like what's your wedge? What's the initial entry point to the customer you're going to hit? Because once you land that, you get the right to do the next product, the next feature. That's the land to adopt, expand. Yeah. Like Zoom did, or they picked video. Right. I mean, who the hell thought that was going to be a big market, and it's a legacy market, but they innovated with cloud. Absolutely. I have always sayings, I try to say, like you don't get to play late innings if you don't make other early innings, right? You know, and so if you want to have this strategy for this large platform, that's great. And every VC wants to see a path there, but they want to execute from where you're going to land and where you're going to expand. Now, startups fail because either where they land, they picked incorrectly. Like you decide to storm the wrong beach, right? Or it's either too small or it's too big. The initial landing spot is too big. They can't hold that ground. And so part of the art of navigating from point A to point B, or I say act one, act two, act three of your life cycle is make sure that you land correctly, earn your keep, show a lot of value, win that first battle, if you will, act one, and then you move to act two, act three. And you can see a company like VMware, clearly on their second, third act, right? And they've done a nice job of owning one product category, server virtualization, desktop virtualization, now expanding to other adjacent categories, buying comes like carbon black, right, in terms of security. So it doesn't happen overnight. I mean, VMware started in 1998. I was there when there's about 200 employees. People forget Amazon's been, gosh, on 27, 1998 when Bazel started selling books. Now they're selling books, movies, food, groceries, video, right? When did you first use AWS? Was it when the EC2 launched? I mean, everyone kicked the tires on that probably. We all kicked the tires. I was a VMware as a product manager. I think it was 06 when they launched, right? And we all kind of kicked the tires on it. And it was a classic universe dilemma. We sold this thing that was, you thought it was small and a very narrow surface there. Amazon started with an EC2. Two building blocks, storage and EC2. S3, right, that's it. And then they said, okay, we're going to go focus, focus on basic compute and basic object storage. And people are like, what can do with S3? Nothing, right? It's not a sand, it's an availability. It's going to fail all the time. But people just started innovating and working their way through it. All right, so Jerry, when you look at the overall market scape out there today, it seems like you still feel pretty confident that it's a good time for startups. Would you say that's true? Absolutely. All right, want to get final word here. Ten years of theCUBE at VMworld. You've known John for a long time. Did you think we'd make it any big memories as to what you've seen as we've changed over the years? I plenty. Let's go back to, okay, so. Okay, now you can embarrass us. Do you know 10 year anniversary of VMworld? Your first VMworld 10 years ago, I was like a product manager. And John Ferrier, I think I met at a press dinner and he's like, hey, Chen, you're walking by. Come here, sit down, and you turn the camera on and we had no idea what's going on. And he started asking a bunch of random questions. I'm like, sure, I haven't cleared this with marketing or anyone else, but why not? High Jack interview, we call that. High Jack interview. And then it's been amazing to watch the two of you, Dave, John, everybody, gross, look and angle, and theCUBE in particular, into this media franchise in terms of both having a presence at all these shows, like Amazon, Oracle World, Dreamforce, VMworld, et cetera, but also the content you guys have, right? So now you have 10 years of deep content and embarrassingly enough, 10 years, I guess of videos of yours truly, which is always painful to watch. So like either what I was saying or, you know, what my hair looked like back then or something, so. Jerry, you still have hair though. Well, the beautiful thing is that, you know, we can look at the reputation trajectory of what people say and what actually happens. You always had good pics, loved the posts you did on MOTES that turned out to be very timeless content. And yeah, sometimes you don't miss it. We had, we sometimes cringe. We miss a bunch. I remember starting one time with no headset on, like, a lot of great memories, Jerry. Great to have you in the community. Thanks for all your contribution. I look forward to the next 10 years of theCUBE, so I got to be here for the 20th anniversary. And now if I walk away, come back on right away, do I get another, like another notch on my CUBE attending list so I can go up and catch up. If you come on the other set, that counts as another interview. Perfect, so I got to catch up with Steve and the rest of the guys. Steve just lost it to Eric Herzog just a minute ago. We had a ceremony, it was like a walk through the supermarket, the door saying the confetti came down, 11th time, so you got to get to 11 now. So 12 is the high water mark. Done, we need t-shirts. Well, Jerry, thanks so much for joining us again. For John Furrier, I'm Stu Miniman, and you can go to thecube.net. If you search for Jerry 10, there's over 16 interviews on there. I know I've gone back and watched some of them, some great discussions we've had over the years. Thanks so much and stay tuned for lots more coverage here at VMworld 2019. Thanks for watching the CUBE.