 Live from Seattle, Washington, it's theCUBE at Tableau Conference 2014 brought to you by headline sponsor, Tableau. Here are your hosts, John Furrier and Jeff Kelly. Okay, welcome back everyone. We're here live in Seattle, Washington for Tableau Data 14. I'm John Furrier, the founder of SiliconANGLE. This is theCUBE, our flagship program. We go out to the events and extract the signal from the noise. Dave Vellante and I always call it the ESPNF tag and we've got some great analysts here. We're going to analyze the players on the field, certainly around the Tableau ecosystem. We have Elizabeth Hedstrom, Henland senior analyst and Stuart Williams, vice president of research at TBR. Guys, you guys are digging in. You do a lot of research, certainly behind the firewall, a lot of great stuff going on. You guys have pretty much behind the firewall, right? Research. Yeah. First of all, welcome back to theCUBE. Elizabeth and Stuart, welcome back. Welcome first time. So, you know, Tableau, it's a kumbaya fest. It's like a cult, a customer just said. I mean, they're very, very successful. Companies like Splunk that we work with and do their show. Loyalty is very high amongst their customers, but yet their TAM is huge. They got 55 million potential customers out there. They're only scratching the surface. We heard they got 20,000 plus. They went public. So, you know, classic company build out, very successful entrepreneurial venture. They get great critical mass. They take some outside funding, explode in growth in a good way. Go public. Now they're public for over a year. Everything's out there in the open. Certainly the private market is much better, more rewarding, evaluation-wise than public. What's the data say, guys? Let's get into the numbers. Let's talk about, let's get critical. Let's talk about the opportunities they have and some of the challenges. Elizabeth, what do you see Tableau's prospects? So when we look at the BI market as an aggregate, we're projecting growth of roughly 5% for the next three to five years on average. And then you look at Tableau growing at 100% just over the last year, clearly there in what we see as the sweet spot for near-term growth, which is how do you take the idea of data and make it accessible to not just the data analysts, but the everyday business buyer. The trick now is, and I think it's similar to companies like Workday, when you're looking at how do you grow from the big idea. And I see Tableau really very intelligently balancing moving from a portfolio-driven message to balancing go-to-market investments with the portfolio next big idea. Stuart, what do you think? What's your take on obviously the growth? There's growth there. They have growth numbers. They're performing. Are they red-lighting their engine, or are they just getting started? Their opportunity is huge. However, they are running into the buzz of the four dominant players that are out there. Obviously, Microsoft, IBM, SAP, Oracle with huge install bases, folks that are already selling the stack. So the solution that Tableau brings, being able to visualize and better understand, get meeting out of your data is a great entry point, and they've been able to leverage people inside the organization to grow their footprint, land, and expand. But the value proposition that they need to really engage the enterprise, which is where the money is, is to be able to help create better decision-making, right? So it's not just getting meeting out of your data. How do I make better decisions, and then getting the proof points, getting IT to align, making it easy to adopt? These are all things that they talked about today. That's just all the messaging. But let's get down to the bottom line. They're fighting a war against hugely armed incumbents, Microsoft, IBM, Oracle, and SAP. We've got Oracle Open World coming around. I'm sure Larry Ellison will establish the fact that he invented visualization. Of course he did. He's been there from the beginning. How do they compete? Are they in the shadows? Is it a guerrilla warfare? They're a public company. Definitely guerrilla warfare. You look at either the stack or you're the player that dances above the stack, and right now Tableau's got the mind share of, we can play with everybody. You looked at their messaging team. So they're dancing? Are they doing the stack and they're dancing? No, because you're not going to see Tableau also do reporting and also do scorecards. They want to visualize the data, and that's a pretty narrow market. But they're doing it well, they're doing it loudest, and they've got the running rate to now sit back and go, okay, we've got our center of gravity. Now let's move outward from there. But to Stuart's point about how do you hit the enterprise, now they've really got to get the rigor of the product. They've got to show it can, what did they say today, operate at scale. To do that, you've both got to be able to sell it to the C-suite, but you've also got to be able to then deliver it quickly and service it. Exactly, and service it, and that's gaining the services partnerships with the large SIs that so many times control access to the corporate accounts is key, right? So where is the Accenture's the Deloitte's, how are the rest of it, and taking this practice inside those SIs from a boutique solution for visualization into more of a solution is contingent upon the enterprise really thinking about visualization as a tool, right? Analytical applications is an opportunity that we've really identified in our research as a growth area in beyond. Is that a category? Is that part of an existing category? It's really a new category where