 Okay, welcome to the Cube Pod episode three, season one. I'm John Furrier with my co-host Dave Vellante. Dave kicking off the pod three major earth shattering force major meteorite hitting earth today Silicon Valley Bank going under FDIC taking a we reported yesterday the loan that they were going after but the bank has been closed and taken over by the FDIC. So major news we're going to dig into this big time, big, big implosion. We've seen the recession hitting, we've seen the people getting smaller rounds in the capital markets. I think this last quarter was one of the lowest VC rounds in quarterly going back many, many years. The market's tight. You got crypto failing. Now you got a real bank failing. Not good. This is terrible. Surprised, John, that the market wasn't down more today. I mean, it was down. Nasdaq wasn't even down a percentage point. Of course, coming off a bad day yesterday, but I agree. This is really scary news. Yeah, and we're going to get into the later in the pod around show me the money section, earnings, public companies, private companies, where that's at. I know you have good insight into that. I have some some inside baseball from some CEOs on the private side, but this Silicon Bank, let's get into the shutdown and the FDIC taking it over. This is huge. We covered the news yesterday. I did a news hit on it. Rob had it. We saw the run on the bank. That was really to me the killer. We called it on our podcast, on our news report yesterday, I should say, that it was a run on the bank. I didn't want to put it in the headline because I didn't want to really promote it, but it was happening. Multiple CEOs were calling me up yesterday saying, we're getting our money out. And they had all their eggs in one basket. And the CEO at the time saying, okay, don't panic. It's really going to be fine. I'm like, that's a red flag. Huge. Rob Hope, editor-in-chief, he reiterated that. He's like, anytime the CEO says it's a red flag, you know, this is bad, but this is a self-inflicted wound. This is the story, right? You know, Killer Bank, great pedigree, Silicon Valley Bank, the place to put your funding if you got funded by a venture capitalist, you know, great diversity, great dollars, they had great rising deposits during the hey days. They survived the .com bubble. A venerable institution, Dave. They were an institution in the startup economy. They were the Silicon Valley Bank. This is huge. I mean, to me, John, this is like, first of all, I mean, it's self-inflicted, yes, but you know, we've got, this is an example of the seesaw economy continuing to surprise us. We gone from tech boom. We had a semiconductor shortage. Now we got a, you know, glut. We had earnings beats, you know, during the pandemic, a hiring binge. Now we got layoffs, earnings, misses, lower guidance, you know, like I said, a semiconductor glut. But the ball buster to me, John, is, you know, these guys were awash in cash during the tech boom. So what did they do? They said, all right, we're going to stuff this into bonds and treasuries. Who knew that was going to turn out to be a risky strategy? Dave, this is the 16th largest bank in the country. It went from doom and gloom. It's cratering. It went from cratering doom and gloom. Oh my God, this has never seen anything like this to a meme in 30 seconds. Got memes out there already. One meme is from startup Jackson on Twitter. OpenAI should take it over and call it cerebral valley bank. So, I mean, you know, Silicon Valley Bank, you know, is an icon in your neck of the woods. It's very unique. It's really disappointing in a concerning development that I think is going to elongate the funding winter. I don't know. I mean, unless somebody jumps in and takes them up, but I can't see. Can you see Jamie Diamond? He could buy anything he wants, but I don't see them buying into Silicon Valley or B of A is super risk averse. All banks had the same problem that Silicon Valley Bank had. It's interesting you brought up Jamie Diamond. Morgan Stanley managed it differently. First Republic and Silicon Valley Bank went the other way. And it's in the weeds for finance, but the story is this. They essentially had huge rising deposits. In 2019, they saw Silicon Valley Bank and other companies like Morgan Stanley had huge numbers, but everyone handled how they invested those deposits differently. JP Morgan did it differently and they were on the right side. They had plenty of cash reserves and they managed it. Bottom line, it was either short term or long term bonds and assets. So, you know, available for sale, long term, ultimate maturity. And they just were on the wrong side of it. They just made a bad call. The other thing too, John, is Silicon Valley Banks, 80% of its liability was deposits. If you look at other banks, some of the other banks you mentioned, more like 60%. So, SBB is more exposed just because of their business model. But again, I mean, who would have thought that sticking them in three-year treasury, three-year maturity treasuries and other bonds would be risky? I mean, it's like, whoa, but that's again, the seesaw economy. And prior to 2022, there's only been 10 quarters of deposit outflows in the United States in the past 50 years. Okay, 10 quarters in 50 years. We've seen four quarters in a row of outflows in banks. Huge banking crisis going on here. So, the cautionary tale that's coming out of this is this could be the beginning. Remember when Bear Stearns and Lehman Brothers crashed in 2008, that was the housing crisis. This is another potential signal for more carnage in Silicon Valley and the tech community and or in business. So, it's going to be interesting to see if this is just a one-off, kind of a self-inflicted gunshot wound for the bank. But this is bad. And these guys had it going on. They had no debt. They had no problem. In 2019, they had zero liability. They were growing. They've like doubled or quadrupled in the last several years. You mentioned the red flag, the CEO comment. And then this morning, the email went out from the head of Y Combinator saying, take all your money out. Don't leave more than $250,000 in there. You have the FDIC insurance. And so, you knew that was just going to create a run. Well, let me tell you what happened. This is the ironic situation. This is kind of the factual playbook. This is like the train wreck that actually happened. So, the autopsy with this SBB situation. Deposits were going through the roof around 2019 and continuing like through 2021, 2022. They were investing those deposits because everyone's getting funded. Massive amounts of funding. We saw that bubble in either short-term AFS or long-term HTM, AFS available for sale. HTM is hold till maturity. Basically, you can sell one. Another one, you have to hold till the end of the term. Rates went up and the unrealized losses snowballed from nothing in June, 2021 to $16 billion by September, 2022. And what they didn't realize, the fatal flaw in all this is