 From Austin, Texas, it's The Cube, covering Pure Storage Accelerate 2019, brought to you by Pure Storage. Welcome back to The Cube, the leader in live tech coverage, Lisa Martin and Dave Vellante, wrapping up day one of our coverage of Pure Accelerate 2019. Howdy, howdy y'all. Hey, I think I started a trend. I think you did. So Dave, this has been a dice shot out of a cannon. I think as only Pure does well, we had lots of conversations, lots of news this morning, which was nice to hear as Pure welcomes their 10th anniversary in a couple of weeks. We talked with customers, we talked in many different industries. Partners, Puritans, lots of innovation has occurred in their first 10 years. Charlie got up on stage this morning, then he came to The Cube and talked about this modern data experience and the 10X improvements and many things that they're going to deliver not in the next 10 years, and the next few years. Yeah, so we're seeing a story of growth here. It's a theme. If you read Pure's press releases, they start the first line as the only storage company that's growing, which is true at least at the storage company of size, you know, billion dollar plus storage company. And they're talking a lot about modern storage. To me, it's a story of entering new markets. Their second decade, TAM expansion into new AI workloads. Certainly the cloud, trying to make the cloud a tailwind. We just heard from Carrie Stanton of Veeam. Data protection is an area. You know, years ago, I remember talking to executive at NetApp, Tom Georgian saying, hey, are you going to buy a storage backup company? He said, no, we're going to preserve our partnerships with whomever, you know, Commvault and Veritas and Veeam, whoever they're working with at the time. And you see Pure taking a similar strategy. EMC at the time did something different. They vertically integrated. They bought a company called Legato. They integrated in to compete. And of course now they're that sort of, they're their stack. And so Pure's small enough now, still close to $2 billion at the end of this fiscal year, that they don't have to necessarily vertically integrate. We'll see next 10, the third decade, what happens there. And then the customer input. You're seeing customers are continuing to invest in Pure, they're very happy. What you've seen, Lisa, is customers look at Pure as shifting, and I said this on theCUBE earlier, shifting labor into Pure's R&D. Now the hyperscalers like Amazon, they'll spend time of engineering time to save money. IT practitioners and the enterprise, they'll spend money to save time. And so they'll happily spend money on products if they can lower the IT labor costs. So totally different mindsets. And you're seeing that's taking hold in Pure really has done a great job of that. Now, as I said in my breaking analysis a couple weeks ago, analyzing the vendors, Pure clearly growing, but these things go in cycles. Right, there's hard compares, you're going to see, I guarantee you're going to see these other companies tune their models, they're big. Pure talks about 10X, the reality is, Dell EMC's 10X the size of Pure. So they throw off far more cash. And so if you're a big whale with a big install base, that's what you do. You mine it, if you're Pure or you're smaller, you're 1.5, 1.7 billion, you go hunting. And that's the dynamic we're seeing. I don't see that changing dramatically for quite some time until the economy shifts and then the mindset shifts and then we'll see how Pure adjusts its business model from perhaps growth to more profitability. And speaking of growth, they are just coming off a very successful second quarter where they announced last month in August 28% year on year growth, adding about seven net new customers a day, a lot of that attributed to innovation and the channel, they did a good job in the last 18 months or so of pivoting their small and medium customer business to the channel, allowing Pure to focus on much more enterprise focus. And they actually I think even in Q2 closed 50% more multi-million dollar deals this last quarter. Well, and while those seem like great numbers, they actually, the stock got hit after the quarter, why, because they lowered guidance. Why, because of this NAND pricing confusion. NAND pricing dropped so fast in the quarter, faster than they expected, it sort of hurt revenues a little bit. They expect that softness to continue so they've been conservative going forward. Who knows, they're smart to be conservative because I wouldn't say that they're sandbagging, I'd say they're being conservative. You know, that's the bigger question, you know, is storage kind of a crappy business? And we'll see, what I say that is, if you're going to win in storage, right, these days you have to gain share. Yeah. Pure is gaining share. Dell at 0% growth appears to be gaining share. You know, 0% growth, it's not a great market. So what's happening, we don't really know, is cloud siphoning off demand for the traditional on-prem storage, it could be. You know, can these companies make cloud a tailwind or is cloud a zero sum game? I tend to think long-term, the more cloud, the worse it is for on-prem. So that's why everybody's scrambling for this multi-cloud strategy, which is very, very early days. Multi-cloud today is largely a symptom of multi-vendor versus, you know, a coherent user strategy with clear management. Now, the big five are trying to change that. Pure is playing its role. Companies like Veeam and others are playing their role. So we'll see how that plays out. I do think there's a clear opportunity in multi-cloud, but it's unclear how large that is, or whether it's just going to be a series of horses for courses, in other words, the right strategic fit for the right workload. So your thoughts on the evolution of their AWS partnership, really looking