 Okay, welcome back, this is live in Las Vegas, this is the end of day one, this is our wrap up segment of theCUBE at Splunk Conference, dot-converse 2013, I'm John Furrier with Dave Vellante, my co-host, and Jeff Kelly making an appearance in this segment who's been scouring for stories, talking to all the folks, talking to the CEO, talking to all the people on the team, customers, scouring the web, guys, welcome to the wrap up. Thank you, John. John. Guys, I got to say, I'm really impressed with what Splunk's done here, and I'm really excited to see what's going to happen with what Splunk's done here, and with post-IPO. You kind of see what people are made of when they have to do transitional things, Dave. You know, I've seen companies pivot, turn, and dime, you guys certainly have helped companies get into the thermal growth, but here, companies succeeding, they hit a rocket ship growth, they go public, a lot of challenges, could be distraction, but certainly my impression is no distraction here, Splunk certainly is hitting cruising altitude, not only getting better and stronger, certainly the customer acquisition numbers are strong, and their partner ecosystem is great, their keynote and fan base, their customers are loyal. All in all, Dave, I got to say, Splunk's looking really good. Yeah, John, I mean, I think you see a lot of different models, there's just two broad models, I guess, in the IT business. One is the safe bet, it's IBM, it's HP, it's EMC, it's Oracle, it's Cisco. I mean, you're going to do business with those companies because you know they're going to deliver a product, and they're going to stand behind it, and they're going to service you. And then you got the 10x value proposition companies. That's companies like Tableau, ServiceNow, Workday, Splunk. These are the companies that are really transforming their irreverent, as Steve Cohen said. They're disruptive, so they got a little mojo going, and at the same time, customers are willing to take a chance because the value proposition is so compelling and so transformative to their business, and they can't get that from their traditional IT suppliers despite what the traditional IT suppliers are telling them. So I love that kind of mojo at an event like this. Jeff Kelly, I want to go to you for a second. Let's talk about what you're finding on the show. Obviously, you were on the crowd chat today, preparing up for Hadoop World and Big Data New York City. Quick programming note, the queue will be in New York City for Stratoconference, Hadoop World, covering that in concert to the Big Data New York City event going on as well that week. But you were out, you did a chat this morning talking about Big Data with Hadoop Ecosystem. A lot of Hadoop here, we had Cloudera, Amarawa, Dala, honestly, they have a relationship also with Hortonworks. What did you find out there? What stories did you dig in? What observations did you find? Well, very much like the last show we were at, Tableau's Customer Conference, it's a really excited customer base here. These customers are clapping and cheering during the keynote. It's something you don't necessarily see. They're more than excited, they're giddy, right? They're clapping, they're hooting, they're hollering. And there's really a sense of community around the customer base. They love to trade stories, they love to trade best practices. The hackathon last night I was at, just rooms filled off the corridors here at the Cosmopolitan. They were there at 11 o'clock at night, they had some TV going, I saw a rerun of Alph playing on the big screen for some reason. I guess that's popular with the group here. But anyways, these guys rub there all night, they're coding, they're drinking beers, they're having a good time. They really enjoy this. It's not something you see at one of the larger events, some of the mega vendors we see. The other thing, Mike, coming into this, Splunk I think was really early on recognizing the value that providing applications that allow you to really manipulate and understand data. They saw the value of that very early. Obviously, they're based their whole premise of their organization on that. They have kind of ridden this wave of big data, all things big data, and they're one of the few companies out there that are actually selling and providing applications that allow people to make sense of, in this case, machine generated data, but they're expanding to other data types. The key for them, I think, going forward is to continue innovating. They've kind of got that lead, I think because they were one of the first out of the gate to recognize the value in this. They got to keep innovating. I think you saw what the announcements today. Clearly, they are. The cloud option that they unveiled today was very popular and it's going to help them, especially against some of the more nimble startups. It's funny, Splunk is now kind of a big established company in a sense in this large, in this big data world. There