 Hi everybody, this is Dave Vellante. We're back, we're live from EMC World 2012, and this is SiliconANGLE.tv's continuous coverage of EMC World. As I said at the top of the show, we've got a simulcast going on at the HBase conference in San Francisco. My co-host John Furrier flew out to that last night, so we'll be simulcasting that. Go to SiliconANGLE.tv, check the HBase link if you want to watch that program. But we're here live, we're here with Don Basilli, the CEO of Violin Memory. Violin Memory's one of the hottest flash startups on the planet right now. Don has been growing the company, has a strong background, a former CEO and chairman of Fusion I.O. has raised, I believe, 190 million. We're going to get into that for Violin Memory, getting ready to do an IPO. Don, Dr. Basilli, welcome to theCUBE. Thanks for having me, Dave. Good to see you. It's a great seeing you. I appreciate you spending some time here. We're here with David Floyer as well. Yeah, we were talking off camera, you said this is your first EMC World. It is, it is. I like VM World, I go to that many times, but my first time at EMC World, and here it's a record for EMC. It's quite an event, isn't it? Now I got to ask you, are you here as a, you know, like a V-Plex sort of partner? Are you here as a friend, a foe? Well, one of our partners, ICI, has us in one of the booths here, showing off a great VDI solution using Violin. ICI, the guys from Marlboro Mass, right in the back. Yeah, from Marlboro Mass, yeah. Long time big EMC distributor, and need some flash to go ahead and make those VDIs run in there, demonstrating Violin in the booths. So, really excited to come down and support them. Yeah, good. I mean, flash obviously is hot. Joe Tucci's been talking about it. He talked about it on his keynote. We saw the acquisition of Extreme I.O. That had to make you happy. What a great valuation was it? 420 million for 25 people, it's rumored. I mean, that's, we have almost 400 people, so when you start doing that math, we're getting pretty excited. Yeah, well, you start to get the linear equation out, and it's good, it's good. But yeah, so I mean, a lot going on and you're part of the, well, you saw the Facebook I.P.O, obviously. We did, really. Yeah, what did you think about that? I think it's $100 billion I.P.O in the Valley, six-year, eight-year-old company. It just shows that the innovation is still possible. I mean, people coming out of 2002 were like, is the internet dead? Has it all been done? And then Facebook comes along and creates a whole new ecosystem. So, very, very exciting area, and it's an area, Violin's not directly in that particular company, but it's an area where I have personally invested in the whole area of social commerce, which I think is going to be a huge explosion coming on that ecosystem that Facebook has, Google, Microsoft have around social connections. So, exciting time really to be in tech innovation again. Yeah, I mean, it's really the third mega I.P.O, right? Obviously, Netscape and Google and now Facebook, and although Facebook's taking a little heat in its first full day of trading, it pulled back, I guess, Morgan cut its estimates while the road show was going on. It's a little controversy there, but we would expect that data is really the central point, the central leverage point of Facebook, even more so than potentially advertising. It's all about data, and we think there's a lot of potential there. We agree with you, really exciting time in tech, but so let's talk about Violin. You guys have, it's reported to be an $800 million valuation based on the math that we just did with the back of the napkin on Stream I.O. It's a little undervalued right now, but still pretty good. Well, I think that's an equity investment value. It's not an acquisition or IPO value. So, I think that the equity investment value of Stream I.O. is quite a bit lower when you're bought, but I think EMC has been one of the big buyers in industry. They've paid some good dollars for Isilon, for Data Domain. Now they've paid a very high price for Stream I.O., at least for all the people in the company. So I think it's exciting, but I think what it's indicative of is that the value to the enterprises, in the end of the day, Violin exists to make applications run faster and cheaper for the end user customers. And that's just, that's what we do. And so we think about all day long and it shows that this new approach of memory-based technologies is what the end customers want. And the legacy approach is in danger of being replaced. And so the companies have to either build it themselves, it's very hard to do. The Violin IP goes back to 2005. Another stream we got from 2006, we're talking about six, seven years of development to bring it to fruition, or that to buy their way into the market. And so I think you're seeing now, this is just on the heels of a number of acquisitions, supply and acquisition, the Sand Force acquisition, Stream I.O. acquisition. People trying to buy their way into the market so they can start to make products. And I read the newspaper report for yesterday