 From around the globe, it's theCUBE with digital coverage of VeeamON 2020. Brought to you by Veeam. Hi, everybody. Welcome to theCUBE's coverage of VeeamON 2020, the virtual version of VeeamON. And I'm here with Justin Warren, who's the chief analyst and managing director of Pivot 9. Justin, good to see you. How are things down under? They are not too bad. It was a bit of a rough start to the year, but things are looking a little bit better here in the middle of the year. It's tough times. And of course, Justin, you guys may know as a many-time CUBE host. And of course, our other almost daily CUBE host these days, Stu Miniman joining us to unpack the Veeam keynotes, the trends in the marketplace. How are you doing, Stu? I'm doing great, Dave. Yeah, as you said, rather than us flying all around the country, we're in doing remote interviews every day. It's different 2020. So this has been quite a year, obviously. Of course, from Veeam's perspective, started out with that blockbuster exit, $5 billion exit to private equity slash VC, insight capital, insight partners, which was just an awesome thing for the founders and some of the employees. And actually going forward now, I think the balance of the employees really have an opportunity to grow the valuation of the company even further. I think that's what we've seen with insight. I mean, they want exits. So it's like, you know, they used to talk about rat marriage, you used to talk about, you know, act two. Well, now we're going to see it play out, guys. So just some high-level stats of billion dollars last year in bookings. They're really shifting to an ARR model in a big way, 375,000 customers. 160 countries, 4,200 employees. Justin, you remember when you first ran into Veeam at like some V-Mug somewhere, you know? And you're like, who are these guys? Wow, they've certainly made it. They really have. And it's kind of surprising, but also not. The feeling when I first encountered Veeam was that it's like, well, who is this people? Yeah, what are they doing? It was very much SMB. It was very much practitioner, very technical focused. And people who used it just loved the product because back then the informal tagline was it just worked. And in those days, it really was amazing that there was a product that was simple and easy to use and worked on all of the things that they needed it to do. And they had a very, very Veeam focused back in the day. Hence the name of the entire company was Gal Veeam. And to see it grow from that, even then was quite a broad base, but a very much an SMB market and see it grow across the entire industry is pretty remarkable. There's not really any, not many other companies who've pulled off this kind of growth momentum. Yeah, I mean, Justin, I think you nailed it there. You know, I think back, it's a company that hasn't stayed still though. You know, in the virtualization community, there were ripple effects when Veeam went beyond just doing VMware and started to do Microsoft. Then a few years ago, I remember after we were doing the QBAT at the show, there was just a real push forward to extend the relationship with Microsoft to the cloud. One of the things that we think we see loud and clear at this show is that VMware relationship really strong. And as VMware goes to various cloud environments, Veeam can go along with that. So that VMware relationship stays strong, but they're also in a lot of the public clouds and expanding beyond what they're doing. They're moving into the enterprising. And I think one of the things we'll dig into is how enterprising is Veeam today, but absolutely a company that very different than they were two or three years ago. And Dave, as you, you know, correctly pointed out, now there's not they, hey, who is this weird privately held company? You know, who's the ownership? I think there's a little bit of a bit more of a understanding as to, you know, they're a big player in the space and a little bit more understanding as to where things go going forward. Well, you know, I want to get your take on sort of their, we're going to go through a lot today, but the vision that Danny Allen laid out in his keynote, and I think it's quite interesting. I mean, given the energy and the VC money coming into the market behind Cohesity and Rubrik and, you know, the noise that they're making, what he put up as their vision is the most trusted provider of backup solutions that deliver cloud data management. So as you guys well know, Cohesity and Rubrik are really pushing this notion of data management, which means a lot of things to a lot of people. It's interesting to note that Veeam, they get new, first of all, new management, new CEO, Danny Allen now CTO and obviously in a strategy role. So he's putting forth this kind of back to basics mentality, but then leapfrogging, trying to leapfrogging the data management narrative into the cloud, bringing cloud into it, super gluing cloud and data management, which I think is really smart because when you think about a multi-cloud data management for data protection, you know, it's got to be about cloud native and it's got to be somebody who's got no agenda around hardware or even necessarily a public cloud agenda and Veeam wants to be that company. What do you think of that messaging, Justin? I think broadly speaking, I think Veeam can pull it off. I do have some concerns around the whole data management side. So the first thing of just being able to pull this off across the industry, I think Veeam is well-placed because it's always been about software and it's always been about partnerships. So Veeam has been channel, was 100% channel back in the day, very, very little direct, if any at all. They're very strong on partnerships. They will partner with anybody because basically they don't really mind who else you deal with. They just want your backup to be done through Veeam. And the backup is very strong. That is what they are great at. So the risk to me on the data management side is that we've seen this play before. Pretty much every