 Live from Orlando, Florida, it's theCUBE, covering Microsoft Ignite, brought to you by Cohesity and theCUBE's ecosystem partners. Welcome back everyone to theCUBE's live coverage of Microsoft Ignite. I'm your host, Rebecca Knight, along with my co-host Stu Miniman. We're joined by Patrick O'Reilly of O'Reilly Venture Partners based in San Francisco. Thanks so much for coming on theCUBE, Patrick. Thanks for having me. So you are a serial entrepreneur now working as a VC. What are you doing here? Tell us why you came to Ignite. Yeah, well, selfishly on the VC side, we have a few of our portfolio companies here that have booths and I wanted to kind of hear what people are asking, why they're interested in the companies and how we're framing those companies to the end users. I think these type of events are really good to unlock hidden potential or things people can tell you that you wouldn't actually have thought about. So Patrick, I've known you for a number of years. I usually see you at the open source shows. Microsoft, publicly very embracing open source. They love Linux, partnering with Red Hat. Even partnering is a lot of things that Microsoft have. They were working with VMware. But what's your viewpoint as to how you see Microsoft in the open source world and how about this ecosystem? Is this a vibrant ecosystem that VCs are investing in or is it just that there's companies of yours that this is part of the story? No, I think historically we've had the build versus buy kind of way of looking at it. But when I typically think of Microsoft, it's more people building glue code to kind of connect things together. And you tend to have blinders on to not think about what open source components you can use. You look for what company has a solution you can buy or license or OEM. And I think that's changing over time. Microsoft did an amazing job with developers of giving them very easy to understand languages and amazing tooling. And then along with that, the documentation and the training. So I kind of felt like you came in to development one of two ways. You either like on the Microsoft track and using the cookie cutter approach, to doing things and getting certified on something or you were open source, you learned a scripting language and you just looked at what you can cobble together in the open source world. And there wasn't a lot of cross pollination, but now I see that those walls kind of dissolving. People are willing to mix and match. Yeah, it's interesting. Some place I've seen Microsoft a lot is in the Kubernetes show. So first got to know you, you were a cosmetic, really the first company around Kubernetes that we knew, I know you're doing a lot of different things, but we love your viewpoint on anything on Microsoft in that space as well as just what you've seen as a watcher of the Kubernetes space these days. Yeah, I mean, I've been, if I step back from Kubernetes, back to the Apache Mezos and Mezosphere days, if you're rewind all the way back there, you kind of had to do a lot of education of like, what do you mean containerization? I have VMs, why do I need containers? And now that we've gotten past that and people actually understand the value you have containers, like having an orchestration system in place that works and works with everything is obviously more important than ever. And it's, I really credit the CNCF and the Linux Foundation for what they've done to kind of bring standards around Kubernetes and shepherd the project. And I think the fairly recent announcement from Google that they're fully trusting CNCF to be the shepherd of that is huge. And it gives a framework for people like Gabe at Microsoft to work with some of the staff at Google in a collaborative way and move it forward for everyone. And I think historically containers made a ton of sense on Linux, but now that we have Windows Server supporting containers and the KubeLit working on Windows, I think in the 111, or sorry, 113 release will have full Windows Server support in Kubernetes. Like that'll be huge. And just a quick aside, like the reason I even kind of honed in on containers and thought it was interesting is the average server utilization is still so low, but we're not really trained as technologists to care about that. And we're really good at building data centers and tucking them off in places where no one sees. But when the average server is taking, it's like running a hairdryer on high for electricity and then they run so hot you have to cool it, we're really not helping the environment. So I think if we can move towards containerization, move towards efficient utilization of our hardware, it'll be better for everyone, not just this ecosystem. So tell our viewers a little bit about your portfolios and your portfolio companies that are here and how they fit into the ecosystem. Yeah, so the one I'm most excited about, or shouldn't probably say it that way, I'll reframe that. Get in our favorite, they're all your babies. Yeah, they're all my favorites. But Zifton Technologies is great. I think their integration with the Windows Defender ATP advanced threat protection tool is great. They focus on the Mac and Linux components and give you that same kind of pane of glass on the Microsoft side to see those endpoints. And like their utilization of AI, like they have an upcoming release where they're using AI to do things. And traditionally in that space, it's been like the AV vendors doing everything and you had kind of, here's our signatures, we're going to scan against those signatures. And it's a creative use of AI now to like look for just anomaly detections. These are things we haven't seen before. Not sure what it is, but it looks abnormal. And those are the kind of like spin outs of companies that I'm looking for too. Like I want to see people doing more meaningful things with AI. I think if we look at Azure and what they're offering now, like I don't need to have a bunch of data scientists at my startup, I can implement computer vision just using one off the shelf components from Microsoft and Azure. I can do video indexing, using their services. If I rewind just back three years, I would have had to have a team of like four data scientists, they'd