at what they're now doing with AWS as this bridge to hybrid cloud. Customers have choice on-prem, hosted, you know, as a service, public cloud. Your take on this forcing function of bringing Pure and AWS together, the customer base? Yeah, I think it's practically pretty clever move by Pure. Take their engineering and say, okay, we're going to set all, do all the heavy lifting. Set up AWS with EC2, priority EC2 instances, networking, we're going to mirror, we're going to, we architected the basically block storage inside of AWS, front-ending S3, which is the cheap object store, pretty innovative. What it does is it gives customers an option for higher availability block storage that looks like Pure, but runs on AWS in the cloud. Very clever. And so all the advantages of OPEX versus CAPEX, you know, the cloud experience, but it's the Pure management experience. So very clever, give Pure customers who are happy an option, because they're, I'm sure they're hearing from the customers, hey, we want to go to the cloud, we heard it from the AWS speaker today. Gardner data, 88% of customers have a cloud-first strategy, but 86 continue to spend on-prem. Right. Okay, so smart by Pure to do that. I don't know how big a business that's going to be, but it's a nice hedge in case that, you know, really that trend takes off. And your thoughts on one of the other announcements today, another first, we've talked about that a number of times, they have been first in a lot of things in the last 10 years, transitioning, offering most of their portfolio as a service. And your perspective against the other competitors that you mentioned, how do you see that? How do you view that? You know, the first Pure looks, they're bigger than the small companies that people have never heard of, like Zadara Storage, who actually were probably one of the first, but they're the first, again, billion dollar plus company to do this. That's what customers want. Customers want the cloud experience and a big part of that cloud experience is a pricing model and a utility model that's cloud-like. When AWS announced Outposts, it was a clear sign that the industry had to respond. I'm not saying this is a response to Outposts, but it's clearly a response to the cloud model. So, paid by the drink, you know, OPEX versus CAPEX, being able to have that cloud pricing model and experience across the portfolio is goodness. So, Charlie, their CEO, talked about this morning, this modern data experience going into the next decade, and it's got to be three Ss. Simple, seamless, sustainable. We all want that, I think, for anything in life. Your take on that from marketing to reality? IT is anything but simple, let's be honest. And seamless is probably the most overused word in a... Not I think in future proof, those two, yeah. Yeah, that's future proof. And sustainable, well, sustainable from the standpoint, what I love about the model is, and we heard this from the customer today, well, you know, the five-year TCO was kind of a wash, but then beyond five years, it was a no-brainer because we're now in that subscription model. So I guess that's the sort of sustainability. You think of sustainability in different ways, you know, green IT, for example, but again, IT's not really green, so, you know, good marketing. Let's just leave it at that. Well, we heard from, I think we had three or four customers on today, with four. Two legal firms, one in New Zealand, one in the States. We heard from a utility company out of Tulsa, Oklahoma, and then Mercedes AMG Patronus Motorsport Formula One. Three very different industries, similar stories in terms of the management simplicity of Pure, the evergreen model of being able to swap out and take advantage of those, the innovations and the things that Pure is doing the R&D on, and from a cost perspective. But I think those were three kind of common business and IT benefits that I heard articulated by three very different industries of very different sizes. I mean, I think it's important to remember, you get really effusive commentary from the Pure customers, and I'm not trying to be negative on that. They're very, it's very clear that companies like Pure, Nutanix, Cohesity, Rubrik, Veeam, they have great customer experiences, and they're different than what companies are used to buying very often. Having said that, when we get into these, you know, benefit, cost benefit discussions, typically you're comparing a modern, you know, circa 2019 platform with something that's, you know, five years old. So you better have significantly better metrics. Again, having said that, you're seeing a different experience, and that's clearly coming through in the customers that you talk to with Pure. They started with a clean sheet of paper, they didn't have a lot of technical debt, not a lot of baggage, there were some really smart people that, you know, in Silicon Valley, you know, inundated with all this cloud stuff, and then they brought it forth. It's very hard to build a billion-dollar storage company. Pure was the first one since NetApp. So- And that was a couple of decades in between. Repar couldn't do it. Compellent couldn't do it. Equal Logic couldn't do it. You never even heard a half of these companies, right? It's been many, many years, decades since you saw a billion-dollar storage company. That's how hard it is to achieve escape velocity, and Pure did it, which is quite a feat. And now the challenge is, their market cap is so large at four and a half billion, and growing, right, ostensibly, that they maybe become acquisition-proof. Okay, that's a good thing on the one hand, because we love independent companies. On the other hand, at some point, the TAM expansion within that little niche gets very difficult. That's why, for example, EMC had to go out and buy a company like Legato. And it made some