backup company at some point starts to talk about, hey, we have a copy of all of your data. It's kind of sitting there not really doing anything. What if we were to turn this into something else and start using it for other purposes? But it's never really paid off for anybody. No one's really done anything with their backup data in a true sense because we haven't seen anyone else become very good at that and be known throughout the industry of, oh yes, once you've backed up your data to this thing, you can then do all of this other stuff with it. I can't name anyone who's actually been quite successful at that, but I can name plenty of people who've tried. Well, Commvault has certainly tried. Actually guys, why don't you bring up the sort of competitive slide? I want to sort of ask a good lead in, Justin. So this data from our data partner, ETR Enterprise Technology Research, those who watch our breaking analysis every week, you see that we use this data extensively. And basically what we're showing here is the fundamental methodology that ETR uses is this thing called net score, which is kind of like net promoter score. It basically asks customers, are you buying, you increasing spending or decreasing spending takes the less, subtracts it from the more and then you get a net score. That's the vertical axis and that's an indicator of spending velocity. The horizontal axis, it's labeled market share. It's not like IDC counts market share. It's a measure of market pervasiveness within the survey. Then it's calculated by the mentions of the vendor divided by the total number of mentions within that sector. Now what we're showing here is a comparison of pure play data protection vendors. And you can see there's no Dell EMC, there's no IBM, is it not pure plays? I can't cut the data by data protection. So I got to put forth the pure plays. But let's walk through this. So what you can see here is you've got the pervasive company in the upper left, you can see the net scores and you can see the shared end. So this is 1,269 survey respondents and you can see the shared end is the presence of these companies within that 1,269 than CIOs and IT practitioners. So you can see convolt, very high presence but then interestingly, and I guess not surprisingly Veeam right there, then it drops off Veritas, Rubrik and a Cohesity and you can see where the heat map is on the vertical axis. Rubrik, one of the highest net scores in the data set and you got Cohesity also very high, not as great of a presence in the data set. You can see Veeam very respectable, it's a 15 year old company with a relatively high net score. Really, really respectable as I say solidly in the mid 30s and then convolt, getting into the pink zone and then Veritas in the red zone, low net score and not as great a presence, which some concerns there for Veritas. So that's guys, that's the horses on the track. Anything there that surprise you? Well, Veritas' position is, well it doesn't really surprise me but it is remarkable just how far away from the rest of the players that they are. Certainly that matches in the conversations that we're having here with customers and others in the industry. The name Veritas just does not come up in the way that it used to. It used to be, I would have said that it would used to be neck and neck with convolt. Now we really don't hear the name Veritas much at all, which as a long time participant in the industry, Veritas was very much part of my career, early on, they were a stand by name, they were very well respected. So to see that sort of thing happen to a great company like Veritas is a bit sad really. Well, you're right, Veritas was always the gold standard of a company with no hardware agenda. Who's going to be the Veritas of X? You would always use that sort of line or phrase. But now, Stu, when I think about the opportunities here, it seems like multi-cloud is going to, within the data protection space, is going to be won by somebody who can do cloud native. So in other words, running cloud native on Azure, AWS and Google, maybe Alibaba, but cloud native being able to take advantage of those native services on the cloud. Somebody who's got an on-prem presence who can bring that cloud experience on-prem who actually can do it also across clouds at very, very high performance, low latency, very efficient, low cost. So in thinking about that multi-cloud landscapes, Stu, how do you assess the horses on the track? Yeah, well, Dave, first of all, one of the things Justin said, beam is partner-driven. One of the conversations I'm having for Veeamon is with the partner alliance team, they are 100% partner-driven. And also, for so many years, we talk about, you know, one of the negatives about Veeam is like, oh well, most of their customer base is essence. Well, you know, if you look at the cloud, you know, one of the knocks against cloud for a long time was like, oh, it's just the really small companies that are doing a lot of cloud. Well, you know, my data manages whether I'm a small company or a big company. So a lot of these pieces come together. Veeam has really been able to move into that cloud environment, what they're doing, spans across them, data protection seems to be one of those areas when you talk about the monitors of the industry like Amazon and say, okay, when are they going to eat your business? Well, you know, Amazon's got a strong storage team, but data protection, they've got some very basic functionality in there, but there's a robust ecosystem and companies like Veeam can capitalize on. Well, you know, you mentioned the enterprise. Of course, we all know the story of a couple of years ago, they had a big enterprise push. They brought in some executives from VMware, some really high quality folks. They struck relationships with companies like HPE and Cisco. I think HPE in particular has paid off quite well, but everybody wants to do business with Cisco because they're very partner friendly. And it's interesting, they kind of pulled back from that, not kind of, they