be reading white papers, they'd be implementing code that like sort of half works and they would probably take half a year to train some models to get like moderate results. And now in the matter of minutes, I can use this off the shelf stuff. Yeah, it's fascinating. I think back to, we were pretty early at theCUBE at watching the whole big data trend. And back then it was like, okay, we're going to take that two-year project and drive it down to six months. And now we talk in the AI space is, how can we drive that down even more? In big data there was concern, everything seemed to be custom. In AI we're starting to get to more templatized solutions, rolling out through a lot of industries and it feels like it's taking off a lot faster than that space is. I know there's a lot of investment going on in the space and a lot of air, so. And I think in particular, what excites you? What makes a good AI investment versus, there's just so much happening out there. I struggle with the name AI a little bit. I understand. I'm working on a talk and I don't enjoy the artificial aspect of it because it's really just intelligence. And right now it's a buzzword, people are throwing into everything. When really they mean we use an algorithm. It's not truly AI. But when we get to cognition, we get to some day if we have quantum supremacy we'll have systems that actually can maybe have a consciousness and decide things like, that's where I'm interested. I'm looking, like on the dev-op side I'm looking for people using AI to get away with repetitive tasks. Like I would love to see someone have a system where it's like hey, we've noticed 90 times this week this guy's done this exact same thing. 99% the same way. Let's automate that away. We've been really good in this space to kind of treat infrastructure like code and be able to tear things up. I've been incredibly excited to see just in my career how we went from okay, you're going to do something meaningful on the web. You need to build a data center. You need to get a bunch of servers, racks and you pay all this equipment and oh by the way, 18 months now it's going to be obsolete and you're going to have to spend money again to where now I can just get some credits to start up in the cloud, try things out and do really meaningful things. So I'm just looking for anyone on AI that's going to do something that moves the needle. Yeah, just on the terminology piece, I live through the cloud wars and the argument over what was and what isn't. So it's just the shorthand for this wave that we have there, whether you AI or ML or IBM has some interesting terms that they want to call it. We understand that there's intelligence that I can do with software, a lot of machine to machine things that are going on and it shouldn't be a lot of heavy lifting by people to go in there. Oh wait, I can train something, I can learn what's happening, so. Well I wanted to ask, I'm sure a lot of entrepreneurs ears are pricking up when they hear that you want to make these meaningful investments. What is it that you look for in a company? Is it in terms of the leadership team, in terms of any track record, what sort of makes your eyes light up? So what I try to go to as many conferences as I can because I feel that's where the hallway track and I can meet people, I can see their talks, see what they're passionate about. So what I'm really looking for is investing more in the people than in the idea because startups can always pivot. And you look at some of the greatest companies out there, they were pivots from a slightly different model and they realized that they always should go and chase down this other thing. So to me I'm looking for people that are doing something exciting where they are already, looking to make the leap, for example like the Spinnaker team or people that do something like if XED wanted to move off and be a separate company, things like that. Where they've done something and they've proven it and now they want to go start a company around it. And I think right off the bat, like if you've built some interesting technology that people are starting to use, you have a decent revenue stream just from support of that and helping those end users. And I think with O'Reilly we do something a little different than other people. I focus mostly on seed investment, very early stage. Our typical check size is around 500K. And I actually allow people to take us off the cap table and just pay us back. Like I've done nine startups in my career and it's fundraising is one of those things where you only get good at it once you don't need it anymore. And I felt the pain of being on that side of the desk and I want to be in the position where we can write the checks and not try to have a lot of governance, not try to take a board seat, not give you down pressure on what you're doing but really be additive. I think moving forward I would love to be in the position where we can help incubate a lot of companies because we found that you all kind of go through, every company goes through the same process. Like now we need a real CFO because we need financial projections. Being able to provide those services for portfolio companies where they don't have to go spend their resources chasing that down. I'm curious how much some of the big players are just the gravity of what's happening and in this space that you're looking at. So obviously we're here at the Microsoft show but Google, Amazon, a lot of activity going on and we call it AI or what you will. VMware, even Oracle, Salesforce, how much of the big players defining and you have to build around them versus, we look at Kubernetes is supposed to make things independent, I should be able to open source and be able to build solutions regardless of what platform they're on. Yeah, I mean I think we're living in a world where people have a lot of choice and we look at even like taking the example of cloud providers. As long as I don't get vendor lock in and use their specific features, like I can move around to different cloud providers, I can now say I want to negotiate a better price here and migrate over. And I think just with any of the technologies like trying to work in ways where the companies can