 Extracting the signal from the noise, it's theCUBE, covering VMworld 2015. Brought to you by VMware and its ecosystem sponsors. And now your host, John Furrier. Okay, welcome back everyone. We are live in San Francisco, Musconi North for VMworld 2015. This is Silicon Angles theCUBE, our flagship program where we go out to the events and extract the signal from the noise. I'm John Furrier. We're here in the director's set. We've got two sets going on, live broadcast and acquiring all that data, sharing that with you. Our next guest is famous venture capitalist, Jerry Chen, did the Docker investment. Was the first to see the mega trend of containers. Former VMware employee, cloud guy, technologist. Welcome back to theCUBE. theCUBE regular. Cube alumni. We have a Hall of Fame. You're on the ballot first year. Yeah, and ballot Hall of Famer. Yeah, I'm not retired yet, so thank you. Welcome back. Thanks. I'd like to kid you, your first investment was Docker. And you know, does he have the sophomore jinx? It was my kind of, you know, poking fun at you. Thanks. Congratulations again on all the success. We love Docker, Ben and the team, phenomenal, great people. Doing great stuff. Again, not being too, you know, aggressive on the business model yet. I get that, no problem. The growth is continuing to flower up. So give us an update on the Docker and this impact. Sure. And talk, get some color on how much of this success you saw and didn't see. What was, what was, what's, what's the outcome now in your mind or how looking back at where you are now? Well, let's split it up. There's the company, there's the technology and we'll talk a little bit of both. And I think like all technology trends, it takes a while to create an impact, but when it tips and it changed the industry. And like you said, I was at VMware for almost a decade and saw how that was growing, growing, growing. And then became this huge standard that kind of shifted the entire industry. I think we're seeing now a Docker's the same kind of trend and influence on technology, but five times faster than the ramp up that VMware had. So the exciting thing is, is Docker's really a pioneering, a new way to think about applications and application deployment. So just like VMware rethought about infrastructure towards networking, Docker's now saying, okay, what's the right unit for the cloud? What's the right kind of atomic unit? And it's really changed how you think about building applications. So talk about what this has enabled, because you're one of the things that we, I think, did you know on theCUBE and Wikibon, we look at this all the time and we're trying to kind of read the tea leaves and also put the story together. It seems that Docker has done more than that. It seems that Docker has enabled the revolution of what I call modern day app workflow, whatever, I don't even have a name for it. But back in the mini computer days, you saw SAP, you saw Oracle, big ERP rollouts. It powered an ecosystem of consultants and projects and essentially workflow. So now with developers, we're seeing a real monetization happening at the application level under the hope that the infrastructure's invisible, right? So, I mean, oh, look at OpenStack, fumbling its way through how hard it is to deploy infrastructure, yet the app pressure to build is still hot. Correct. Well, look, two things. At the highest level, cloud and mobile changes everything because that's forcing and building new apps, right? But then you think, okay, we need to build a new cloud and mobile apps. What's the best way to do that? And Docker's really enabling this ability to build new applications faster. And when I think about entrepreneurship or on Docker, there's really a tooth question you to ask. Is A, when you move to Docker, move to containers, what breaks, what changes? And so there's a whole ecosystem trying to fix the old to work in the Docker ecosystem. But more exciting is when you move to Docker, when you move to containers, what can you now do differently or better? So how does security work better in Docker? How does networking work better in Docker? How does app deployment work better in Docker? Or you can say like, oh, what breaks? Around storage breaks on Docker? What around compliance breaks with Docker? And so if you think about those two angles, what changes or what can you do differently? And as entrepreneurs, it's an exciting time because you kind of pick and choose how you want to play and there's plenty of companies to be created. And the growth in the market on the deployment side is there, as I mentioned. So let's talk about what breaks and what kind of changes. Hybrid cloud, big buzzword, but really cloud native is probably taking the place of Docker and Kubernetes is probably the most overused buzzword. What the hell does cloud native mean? And then, but let's talk about that. You're born in Canada, are you cloud native? Cloud native is a great term, but let's talk about cloud native. So you have to hype the web scale guys. You know, Yahoo, Google, Facebook. These guys have been living DevOps from day one. And then you have the emerging startups, Box, Dropbox, you name those coming Netflix. They're cloud native because they're born in the cloud. Then you got everybody else, the legacy. How do you guys see that evolving and when you guys have the board meeting in Docker, because you have people who want to go faster but have that legacy, they don't have that clean sheet of paper. Yeah, I think, I mean, it's such an interesting thing to say cloud native because we're dealing with the generation of college grads and engineers and developers and companies that like you started born in the cloud. They've never been inside a data center. They never racked the server or set up a sand. And when you think about what changes, if you don't even know what a physical switch is, that's cloud native. And when you kind of put yourself in those shoes, that's a huge paradigm shift. So now you're looking at your, I don't