pulled back on that major initiative and the high priced direct sales people. And I remember doing a breaking analysis when Veeam got acquired or maybe it was even previous to that and making the comment that, yeah, they had to pull back on that but I dug into the ETR data. Veeam actually has quite a presence in large company. Maybe it's division of a large company or maybe it's shadow IT, I don't know. People who just want the simple backup but they're VMware customers. And it seems to me they really have an opportunity to go up market, maybe kind of to reset that enterprise strategy. What do you guys think? Yeah, I think that's, that was what they were trying to do a couple of years ago. So I think partly they just didn't succeed as quickly as they had hoped. There was also a little bit of an issue which is something I remember speaking to Ratmir about some years ago, about the challenge of being able to serve these different markets because what SMB wants is quite different to what enterprise wants. And being able to fulfill both of those needs simultaneously from one company is really challenging because things that you do for enterprise, annoy SMB, the things around complexity to be able to deal with the inherently complex environments that are enterprise. SMB just doesn't have that issue. Whereas if you can only do things in SMB type ways that annoys the enterprise. Being able to satisfy both of those markets in a way that they're both happy with and so that no one else feels neglected that's pretty much what they were struggling with, I think. The hard pivot to enterprise meant that their existing customer base which then was mostly SMB, they started to feel a little bit neglected. So it was just a bit of a stumble. I think it feels like they've reset now and understood how to do this in a slightly more gentle fashion, but we can call it that. So rather than going for that really aggressive push into enterprise, they're just following the natural momentum which is people who've come from SMB and some of those medium companies grow into very large companies and bring Veeam with them. And others are just that people as they move through their career will go from a small company to maybe a medium company and then they'll end up in a division of an enterprise company. And they're used to Veeam and they want to bring what they know and like. They want to bring that experience to the company that they now work at. So there's a sort of natural flow there I think for Veeam that is only now showing the fruit of what was actually laid down a few years ago. Well, and I think there was something else going on there too, which is we now know the company was positioning for an exit and was up for sale. So the enterprise is a very expensive. It's time consuming. The ROI is oftentimes very long. That's why you see enterprise, startups raising gobs of money and they just, I think weren't getting the ROI. And when you think about insight, this is one of the more forward thinking like PE or VC firms. They'll live with the rule of 40, right? Where a rule of 35 or even rule of 50 where it's not just about growth. It's about growth plus EBIT. And if you add those up and it adds to 40 or 45 or 35 or wherever their target is, I don't know exactly what insight's looking for. But that's the combination that drives value. So my guess is they wanted to dial up EBIT for the sale and they might've had specific targets who knows that were pre-negotiated. But I think that probably had something to do with it. And as well, as you're pointing out, Justin, it takes time. But now Stu, if we look into some of the things that we're hearing from the messaging, some of the announcements and we'll get into that, big discussion around digital transformation. One of the first, if not the first to do backup for Office 365, another new version for a Veeam backup for AWS. So there were some enterprise-y types of things that they were talking about, a little glimpse at version 11. Any thoughts there, Stu? Yeah, well, David, it's interesting. Justin put out a really good point there. When you talk digital transformation, Dave, one of the things we've been saying for years, the difference between a company before and after that is you're leveraging the data. So if I look at Veeam and say, do I protect the data? Absolutely. Do I secure your data? I'm involved with that. Actually, one of the leadership changes, they just hired their first CISO. So, bigger push into security that will help them a lot in what they do in the public sector. That's where the CISO actually came from the public sector side that will help them. But what I didn't haven't heard as much yet is, okay, I'm a piece of that data. And if you're going to the cloud, I can protect it and secure it. But how do I help connect people to get more value out of the data and leverage that data? So, I think Justin nailed it with that. So many pieces that are important about data that Veeam does do, but that like the discussion, we always have an AI is it's be able to take that raw data and converting it into insights and outputs. Well, to Justin's point earlier about data management, and I want to pick up on what you were saying about security. Obviously, everybody's talking about ransomware, but to me, you talk about the CISO. The role of the CISO is obviously evolving. It's now a board level topic, but the CISO oftentimes was off as a peer, I say off, but as a peer to the CIO on purpose. They didn't want the CISO to report to the CIO because it would have been like the Fox watching the hen house. But I think it, because it was this sort of failure equals fire mentality and they wanted the truth. But I think now people have transparent discussions at the board about security. Hey, we know we're going to get penetrated. It's all about our response. Obviously we have to deal with the layers, but we're exposed, everybody's exposed. So I think increasingly organizations are realizing that it's a team sport. You've got to get everybody involved, the lines of