are companies like Logly and Sumo Logic who are coming at Splunk doing similar things, but doing it from a cloud perspective. Well, Splunk now got an answer for that. Well, I want to ask you guys about that because John, Jeremy Burton, we were there when cloud met big data, and so people have been putting those two together, but you take company like Splunk and a company like Tableau, not big cloud plays. What about that cloud meets big data? Is that a misconception on the industry's part? Or is it a fundamental requirement that cloud meets big data? I think it's a fundamental requirement. As you know, we were close to EMC when they put that together and we had the first cloud mobile social editorial. You guys had the first real research around those three pillars, and big data just came out of social and cloud, and hence the cloud era, pun intended with cloud era, the company. But, Dave, we saw this from day one. This is a fundamental economic wealth-creating inflection point, meaning new companies, new brands going to emerge, that are going to change the game. And this is where all the chips are on the table, and you're seeing the incumbent vendors, like EMC, change their game and go cloud meets big data, and go in that. And EMC, I gave Jeremy Burton a lot of credit. He saw the work we were doing. He saw the marketplace. He came fresh into EMC and said cloud and big data. Those are the two pillars. He bet the ranch on that, and the bet's coming home. Jeremy Burton's making more money than any, even not a CMO anymore, he's executive vice president, doing great just on the stock options. He made a good bet, he's playing out. He's also a great executive with some product chops. Absolutely table stakes, in my opinion, that the application market is going to be enabled by that. So Jeff Kelly, so I got to ask you. There are forces that you mentioned. You've got open source, you've got some new players that have seen the opportunity that Splunk has created, that they're going to have to Splunk. So what's your prediction here? I mean, you've got a public company now, they've got more resources, they're clearly a leader in the business, but you've got other companies coming after them. Not only start us, but we were at HP, the Vertica user group they were talking about, they're Splunk killer, you hear it all the time, oh, we can do that, we can do that. What does that all mean for Splunk? Well, the good news for Splunk is they're ahead of everybody in this game, because they've been doing this for longer. They have a more generally accepted, among the customers, a better application for VMware, for instance. So they're actually ahead of a lot of these other vendors. There's VMware itself trying to claim. Right, oh yeah, at VMware it says, well now we've got a tool for monitoring that's just as good as Splunk. Well, if you talk to some of the people using the Splunk app for VMware, they'll disagree with that. So bottom line is a little bit simplified, but people really like the Splunk user interface and the application, it's very easy to use and that's something that you can't necessarily replicate. So it'll take some time for some of these players to catch up, but back to the point John was making, this whole idea of cloud and big data and you're asking, is that really the two megatrends here? And I think absolutely, when we start talking about industrial internet, internet of things, whatever term you want to use, we're years away from that really being a reality, I think in terms of an interconnected world, but clearly the two key enabling technologies are going to be big data, making sense of all those connected devices and cloud, being able to connect them in a way that makes sense, where you can't do that in an on-premise situation if you've got isolated data centers. Now the other thing, this company started in 2005, it's yet another Silicon Valley success story John. I mean it's just, Silicon Valley's just running the table. What's your take on the Valley action going on here? I think Silicon Valley is going to continue to do well and rule the road here on IPOs and success. Silicon Valley is the ecosystem that drives a lot of wealth. It's the Wall Street of startups. However, there are a lot of successes outside of Silicon Valley. This is just another string of successes, but Dave, this is an absolute poster child in my opinion of a venture that could've gone the wrong way. I mean Splunk was not a shining star when it got funded. It took two visionary venture capitalists, Nick and David Hornick. Nick from, he's now with Ignition and David Hornick from August Capital, made the bet, they bet on technical founders, they bet on the right product guys. It was a small tool, and it was at the time, it wasn't the trendy thing. This is pretty big data, this is log files. They saw a problem, they saw a good team. Now this thing could've gone off the rails, right? If you look at today's market, this is what I worry about all the