 from the Sands Convention Center, Las Vegas, Nevada. Extracting the signal from the noise. It's theCUBE, covering AWS re-invent 2015. Now your host, John Furrier and Stu Miniman. Hey, welcome back everyone. You are watching Silicon Angles, the CUBE, our flagship program. We go out to the events in the moments and extract the signal from the noise. I'm John Furrier with Stu Miniman, Ryan Floyd, founder and partner at Storm Ventures. Welcome to the CUBE. Good to see you again. Yeah, right off the plane. I'm excited to be here. So, love the fact that you're a venture capitalist. We'd love to hear about where the money checks are being written. I'm going to talk to Jerry Chen next tomorrow. School of other VCs, Frank Artali, Ignition. I'll see Seattle Focus, we'll get to that in a later. But the money right now is in cloud. So you were on the CUBE multiple times and you were kind of a naysayer. We loved it. We believe in your vision. It's hard to create value that could be monetized in a venture way in some areas of open stack and Amazon. But now that the enterprise is now really seriously engaging in the cloud, it's becoming very clear that private hybrid is kind of being redefined. What are you seeing for entrepreneurs out there? What are they telling you when they come in? What's the pattern that you're seeing? Well, I still stand by the fact. I think trying to deliver any kind of service inside of Amazon, that's an Amazon core infrastructure service, that's still a tough business. But I'll tell you what's changed. What's changed is enterprises really are thinking about hybrid architectures today. So when you talk about whether they're running a private cloud or think about public cloud, most enterprises today, they want to be able to do both. They're thinking about running things that make the most sense in their own private data center and they're thinking about also being able to run workloads in AWS. And so that's introduced a whole host of new companies that have to be able to span a hybrid and public, whether it's AWS, Azure, or Google. So the disruption we're seeing clearly is going to be in the enterprise. We had a blog post that was written by a CUBE alumni explaining the cloud game that said, because we always say, what inning are we in? A third inning? And we had a big debate at the Wikibon CUBE, we were at Boston. And we had a big debate. I'm like, it's early innings, Dave along. There's no, it's later innings. And then finally, we had one of our CUBE alumni say, no, no, you guys don't understand. It's been a double header. Amazon won 10-0 in game one. Game two is the enterprise and it's starting. So let's break that down. Game one, okay. They sweep public cloud. They won that thing. Bigger than all the four other combined. Just completely shut out, 10-run rule of Glittle League or Mages, whatever you want to call it. Enterprise games different. You got compliance, all kinds of nuances in the enterprise. How does that change the adoption and thus the value for startups and creating value? Well, I think first of all, people got to understand most enterprises have got a lot of applications that are already running, right? That they've had their production that have been running. And the last thing you want to do if you're managing an enterprise and your revenue is tied to these applications is risk running at somewhere where it may fail. So think about all the implementations of VMware. That's not going away anytime soon. So I think what we're going to see is a lot of work that's going to go on in terms of helping enterprises think about how best to manage those workloads, whether it's in their existing data center environment or how best to shift existing or new workloads into a public environment. And there's just a ton of technology. I'll give you an example. How do you know your workload is going to be able to run well in Amazon, at scale? It's hard. It's hard to know that. You know it runs fine in your VMware environment today in your own data center. How do you know it's going to run well in Amazon? It's hard. So I think there's some companies that are at hard at work trying to figure that out. So I got to ask you a question. Stu and I always talk about this on theCUBE with Dave Vellante. We always want to share advice for the people watching whether they're younger VCs or entrepreneurs or enterprise CXO level people. There's a big thing going on with Greylock, Blitzscaling. They're teaching entrepreneurs their classes at Stanford. If you're in the professor in entrepreneurship, because you write checks, which is the ultimate, you get a good grade, you get a check. What's your advice to startups right now in terms of navigating this landscape? Is there an investment thesis that you believe in that to be the next Uber, the next Airbnb, the next Microsoft, the next big company that's going to create a lot of economic value? What are your thesis? So first of all, look, I think the whole concept of Blitzscaling and what Reed did with LinkedIn, it's impressive. I mean, it's just incredible how fast these companies can grow. But there's something that's almost common with all of them, which is they're consumer focused. They're not focused on the enterprise. Most enterprise companies grow relatively slowly. No, Blitzscaling, you get fired for that in the enterprise. No, no, listen, people cite Slack, and they say, oh, Slack, Slack. Slack adoption is almost consumerish, though, right? You know, the three of us are, well, but it's even led less, you and I start using it as individuals. That's not even shadow IT. So