 Live from San Francisco, California, it's theCUBE at VMworld 2014. Brought to you by VMware. Cisco, EMC, HP, and Nutanix. Now here are your hosts, John Furrier and Dave Vellante. Okay, we're back here live in San Francisco, California, this is theCUBE, VMworld 2014. This is our fifth year. I'm John Furrier with SiliconANGLE, I'm with Dave Vellante, chief answer to Wikibon, my co-host. It's our fifth year, VMworld 2010 was our first. Paul Morris was the CEO, Steve Herrod was the CTO. So much has changed, and our next guest is Steve Herrod, the CTO of VMware. Welcome, oh, you're not the CTO anymore. Not anymore. General partner at General Catalyst, our partner at General Catalyst, now a venture capitalist. One of the VMware alum that are out there as VC, Pete Sancini, Jerry Chen, yourself, we're from tier one, VCs, as VMware alumni, so you've got the full Kool-Aid injection in the DNA. Welcome to theCUBE. Yeah, I think this is my fifth CUBE also, so I might be the veteran here. You were on theCUBE the very first CUBE we ever did. I think so, I've done several with you. I like it a lot. Boston, yeah. Yeah, for EMC world. That's right, that's right. So, a lot to catch up on, we had Jerry Chen and Pete on earlier for the VC panel. I love this VMAFFIT because we're actually chronicizing some history. There's always a mafia in Silicon Valley, the PayPal mafia, the Google mafia, now soon to be the VMware mafia as it just continues to grow and evolve. There is no mafia. You know, in venture terms, I guess. So a lot of startups coming out, right? So we had a good conversation about that. So, one, I want to get your take on you as a VC now. You're seeing a lot of deals. You're seeing your baby that you've been riding for a long time, this horse VMware, explode and start to see stuff that Pat's materializing out. All stuff that you help architect, frankly, start to play out. So, you got two lenses. You've got the inside baseball of what VMware has been architecting, maybe not to date in all the nuances that they now know. But now as a VC, you're seeing everything. So you have great metadata, so share. What's, how's it coming together? The landscape outside of VMworld and VMware's ecosystem and the entrepreneurial community. Yeah, so you've had a great set of people on here that are startups and big companies alike. The funnest thing is as a CTO at VMware for almost 11 years that the goal in that role was to sort of look ahead three years, try to have an opinion about where things were going, grab a great group of engineers and then make a bet on it. And that's really what the venture capital role is also. And really trying to have an opinion and really bet on great teams. So the core skill set as a CTO I think was there. Also as a CTO you don't have direct influence largely. You're influencing through a bunch of other means. And I think a good member of a board of a startup does the same thing. So from a skill set I think it's very similar. But from a core content, you know, this is obviously one of the biggest transformations in data center and infrastructure world. And so a lot of companies are trying to build around it in a good way. And what's interesting is like note, you don't see people drop out of college and go do an enterprise startup. That it's always someone who's worked at some bigger company. And they've gotten the lumps and they've been beaten up by CIOs and they know about integrations. And so you're really finding that people starting companies are coming out of great companies like VMware and EMC and Cisco and Juniper and all those companies. So I think that's also been very helpful. But fundamentally it's the transformation of the data center, the presence of the cloud, all these things you talk about and being there. Yeah, it's a lot of fun. It's a really interesting way. You spend your days meeting interesting people and almost all of them are optimistic. They think they can change the world as they say on the Silicon Valley show. And it's a really good way to spend it. A lot of smart people as well. Well, Jerry Chan has a good first investment. Obviously Docker, big news here. I said, hey, you might not have to do another deal. That becomes the unicorn. It's already getting some great traction, certainly with the announcement here. You've made some good bets too, already in your first tranche as a VC making, putting out some money. We had Data Gravity on, Paula. Yeah, Paula's done a great job in the Data Gravity launch. I think it just won an award here as well. So it seems to be doing quite well. So tell us what. I mean, first of all, we had her on theCUBE. She was fantastic. And I asked her, is Data Gravity an aspirin or a vitamin? And she says, and I actually was shocked. I was so surprised, it really surprised me. Just, we're neither, we're a vaccine. And I go, well, that's a smart answer. But I'm really impressed with her. So what got their attention? What got you on