that they fucked up and didn't understand that the deposits were going to be running off because of the recession. So, what they missed here, the big miss was they couldn't manage with some financial instruments, but the deposits were dropping off. So, they were technically insolvent by September, 2022. They thought they could resolve it. And what happened was is that when the run on the bank happened, combined with the outflows, it was just a death spiral. So, they tried to raise $21 billion in securities to raise cash. That was what we reported on. That was the same day that Silver Lake Capital Corp went liquidated. Silvergate. Silvergate liquidation happened, but they couldn't get the round done. And that was just like in the past 48 hours, just like cratered. So, living from yesterday to today. You had the double whammy, right? You said, like you said, the deposits started to decline because of the tech recession. And then at the same time, you had higher interest rates. So, people had, hey, we could maybe put our money elsewhere. You remember the savings and loan crisis back in the 80s? What would happen is those smaller banks that gave more attractive rates, they had the liquidity crunch. And that created that terrible domino effect. I don't know if it's the same here, but I remember that. You're thinking these small banks, what's the big deal? But then that ripple effect. Well, we're going to agree. I want to get it to the on the RAND section. I want to get your thoughts on what the impact is from the interest rates. Is that the government problem? But right now, it's being reported by Dan Primak from Axios. FDIC is saying that Silicon Valley Bank clients with deposits above 250K will get an advanced dividend within the next week. So, this is because there are many startups, companies that are relying on the payrolls services. So, yesterday what happened was startups were calling me up, VCs were advising startups, get your money out. Because a lot of people knew about this. Carnage on Twitter knew that saw this coming. People saw it from white comedy you mentioned. And so, people were getting up. But as of yesterday, it was a run on the bank and that was killer. So, there's a startup impact. People might not get paid for two payroll cycles. How long is that going to take? Yeah, to get the payrolls back in line. That's scary. I mean, at least the FDIC is stepping in. Okay, that's good. How fast can they move? Payroll. I got to get paid. The blowback is going to be massive. The fallout will be interesting. This is a Chernobyl moment in Silicon Valley, Dave. I mean, this is like, we don't know yet what the hell is going to happen. Right now, that's looking good with the takeover. But it's just amazing. I think, again, funding rounds are drying up. I think this elongates that. Maybe AI is going to be a catalyst, but it's really unclear who's going to fill the role that Silicon Valley bank played is trying to trust a banker to your peeps. Yeah. I think this to me is the big story, is also the subtext to all of this is Silicon Valley Bank and Silicon Valley Venture Capitalists. Pretty much the playbook is you put your money and you get funded. You put an SVB bank, SVB, right? So when I raised Venture Capital 15 years ago, small, a big round was considered like $5 million, which we did. We were told, put it, we were told, put an SVB almost like it was like a contract, like inside baseball, like watch the money. But if you don't have money in three banks, I tell all startup founders, if you're listening to this podcast and you're a startup founder or anyone in business, you should have three big operating accounts, two, three big banks and an investment fund, not one bank, all the payroll, all that stuff being held in there. Do not have one bank. That's the killer. Yeah. I remember my first startup, John. We were doing really well. We had all this cash, and so we put the money into these treasuries, but in order to get the money out, you had to have an auction. We ran it for years. Well, all of a sudden, when the economy tanked, the auctions, nobody was buying. So our money was locked in. We learned the lesson. If it ain't liquid, don't do it. Well, we're going to keep tracking the story. The SVB shutdown is going to have impact. I think the next topic, Dave, I want to get your thoughts on is that I feel strongly about is, what is the impact going to be on the valley and startup ecosystem? We hinted at this, I think, in the first pod. This is bad right now. Two months ago, I was on theCUBE saying, I don't think we're going to have too hard of a tech recession, digital transformations happening, cloud guys are a historical element, first time in the history of having hyperscalers in market with the agility of the cloud. I was very bullish. We saw the AI wave coming before ChatGPT. We had that covered, and we'll get to that next segment. But I thought we're going to be fine. But I got to tell you, I'm now revising my position. I think we are going to be in a two-year freeze, just like the .com bubble worse. We're seeing really high-end people getting laid off from the big tech companies and the economy with the interest rates and with the banks failing, with crypto failing. The only good, and even the cloud guys are tightening their belts, Amazon, Google, Microsoft, all reporting earnings down from where they thought they would be. And internally, the scuttle button, all those big hyperscalers is tighten the belts, prepare for the worst, high impacts, value. This is huge. So I think if we're in a two-year freeze, if that's possible, then it's going to look a lot like 2001 to 2004. So good time to start a company if you have the cash. But if you're in market, you might be on the wrong side of history here, Dave. And this is going to be a battle for who's going to be competitive in this next wave of technology. Who can survive the capital markets? I'm not ready to say it's worse than the .com bubble. I mean, that's when you moved out there. I mean, I remember driving up and down one-on-one during that time. I mean, buildings were empty. Sun Microsystems was a big client of mine. I remember visiting them and there was just nobody around. But the difference now is the cloud allows these tech companies, they could more quickly right-size their infrastructure where necessary, whereas back then, they read all these sunk capital costs. And I think the quality of companies today is much better, but it's a different era. But a lot of these companies are still well-capitalized. I mean, that said, I think this is very bad companies. There will be companies that risk running out of money and start to get into liquidity crunches. I disagree, Dave. I think I have to take that aside because I just, from out here in Silicon Valley relative to the .com bubble was highly impacted here. I'm not sure what's like in New York and Austin, some of the other tech hubs or even what's going on in Europe. But if it's similar to