startup environment is that all the different funding dynamics, all this crowdsourcing, this, that. You've got to have good investors. This is a great example of great investors back in their guys, back in their team, because this thing could've been off the rails in the fourth year, okay? Product strategy, debate, boardroom dynamics, people not paying attention, sleep at the switch as we say, and this is an example of a company done right. They hit the growth curve, big data swooped in, they had a great product, happy customers and incrementally moved the ball down the field and finally scored the big long ball with the touchdown with big data. I think in this class, if these are football analogies, first down, first down, first down, and then big data comes down, they throw the ball in the end zone, touchdown, home run, there it is. That's the IPO, that's a success story. I mean, there's a fine line between good and great here, isn't there though? I mean, like you say, I mean, even Stephen Cohn was saying, not Stephen Cohn, sorry, Stephen Cohn, was saying that he couldn't have predicted where they'd be today, the IPO, et cetera, so there is a fine line between good and great. Well, this is the thing, this is my point. If you look at Splunk, right, Dave, they could have, no one was buying their stuff initially, right? And so, except for some tech geeks, no one was kind of get it, but the recession hit and people weren't spending in 2008. That was a big surge and you saw the spending and Splunk became a great solution because for very little cash, you can come in and create business value. That was a really, really important moment in the company's history, David, and what also happened is, they believed in their own product. You heard from the people here, culture, they're aberrant, they're disruptive. They use their own product and they focus on the customer. Those two things, good timing, still comes to people who are preparing. So, I mean, it's not enough to just have a big market. It's not enough to just have a lot of capital behind you. You need other ingredients, obviously, to succeed. This is what I'm afraid the younger generation doesn't understand in the startup world is you can't just magically put pixie dust and get the home run. You've got sometimes really being in good position, as they say in basketball, be ready for the rebound off the rim, in this case, it log file tool with good technology, moves into the big data world, and hello, they've got enterprise customers. I think part of it, look, you've got to admit, part of it is luck and timing. You've got to have that on your side. But they've also got a really good product and they're smart enough when those opportunities present themselves to take them. I think they are, again, timing is fantastic for them right now. We've been talking about the year of the big data application and we're really still waiting for that. They're in a really good position right now to really take advantage of all the interest in SQL on Hadoop, interactive analytics on Hadoop. Well, guess what? They've got a product in Hunk, cute name, but a good product that allows you to get right in there as a business user and start analyzing, searching data, using a search interface. It's a good looking product, I got to tell you. It's a very good looking product and people are looking for this. People are like, well, how am I going to get all that value out of... It's a hunk of a product. How am I going to get all that value out of Hadoop? Sense, bug sense. Hunk, they got the naming conventions down there. Yes, some interesting names, but nevertheless, they've got, they've got to play right now in an area that's got a lot of interest and they've got the track record in the log data to actually show they know what they're doing. Well, remember, Mike Olson, two Hadoop worlds ago announced the application tsunami. That kind of never came. We said the analytics was a killer app. In the meantime, as the market kind of catches up, we still haven't seen that application framework hit, but yet still, analytics is the killer app, right? Analytics is definitely a killer app, I think. Well, it's analytics for the masses is the killer app and that's the holy grail that everybody's going after and I'm not declaring Splunk is there. I don't think Splunk is there. I don't think anybody's there yet. You talk to Tableau customers, you talk to Splunk customers, they're not there yet, but they're closer than the BI crowd ever was. They're certainly closer than the traditional BI players and then that's because they don't have that legacy architecture to deal with. Guys, but there's also a cultural issue. It's not just the technology of the products, it's getting business users to understand how to look at data and look at it as an asset and something you can actually try to value. The timing's right for that. Absolutely. So I want to wrap up and ask you guys some follow-up questions to close the segment out. In