you have the functions of an application tied with visualization. What does Tableau do? They provide the visualizations and they're extremely flexible. So if you're an agile business and you have the ability to grow on this, that's great, but what about the businesses that aren't that agile, that aren't that responsive? Okay, so the question I have to you guys is on that point is product leadership is there right now? And product leadership is rewarded. Obviously Apple announced today the iPhone 6 and the iWatch and the whole world stops. Oh my God, amazing leadership, great imagery, consumerization, obviously user interface is everything, but are these guys just a feature? I mean, so into the day, does that product leadership hang together when you have the existing competition with huge bank roles who have the stack, can just roll through them and just saying, hey, they're just a feature. I can have some good enough reporting, good enough visualization. Is their visualization that much better that they can compete against? It's an evangelist story, I think. I think the product can compete if you've got the right people inside of the customer organization saying, we want this. The customers we talked to in our recent research, they're with the full stack because I kind of have to be, it's what I've got. But if I've got something that's better, cheaper, and faster that also talks to my Oracle database and SAP HANA and Splunk, why the heck wouldn't I get that if my IT guy is telling me it's easy and it's simple? And that's one of the things that we're really seeing is if you can prove yourself to be heterogeneous and able to perform, you can start to slice away at these bigger brands. So the issue here is not so much rip and replace and competitive displacement as it is coexist with existing systems and become the horizontal fabric of the organization. Bingo. And something that struck me in Christian's keynote this morning was this talk about unlocking the creativity of data analysis and it was a lot of really big picture visioning right now, but I think that that's the heart of where the go-to-market message and the product meet the road together is making that message real to the C-suite because when the C-suite says, oh my God, I can do this, then anything is possible in their minds. Well, IBM is also a customer of Tableau. They're also a partner. So isn't that a frenemy situation? It's definitely a frenemy situation. IBM has been leading its way with their own analytics stack. They have a series of analytic acquisitions that are small applications that are very targeted. So when you think about what Tableau can do with its flexibility, it helps to serve as a bridge for the IBM customers with IBM. One of the key drivers that we see really is this idea of bringing analysis to the data or do you bring data to the analysis? So when you look at the range of data databases... Are they mutually exclusive or those two mutually exclusive? No, and that's really the question for the IT organization. How do I create a tool? And so some of the things that we heard this morning about... So it's a choice issue. ... data cleansing. It's how you use your tool. You can choose either way. And is it tied to the business process? If you have customer-facing data, does that collect out in the cloud? Because it's easy to work there. If you have back office information, financial, transactional pieces, maybe B2B, that might be better behind the firewall. How do you get a tool that really works across all of that to drive insight? And I think that's the gap that Tableau really needs to jump. And do you think that their product advantage and their competitive strategy there is leveraging their versatility? Or is it just a feature? You know, it's almost... I'll go back to the cloud firms again. When you look at somebody like Workday, have they done anything that the oracles, IBM, Microsoft, haven't done? Well, no, it's still an HCM application. But it was built to be the best born-on-the-cloud application that it can be. And I think when I look at Tableau, I'm seeing a firm that is saying it's about the visualization stupid. It's not about business intelligence. It's about what you do with the data. You're visualizing it to get to a better answer. They're owning the category of visualization. And they're betting the ranch that the horizontal overlay fabric layer will be standardized on Tableau. And I think they're really trying to take that idea of visualization out of just it's a product that does X. I think they're trying to make visualization the next business intelligence terminology. It's about what that data can do for your broader business. It's a big, ambitious message, and it's going to take a lot of investment, I think, in the product, in the team, and in growing the business to really make it a provable reality. Well, I'll say SAP is a player that's certainly educated the market. I've been to all the SAP fires going back five years. I didn't go this year, though. And Bill McDermott and Schnabe is no longer the CEO. They were showing demos on the iPad the first year the iPad came out, essentially educating the market of analytics. Not much there with SAP. I mean, SAP, I mean, they have some stuff they have there. But people have been criticizing their approach lately. Is that an opportunity for Tableau, or did they see them as a friend? Yeah, it certainly is an opportunity. They do connect to both SAP HANA as well as to the enterprise applications as an underlying basis. So it's incredibly important for Tableau to be able to make that migration to the in-memory databases. That's really key for them for