Silicon Valley, it's bad. And I think it's going to be worse than the bubble. I think it's going to be high impact mainly because of the overhiring and all the companies that were out there trying to overhire and that bubble burst. Now, the only good sign in all this is the AI hype. So I totally see this depression coming and I'd be prepared for two-year freeze if I'm company out there. And if I'm unemployed right now, I would be really, really nervous. Well, there's very little in the data that suggests that this is going to end anytime soon. I mean, having said that, it's not like enterprises aren't spending on tech. They are. They're just really focusing their investments. Focusing is a word for cutting. Yeah, it's true. They are cutting it. But they're not like the thing of the .com. Everybody, you remember Ed Zander during the .com bubble? He stood up at an earnings cost and said, anybody want to buy a server? Because nobody was buying anything. And that's not the case today. People are buying software. They're buying the cloud continues to grow, albeit at lower rates. You saw Dell's earnings. You saw HPE actually doing pretty well. I think companies have actually done a good job of rationalizing expenses. They use it as an opportunity to pair the quote, unquote, dead wood. No offense. Well, is the middle class, I call it the middle class of tech, the middle, mid-range companies, are they getting glutted out? Are they getting cut? I mean, the rich get richer in this. Let's face it. They're going to survive. Dell will survive. Amazon will survive. Google will survive. But they're laying off millions of people, 30,000s of people. So, but the percentages aren't large because they have such huge employee base. So the question is what survives and what doesn't? The ones that I worry about, John, are the ones that don't have what I'll call inherent profitability. I'll give you an example of a company that has inherent profitability is Snowflake. You look at what they're doing and they can manage expenses. It's all about free cash flow for those companies. And so they have knobs to turn. It's the ones that don't have enough revenue and have just too high of an operating expense that I worry about. And now I think there's a lot of security companies out there that something's got to give. I mean, there's just far too many companies in that space. Having said that, there's companies doing pretty well, CrowdStrike. We saw Palo Alto Networks earnings really, really solid. Okta actually pretty good. Cisco, I just saw Chuck Robbins out at MWC last week had a meeting with him and a couple of other analysts. Cisco's doing pretty strong. So we really have a sort of a mixed bag here. That wasn't the case in dot com. Everybody was sucking wind. Well, do you think that this current bank failure was a one off? Or do you think it's indicative to the bubble bursting blowback that might look different than a dot com bubble? I mean, there's definitely comparisons with the dot com bubble. I think it's worse. I'll say that again. But it's not situationally the same. There are cloud hyperscalers. You've got AI around the corner. But it feels like definitely a bubble bursting for sure. In this case, some carnage. I mean, the housing crisis in 2008 was a function of the big short kind of thing. This is the tech version of the big short. I don't know. Well, you know, it's interesting because you're right there. And I mean, you can't be any more in the heart of Silicon Valley than we are sitting right now. And so I look at it as again, I said earlier, SBB was unique. There are there. I mean, who's their competitor? There aren't really any SBBs out there. You know, it's not JPMC. It's not Wells in the turnaround. It's not B of A. They don't do what SBB does. And so what happened is from 2020, you know, to early last year, even mid last year, pre-Ukraine, all this money flowed in from tech for tech. And like you said, what they said, BC said, put it in an SBB. They did. So I do think in some regards, it might be, I'm hopeful, that it is a bit of a one off, but it is. It is definitely a warning sign and no question about it. Well, the collapse of SBB is a significant impact of the tech industry. And Jessica Lesson summed it up great. She's the founder of the information she's saying is the most insane experience of her professional life. Out here in Silicon Valley, this is just an institution. It's like literally like a big attack on the valley. I mean, startups were risk taking entrepreneurs. Now they might have a chance that potentially they could have their money disappear if they're not FDS. You can't get them the cash and missing paychecks. So we'll see. That's good news. What do you do if your SBB during the boom years of during the pandemic and all this money is flowing in, you're not going to turn it down. What are you going to do? You're going to say, all right, let's just stick this under the mattress, which is essentially what they did. The problem is the mattress is locked for three years and you got to pay a big to get it out. If this uninsured deposits, they're fucked basically that they're screwed. Well, the issue was that they they couldn't wait till the maturity and they get ran into a liquidity crunch and now they got to take the loss. Well, I think like you said, the companies that have cash flow are going to survive. And the ones that have like, I won't say fake cash flow, professional services, heavy businesses might be at risk. So I think to me, I'm looking at this kind of impact of who can survive the cash because cash is king right now. I'm to your point, Dave, I think that's a really good point. But is it real cash? When you say turn knobs, knobs and acquire that there's like a few handles like a business that's scaling, knobs means you can steer the ship away from an iceberg. A professional services business isn't a knob. That's a bunch of people in the streets. Yeah, no, a knob says, hey, I have things that I can dial down and make more profit. During the boom, growth was being rewarded. If you had growth, your stock price would go up. That's not the case today. I want to ask you a question. You told me one time that after your first startup failed, you said you learned in Silicon Valley who your friends were after that. And SVB went out to get funding. They were looking for a white knight. Everybody was like, sorry. Yeah, you know why? They're circling for the better deal. Like, hey, friend, sorry to see you go under, but we'll let you bleed out and then we'll take the scraps. I guarantee you, you'll see someone come in immediately, probably come in and get a better deal. The options of the financing didn't happen because why they're on a death spiral? I mean, once the run in the bank happened, Dave, it was over. And this brings up a whole another conversation around the future of banking. So again, the concerning thing is you got crypto failing, you got real banks failing. Something has to come out