 Live from Washington, D.C., it's theCUBE, covering AWS Public Sector Summit 2017, brought to you by Amazon Web Services and its partner ecosystem. Welcome back here to Washington, D.C. You're watching theCUBE live here at SiliconANGLE TV, the flagship broadcast of SiliconANGLE. We are at AWS Public Sector Summit 2017, wrapping up day one coverage here in the Walter Washington Conviction Center, along with John Furrier. We are now joined by our esteemed colleague, Jeff Frick, who's been alongside all day, handling all the machinations behind the scenes. Behind the scenes, Jeff. Doing an admirable job with that, Jeff. So what do you think, our first ever visit to your town? I love it. I love it, yeah. Since I think to have below it at the Opry. The Opry's the other big convention center here. Or Grace, not Grace, I mean. And her National Harbor. Same company. National Harbor. NGM. You're our DC guy. Gaylord. Gaylord, thank you. We're going to get some tickets for the nationals game tonight. We're going to go Nats game tonight. Strasburg pitched last night, did not pitch well, but who knows, maybe we'll get Geo tonight. Well, the action's certainly Amazon Web Services. Yeah, let's talk about what we had going on here today, Jeff. Well, I mean, look, we interviewed, you and I had some great interviews that Intel came on, which is obviously Bellwether in the tech business. Jeff, former Intel employee knows what it's like to march to the cadence of Moore's law and Intel's continuing to do well in platinum sponsor or diamond sponsor here at the event. Look at it. The chips are getting smarter and smarter. Security of the Silicon, powering 5G, a network transformation. A lot of the plumbing that's going on in cloud and in cars and devices and companies, it's going to all be connected. So it's connected, world we're living in, and Intel's going to be a key part of that. So they're highly interested and motivated by all the people that are popping up in the cloud. We were just talking, and Jeff, I know you're able to listen on the last interview that we did, but a point that you made, that you have a point that you raised about four years ago when the CIA deal came down and AWS is on one side and IBM's on the other and AWS wins that battle. You called it the shot heard around the cloud and that now four years later has turned out to be a hugely pivotal moment. Yeah, I mean, this is like moments in hot time history here. Again, document on the cube for the first time and I think any was written about this, but I'll just say it since we're going to be analyzing it. The shot heard around the cloud was 2013 when AWS public sector under Theresa Crawford's team and her leadership beat IBM for the central intelligence agency, CIA contract, guaranteed lock spec for IBM. See, Amazon comes out of the woodwork and wins it and they won it because essentially the sales motion and the power of IBM had this thing locked in. But at that time, the marketplace was booming what we called shadow IT where you can put your credit card down and go into Amazon cloud and get some instance. What happened was someone actually got a little prototype showed their boss and they said, I like that better than that. Let's do a bake off. So what happens at the last minute a new opportunity comes in and then they do what they call a bake off. Bake offs and the RFPs come in and they won. Went to court and the judge in the ruling actually said, Amazon has a better product. So they ruled in favor of Amazon web services. That was what I call the shot heard around the cloud. Since that point on, the cloud has become more legitimate every single day for not only startups, enterprises, as well as now public sector. So shot heard around the cloud fast forward to today. This show is on a trajectory to take on the pace of reinvent, which is their core Amazon web services show. And of course, which is why we're here, chronicalizing this is a moment in history. This is where we believe. Jeff, you and I talked about this and Dave Vellante and I talked about the research team. This is where the inflection point kicks up. This is a new growth pillar, unpredicted by Wall Street. New growth predictor for revenue for Amazon. They're already a cash machine. They're already looking like a hockey stick this way. You add on public sector, it's going to be phenomenal. So a lot of people aren't seeing it, but this is just growing like a weed. Well, Jeff, follow up on that. I was going to say, the two megatrends, John, we've talked about them time, time and time again and Teresa Carlson and team have done a terrific job here in the public sector. But I always go back to the James, Tuesday night with James Hamilton to reinvent. If you've never gone, you got to go. And he talks about just all these big iron infrastructure investments that Amazon continues to make because they have such scale behind them, whether it's in chips, whether it's in networking, whether it's in new fibers that they're running across the oceans, they can invest so much money to the benefit of their customers, whether it be security in all the areas of compute. That is fascinating to me. The other thing we always hear about cloud, right, is at some point it's cheaper to own rather than rent. And he just keep coming back to Netflix. Like at nighttime, I think Netflix owns whatever the number, 45% of all internet traffic in the evening is Netflix, whatever the number is. They're still on Amazon. So it's not necessarily better to rent than buy. You have to know what you're doing. And we were at another show the other day was Gannett, the newspaper company. When they're using a lot of servers, they use hundreds. But he said there are sometimes using AWS that they actually turn all the servers off. You cannot do that in a standard infrastructure world. You can't turn everything off and then on. Which again, you got to manage it. You don't want that expensive bill. But to me, being able to leverage such scale to the benefit of every customer whether it's Netflix or startup, it's pretty tough. And this is the secret. And this is something that again, share with the CUBE audience here. It's not new to us, but we're going to re-amplify