speed. Makes things a lot easier for them. But coming back to the comment, I mean, Christian made today, it's really about joining the art and science of visualizations together. That's the Tableau space where they really want to play. But they've been making huge investments. I mean, a quarter of their revenue goes to R&D and half of their... And the losses are showing up on the balance sheet. Yeah, a lot of this stuff goes out. So where are they at in their business art? Their customer acquisition, they're gaining ground with those customers low-hanging fruit and then expanding that business. So they have a very different model from the big four. For what it's worth, their behavior when we looked at this entire landscape, especially the recently IPOed, the Pentahos, the Clictex, the Tableaus, their sales and marketing and R&D spend is not out of scope with the rest of the market. It's higher in aggregate for them than for other firms in their space. But they're spending for growth right now. So that doesn't make it... They don't look out of alignment with everybody else. And candidly, I think they're building the right platform. Well, they have to grow because the market opportunity is fantastic when you add in the fact that their growth rate is higher than the others. And two, the international opportunity, which I want to get your perspective on. I talked with David DeWalt at FireEye and kind of sidebar at the VMware event months ago. And he said, international is exploding for us. North America, everyone thinks North America is where the action is. No, it's international. I talked to VCs in China, it's got exploding. Everybody thinks North America is where the action is because that's where the big four are spending their time because right now all of their growth is coming at someone else's expense. So you've got to defend your North American install base in an SAP case, it's German install base because you start losing those customers and all of a sudden you are dead in the water. But the international expansion, I think... I find myself mentioning Workday a good bit, but I think that both of these companies are in a very similar state of growth. They're both looking at how do we expand internationally, how do we really think about our next big moves and they're trying to balance doing a little bit of everything all at once. And I would caution that I think they're both facing the same problem. Pick your markets. Make sure you're not going after everything in APAC all at once. Pick your big market. Grow from there because Landon Expand as Red Hat has shown, especially when it looks at these adjacent market opportunities, is about make your right choice and build outward and don't try to do too much at once. So if they bite off more than they can chew, that's a risk. Huge risk. Huge profitability risk and I think huge exposure risk, especially in a market where here's my projection for 2015-16, all the predictive analytics acquisitions are going to start seeding ground to the visualization-driven acquisitions. So IBM, Oracle, SAP, Microsoft, I think they're all going to be coming after this market so I would not want to be an overextended visualization vendor in 12 to 18 months. So I got to ask you guys the predictive marketing question, how this threads in, has the company been following? I'll be speaking on a panel with them next week. Mintigo, SequoiaVac, VentureVac company, they're in this predictive signaling kind of space, you know, social sales as they call it, which essentially is a big data play, but you're talking about born-in-the-cloud solutions like driving revenue. In a way, visualization is going to be an enabler for that. So do you see the digital landscape being impacted significantly by the tableaus of the world? We had our previous guest on who was saying, you know, as an end user, the insights are off the charts. Do you see it changing the digital landscape in terms of how people are doing their, all their outbound and integration with its customer service? Because if this is the case, then the full organization will have that ability to make these kinds of changes. So I'm trying to get a perspective from you guys. How do you see the human capital impact around digital? So the digital marketplace where you have consumer data, data from devices, data from different services, and the ability to flip that back out and present it back to them to help them make additional purchase decisions is a huge, huge opportunity. We've seen, you know, companies like Mint pioneered doing that with personal finance. There's additional opportunities with healthcare, huge payoffs to both the individual and to institutions in cost reduction. So yeah, visualization is huge. There's a huge opportunity for that, for efficiencies in the marketplace, as well as just behavior change. If you think about things around your own personal health, what you can do, you know, if you just exercise 30 minutes a day, walk for 30 minutes, that's a thing that people have been driving, do your 10,000 steps. Well, when you actually track that, you see the positive behavior shifts. So visualization is a tool that really makes that connection with individuals and then provides the feedback back to them. They can't exist without each other and that's where I think you're going to start seeing, oh, the big vendors are going to look at this as, it's one more piece of my puzzle where you look at vendors like Tableau and they're really going to start saying, no, it is the puzzle. It's not about making sure that the stack does what it's supposed to do anymore. It's about breaking the stack. It's about thinking