know, what's right now as an immigrant to the cloud, right? They're looking for the passport to the cloud and your ticket. But you probably don't want to be a, unless you want to move to the cloud is one option and you want to go for an on-premise community cloud or this concept of like this hybrid cloud. I think a lot of noise is lost in that word hybrid because it implies that you want to move apps back and forth or some workload spread. And I think what we're seeing with most enterprise is there's a category of applications that'll probably never go to the cloud. That's fine. But there's a category of applications or building that are cloud native. They're built first for the cloud on the cloud. And mistake one was trying to build new apps with old tools, right? That was a fail. And what happened, Docker and these new technologies came around like MongoDB, new storage, new databases, like Redis for cloud native apps. Second paradigm is okay. I built new stuff in cloud with new technologies. That's the right answer, right? The fail was old technologies. Number two is got a existing app. I want to move to cloud. What do I do? Do I rebuild it right from scratch? And there's advantages to doing that. And sometimes some apps you should rebuild. Do you wrap it up in a VM or a container to kind of just lift and shift it to the cloud? Be it polycloud cloud or private cloud? And then the third is what category applications probably don't go to the cloud right now or shouldn't end in your future? And how do I leave it on premise, secure it, give me some of the agility and some of the goodness I get around the cloud but with my legacy technology? What do you think about hybrid cloud? What should it take on that? I mean, I asked every guest this past week since OpenStack and LinuxCon last week or two weeks ago, does hybrid cloud exist? Is it an outcome? Is it a product? I mean, you can't really buy hybrid cloud. I mean, what does it look like? Is it the tooling? What is? You know, you don't get the right answer, you don't ask the right question. And I think the right question is, what is the right definition of hybrid cloud? And if you ask any of your guests or any 10 folks attending here, you'll probably get 12 different answers of what hybrid cloud is. And I think hybrid cloud is kind of what you want the cloud to be. And that's not a wrong answer, right? Because in many ways it's like, why should any single vendor or company impose, this is what cloud is, this is what hybrid cloud is on you, why don't you as an engineer, you as a developer say, you know what, this is how I define hybrid cloud, this is my cloud. And for some, it's public-private. Some, it's like my own cloud that's hosted in a rack space. Some, it's a single application spanning multiple clouds. Me, my hybrid cloud is Azure and Google and Amazon. That's three public clouds, but it's my hybrid. And so, I think question one is, what do you define hybrid? And I think it's fine for everyone out there to find hybrid in a different way. It just shows you what we're really seeing, this, you know, cambering explosion of new ways to think about apps and architecture. And that's a good thing. Well, I think the key word in that, first of all, a great, great summary. I love that answer. Engineering is the answer. At the end of the day, it's an engineering opportunity to say, hey, our business has unique requirements and this is how our infrastructure is going to look. It's kind of like distributed computing. It's a concept, but how it's deployed in engineering is different by the environment of the apps and the business. So, what, different horses for courses, right? As they like to say, different types of hybrid cloud for different apps. And I think what you're seeing, there's a generation of new technologies out there like Docker, they're enabling you to build a cloud you want. And that's probably a more profound question of what does that look like? And, you know, you can talk to the VMware folks or the Docker folks or the OpenStack folks, the Red Hat folks, and they probably have a different opinion. But I get excited because I go to engineering meetups all the time. I talk to them how they build their apps. And even out in Silicon Valley between, you know, Facebook, Google, Medium, Twitter, the way they build their apps and their clouds are slightly different too. Yeah, yeah. It's agile. It's defined by the personnel, the environment, great answer. Oh, I got to ask you about, I was on MCing a launch last night company and we're talking about the cartel of storage. EMC, I know you guys are investors in Pure, but we were speculating when was the last breakout storage company since NetApp? Yeah. Pure now is looking good off the tee, as they say. Still, incrementalism has always been their answer, but what's game changing in storage? You got networking with NSX throwing some numbers around, like it's pretty impressive, looks pretty good, sounds good, but again, that's VMware articulating it. But what are you seeing happening that's organically coming out of the market? Not vendor defined, unified and software defined are vendor term. Sure, yeah. Hyperconverge was not a vendor term. That was a kind of, it came out of the engineering community. So what are you seeing now that's bubbling up that's not a vendor driven key trend? Okay, I think it's storage is probably three things to track. One is the storage is medium, like disk versus flash, and the server side flash, array flash, storage class memory. So there's a whole bunch of interesting stuff coming from Intel around storage class memory. So one is to think about the medium. Number two is the architecture. Hyperconverge, array, server side, cloud base, et cetera. So I think that's the second thing to think about. The third thing is kind of location. Is it private cloud and appliances? Is it software only? Is it like a hosted service, only in the cloud? And so you think about those three axes, like kind of pick and choose, you're seeing a bunch