of this on the banking side, the digital banking, frictionless banking system, maybe have some some some blockchain. Well, let me ask you a question. Maybe, you know, brings up brings an interesting thought here is did the maybe it was self induced, but where are the regulators here? Right? I mean, you know, you look at at the the banks who went through the 2008 crisis and had to go through the stress test, and they're solvent. This is not that this is not affecting them. Where were the regulators when Silicon Valley Bank was getting this huge injection of cash in terms of saying, hey, well, maybe you need some other investments that can protect you for liquidity in case those deposit levels start to decline? You know, was this a failure of the regulators? No, I think this is this is basically SVB screwed up. And then the companies that have done deals with to keep their money with SVB probably did longer term deals. And that's that's the problem. That's that's the institutional structure of SVB and and their and their deal. But the impact of this is I mean, real people are going to get hurt, Dave. I mean, this is like, you know, a lot of people are going to get hurt, lose money. So what's the point of regulators then? I mean, I say, you know, but I mean, isn't it their job to make sure shit like this doesn't happen? Well, it happened really fast, as they say, you know, they said we're in an era of speed and velocity. And this run the bank was a speed run. This is like a this was like a this happened literally overnight. People are like, we're talking about this last night, even even on Twitter, when I went to bed, I was like, you know, how fast will they be bought tomorrow went from our report yesterday, which was four o'clock Pacific on Silicon angle, we it turned, it was turning in real time, the meltdown was happening. Like I said, it was like Chernobyl, it was going on all night. All right. So what is the impact to Silicon Valley companies, both both public and and private and VCs, give us your analysis. Well, first of all, it's a climate. It's a whole sentiment thing. It's trust that you meant to rip who your friends are. I mean, when people are losing money, a lot of people are going to lose money here. People, lives will be impacted either payroll or companies. That's one problem. That's a long term impact of it. And the other one is confidence, right? If there's no confidence in the system, banking and institutional, that's going to be there. Again, I think the broader conversation is that the startup economy right now is gearing up what I call the early stage movement is accelerating. This I still believe to be true because you look at the time of the dot com bubble between 2002 and 2004, there were major companies that were founded during that time that were highly impactful. So it's well proven in these cycles that the time of innovation, the best companies come out are right now. So that's really kind of key. And so that gets a little bit of a blowback on that momentum because this is just structural carnage hitting the street. Bad money losing, institutions have no confidence, VCs might be gun shy. So I think there's going to be an impact on the startup ecosystem for sure, especially in Silicon Valley. I don't know what it's going to be like in the rest of the world. I will tell you though, if you're out there promoting decentralized banking, you want this right now. This is going to be using this as a bully pulpit cheer lead on. So Silicon Valley, I think it's a black eye. It's going to put a stain on the valley, unfortunately, and that they didn't get their shit together on this one, in my opinion. And then the learning for companies, don't do business with one bank. I mean, we have four banks now, Dave. So then we're not even adventure back, but if you get $10 million in financing, you could put it in multiple banks, and you have that liquidity always option and managed. Yeah. I think we had a little bit of dough in SVB. I think, I think, I don't know, to be close that account, I can't. We have some money in there. We do, right? I don't think it's insured. I don't think we're going to make the $250,000 threshold. No, we're good. We're good. No, I think we're good. Hold on. I got to text somebody. We can. Like I said, I mean, it's this world is so weird now. I mean, we're old enough now that we've been around many cycles of innovation. The memes are all over the place. It's been crisis to meme in 30 seconds. Yeah. Well, I don't think it's going to have a huge impact on public companies. I think their fortunes are going to be determined by their ability to get ahead of this slowdown, to understand the new sales cycle, to put the appropriate resources on there and control expenses, and very importantly, to forecast accurately, right? I mean, I think you're seeing everybody dial down their earnings estimates. We maybe talk about that, but I think that's key. And that will keep people calm. I think that's- Well, let's jump into the money side of where the money is being made. So, first of all, we have a whole AI discussion because I think the bright spot on this whole cratering and the carnage is the fact that you got an AI movement that's happening. That's real. We documented that. But in terms of earnings, Dave, the public companies have stuff out there so you can see the numbers. The consumption-based SaaS companies, the big, the winners, the snowflakes of the world, data dogs of the world, those companies, their growth in 2022 to 2023 is down big time. And so they're getting hammered. MongoDB earnings were out. Oracle had a decent earnings, but still dropped after hours. Still speculation there on their forecast, but that's the public's. So, you've been tracking all that. Privates, not a lot of you have access to this. We'll start with the public. What's the public? Well, so security remains hot. I mean, we've talked about this. Security's not immune from the downturn, but it had been consistently performing better than other sectors. It kind of reverted to the mean. But the crowd strike, it's net new ARR off the charts. Mongo had a strong quarter, but weak guidance. Oracle, actually Oracle grew kind of double-digit revenue. I mean, amazing. Very strong IS and PAS, but people want to see that Cerner acquisition payoff. That was a giant acquisition. Couchbase, smaller company, had solid earnings, but stock really didn't do much. So it's not a disaster. I mean, Dell, everybody seems to be managing to expectations. What happens is they'll make the EPS or beat slightly on EPS. They might miss a little bit on the revenue. Sometimes in the case of like CrowdStrike, they'll do a beat and raise, but that's rare. Cisco, although, did a beat and raise. So it's really mixed right now, John, but I don't see disaster amongst the public companies. I don't see like huge cause for panic. Well, Snowflake had a 60-something percent growth. They're now down to 20. No, no, no. Is that right? Snowflake's