horizontally, long-term big picture and it's a fascinating time to watch this space. Well listen, I want to ask you, this is a really great conversation. I think you're highlighting one of the big nuances that most people overlook and that is they try to put a square in a round hole or vice versa. So what you're really talking about is a market that's actually building out in real time, meaning that it's still embryonic and the pillars are being put in place. Exactly, so okay, so if that's the case, overlay works, horizontal works, if the systems are in place. So CRMs will still be involved in some sort of relationship management workflow. So it's really separating the data from the workflow. Do you guys agree? And you also have this capacity to have more individualized. If you take the three-letter acronym, apps, and you make them kind of disappear into functions. So you have visualization functions, you have things that you do with HR and finance. There'll be an app that will be combined from all those knit together, right? And visualization tools are going to be key to making those types of things work. I brought up the digital question because I wanted to come back to this concept that I always roll my eyes over, but I like it because it's a great concept. Storytelling, you know. So you must have rolled your eyes during the keynote. I mean, come on, I totally was rolling my eyes. No, but it's legit questions and outcome, right? You can't tell a story unless you know what the story is to tell, right? So it's kind of, you sequence it out. If you have the data, this is a data science problem. You got to have the data. You got to know what the data is telling you. Then you got to analyze the data and then tell the story. So you guys are, in a sense, research essentially, is one of the forms of storytelling. You also know data business. Where are we with the storytelling? How far along are we? Can we even tell the story? The story is, hey, the story's being told someday. I was laughing because if I was Microsoft and I was watching the Tableau keynote this morning, I'd be scared out of my wits for PowerPoint because I am not by any means a data jock and I was looking at those tools going, I want to play with that. I want to use it. I want it to be everything I do my business on every day. So I would be scared for the future of office if I were Microsoft as I watch where companies like Tableau are going in breaking down the traditional reliance on established tools. And I'm going to take the con side on that and say that the ability to tell a clear, cogent story, bring good argumentation to that story is just as missing in the marketplace as the ability to understand and use the kind of analytical tools that are out there. There's a lot of education that needs to take place in the business users and among the data analysts. I mean, that's why we get to be the analysts that we are. We're always arguing and analyzing and being critical but at the end of the day, data is the ultimate trump to non-data. So logic and emotion, right? Logic is the data. It's funny, I was on my flight out here watching the Pixar story, which is a big documentary they did. And here was John Lasseter saying that they were devastated because they were being told that the computers killed the hand-drawn animation where for them it was always just about telling the story. And this whole conversation brings that back to mind because if you don't know where you, if you don't know where you want to go no matter how cool the tool is, you'll never get there. So you need to know where you want your data to be. And I think that's an interesting point for the Tableau folks is they understand what they have but they also understand and are just as avid at going out to the customers as it seems for insight as a lot of their cloud-driven competitors rather but other folks in this application space, you hear we got 8,500 new features coming and 70% of those we got from our customers, from all of these different firms. Tableau is one of the first software companies that I've seen really taking that mandate of get features from the users, go out to the customers, understand what they need and then commit to do it. It's only once a year, not four times a year but this is the first time I've really seen that model in an on-prem player and it seems to be working for them. Well, I think you pointed out something that we were teasing out earlier, you kind of put a wrap around it which is they go out to the user and it's a user-centric product. As you said, you could use it, right? But they don't mismatch the technology rollout behind it. Some companies say, here's my technology users now and then they pretend that they're going out to the users to essentially A-B test what they want technology to be. Versus this way they seem to do it the other way. When you take the partners and you put the partners in the equation too, I think this is where, here's your growing pains, you're now in the big boy leagues, mature company, you've been at this a while, you've got a huge user conference well done. Now how do you keep the message to your partners consistent whether it's your dev partners, your OEM partners, how do you make sure that you are now manipulating the orchestra to play whatever song you needed to play? Oh, and vary that by region. Oh, and vary that by line of business. Yeah, and that's compelling. So I got to ask you guys to kind of wrap up the segment. Let's go through the show. What do you like so far? What's working? What's awkward? What are they fumbling? What is Tableau doing right? What's awkward? And what are they fumbling here? So I