of companies either go deep on one of those three things, we're going to be pure, the flash storage company. Doesn't matter where the flash is, we're making bet on that wave is going to swamp EMC and the rest. You have folks that kind of make a bet around, okay, next gen server side, next gen array base. And you have a whole generation of companies saying, we're going to be the storage service in the cloud or storage service on premise or storage for solid fire. So I would say, if you look at those three trends, you're going to find some good innovation in each of those. Some incremental stuff, but also some good innovation storage. And the way you just laid it out was awesome because it's complicated. It's not, you can't just say, I'm betting on that horse. There's a lot of courses in different horses. So we don't know what the weather's going to be like depending upon the course. Storage is a $40 billion industry. And it looks very different. Waiting to be disrupted. It's always disrupted, right? Because you look, got pure storage and kind of Nutanix disrupting this generation. Before that, he had NetApp, he had ISLON, he had Data Domain, another Greylock investment. So we've been lucky to be involved with a couple of these generations from Data Domain to Pure and hopefully beyond, but we continually see storage going through these generational cycles. Yeah, but to me that when the names change on the leaderboard, I mean Data Domain, I know it's a great exit, still is an R&D project for EMC, ultimately a two billion plus R&D project, but you know, great product. But there's a lot of efficiency still available as you lay out the different cloud opportunities per company, there's a ton of opportunities. So with that, I want to ask you the sophomore Jinx question. So what else have you invested in? What are you working on? What do you get your eye on? Share, tease out, I don't want you to give away your trade secrets to the other VCs, but what are you looking at right now? What have you just recently invested post-docus? Docus was your first investment. I don't know if there's any trade secrets to give. I think there's- They got you on surveillance, where's Chien-Chien going? There's really not much to follow or surveil. So I'm looking involved with three other companies, four other companies right now, the security company that we incubated, Michael Callahan, who you know really well, so that's, as you heard today in the keynote, security is going to the evergreen market, so we're excited. Enterprise app company that my partner Joseph and I incubated, so it's still early, but it's attacking kind of enterprise applications. I'm an observer on Cladera, so I spent a lot of time in the big data space. When did that happen recently? So I've been kind of involved loosely for the past two years almost, because I spent a lot of time- And Neil's been pretty busy. And Neil's a full-time board member, he's a great board member, but I've been looking at a bunch of these next-gen data companies and I've been helping the Cladera folks to outthink through different things I'm seeing as an investor. And so me and Pete Sancini, we just announced a small seed investment we did yesterday and kind of called it Instabase, so that V-Mafia working together. Wow. Yeah. How come we didn't get that on theCUBE? What's happening? Well, you had Pete earlier, right? I know, I would have had that on with a special segment, come on. All right, Pete, you're watching, we're going to come back and follow up on that. So as you explained that, how big was the deal, small seed, was the seed deal? It was less than $4 million, so like large seed, small A. And so Pete and I have been looking for a project to work on together. It's a great entrepreneur, a not-barred watch. He's a Stanford grad, CS master's, PC student at MIT in their C-Cell lab. And he created a project called Data Hub when he was at MIT. And now he's taking some of the learnings around his project and his PC thesis and creating company around it. So, a lot of it. So you got four other projects besides Docker and... And I've been looking lately around vertical SaaS applications. So looking at, you saw the keynote today from construction to healthcare to finance to government. Each of these verticals are to be rethinking applications for those industries. So I've been spending a lot of time looking at different workflows and different these verticals. And you'll see some projects coming out of that space for me, too. What's the biggest surprise you've had at a board meeting with Docker? Ben and the team, obviously a great theme over there. Just feedback from the market, some anecdotal comments, besides just a massive traction that they've had. What specific new learning can you... Board meetings are confidential. But... Well, anecdotally, trend data. I mean, I'm looking for something that you can share that's unique, that's the unique learning that you acquired. I say the unique learning here, and what Docker does well is focus, right? It's people who want Docker to be another VMware and just recreate everything VMware did is are probably not thinking about Docker right. Docker's enabling a whole new way of building applications. And if you kind of embrace Docker as a new architecture, that's the right way to think about cloud native applications. And I think the learning is, I'm surprised, some of the companies out there who you think would be laggards are actually embracing stable applications, containers of apps, scale out versus scale up, new database technology. So I would say the learning there is, pretty much most of the companies you would think are slow movers, the incumbents would be disrupted, are all having small projects of self disruption. And I think if you're a savvy CEO and an entrepreneur right now, you're going to find those pockets and you'll follow it aggressively. Okay, final question. What's going on right now in terms of the VMware ecosystem? Obviously you see the announcement of Microsoft