grown faster than that. But I guess what I'm saying is I don't see a reason to go all in with your chips. But at the same time, I don't see things vaporizing in tech. People are still spending. What about the private companies like Databricks? Because Snowflake's a public company. Their data's out there. You've got Databricks, a competitor. They're valued at billions of dollars. What's the 34 billion last time they did the round? I'm sure they did it down a recapitalization. Stripe, a private company, is just raising $6 million that was announced that they have to do that to cover the employee tax consequences of their IPO. So $6 billion to cover their employees' tax obligations. So Databricks is the topic on breaking analysis today. And it was more of a sort of futures-looking, technical architectures. How foundation models like GPT are going to change the AI tool chain, how that's going to affect companies like Databricks. But they raised a boatload of money. You remember Cloudera? They were late going public. Cloudera didn't go public until 2018 because they were sitting on so much cash. And it wasn't really favorable for them to go public. The market was different back then. But I think Snowflake would have wanted to go public. I think the problem was that Microsoft was Databricks' main go-to-market channel through Azure. And so it was kind of like Azure, Databricks was their spyglass. And now Microsoft is building its own modern AI tool chains. And so Databricks had to go redo its go-to-market. And it's got to make some investments there. But I think it's got plenty of cash. But it's it and others. I would include Snowflake as well as facing some challenges. All these new AI tooling comes in and sort of changes the way in which people use data and think about the velocity of data and the amount of data. I think to your earlier point, when these downturns, shit starts to change and happen. And I think we're going to see that again coming out of this. You're going to see some new companies emerge with new thinking. And so, I mean, right now, let's face it, it's a good time to start a company because it's an interesting time for investment. If you can, you know, get it off the ground, but valuations are down. Well, the startup cycles around the AI area is compelling. We had the startup showcase this week and that we had any scale on. We had a Strymoner, we had OctoML, Neural Magic, Arthur.ai, Roboflow. Then we had Hugging Face CEO and some amazing people on that were doing talent. So Hugging Face is known for the machine learning kind of GitHub model, but just great talent, great, great talent. Coheir, the founder of Coheir, they're doing a large-scale stuff. So all next-gen companies, they look different than others. John, just to share some data from ETR. So Databricks doing really well. Coheir, you mentioned doing really well. Hugging Face and the dataset doing really well. So these are companies with momentum. Organizations, it's not the Ed Xander. Do you want to buy something? There's money being spent. There's deals being done. Mobile World Congress last week, MWC. There's a lot of business being done. So there's transactions happening. That's why I'm not ready to call it.com bad yet. Well, I mean, this is the bright light. So for example, one of the things that I'm noticing is kind of like that in every cycle, there's always a lesson, cautionary tale. You want to be on the right side of the street when things happen. You don't want to be on the bad side. You want to be on the right side of history. But Coheir, Stability AI, Aiden Gomez, Tom Mason, they're the founders of these new companies. They're different. Hugging Face different, any scale, different company. They're all structured differently with different people. And so what's happening is they look and they act differently. They're not using the same old infrastructure. Some are using Azure over AWS. I mean, open AI now, you can stand up Azure instances. Amazon's got to be pissed. So they're going to be all over that. So again, this is a new class of entrepreneur, which means that there's the old way now. The old way is what was happening in the past three to five years. So when you look at data infrastructure and security, two of the hottest areas that are platform oriented that are enabling this change, they're going to get radically shifted. So if you take the opportunity on the good side, knowing that there's a kind of a gloom and doom kind of financial problem with the banks failing and the VC is not investing, with this kind of shift entrepreneurially, that means everything stalls. It's kind of like a, it's like the eye of the storm, right? Everything's quiet and then it's just shift quickly. That's what I think is happening. And to me, data infrastructure is going to get impacted. You mentioned Cloudera. They had big data in their hands and didn't get it right and ended up becoming just another player in the market. They're still around, but they're not game changing at data bricks. This could be that Cloudera moment. Snowflake could go the other direction, but those guys are well positioned now. My point is these entrepreneurs look different. Their companies are structured differently. They're building different technologies. And that to me is going to be very interesting to see how that affects the developer community and how the open source world would be impacted. So that to me is a big aha moment this year. And that's the bright side. Machine learning is now the new computer science. Software engineering used to be the degree in computer science. Now it's basically machine learning. If you're not using machine learning and you're writing code, you're not really a developer. Every developer will be using machine learning in the near future, if not like immediately. So the game is changing on who writes software. And that will be the tell sign, Dave, of how fast this thaw is. How fast this freeze bubble bursting carnage is recovered. I mean, the Fed is still a big wildcard here. I'm not an economist, but you saw the jobs numbers today. Unemployment level was up a little bit. It was just mixed. And so people are saying, oh, well, maybe a quarter point is okay. And so my point being, to me, inflation is the big concern because it crushes the consumer and it just makes things unpredictable. At the same time, the Fed's trying to balance unemployment and unemployment is very low right now. So that to me is the wildcard. But my point being this, John, people are spending money. And if inflation hits hard, they're going to spend less. It's always the case. And so that is my big concern, is coming into the summer, maybe even going into the second half. If we come into a recession because the Fed is stamping out inflation, that's going to affect tech spending. I feel like right now, spending's okay. It's not terrible. It's not great, but it's definitely not terrible. And so companies, these SaaS companies, and even these