actually, some other crappy acquisitions that didn't work out. And then they stumbled into VMware. It was, again, a part of a TAM expansion strategy, and they lucked out because they had the greatest acquisition in the history of IT. But I guess my point is, at some point, a billion-dollar company becomes a two billion-dollar company, maybe it becomes a five billion-dollar company, and then it's like, okay, what do we do next? And you're seeing NetApp is in there now. NetApp is a growth challenge. And a TAM expansion challenge. But it's too big to get acquired. There were years, for years, there were rumors about Cisco acquiring NetApp, and it kept the stock up. It never happened, so stock buybacks, talking acquisitions, refresh of the portfolio, squeezing out a little bit of growth, some bad quarters, that's the nature of the big company. So pure, at some point, we'll hit that, but I think we're a couple billion away. They have also done a robust job of building a robust partner ecosystem. We talked to a number of them today, Cisco, NVIDIA, we had on Veeam, Tomorrow's Splunk is on. In terms of this growth that you talked about, how well positioned are they with the strategic and technology partnerships, that they are not only building, but evolving quite quickly. Where does that factor into your thoughts about their future in the next decade? I think the key to that is their architecture in terms of their API framework. It makes it easy to integrate. And to the extent that they continue to grow, the customers buy their products, love their products, the high NPS scores, all that stuff. It's easier to have an NPS score when you're a billion dollar company than it is when you're a 50 billion dollar company with a big portfolio, but customers clearly, pure has momentum, people want to be with a winner, pure is a winner, their architecture is easy to integrate, relatively speaking, to the legacy vendors, and it's clean across the portfolio. And so that's why I think the ecosystem continues to grow. I'd like to see more growth. I remember ServiceNow when they were a billion dollar company and thinking, wow, it was about this size. Now you go to ServiceNow, you see the big SIs, you see a lot of niche players bumping into them, or jumping up. I'd like to see that here, and I think it will continue. Well, this is certainly a good chunk larger than last year's Accelerate, which was about a year and a half ago. And look where we are, Dave. We're in Austin. This is Dell's Backyard. This is a bold company. I was telling you earlier today when I was doing some research for our guests, something that catches my attention as a marketer that many companies cannot do, and that is be very bold and very direct against their competitors. And tell customers, this is why you should be buying us. I applaud that as a marketer and as somebody who gets to interview folks on theCUBE because it's hard to do. They have this bullish culture that they've always had and they have grown in the last 10 years. We're seeing expansion and we're seeing them not afraid to tackle anybody that their customers are looking at. So, I want to talk about some of the industry dynamics as well. The IT industry loves a vacuum and I think in some respects, the acquisition of EMC by Dell created a vacuum and Pure is taking advantage of that. Now, for a while Dell took its eye off the ball and the storage business was affected and then they got their act together. And now it's 0% growth, it's eh, okay, I'd like to see better growth there. But they've been doing a lot of work and Pure has referenced this in some of their press releases. Dell is consolidating its portfolio which is exactly the right thing to do. Dell EMC's portfolio is way too complicated. But you have to be careful. You can't just consolidate overnight because you're alienating your customers. So there's still some of that going on. The linchpin of Dell's strategy is VMware. You're right, that is the key. That's where the future is for those guys. So when EMC was an independent storage company, it would fight tooth and nail. Jeremy Burton was, we're going to take out NetApp and they have all these crazy videos and they were focused, a competitive oriented company that loved its customers and was very customer focused. In many respects, they're still competitive, very competitive, but they're not that independent Pure play anymore. Now it's NetApp and Pure, and I feel like NetApp is so distracted with some of its struggles that Pure is really, has an opportunity. I remember Scott Deeson years and years and years ago told me when they were, nobody said, we think we can be the next EMC in storage. And I was like, really? That's an amazingly bold statement when it appeared that the storage industry was kind of disappearing and everybody was getting acquired and it was becoming this vertically integrated converged infrastructure player with storage and networking and servers. And that still may happen in cloud and everything else. But Pure has an opportunity to really become the leader in this business and has an opportunity to become the number one storage company to take some time. For a while I questioned, does it really make sense to have independent storage? But you still see a lot of innovation, certainly the backup vendors. You see startups, you see smaller companies, VC money still coming in. Back to something we said earlier, IT generally and storage specifically, really isn't simple. It's very complicated and it's very hard. Well Dave, we haven't had a great first day. I'm excited to work with you tomorrow. We've got cause coming on, kicks coming on, some more customers. Lots of good stuff in store for day two. All right, cool. Looking forward to it Lisa. Likewise, for Dave Vellante, I'm Lisa Martin. You're watching theCUBE, the leader in live tech coverage.