with Windows 10 on stage, with Sanjay Poon on end user computing. You got vCloud kind of out there, vSphere, vCent, a lot of cool stuff going on. They made some good decisions and they were building out but the world's still evolving. Their boat is a little heavy right now. They've taken up a lot of, they're doing a lot as Pete said, but there's a lot of turbulence in the water, if you will, in the VMware boat and the ecosystem. What are the investment opportunities that you see and opportunities for entrepreneur within the VMware ecosystem? Are they doing it right? Is VMware making the right moves? What would you recommend that they look at or change? All that above. You know, I think VMware is a company that I know well and have a lot of affection for it in my heart. And I think they do some things well and some things not so great. And so I think some of the core technologies around virtualization, that's their bread and butter, they're doing that great. I would say the opportunity around VMware is look at things that they don't do well or it's not a priority, right? And so you'll see them making kind of announcements in different market spaces from clouds to mobile to security and you're like, okay, that kind of makes sense, but if it's not a priority for the company, then they're probably not going to do it great. And you look at networking security, I think it's one, they're probably doing some interesting stuff around. I think the question becomes, is that the right architecture for the next 20 years? Or is that just kind of the architecture of the last 20 years warmed over? Are they leading or following? That's what you're kind of saying. And the debate is, is this technology in each of the product categories, the last of the prior generation or the first of the next generation? And it's the last of the prior generation, you're like, fine, I'm going to build an ecosystem of product to go forward. You have to leap forward, use a springboard. If they're doing something that's the first of the next generation, then that's either get out of their way or ride on top of it. And so to say there's some products that are doing is like the best of the last generation. And there's some efforts I think they're going to try to do first in the next. And with any incumbent is how many of these plays can they do and do really, really well with everything else going on? And not get defocused. Not get defocused. Not take too much on. Correct. And there's a lot of, I mean, and that's why you see some companies do things well and wrong. Like cloud as a service, right? You can argue if you're not Amazon or Google or Microsoft that can do things that scale, why should be in the data center building business, right? Final question. Final, final question. I always go with the final, final question here because I always pop one in there. Dave Vellante and I were talking about Amazon. We always love the Amazon. And we did a panel prior to VM role. Me, Stu, Dave, and Brian Gracie, our new analysts, basically trying to peg the inning of where the disruption is. And I'm like, man, it's early. First inning, maybe they haven't even started. Spring training. And Dave's like, no, no, we're in the seventh inning. So huge different debate on where we are. And then Mark Lewis at Formation Data wrote a blog post. He was inspired to write a blog post that said, no guys, you got it all wrong. It's double header. Game one is Amazon. Game two is enterprise, different rules. So I want to get your take on that comment because you could argue the big players of this next generation are emerging Amazon. Okay, game one, public cloud. Clearly dominating. Game two, getting started. Do you agree? And if you do, what's the rules of the new game in the enterprise? I'm trying to think over the right support metaphor. Innings is a double header. If you stick with baseball, I think it's both a double header and early in the first game, okay? And because two things. One, underlying all this change is the benefit of Moore's law and scale, right? So the cost of build a data center cloud at scale is going down by half every 18 months. So think about that, right? The cost of stand up at Amazon data center, run an Amazon cloud at scale four years ago was two acts of cost. And you know, they did the DOD deal before I know it was $500 million plus or minus in three or four years. They could probably do that at $250 million, right? If the government or some other government or some other industry said, hey, we'll pay you $300 million, build us our own Amazon. So the cost of them to do that goes down as a unit of cloud is an Amazon instance, if you can imagine, like a $500 billion instance. But it also lets new people come in and get to scale faster because all of a sudden the barriers to entry become half and half and half. And so it's still early because I think there's most of the enterprise apps and even consumer apps aren't on the cloud. God bless Amazon and Google and all those companies, but they're not on Amazon, so it's early. But this is the game where the rules and the later inning change because the underlying benefits of Moore's law and the technology around us, bandwidth, mobile, enables the later innings to play by almost a different rule book. Tubbs a roll. Jerry Chen here, sharing his insights, his observations, his learnings, and also what he's working on. I see a general partner at Greylock, partners, great to see you on theCUBE. Great to have you back. Congratulations on the sets. My favorite set still I think is VMworld Vegas when you were in the big hang space with the huge screens. Yeah, that was a good one. That was fantastic. It was the first time we had Frank Slutman on former data domain, Brenda Greylock as well, one of our favorite CEOs out there. Great to see you, Jerry Chen, investor perspective, former VMware technologist here inside theCUBE on the director's set, the two set production in Moscone, North, VMworld 2015. We'll be right back here for this short break.