think one of the things that most appealed to me were some of the very practical announcements that they made around things like data prep. That's in our research, huge barriers towards people adopting greater levels of VI sophistication is just prepping up the data. And some of the tools and things that they announced today really get at the heart of that. And that just being able to ease that barrier is a huge opportunity for them to sell more product, right? What are they, what's awkward for them in this show? What's the, and it could be messaging, could be product. What's the awkwardness here? Is there anything? So obviously there is, it's a technology led company, right? So for me, I look at them and say, you're making great investments in technology, but you have to make that next growth, plant the seed for that enterprise conversation, right? What's the business value? How do you go to the business leaders and say, we're going to help your business grow by X, Y, and Z. Not necessarily to see the data, but to help you make better decisions. So you're talking about the real enabler for that next level growth. Right. Okay, what are they missing? What's missing here? Well, one of the things that I would like to see more are more of the large SIs. I'd like to see more of the partnerships there and see how they're making investments to grow that out. I've talked to several of the partners here around the embedding and the OEM. And while they're extremely happy with working with Tableau as a company, the technology itself, when they make compares to other companies, isn't as easy to work with. They're happy to work with Tableau from the functionality, but they want to make it easier to integrate. And I think maybe some of the announcements today around the Cloud API may be a roadmap in that direction. What's your three areas of they're doing great? Project Elastic, I want to see it go live. I want to actually see if that kind of mobile delivered application can be as heterogeneous as the on-premise offerings that they've got so far. Can it talk to everything really? Or is it going to be something that starts with Excel and rolls out slow over time? I think that's a huge threshold for them that if they cross it with Gusto, sets the next wave for people to say, well, they really mean business and they're here to stay. Yeah, real game changer product, ease of use. Huge game changer product. If they come out with the full arsenal, proven ready at go time. So you like that. So what's awkward then? Here. I know there were a lot of great demos today, a lot of very nuanced point to point demos in the keynotes of the offering, almost by feature. Again, big leagues, enterprise conversations. VMware is a great example of a company that can talk to the enterprise, but is still product led. I would say that they really need to think about when you've got your big time customers sitting in the audience, how do you make sure that it's not just the visualization guys that are there, but their bosses and their bosses. So you're saying they're not thinking big enough? No, I think they need to think bigger for next year. Yeah. On the demos. Yes, I think they need to think bigger for next year, definitely. What about the, what are they missing? I want to see more of a view for in next year's show. I want to see more of a view of that growth plan. We happen to hear their head of sales talking at Kelly Wright talking with you just before we came on about where are they setting up new offices? Where are they going to market? I would love to see that global picture presented to the customer base next year. We're here in your backyard. We're here to support you. We're here to stay. Yeah, and the channel thing baked out completely. Well, and more than that, have the channel partners up there. Have the channel partners up there talking through the demos with them. You guys are a wealth of information. I'll give you guys the final word. Just give a plug to TBR's research. What do you guys got going on? What's the big report that's coming out of the oven? We actually just published. I think the press release should be live now at this point. Our recent business intelligence customer research. So, Stewart's on the road, bringing it to our clients to talk them through it in real time. We're going to be doing a webinar on it on October 1st. So I got to ask one final question because I just popped in my head and I thought I'd have to ask in this interview. Realism of the BI market, how do startups compete in this? I mean, you've got platform out there, you have a variety of others. Be loud, be definitive, and get at least five tier one customers in your first year that will be willing to talk for you in public. Yeah, five tier one customers willing to talk in public. And then what does that mean? I mean, is there like table stakes? Just like? Well, it makes sure you won't get swallowed up by somebody with a big wallet. Unless that of course is your end game. Unless, that's exactly it. But the other side of this is that there are huge opportunities for BI in things like internet of things, healthcare data. Ad tech, we have a lot of spending. Those are lifestyle businesses or features, if you will, or a little outposts of businesses, maybe. Yep. I think the M&A market's pretty hot. What do you think right now? Oracle's on a buying spree these days. Are they ever not on a buying spree? They have to be. Guys, I really appreciate it. Stuart Elizabeth here from TBR. This is theCUBE. We are here live in Seattle for Tableaus, Data14, this is theCUBE. I'm John Furrier. We'll be right back with our next guest after this short break.