in like next year. So sometime next year, they hope to turn that technology acquisition to a product acquisition. Yeah, they're all flashed away. I mean, it's curious. I mean, we're watching thinking, okay, is there going to be, you know, in the NFL when somebody drafts a left tackle, all of a sudden there's a run on left tackles, you know, do you think it'll be a similar sort of run on flash companies, or is it a little bit too early for that? You know, I like in this space, first of all, space is so exciting. I mean, I haven't been this excited since the networking space in the 90s. And I liken a lot to that industry. In that industry, you had many, many, many companies formed throughout the 90s. There was a big incumbent called IBM. And IBM and technology called SNA. And almost every company used SNA. 70, 80% of the data flew through SNA and in the corporate network. Even the middle of the decade was still there, but out of that decade, 20, 30, 40 companies were bought for hundreds of millions or billions of dollars. And in the end, Cisco emerged. And IBM actually sold SNA to Cisco and sort of exited the networking business. They just got back into it another 10 years later. So I think that it's very interesting here. We're seeing a similar thing. There is another 30 to 50 companies already formed, venture backed, that are trying to do what violins do. Okay, and create all memory arrays, all flash-based memory arrays to go ahead and bring it to the market. Much like there are 30, 50, 100 companies creating IP networking devices in that. So I think that it's healthy. It's very healthy. And it shows that in the end, the customers want the technology. And they're looking for the approaches to get the technology, whether it's from an incumbent vendor or an upstart. That's to be determined. What we can do is kind of try to copy what the Great John Chambers has done, which is basically build violin, make it bigger and bigger and bigger, and keep servicing the customer over the next five, six, seven years, so that we hopefully emerge as a very important player out of that period. Well, I wonder if I could run this by, I kind of look at violin as the data domain of flash. In other words, data domain's value proposition obviously had its data duplication piece, but a real appeal of data domain was that you could drop it in and you didn't have to change anything. You didn't have to change your processes. You guys talk a lot about no changes to applications. So I use that analogy because it's disruptive, but it's disruptive to the industry, but it's not disruptive to the IT practitioner. Is that a fair angle? It's a brilliant insight. And it's something we work really hard about. We talked about ADCIOs when we first took over violin as violin 2.0, we took it over, recapped it, and they said, listen, don't make me change my infrastructure. Someone has always given me something faster and better. Just let it plug in. It's why we have V-Plex certification, SVC certification, work with Oracle ASM, Symannic Veritas. You can plug violin today, get the benefit, don't have to change your database, and make it all happen. And that's, I think the reason we've been able to get some of the biggest customers in the world to have already adopted violin in such a short time period. Now, you guys are readying to do an IPO, right? Talk about that a little bit. Why IPO? I think the public market has shown, and hats off to the Fusion management team today, in that they're basically able to derive a multi-billion dollar valuation in the public market, able to access capital. And I think that we're being asked to do the same thing. Our customers, our partners are saying, go public, raise another few hundred million dollars of capital, grow violin even faster to go ahead and take advantage of the opportunity. Cisco did it in its day, Google did it in its day, Netscape did it in its day. Seems like the right thing to do for our customers, our employees, and our shareholders. Well, and you're going after some big markets, right? I mean, I presume like most CEOs slash investors, you're looking for a big market, and you've obviously targeted one. I mean, you've publicly talked about Oracle, EMC, as really ripe for a change. Now, of course you're, again, there's this co-opetition, right? You're in with ICI, they're a strong EMC partner, so there's this sort of ebb and flow of friend and foe. But talk about that a little bit in terms of the size of the market that you're going after. Today, we believe we address $20 billion of annual spend, the high IO market and a performance optimized tier two market. That's today, and all that should be in memory. And it's not because we say it's because Larry Ellison says that Oracle should be in memory. Joe Tucci himself is tall about the future of his industry, but even more importantly, the application software vendors. Okay, the SAPs of the world, who's now our investor and partner, the Oracles of the world, the Microsofts, the SASs of the world, they're saying all my applications should run in memory, and I want persistent memory, I want