first impressions of day one and what are you looking for for day two? Jeff, we'll start with you. First impressions, like I said, very excited base of customers here, 1800, excuse me, plus customers, 18,000, that'll be a few years, but nevertheless a good showing here. I think tomorrow on theCUBE, we're going to look for certainly some more customer stories. It's always interesting to hear from customers because they are on the front lines. They're using the product every day so I expect to see a lot more of that and really tomorrow I think is going to be a lot about these customers networking with one another and I'm hoping to get out there and talk to them. Let's add on the question to you then and then to Dave, same thing. What's the challenges for Splunk as well? I think the challenge for me, from my perspective is to continue and make the cloud play real. Continue to invest in that product and that approach. As I mentioned a minute ago, I think cloud and big data are critical to really leveraging industrial internet, the internet of things, and if Splunk wants to be a key player there, they've got to really fill out that portfolio of cloud based capabilities. I know you said Dave, go first. Well, so for me, John, we heard from the executives today, very strong story, we heard very solid product lineup. It's very clear in talking to customers that there's passion here, there's real traction. It's substantive. To me, the big thing is ecosystem. I feel as though the ecosystem here at Splunk is good, but I feel like it's not been as deliberate as it can be. I think Splunk has a ways to go there. I think that is one of the leverage points that this company really has to focus on because like today we talked about earlier, 45% of Splunk sales goes through the channel. I think it's got to be way, way, way higher than that. Now, they're making great progress, but I think that they've got to have a goal of getting to 70% and that comes through the ecosystem. It's going to take some time. It's going to take some investment. That's really where to me the big upside is for this company. My impression is I'm very impressed with Splunk. I'm very impressed with the ecosystem. I'm impressed by the rabid fan base of their customers who are proud of the product. Again, exemplifies my point about startups having a great product focus. Products will win. Again, the four piece of marketing as I teach you in marketing 101, one of those product. But the challenge is Dave, I would agree with you. The ecosystem is a challenge. Good news is they have a great turnout here. There's no light weights out there, all heavy weights in terms of what they're doing with tech and their value proposition. So great start for the ecosystem. So I think it's looking good off the tee to use the golf analogy. Landing in the fairway. So that's one. My big thing on the challenges for Splunk and that I'm watching is the cloud. I think moving to the cloud is not as easy as it appears. Although that's the value proposition. So to move the DNA of the company with the pressure to drive revenue, luckily the market's kind of moving to them right now. So it might be a rising tide floats all boats. Moving to the cloud is very, very difficult. And I think that's going to be a key challenge. We're going to keep watching that. Look at what SAP has challenged with the cloud. They've had multiple restarts and misfires. Now they're seeing them get their groove back with HANA. I think this could be a big challenge for Splunk. And we're going to, I'm going to watch their cloud and that's going to be my focus for them tomorrow. Yeah, I would agree with that. I would just say on the ecosystem point, I think they were actually, I think they do have more work to do, Dave, but I think they're in really good position because some of the Hadoop players, for instance, knee Splunk, I think more than Splunk means them right now. Okay, we're going to close down when the government is closing down right now. So, you know, that's, that's a good point. Except we'll be back tomorrow. We'll be back tomorrow because we work for free here at theCUBE. We are open source content, programming node next week, Dave. We're going to talk about big data and internet of things. I'll be interviewing the CEO of GE on stage. Yeah, Jeffrey Immelt. I'm really proud of you, John, for being selected. Out of the zillion people that they could choose, they chose you to host this panel. So yeah, that's just fantastic. Might be my last, but we'll see. We'll bring some cube mojo to the GE event on the industrial internet next week in Chicago. Mines and machines, another player to watch. Guys, great day and great wrap up here. That's day one wrap in the books tomorrow here. We're going to go to the party tonight. Find out what's going on here at inside, theCUBE inside Splunk Conference.conference2013. I'm John Furrier with Dave Vellante and Jeff Kelly, Wikibon. We'll be back tomorrow. Good night and join us tomorrow.