there? What got you to look at them and dig into them? Yeah, so in their particular case, in any venture capital in the world, they look at the team, they look at the space, they look at the technology. And Data Gravity had all of those things. And Paula was the founder of Equalogic, as you know, and had a very good background, a very good experience around this. And she had a theory that you could really build something, she's now calling Data Aware Storage, and really a way of building awareness about the files into the infrastructure. And what's cool is it's kind of like virtualization. When you add things in this layer, they're always on. They work across all the different types of software that you're running. And the theory is that if you do the same thing at the storage layer, you're going to have insights into data. You're going to see things that probably shouldn't be in your files that are sitting around there. So it's a pretty neat bet that storage can get smarter and be Data Aware. So did you have to sell the partnership on it, or was it a no-brainer across the board? Because these good ventures come out of left field, not seen by everybody. You had a unique view on it. What was it like at General Catalyst? Was it all? Was it take a little bit of prep for these guys, softening the ground? What did you do? This one was very, very easy. Paula and her team and John and everyone are really accomplished entrepreneurs. It's a big space, and they know what they're doing. So this is one of the easy ones. And you guys knew them before. You had a good read on them. Yeah, our team had definitely interacted in the past. She was great on theCUBE. She demonstrated, just by a brief conversation, real leadership qualities, an ability to pull together a team, which I love because the East Coast needs a little bit more of leadership quality than teams. Yeah, it's a really great team they built there. Yeah, so we'll be watching that one. So what else? I've been told to ask about Illumeo. Illumeo is extremely exciting, and this is, I'm doing stealth investments right now. So that's one of the challenges on coming on the show. At a very top level. Did Stu leak that? There were two very strong thesis that I'm using for all my investments. One is around a multi-cloud world. And I don't say hybrid cloud because I really think it includes SaaS applications, includes mobile applications. And really thinking about what are the things that a company is going to need to embrace all these multiple clouds. And that absolutely touches on security in a big way. And then the other part of this really thinking deeply around the infrastructure required for mobile applications is they're truly embraced by enterprises. And so there are a couple of stealth investments. Illumeo being one that you're going to hear a lot about. I promise we'll be doing a CUBE session next year that's talking about very big things there. Well, we've talked about security in the past and we've sort of tongue in cheek said, is security a do-over? Pat Gelsinger said flat out, yes. We've had that conversation before. So, and then somebody tweeted out, I think it was today, oh, we're spending more on security than we are on developing apps. I'm like, well, that's probably been the case for 10, 20 years. But so, is this part of a do-over or is it more of an evolution? What's going on? No, security, obviously it's a very heavily invested space and it's one of the bigger problems in all of IT. You guys cover this all the time. Yeah, it's the great time, as they say, the robbers rob banks because that's where the money is and increasingly the identity, the personal information, the intellectual property is all in these computer systems. And then you throw in just the complexity of a faster moving world where you can't do configuration management databases. You can't do all the stuff that people used to use to get control. And so, as a result, it's more interesting to steal stuff from the world and it's easier because there's so much craziness with mobile. So, I think that the world is very ripe for a lot of solutions. Couple that with all the national, sponsored intercepts that are going on and cyber warfare that's growing. It's just going to be something that we talk about for years to come. Yeah, so I asked you, you joined our crowd chat pre-games, kind of experimental pre-gaming concept. It was really fun on Friday. I asked you the VC question. What opportunities do you guys see for founders, innovate? And I really liked your answer. What was on security is the white space that you said your favorites were security for perimeter-less IT and new infrastructure. So that's kind of implying multi-cloud, if you will. So, and can you drill down on what security for perimeter-less IT means? Yeah, it's a mouthful, isn't it? So people talk about the- I'm just waiting the day. The following, yeah. I'm actually perfectly fresh, this is easy. The fall of