network-sharable memory, and that's the way you should run your business. And so the customers are saying, yeah, I should run my business. Why should I only take 10% of my data for 90 days of a year when I can have 100% of my data in real time for all 20 years I've been in business? You're going to have a much better business if you analyze that kind of data. And so the customers are pulling it, and what we're doing is we're working to deliver the technology. And all the big conglomerates have amazing software, I mean, VMware, Green Plum. I mean, EMC software assets are amazing, Oracle software assets are the best in the world. Of course, that's what we do, we make the software run faster. Where we see competition is usually with a sub-segment of any company. You know, we're technically a competition sub-segment of every company, of IBM, of HP, but in reality we're not because we're really focusing on a different problem, which is actually to give the end customers the ability to analyze and transact on huge amounts of data in real time simultaneously. And that's what we do, no one's ever done before. We had Nino on last week from SAP Ventures. We were down at Sapphire, and we talked about the investment in violin. You mentioned SAP and memory, of course we got a big dose of Hanna. That's if you're an SAP customer, you're going to hear a lot about that. When a company like SAP, which is corporate venture, invest in a company like yours, is there much discussion about okay, how do we dovetail into things like Hanna, or is it more they just see a trend and want to get a piece of the action? It goes the other way. Usually the corporate investment comes after there's a reason to be in the market together. So really for all of the investment partners that we have that are corporate, it's because they saw a match and the technologies are to go to market, and they really wanted to support the match. So as a small company, you need to grow the company, be able to embrace and work with the companies as big as an SAP of the world. And so the investment is really just a show of support for what's a natural fit in the marketplace, either technologically or go to market. In the case of SAP, I'd say both. It's a wonderful thing for the customers. It's a wonderful thing for the vision of the company. It's a very early on vision. You have to give them a tremendous credit for realizing that the software layer itself should be reshaped over the next seven to 10 years to all run in memory and eliminate in the software itself the bottlenecks. And so they started that program a couple of years ago. We happen to, I believe, accelerate that program's ability to go ahead and deal with large data sets. At the same time, we take all the legacy, ERP, and we can move it in memory right away. And that's really exciting. And you know our stance on that, David Flores basically came out and said, all active data will be in flash or memory, eventually and probably not that far. So just going on to that. So we only have, I got the break sign like three minutes ago, but go ahead. I just have one question, which is, the active memory is going to be in persistent flash type storage. Where do you see the value in that chain, the management value? Where are the breaks in that? Where you're going to fit in the next software companies that are going to come in and take advantage of that? The new ISVs or the new CAs, et cetera. So I think we work with dozens of application level. Be they SaaS or be they existing providers of enterprise software that are going to take advantage of that. So very clearly the application layer, the end stuff to touch the customer, be it analytic, be it a Salesforce application, be it a big data stack, whatever it is, those folks are definitely going to benefit from it. They can write the code cheaper and faster and better. In the middle, I think it's an open question. Certainly Violin will have a full set of management features to go ahead and manage our memory spaces into the hundreds of petabytes, into the exabyte layer. And then the big middle-quit question is things like the virtualization layer. How much does the virtualization layer own? You can today run VM inside of Violinbox if you want to. I understand it's a vision EMC has for the future. So does the virtualization layer take over thing? Does the layer, the memory layer hold it? Or does the application, as it does in Oracle today, does the application own it? I don't know the answer. It's exciting to find out. All right, Tom. Well, listen, thanks very much for coming out. I got a lot more stuff for you. And I really hope you can come back and we can get into sort of your decision to go deep into your own controller design. You guys have added value there. It seems like you got a very strong technical team. You've got an interesting combination of business and technology as your background. And so hopefully we can continue this down the road. David, look forward to it. Thanks for seeing me coming up. Great seeing you guys. All right, keep it right there. We'll be right back after this brief break.