business, the users being responsible. And of course, IT, my point is that security and data protection are now becoming two sides of the same coin almost like privacy. We've shared that before. So when you think about digital transformations, you think about data protection as part of your security portfolio, not just something that you bolt on as an afterthought. And I think in many respects, Justin, that's maybe a bigger market opportunity for a lot of these data protection companies and backup companies than the so-called opaque data management that you're referring to before. Yeah, I'd agree with that because what I'm seeing from the security side of the market, particularly within large enterprises, is a change in mindset from a prevention to a resilient kind of mindset around how to deal with this. So previously there was a lot of either we'll just ignore it because it's not really a problem and it's not going to happen to us. Then it became a kind of a fear response of just we want to prevent it ever happening to us. Now it's kind of, we've gone to an acceptance. I don't know, we're going through the Kubler-Ross framework for dealing with grief. People are understanding that sooner or later, bad things are going to happen to us. What we need to figure out is how we deal with it when it does. And that's the mindset that you need to have when you're talking about data protection. So it's the same kind of mindset that you need for security. And now people are starting to look at, okay, how do we firstly detect if we've actually got a problem? If there's a breach or if there's a risk, how do we notice that we and know that that's happening? And then once we notice that, what do we do about it? So that's things like catching it early so that when your recovery is small, which is the same general idea around software development of fail fast. You want to just take the failures early so that you can correct them all. Basically, if you find yourself in a hole, stop digging. And then once you've figured that out, okay, now how do we recover from this in a way that is minimally disruptive to the business? And that could be like recovering from ransomware, having a really solid backup that you can restore quickly. That's the best protection against ransomware that you can have. Then you can start trying to figure out, okay, we know we can recover if it happens to us. Now let's just try to reduce the number of times that this does actually happen. That's the general idea that I'm seeing come through far more often with CSOs, with CIOs, and with board-level conversation. I want to come back to Justin and then Stu and with your final thoughts. Justin, I want to get you to take on this VM universal license. Was this a case of, hey, we had so much complexity across our portfolio, like you go to the Italian restaurant, you want everything in the menu or there's too much to figure out, just order for me. And they're trying to clean that up or do you see this as sort of a more innovative licensing approach that's more cloud friendly? What do you make of that? I think it's a bit of both. I think it's part of VM's ethos as well. Again, from back in the very early parts of the company, the idea was that it just works. It should be simple and easy to use. So it's completely on brand for VM to have a simple and easy to use licensing model. There's a lot of criticism from Enterprise and particularly from medium and small business for overly complicated licensing models. We see people wrestling daily with the billing system within AWS. We see people frustrated with the licensing approach of Oracle. We see them similarly frustrated when you start figuring out exactly what have I licensed and what am I not licensed for in Microsoft's ecosystem. So for them to have a simple and easy to use licensing approach just fits right in with the rest of what the company's doing. It does also simplify the way that they organize and operate their company as they have to deal with lots and lots of different partners. Having a complicated licensing system on top of all of those other complicated licensing systems would just make their own job much, much harder. So this way it actually works for VM as well as for their customer. Yeah, simplicity is the watchword there, Stu. And I get the sense in speaking to VM customers and partners that VM will, basically has the philosophy make it easy to consume and we'll sell more. We're not going to try to micromanage to maximize revenue. You heard this certainly from some of their big partners who said that VM made it transparent to our salespeople for commissions and their salespeople and really make it easy to do business with. So Stu, I'll give you the last word here. Yeah, so I think, as you mentioned, VM also listening and seeing what their partners are doing. So we've watched companies like AWS trying to make a little bit simpler as to if I'm choosing compute, I don't have to be locked into one model. I'll pay those across the environment or pure storage, another partner of VMs. If I stay a customer, I make it easy to be able to move from one generation to the next. So that cloud like model absolutely is what we expect. And when you talk to customers today, we know the only constant is change. I actually loved in the keynote, there was, I believe it was Satya Nadella that they quoted and said that we've seen more change in the last two months than we normally would see in a decade. So VM being agile, moving, listening to their customers, learning with their partners and making sure that they've got things in the modern consumption model. Well guys, thanks for helping us break down Veeamon 2020, some of the key trends in the marketplace and some of the commentary on the keynotes. Justin, Warren, Stu Miniman, appreciate your time. Thank you very much. Thanks Dave. And thank you for watching everybody. This is Dave Vellante for Stu and Justin and the entire CUBE team. Keep it right there. We'll be back with our coverage of Veeamon 2020 right after this short break.