the perimeter is something people have talked about in a little bit. I think it was really instigated by AWS, has done the fall of the perimeter of I own all my resources to infrastructure running in the cloud, but it's 100% the perimeter used to be also around all my apps are internally, but now I use Workday and Salesforce and so many that are out there. And then lastly, the perimeter used to be that all my employees, the good guys were inside of my data center or my company, and the bad guys were likely outside of it trying to get in, but now with mobile as well as with inside or threats, it's completely reversed. So you have just as many bad guys and troublemakers within the perimeter and you have employees trying to be productive outside of the perimeter. And the API economy creates more vulnerabilities. I love APIs and 100% that that is really the core and the thing that's driving all these different apps. So I like to really think differently about, first of all, security shouldn't be at a perimeter, it shouldn't be an infrastructure concept. It should wrap applications and it should go where the application goes. And then secondly, I love the API world and investment I made as a company called Runscope, which is in San Francisco, I love them. They're really thinking of a world where enterprises have to write and support their APIs as really a core concept, as they monetize them, as they write their own mobile apps. This came up in some of our, we had it on theCUBE, I'll bring it up for the first time this week around Docker, right? Great for stateless applications, REST, APIs, et cetera, but stateful applications is a little bit challenged. Can you give us your thoughts on that? Stateful applications a little bit have different requirements. How does Docker play for stateful applications on top of virtual machines? It's kind of getting geeky, but you know. I like geeky. No, I think they're very, it's funny because they are often considered before this event is very competitive. And I think really they've been targeting different audiences and different value propositions. VMware has largely been for stateful applications, keeping them running, making sure that they run well. And Docker has been a very easy way for a large number of very quick lightweight applications that are largely stateless to be created. So I think what you've seen at this event and what makes just a lot of sense is you can combine the values of each of them and have something new. Is that the core kind of thing here with Docker? That VMware is kind of like not just jumping on the Docker bandwagon. Is that the real thing that they're trying to do? I think they did even a higher level. I think the world is comprised really of existing apps and yesterday's apps and the traditional way of writing things. And then it's the new cloud scale web apps that are being written. And the latter are largely stateless and they have a lot of tiers that look very similar. So I think it makes good sense to be able to support both type of applications in the model world and take a different approach to each of them. Hey Steve, I want to ask you about your sort of personal investment thesis. I mean, obviously VC's always looking for the big hit, right? But you help perpetuate one of the biggest, if not the biggest transformation in IT industry history. I guess with the, maybe with the possible, I guess with the exception of downsizing the mainframe, but still massive. 10X disruption. Is the next wave, whether it's cost cutting or what Merit used to call deeper integration into the business, is it as big? And from an investment standpoint, I mean, it's certainly as big, I mean, tam-wise. But are you finding that you're investing in pockets, trying to invest in pockets, or are you seeing that there's potentially another big giant VMware-like investment out there? What are your thoughts on that? I think, so A, it's a really fun time to invest. I focus, my number one priority is finding really strong technical teams investing in hard IP problems. That's my unique angle, but really applying it, I think everyone talks about mobile in different ways. I think if you look three years out and underneath the covers, mobile is going to be everything. And so it's really going to be not just how do I write the newest app, how do I do BYOD, but I really think it's what infrastructure has to be in place so that every single enterprise app you use today isn't on a web browser. It's actually delivered in a right mobile way. And that's going to affect everything. It'll affect how developers work. It's going to affect how you secure your information. 