I think in the enterprise, things tend to happen a little bit more slowly and more, you know, it's more plotting along. It's being more thoughtful. So the advice to entrepreneurs is to be thoughtful about how you grow your business. One thing we really focus on is you got to make sure that what you're selling, enterprises really want to buy and be clear about it, because it's expensive to go to market. It's expensive to hire salespeople. It's expensive to hire your inside sales team and start to get it to go. So the last thing you want to do is go raise a bunch of venture money before you know that there's a great fit for what it is that you're building your enterprise. So your investment thesis is you want to see some technology that's differentiated and a revenue model. A revenue model and we want to see some evidence that this is something that the enterprises want to buy. You know, selling into the enterprise isn't about throwing spaghetti against the wall and seeing if it works. That's a lot of what kind of consumer investing is. It's hard to predict the next, at least for me, the next Snapchat, the next Instagram, the next Pinterest. Amazing companies, right? In the enterprise though, it's a lot about solving actual problems that these guys have. And as a result, you need to test out that thesis in the enterprise and make sure that people are actually willing to buy something. It is about technology, but I can tell you there is just a graveyard of great technology companies that never went anywhere because they just didn't really solve a problem. Stu, what's your data show? I mean, Wikibon's analyzing it. What's the big problem that needs to be solved right now for enterprise cloud? Well, so, I mean, we've been talking to the last 15 years that we spend 80 plus percent of our budget on keeping the lights on. The term that we've used at Wikibon for years, and I actually hear Amazon say it, is you need to get rid of that undifferentiated heavy lifting. So, I guess a question I have for you, Ryan, is we know AWS is a great place for startups to work with. They even get startup credits, get involved with it. Is the Amazon marketplace a good place for people to be? Is that profitable? Is that someplace they can grow their business? Is there concern that Amazon might be a competitor once they're in that marketplace? So, yes, I think the marketplace is a great place for startups to be. And for larger companies, I mean, maybe Juniper was here last year. I was surprised to walk into Florida today and see Juniper here. It's a great place for all companies to be in the ecosystem because the reality is Amazon, this is the cloud show. This is where you want to be. I mean, if you are a player in the cloud, you have to be at Amazon. You have to be at OpenStack. You have to be at two big conferences every year. So, you have to be there, but from an investment standpoint, I would be very cautious about funding a company that is funding a feature that I would think that perhaps Amazon might develop. Amazon has shown over time, whether you look at their, what was the document, Zocalo, right? Were they developed their own, to compete with Dropbox and Box? Look, if it's a good business, Amazon ultimately may very well go into it. So, what we get excited about is startups that are building on top of the Amazon platform and being able to accelerate faster because of the services they consume very quickly from Amazon. So, Ryan, let's talk about a couple of things. One is, I totally agree with you by the way. We believe in the things you're saying because we're seeing it too. However, now the growth is on the enterprise side. So, it's cool to be in the enterprise now. So, the consumer stuff's kind of, you're seeing the bubble bursting a little bit, soft bubble. Yeah, yeah, I mean, I mean how many, I live in my own little enterprise bubble. How many Uber, Airbnb's are there left? I mean, I just, it's popping, trust me. Okay, if you believe it's popping, which I do. But the enterprise has a lot of growth left. There's a lot of underlying technology changes going on infrastructure wise. Oh, it's huge. So it's not just like a fly by night, it's a big deal. No, look, it's the biggest, so I've been an investor for 15 years since I started Storm. It is by far the largest change in enterprise IT right now. Then it's been in the past 15 years. It's enormous. I don't think people have it, it's trillions of dollars that's shifting right now between players, whether it's startup or between other enterprise companies. It's massive. That's the reason Juniper's here. They know it, right? It's the reason Cisco bought one of our companies MetaCloud back in September. Why is an Oracle here? That's a great question. Because a database, David Floyd pointed out, let's bring up Oracle because Oracle, IBM, HP, these are the big incumbents that are being disrupted by Amazon. So the M&A markets on fire right now across the board. What are you seeing in terms of the corp dev because certainly the cloud is forcing the product teams to build faster but organic might not meet the timetable. Inorganic growth via M&A is critical. There will be a lot more M&A. I mean, we just saw IBM announcing they would purchase the Cleversafe. And they're doing that in direct response to be able to deliver a lower cost, more agile storage service. And you're going to see all the big companies need to do that because it's just, it's moving at too quick a pace. I always say the big companies, whether it's HP, whether it's IBM or the CMC, they have phenomenal engineers. It's phenomenal