infrastructure companies, they got big install bases and they're doing business. They're doing a good job with the go-to-market. Companies are buying. They are focused, which means they're cutting certain things. I think it's more they're delaying certain projects and they are still spending on security. They're spending on digital infrastructure. They're moving to zero trust architectures. Any sort of data platform that allows them to better target customers is getting funded. And so there's still a lot of action in the field. You see it at these big shows. We certainly saw it last fall at ReInvent. I remember sitting in the MongoDB. They had that little those breakout rooms. John, you remember that? We had the green cards and I'm sitting there eavesdropping on all the customer conversations and they were consistent. Hey, yeah, we're going to push that out. We'd like to take it in smaller chunks. Can we split the contracts up a little bit? So it wasn't like there and it's still, it's not like they're not doing deals. And I just talking to customers at MWC, same thing. We're breaking them into smaller chunks, but we're still spending maybe a few more approval hurdles that we got to go through. But we got budgets and we're not stopping. Well, I mean, the question is what, how does AI continue to grow? How do these applications get built in modernized? And what's the role of the cloud players? This is a big question. We've been covering AWS for 13 years at ReInvent. Google Cloud, been to their events. Microsoft, Azure watched them reposition the entire company onto Satya Nutella. Now they got ChatGPT, they got 100 million active users on Bing, a search engine that nobody used except for MSN users, msn.com users. So here you go. You got a complete shift. You got people who were Amazonian customers, hardcore AWS fans, spinning up Azure servers to get the ChatGPT APIs, open API. So this is, you know, Amazon's got to be there scratching their head. Again, this hyperscalers were never around in any recession in the past and they are a power source of agility, velocity, new product introduction. Look how fast Microsoft turned Bing from a nobody to a player. So anyone, so that proves the point on our first part when we're saying, is there a competitive advantage to open AI? You know, again, another debate, what does AWS do in response to you? Microsoft's looking really good right now, poaching people from AWS? I asked AWS at MWC. I asked Wayne Duso, what do you think of ChatGPT? He just looked at me like, you asshole. But he did say, you remember when you met with Adam Salipsky, he said, this is last fall. Hey, large language models are a thing. We're on them. You know, we're going to have a play there. Wayne said the same thing. Look, you know, we don't talk about futures, future products until they're ready. That's not our thing, but believe me. Well, Adam nailed, he had mentioned large language models in my interview with him, Dave, you saw that out of the transcripts. Adam is a lot more on point with what's happening. I think people give him credit for because he's new under Jassy, coming after Jassy. But I think Amazon, as we had called it, is going through some management changes where he's got to get his team in place and they got to be smarter about how they handle the ecosystem. So the word ecosystem is super important for AWS. They have basically SaaS and now platform players coming out. And the joke about ChatGPT and your comment from Amazonians is that, and we've been following this, is that Amazon, like Google has been very much in front of all the AI work. They've been leading heavily, a lot more than Microsoft. Microsoft essentially bought into open AI to get a leg up. So on the chessboard, Microsoft looks like they're winning. I think, but if you look at the economies of scale that Amazon has in the trajectory of their AI business, SageMaker's got some really big advantages for around compliance. So it's not just slinging code with ChatGPT and open AI. When you start getting into the real problems of AI today, Dave, it's not the benefits, it's the problems that it causes. Bias, compliance, legal issues. You can't be just slinging AI code around thinking you're going to be like rolling over everybody. So I think that's the big aha moment that people are going to face very quickly in the AI world, which is, I got to operationalize it. I just, I want to go back to something you said, and I want to make a comment about AI, that larger conversation there. But you had mentioned early on that the consumption models, that's where people are getting killed. And I wouldn't say they're necessarily getting killed. What I would say is that people are taking advantage of the cloud to optimize their spend. So yes, Snowflake was down a little bit, but it's still growing 50% last quarter. So there's a little dial down there, down from 60% or whatever they were earlier. You saw the same thing with Mongo, with Atlas, couch base with Capella. The benefit of the cloud is you can dial down, the benefits dial up as well. So I think my point being that I think this is for now anyway, a trend where people are just being prudent. Now we'll see if they start pulling plugs, but they haven't yet. Yeah. I mean, go ahead. Well, I mean, I think it's, it's belt tightening time, right? I mean, I think, I think there's a, I have no proof on this yet. I have no evidence other than a few data points, but connecting the dots, I'm saying that the middle class of the companies, I call them the mid range, kind of mid sweet spot, mid range size corporations, private and public, they're going to get squeezed because they got, they're getting killed by ransomware. There's no defense on the security side. They got to make huge investments in IT and they're in the middle of a digital transformation to cloud and there's a lot of complexity involved. So that requires talent and that requires speed and agility and money. And you know, the heyday of leaving all the lights on, so to speak, in the cloud and just going full throttle is over. It's really ROI time impact doing more with less. I hate to use that term, but you know, any down market, if you can't show immediate impact, then you're out and that's what the cloud does. Now, not everyone's getting there. I mean, not to get all nerdy, but there's more virtualization in the enterprise, buying orders of magnitude over containers and Kubernetes. So even though that's growing significantly, that still costs money to migrate old IT over to virtual containers. This is like what's under the hood. The engines are off. The tech engines are changing. That's my point about AI. A whole another wave is going to wash away those sand castles I call them, you know, in the beach. That's old IT. Look, AI, you know, they're saying the trend is your friend. And why not? This is the one segment that could be a real catalyst for tech momentum. It's got amazing disruption potential. I have to tell you, I've been