it because people make a mistake with the cloud. It's in one area. They don't match the business model to their variable cost expenses. If you get into the cloud business and you can actually ratchet your revenue coming in and then manage that cost delta, red line, black line, know where those lines are. As long as you're on the black and revenue and you then have the cost variable step up with your revenue, that is the magical formula. It's not that hard. It's back of an envelope. Right, right. You draw it. Red line costs, black line revenue. The other great story from, it was from Summit actually in San Francisco earlier this year at the keynote. They had Nextdoor. Everybody knows Nextdoor. It's the social media for your mom. My mom. They love it, right? People are losing dogs and looking for a plumber. But the guy talked about Nextdoor. Don't knock Nextdoor. I don't knock Nextdoor. The Nextdoor CEO gets up and he said, well, I laugh because the Nextdoor's mom didn't know what he did until he did Nextdoor. Anyway, he said, we have the entire production system for Nextdoor and then we would build production plus one on a completely separate group of hardware inside of Amazon. When that tested out and is ready to run, guess what? We just turn off the first one. You can't do that in an owned infrastructure world. You can't build in an N plus one, an N plus two and turn off N. We just can't do that. The few CEO, Josh, you should, everyone check out their name on YouTube.com slash SiliconANGLE. He was awesome. He basically, it's all throwaway infrastructure mindset. To your point about Nextdoor, you build it up and then you bring the new stuff in. You basically, for digitally throw it away. Right, right. That's the future. And this is the business model aspect. And public service sector, we were joking. Look it, let's just be honest with ourselves. It is a glacier, antiquated old systems, people trying hard, government servants, employees of the government, not appointees. They don't have a lot of budget. They're always under scrutiny for cost. So the cost benefits always there and they have old systems. So they want new systems. So the demand is there. The question is, can they pull it off? So talk about the government mindset or the shift, we've heard a little bit about that today about how, to the point you just made there, John, that very reluctant, some foot dragging going on, that's historical, that's what happens. But now, maybe the CIA deal, whatever it was, we hit that tipping point and all of a sudden the minds are opening and so people are embracing or being more engaging with new mousetraps, better ways to do things. Well, we've got the speakers coming on here so we should wrap it up real quick. Final thoughts, what they want. I'm just going to say, the other thing is that before there was so much fat, not only in government in general, but in infrastructure purchasing, because you had to, you better not run out of hardware at Q3 when you're running the numbers. So everything was so over provision, so much expense and over provisioning. With Amazon, you don't need to over provision. You can tap it when you need it and turn it off. So there's a huge amount of budget that should actually be released. Mike, I want to ask you guys, we'll wrap up here. Final thoughts, what is your impression of day one? I'll start here and you guys can have time to think of an answer. My takeaway for public sector is, Teresa Carlson has risen up as a Prime Executive for Amazon Web Services. She went from knock on doors eight years ago to full on blown growth strategy for Amazon and it's very clear, they're not there yet. They only have 10,000 people here so the conference isn't that massive but it's on its way to becoming massive. Here's their issue. They have to start getting the cadence of reinvent launches into the public sector and that's the big story here. They are quickly shortening the cycles between what they launch at Amazon reinvent and what they roll out of the public sector. The question is, how fast can they do that and that's what we're going to be watching and then the customer behavior is starting to procure. So you look green light for Amazon but they got to get those release cycles. Stuff gets released at Amazon reinvent, they got to roll in the government, shorten that down to almost zero, they're win. Yeah, my just quick impression is I like to look at the booth action because we've all had the booth duty, right? What's going on in the booth? The people that paid for a booth here feel like they got their money's worth and the traffic in the booths has been good. They've been 3D, 4D. So the people are here are curious, they're interested, they're spending time going booth to booth to booth and that's a very good sign of a healthy ecosystem. This is a learning conference. Absolutely. Your thoughts? I wouldn't say it's a red light by any means but it's like a caution light is it's about budgets. You know, I think when you're running government you're always, you are vulnerable to somebody else's budget decision. You know, whether it's Congress, whether it's the city council, whether it's the state legislature, whatever it is. So that's always just kind of a little hangup you have to deal with because you might have the best mouse trap in the world but somebody says, ah, you can't write that check this year. Maybe next year. Well, I got my- We're going to put our money somewhere. I got my Trump joke in. Yeah. And not enough have you heard it but my Trump joke is I'll say at the end of the day there's a lot of data lakes in DC and they've turned it to data swamps. So Amazon's here to drain the data swamp. He got it in. He's been practicing that all week. I've heard it three times. Are you kidding? The data swamps- Well, if you know our cube, you know we talk about data swamps. I hate the word data lake. Right. As everyone knows, I just hate that word. It's just not- Well, there is value, value in that. I don't know my grade. I hate it the word data lake. For Jeff Frick, John Furrier, I'm John Walls. Thank you for joining us here at the AWS Public Sector Summit 2017. Back tomorrow with more coverage live here on the Cube.