100% the API economy will be in place so that people are grabbing the data from everywhere. So this is basically this whole awareness thing that Paula brings up. It doesn't just apply to data. It really applies to being aware for applications, being contextually aware of environmental issues. I think data awareness will hit all the infrastructure that people are there. It's how you can do better context, which I really like that term as well. So the thesis is find a problem, you go attack it, find a team, and then kind of see what happens. Yeah, definitely have a strong opinion about where the world will be several years from now. Find the best team to go attack some of the problems and know it's going to morph a little bit along the way. And I think mobile for the enterprise is definitely one of the biggest areas on that front. So I got to ask you a personal question since Dave had asked a personal question, I have to ask one too, because that's what we do here in theCUBE, as you know. VCs say no a lot. And CTOs don't necessarily say no a lot. They usually like kind of, or maybe they go with the flow. We can do that, maybe, you know. What was the hardest thing that you had to transition to this? No, no, no, because everyone wants money, right? So you get the lottery ticket or the investor or the banker, if you will. You're funding great entrepreneurs. Has it been hard to say no? And what is- That's a really good question. It is, you know, certainly you have good personal ties with a lot of people. There's a lot of merit ideas that you can't possibly fund or go into. I'm a big believer in sort of Silicon Valley karma and help people out here whether you do something or not and something good happens later. So everyone has to say no a lot. I try to provide some extra level of analysis or some suggestions along the way or introductions. But it is kind of hard. No one likes to say no as often as you have to. You'd like to say, yeah, here, take some cash, run with it, right? But it's hard. You've got to say no. Entrepreneurs are saying no to venture capitalists quite a lot also. What is the coolest thing that you've done as a VC that you could share with the folks out there? Besides kite surfing, I don't know if you have a kite server, that's what they all do from what I hear. I don't kite surf. But what have you done that's the coolest thing since you left VMware? So my favorite thing is, again, coming more from a technical background and running engineering groups, we were able to create a Palo Alto office which is actually a house in University Avenue. And I wanted to create it like, if I were an engineer, what would I want to come to? And a lot of venture firms that you go to, they look like banks or art history museums. Very, very serious. Mahogany, yeah, big board meeting room. But I wanted a place where you have great coffee, whiteboards and you just kind of hang out on a porch. And so that's what we've created. And I actually really love it. It's a good place just to have genuine conversations and dive in deep into what you're trying to build. Okay, final question for you. I know you're super busy. I really appreciate you taking the time. Come on theCUBE is, your take on this year's VMworld, looking from the balcony down as now venture capitalists, watching the actors do their thing on stage. What's your take on it? What's your observation? What's your commentary? Yeah, obviously I'm really big conference. You've seen end user computing with Sanjay Arrival really, really betting in a much bigger way with acquisitions and a story that's very exciting. So that's different. And I think Evo has certainly raised a lot of eyebrows. A lot of people saying it validates existing models, but also just a really lot of big questions on that front. So it's been a maturing of the group. I think it's more activity than in the past and it's fun to watch. Very polite EVO Rails analysis there. You played it perfectly like down the middle of a VC wood. People are asking questions. No, it's validating, certainly Newtonics. Yeah, they're a great company. It validates Tintree just on here, but. I think it's representative of the model of the future. Tighter integration of software and hardware is clearly where things are going. All right, final, final question. Advice entrepreneurs that want to get your attention, get a meeting with you, come whiteboard with you. How do they do that? How do they get your attention? What should they do? Oh, I'm easy. Send me email, harridatgeneralcatalyst.com. And I love meeting people. Even if it's not for a pitch, come by, have a cup of coffee. Check out the yellow house that we're in. All right, Steve Herrod, former CTO of VMware now, partner at General Catalyst Venture Capital firm. Part of the V-Mafia Venture Capital alumni group, which consists of Pete Sunstein and Sherry Chen, Steve Herrod, all CUBE alumnus. We all love them all. All great stuff. And I think Dave VMware alum, as they start getting bigger and bigger and doing new things is going to be good. And then Silicon Valley Karma certainly is in play with those guys, great engineering culture. Great to have you back on the CUBE. Great to see you. We'll be right back with our next guest after this short break.