looking forward to this day since I started the industry 30 years ago when AI was, you know, in the 80s, people would talk about it. It was fascinating. And then you had that, you know, decades of AI winter. Well, now you've got, you know, all this data, this processing power, these foundation models like GPT and others. And that is really exciting. And it's game changing in my view. Well, I got to say, I've been an AI guy since college, you know, when AI was kind of in the beginnings of its movement. You know, we love media. We love video. If you're in the video business and AI, you've had moments where the scale side of things weren't kicking in, but now video and AI have scale behind cloud and data. So I think a lot's going on in those areas that have been people have been itching at this, at these areas. And it's good to see them both explode. Video is more important than ever before. And, and AI is going to be creating more value and doing all the heavy lifting. And you and I both bullish on that. So I think you saw Keith Townsend's tweet. Exactly. The treasure trove of metadata from all of our Cuba transcripts. Yep, we know it, Keith. We're working hard on it. We're working on a Cuba. Well, what I want to do is build an avatar for us so that we can do interviews as avatars. And then just go back to the linguistics of the index and have the index basically do the interviews for us. That's definitely, I mean, that could be done. That's what we'll see after the rant section. Basically done today, right? We'll save that. How about crypto? Bitcoin falls 8% to 19,900, nearly two months low. Ether falls 8% to 1,400. Silvergate capital is gone and Silicon Bank, ex-valuate banking plodes. Buying opportunity, Dave? I think so. I mean, crypto is not dead by any means. I mean, I, by no means do I think that crypto is all of a sudden, you know, Bitcoin's going to go back to 100,000. I think it will someday. But I think it could be, you know, 18 months, two years, you know, before we start to see another run up. But I think it's going to happen. I think the fundamental for crypto, like you were saying earlier, when banks fail, there you go. That's what got crypto started. And so, and I still think the innovation is there. Yeah, there's a lot of scams. They get shaken out, you know, the Silvergate stuff. To me, that was more just piss-poor, you know, management of the bank, not doing things, not running best practice. That was just, that was just poor. But I still like the crypto thesis. I think there's a lot of innovation, distributed finance, no defy, no doubt is, I think, still a thing, even though it's being crushed. I'm still a long-term bull on crypto, John. I think that the bank failures points to digital currency. I think the regulation is going to be a cluster. You know what? I think this is going to be an opportunity to look at how this fallout happens. And I think it just highlights the fact that the world's changed so fast. And I think, you know, my rant would be, you know, on this is twofold, the government. I'm wondering how much involvement our government has in this and the other regulators and the financial institutions. Is this another, is there something under the covers here that has a 2008 big short kind of systemic problem? I mean, I don't know, Dave. It's like, it makes me feel like I'm not really happy about this. Well, I mean, you know, crypto should be regulated. I mean, I would welcome that if the governments come in and say, okay, here's some guidelines for crypto, protect the small investor. I mean, a lot of people got hurt, you know, during the tech boom and, you know, the meme stocks, I mean, you know, the regulations should be designed to protect people who can't protect themselves. You know, having said that, you know, people say, oh, you should ban crypto. I mean, that's just... Well, let me ask you a question. Speaking of crypto and AI, since we got on the pot here, is Web 3 crypto or AI in your opinion? Because the Web 3 war has been kicked around a lot as describing what crypto is. And crypto became NFTs, shitcoins, not truly blockchain-enabled companies. Web 3. We talked about this two episodes ago. I think it's the confluence of those two trends. I think Web 3, you know, metaverse and crypto slash blockchain, cryptography, I think those worlds will come together. I think there's going to be a lot of innovation there. I think, you know, as well as I do, that blockchain in terms of privacy and ledger, and there's just so many, you know, awesome potential workloads and applications, but the tech itself needs to get better. And I think that's where a lot of the innovation has to come from. You posited two shows ago that everybody's leaving crypto going to AI. I do think those... Yes, it's happening. Those vectors will... I know, but I do think those vectors will reconverge. I do. Well, we'll see. I mean, we'll see. I think they are going there. That's the herd of the alpha entrepreneurs and techies, and money too is going there. But I think crypto also has the self-inflicted fraud wounds that they drank from the trough too much. Look at the failures. The Wall Street Journal had an article on March 3rd, I'm reading it right now, on Tether. You know, the Tether falsified documents and shell companies makes FTX look like, you know, small potatoes. Basically, Tether Holdings, it's around stablecoins. So Tether runs... It's a $71 billion stablecoin. It's supposed to not go under. If this goes under, then that's going to be mayhem. It's going to be crazy. So crypto's fraud side is killing its own growth. I know. I mean, I got a lot of greedy friends in crypto, you know, my track friends. And you remember when these exchanges were saying, hey, put your money here. We'll give you 15%. This is determined zero interest rate. We'll give you a 15% return and they call me up. You got to put all your crypto into, you know, this platform or that platform. Like, no, NFW. This thing's going to blow up. And so that's just... People got hurt, you know. And you saw that. Wolf of Wall Street. Watch the movie. Younger kids out there weren't around. You know, the bulletin board shell games were all over the place. You know, fraud is everywhere. All right. Well, Dave, rant section. What's your big rant this week? I got two rants. I mean, I don't want higher taxes, but the debt has me concerned. Everybody's down on Biden's tax plan. It's never going to see the light of day. But what I did like about it is he at least talked about attacking the debt. Clinton did this. He was the last president. He raised our taxes, but he said, I'm going to pay down the debt. So I'm okay with that. The other rant I have is I saw a stat the other day that women and CEOs and the S&P 500 now 8% double from 4% a decade ago. Yeah, progress. Well, how good, look how good everything is. I mean, 8%. I mean, that is just... Yeah. This is not good enough. I mean, you know, John, you just did the two unbelievable events and the