work together and be additive, I think that's where we actually move down the field and don't know what analogy is appropriate to use but I feel like there's a lot of really interesting stuff that we should be doing and making every company doing a slightly different version of the same thing. I don't think makes sense. Like even silly things, like as we mature, like back in the day, everyone used to have broadcast television, we built all these antennas, we got all this range, and then we moved to digital and we didn't need those antennas, we didn't need that range. So they started to decommission them but then companies came along and they're like, well wait, now we have this unlicensed spectrum we can use. So now they're using it for internet. You can get 20 megabit connectivity out to a rural farm where now they can put some cheap IoT sensors and do really meaningful things of low cost technology. Like those are the things I'm interested in. Kids that want to cobble together IoT sensors and come up with a way to use what they have in rural areas and have technology actually help people in a meaningful way and I think those are a lot of very viable startups in that space. I do think we live in a world where every company is going to end up graduating into one of the camps, be it Salesforce, Google, Microsoft, but in that innovation spike, like when they're first starting improving out the companies, I think they have a ton of choice. You described a very beneficent approach to how you think about VC. Do you think, how would you describe the VC landscape right now? You said you want to be able to just incubate great ideas and help these young companies when they are not good at fundraising and they don't have the smooth slick deck that will really impress the bigger VC firms. I mean, how, what's wrong with the VC landscape today and what else are you doing to make it better? Well, I think the incentives are a little off. I can speak for myself like when I was looking to raise VC money in my previous companies, like you get these great offers from people, but then you talk to other entrepreneurs and you're like, I'm not going to call anyone out my name, but you're like, well, how is this particular VC firm served you? And you start hearing like of ways that was additive, but also kind of put undue pressure on them where they say things like, well, we really didn't need to raise that round then. We could have done bridge financing or we could have figured out how to get an MVP product out there and brought in some revenue. So I just think it's the ultra high returns that VCs are looking for and the promises that those VCs are making to their LPs in their funds to outperform everyone else. And everyone talks to everyone, right? So if anything's meaningful out there looking for investment, kind of the back channel is very vibrant and it's dog eat dog. And some of it, I kind of reckon it to, you know, you're alma mater, like where you went to school, if you're an MIT person, like MIT is the best place in the world. Some other school, they're the best place in the world. And the VCs tend to kind of like fall in those camps. And what I'm looking to do- And those are real biases that impact women and underrepresented minorities to their detriment. Yeah, and that's the thing I've struggled with too. When you look at the, like let's take Andresa, for example, you look at their portfolio companies, like you kind of can locked into that ecosystem. Like if you want to go, you know, if I'm a mesosphere and I want to go partner with someone that's not under that, where they have a company in that portfolio that does similar things, you're going to be pressured into working with the portfolio company over going off and maybe choosing the better, you know, choice for the industry. So I'd like to see, you know, those things change. So Patrick, we talked a little bit about Zifton, security endpoint, you know, really hot space. I want to give you the opportunity, other companies you have here that we should check out. Yeah, so work closely with the team at Turmonomic. I think what they've done over time, you know, is amazing. I love products where you can just bolt it in and within a short period of time, you're getting value. Like, you know, stepping back and just saying one thing about Zifton, like I think it's amazing. So I come from a software development, you know, background and one thing as a software developer I've always found fascinating is like, when you come in wearing the developer hat, they give you the keys to the kingdom. They're like, oh, here's root access to the servers. Here's where all of our data is. Here's how you do a snapshot of production to, you know, test it, you know, in staging. And I've always thought that it was a tremendous amount of risk. And, you know, on average, a company can be hacked for up to a hundred days before they even realize that they've had a breach. And like any kind of company, you know, be it Zifton or anyone in that space that can showcase that to you, like, you know, raise up things that you weren't aware of, you know, is really interesting. And then, you know, to the, like, you know, Niko and Turbonomics and like the things that they're doing there, like to actually get the most out of what you already have, like that's huge to me. Because one of the things I see in cloud computing that we didn't necessarily have with, you know, directly leased or owned physical infrastructure is it's almost too easy to spin things up. You know, you've got the guy clicking through the UI and he's like, oh, look, this instance looks great. Like, oh, and it says it's only going to be $140 this month. And then they end up spinning up a thousand of those. You know, you get that first sticker shock of like, here's my $250,000 bill that month, you know, for cloud. And companies like Turbonomics can like, avoid you, you know, making those mistakes. Great. Patrick, thank you so much for coming on theCUBE. It was really fun talking to you. We could talk to you for hours. Thanks for having me. I appreciate it. I'm Rebecca Knight for Stu Miniman. We will have more from theCUBE's live coverage of Microsoft Ignite coming up in just a little bit.