teams, but it's hard to turn those ships in a very short amount of time. And what we're seeing with companies like Amazon, just putting a tremendous amount of pressure on those companies need to evolve their products quickly. Well, do you think enterprises can pivot, if you will, faster than 10 years ago? Yes. So there can still, it's not the big aircraft carrier, it might be more nimble than it was. I mean, we're seeing IBM move pretty quickly. Yeah. It's still slow, but like relative to a startup, but. Well, yeah, so I think IBM developing products can pivot more quickly, but I thought the question was, can enterprise buyers pivot more quickly? And enterprise buyers are moving very, very quickly today because it's about cost. They don't want to invest in any more proprietary infrastructure that's going to lock them in or is going to be very expensive long-term. They have developers that are developing against AWS, against Google, against Azure. And so it's happening very fast, whether the management wants it to happen fast or not. Okay, so here's a quota from Dave Donatelli, who's now the new EVP in Oracle reporting to Mark Herd, former HP, former EMC. Quote from my article on Forbes, if you're in the infrastructure business the cloud has fundamentally changed the industry, says Donatelli. Hardware companies trying to sidestep the issue with marketing by attempting to position themselves as a cloud arms dealer, but the fact remains any hardware vendor without successful public cloud business will face significant challenges. He's referring to NetApp, HP, IBM. Yes, yes. He's saying. The only thing I would, I would agree completely with that quote, except for public cloud business. I think there will be, what most enterprises want is what AWS delivers. It's agility, it's ease of use, it's low cost. If you can get that inside of your private enterprise, inside of your data center, there's going to be a huge market for what people call private cloud, and that leads into hybrid cloud. So, but I do agree, everything is moving to software, everything is moving to low cost, and if you can't be agile, it's going to be very tough. No one's provided proprietary systems anymore. I love that. Is Amazon an operating system? Amazon Web Services? No, I don't think Amazon, I think they'd like to be, but no, I don't think Amazon's an operating system. So you don't think we obviously have Microsoft operating system windows office? No, I think at a very high level, Amazon's got a set of APIs that programmers develop to, and Amazon, what they do better than anyone is run infrastructure that just smokes all the competition, and it's incredible what they've been able to do. Yeah, John, I'd agree, I'd court much more the terms overused, but they're a platform. Yeah. I mean, Amazon is a platform, they set the API that everybody needs to be able to work with, but not an operating system. We've gone beyond the operating system, we've been minimizing the value of the operating system over the last decade or so, John, right? So, you know, platforms is an operating system. Sue's being political. I think it's an operating environment. Certainly the way they're constructing it is a mainframe, but we'll go back to that later. Final question, I know we got to get going, but what are you looking for here? You're scouring the landscape. Yes. What kind of deals are you looking for? You're out here pounding the pavement. So, I want to meet great entrepreneurs with great ideas that leverage things like the AWS platform that can accelerate growth really quickly. All I do is invest in the enterprise, so I'm interested in companies that are focused on enterprise buyers, but to the extent they can leverage Amazon to get there quicker, I want to meet them. Are you happy with Amazon's ecosystem in terms of fostering that grid? Because you're going to invest in a company that's going to fold an ecosystem. You worry about them buying, building while they're... Well, most of the companies we fund are applications riding on top of AWS. So, we haven't funded any infrastructure companies that I worry about Amazon developing themselves, but as far as their partnership, Amazon's done an amazing job. They've got a whole team now dedicated to making startup successful inside of AWS, and it's truly impressive. Have you done any co-investing with Amazon? To my knowledge, Amazon doesn't do any co-investing. Are they investing? To my knowledge, Amazon's not doing any co-investing. You sound like that movie. That I think it fits the amendment. No. No, they are investing. No, the answer is we have not done any investments with Amazon. They are investing in the ecosystem quietly. So, we're seeing that. So, we've done no investments with Amazon. Okay. Great to see you, Ryan. Ryan Floyd, out from the great enterprise investor. Guys, talk to Ryan. Great guy to invest in. Knows his space. If you're a consumer, don't go there. You might have another partner, but he's also in the enterprise. Again, one of the great investors here in the business. It's theCUBE. We'll be right back more of this short break. Coming up next on theCUBE, you're going to find us, we're covering Pentaho World, the Grace Hopper Celebration of Women in Computing. Join us at silkenangle.tv. We will be down covering where Satya Natel will go out again and face the music at the Grace Hopper Celebration in Houston. I'll be down there with Jeff Frick. Dave Vellante will be at Pentaho World. Keep watching SiliconANGLE TV. We'll be back with more live coverage, day one of three days of coverage after this short break.