women in tech angle was phenomenal, the International Women's Day. There's so many talented women in our industry that are absolutely qualified to be chairmans and CEOs and 8% is just pathetic. My rant on... First of all, yeah, I agree with the rant on the women's stats. That's equality. Equity is bad. My big rant is International Women's Day. Why is it a women's day? Why is one day? It should be every day these days. I rant on these whole I'm with Morgan Freeman. It shouldn't be every day is a day, right? So, you know, to celebrate and step back should be a focus on the numbers and question on where we're at. So I think, you know, having an International Women's Day is good for that, but making it and be like, that's it, we're done. No, it's going to be back to work. So we're going to... I'm going to pledge to do more interviews and keep focusing on that because there are some amazing women out there and 50% of the population is 51% women and software is used by everybody. So it's so unbalanced and the tech business has to change. It's got to be equally represented and we need to get our company 50-50 as well on the video side. So that's my rant on that. And let me just say, it's not an education gap. There's more women getting educated. Women are better educated than men. And so, they should be CEOs. Put the smartest people in charge. The comments I heard in a lot of my interviews was the pandemic was actually good for men to understand what it's like to work at home. And that came out a lot. My other rant, I was going to be... My number one rant is going to be on SPB, a comeback in a second, but my other rant was going to be on the Biden White House Nothing Burger of a report. The Biden White House released the U.S. National Cybersecurity Report. It was comprehensive. It didn't say anything. It just said here's the state of cybersecurity. The government is letting companies outside the United States attack our land and people, and they're not changing the red line. And they're letting it go. And they're telling private companies to defend themselves. So we're responsible for defending ourselves and the companies. And that's unacceptable. The government should have a better doctrine on this and change the policy. And I don't know. These documents are just kind of more the same. We're going to private public, private partnerships, just not getting done. So the government needs to be much more proactive, whether it's incentives, ransomware hurts people. And there are people dying because of this. So it's not like there's no deaths. People get unemployed. They have family hardships. So in war, that's how they do that article five, which is if someone gets killed on American soil, then they will respond. Well, ransomware doesn't kill people technically out of the gate unless it's a fetal monitor or something, which actually has happened. But cybersecurity is a threat and it's brutal. That's a good rant, John. And you're right. The finger wagging from the government at companies to do a better job. The public-private partnership is crap. I mean, look at the Federal Trade Commission, Lena Kahn going my rant again, going after big tech, going after tech, shutting down the arm, envidia deal. It's just not good. And so, again, I'm not saying big, powerful corporations shouldn't be regulated if they're breaking the law, they should. But the finger wagging and the high and mighty posture, it's just not productive, in my view. Well, my number one rant for this podcast is the SBB Silicon Valley Bank debacle. This is disastrous. It's never should have happened. Management should have caught it. They should have been on it. In fact, the chief risk officer was reported as seeing it, saw clouds on the horizon, and then resigned and cashed out her stock and left. So, they saw this coming. It never should have happened. It's going to cause harm. People are going to lose money, self-inflicted, just absolute mismanagement and horrible situational analysis on the entire bank. And again, 16th largest bank in the country, just despicable. And the fallout will be tremendously huge. I'm going to pile on, I'm going to pile on and say banks are regulated. The regulators have to take some piece of the blame pie on this. It can't be 100% on the bank. Maybe, give me something, John. Give me 15% on the regulators. SBB Bank never should have failed. Period. Full stop. It's a bruise on Silicon Valley. This is a problem. A lot of people are losing money and will be hurt. It's huge. It's too bad. It's really unfortunate. Well, Dave, we're at the time here. We're pushing the hour here. Just, you know, we've got a lot going on, the Cube, right? The world's changing for us too. More digital. We're doing a lot more shows. I got to say, the studio in Palo Alto, your studio in Boston, kicking ass. I love the content. We did International Women's Days. I did 20 executive leaders. We had women in data science at Stanford, getting hardcore tech power there. We had the startup showcase with AWS's ecosystem around all the ML, AI stuff. All the big leaders are AWS ecosystem partners. So that's a good sign for Amazon Web Services. RSA is coming up, security. We're going to see a lot more security and AI content for us. And of course, watching all the big tech trends, all these big moves being made, you know, happening in the industry. And again, today is the bank failures, crypto failures. A lot of shit happening. So we're going to be a meteor at RSA. So I'm stoked about that. Mobile World Congress, MWC, last week, we had a big presence there. It was awesome. Four days, like I said, we're doing business. We didn't do our pod last week because I was in Barcelona, but the whole disaggregation of the telco stack was front and center. You saw a lot of tech companies, Dell, HPE, Red Hat, Snowflake, AWS, Google, Microsoft, all of the traditional tech companies are aiming at that trillion dollar plus telco market. Some really interesting dialogue where big finger pointing between the telcos and over the top providers and public policy. So that's going to be a really interesting space to watch. Hey, great to see you in the studio. I'm in my office. See the Bruins Jersey in the back there? Best team in the NHL right now. Let's see if they can make a run for the Stanley Cup. Yeah, they blew it last night. They were up to zip to the Oilers. They ended up losing 3-2. So, well, anyway, hey, their ninth loss of the season. Yeah, exactly. By the way, John, Red Sox are 10-0. Keep your socks on. I don't know if you can see my Red Sox socks. Well, we'll see how good that comes out of the season. But, Dave, great pod. Hey, have a great weekend and let's pick it up next week. A lot more crank. We'll see the blowback. I guarantee you we'll be talking about SVB and the impact of that for a long, long time. Crypto rising from the ashes hopefully soon. Again, what a weird market, but still it's still opportunity out there. All right. Thanks, John. Thanks, everybody.