 From Austin, Texas, it's theCube covering Pure Storage Accelerate 2019. Brought to you by Pure Storage. Howdy y'all, welcome back to theCube, the leader in live tech coverage. We're covering day two of Pure Accelerate 19, Lisa Martin with Dave Vellante. Welcoming to theCube for the first time from ESG. Mark Peters, principal analyst and practice director. Time with you. Oh, my apologies. You are so young. I wish, I wish that were true. You in fact were one of the first analysts. I think that's true. If not the first analyst ever on theCube. Well I'll say welcome back. Thank you. We're glad to have you here. So you've been with ESG for quite a while. You know the storage industry inside and out, I'm sure. Pure, just about to celebrate their 10th anniversary. Yesterday we heard lots of news, which is always nice for us to have fodder to talk about. But I'd love to get your take on this disruptive company, what they've been able to achieve in their first 10 years, going directly through as Dave's been saying the last two days, driving a truck through EMC's install base back of the day. Your thoughts on how they've been able to achieve what they have. That allows me to talk about something I really want to talk about. And I think it addresses your question. How have they been able to do it? It's by being different. And I don't know, you mean obviously you do a stack of interviews here and maybe other people have talked about that. But that is the, and when I say different, I don't necessarily mean technology. I have a kind of standard riff in this business that we get so embroiled in the technology, do not for one second think it's not important. But we get so embroiled in that that we miss the human element or the emotional element. And I think that's important. So they were very different. They created these armies of fans who just bought into what they did. Now of course that was based on initially bringing Flash to the market, making Flash affordable. They've extended that here with the C announcement. And other things as well. Sorry, I don't want to just focus on that. But they've continued to do things differently with the technology. But I think what really made them an attractive company and why they've survived 10 years and are now big, sizable, is because they were a different sort of company to deal with. Are you at all surprised that the fourth accelerate is in Austin, Texas. Totally. Dell's backyard. Yes. They're bold. They're disruptive. They're different. They're bold. Okay, but also, did you go to the other three? The last two? I was trying to remind myself where they were. I know one was kind of on a pier and in a ballpark in San Francisco. One was, you remember the one that was in that rescue wharf? Yes. Which was, but that was a rusting. So cool. But it was a metaphor and a rusting spinning desk, right? But it was also such a different sort of place. And so, and I promise I'm coming back to your question. But it was also an effew at EMC, but anyway. Oh, yeah, I agree. And then the last one was in some sort of concert-y whole thing. The Belgrade Civic, yeah. Yeah, yeah, yeah. Yeah, rock hall. Yeah, so they were all different. And so, yes, I know this is Dell's backyard. Probably literally, because I'm sure Michael Owens is a lot of the place, but. It's also kind of very normal place. And so there's a little bit of me that I don't want to use the word worry. But as you grow up, and of course we've got the 10-year anniversary. We're in Austin. What's the tagline of Austin? I don't know. Cook them? No, keep Austin weird. Oh, okay. Now I don't want to suggest it appears weird, but they were always a little different. I said that's why I think they were attractive. I agree. As much as anything. Yes. That's why they had the hordes of the admiring fans all wearing their orange socks and T-shirts and cheering. And as they get older, as they get more mature, as they expand their portfolio, Charlie was on stage talking not so much about scale as a problem when he was asked, but more about complexity. As you get more complex, you actually get more normal. And so I don't know that weird is the word, but a bit like Austin, pure needs to keep pure interesting. I like that. Very interesting. So you and I, we've been around a while and we've kind of students of the industry. I was commenting earlier that it's just, to me, very impressive that this company has achieved a new definition of escape velocity, we're achieving a billion dollars. Sure. First company since then I have to do it. I got it listed. 3PAR couldn't do it. Compellent, Data Domain, Isilon, Ecologic, Left Hand. All really good companies. All very successful companies. What do you think? And all coming out of the dot com, you know, crash. Maybe that paid part of it. Pure kind of came out of the, you know, the recession. Why do you think pure has been able to achieve that, that, you know, 4X3PAR, for example, in terms of revenues, and it's got a ways to go. They probably do 1.7 this year. I think they have aspirations for five. I don't know if they publicly stated that. I hope they do. They probably have, right. Of course, why wouldn't they? Thoughts on why they were able to achieve that. What were the sort of factors? Genuinely, having no idea what you were going to ask me and now actually listening to the question, you've just made me think of something that I had not really thought about. That's why it took so long to ask the question. It was a very long question. I'm too worried to formulate an answer. You are the star. You used the word escape velocity. Let's think about planes. I mean, you know, I think it's, you know, V1. Isn't it to take off, which may be not the same as escape, which is in the sky, isn't it? But you get the point. How long to really take off and be independently airborne? They gave themselves, I don't know how much was, by design, default, how it really happened, I don't know. They had an immensely long runway. You think the whole conversation about pure for years and years was, oh yeah, yeah, they're making loads of revenue, but they lose 80 cents every time they get 50. That was the conversation for years and years. I know they've now turned that corner. And I think the difference actually, the more I think about it, yes, you can talk about product, yes, you can talk about the experience. I think those things are both part of it, but the other companies you named had cool things too. They all had cool products. You had, what was it, the autopilot thing with the propellant, and they had lots of people cheering actually in this building, I think. Three-par was yellow and kind of cool in a different part of the market. Disruptive, right? But they were both trying to get to the exit fast. Whether that exit was being bought or whether it was going under, I don't know. It was going to be one or the other, and for both of them, they got bought. I don't think pure had that same intention, and it certainly got funding and backers that allowed it to take longer to take off. That's a really good point. And I think there's a new Silicon Valley playbook. You saw it with ServiceNow, with Frank Slutman. It's like the Silicon Valley Mafia. Slutman, Deetson, Bushree at workday. They all raised a boatload of cash, and they sacrificed profits for growth. I mean, I remember Dave Scott telling me, when he came on, the board was saying, hey, we're ready to raise 30 million. He said, I need 80. 80's chump changed today compared to what these guys are raising. Well, I mean, I think they pretty quickly raised hundreds of millions, didn't they? They weren't scraping by on 50 or 80 million, which is what you see. Sorry, can one more thought? Go ahead. Just this escape velocity idea, I think is interesting, because the other thing about escape velocity is partly how long you take runway or whatever, but it's the payload. And the more the payload, the longer it takes to take off the ground, or the more thrust you need. Thrust, in this case, is money again. But if you think about it, this is another thing that we're here and I are going to say, we've been doing this a long time. The storage industry over decades has been one of the easiest industries to enter, and one of the hardest to actually do well. Why is that? Because the payload is heavy. It's easy to make a box that works fast, big, whatever you want, in your garage, you know, two men and one application, working for a day. It's really hard to be interoperable with every app, every other system, operational needs, and so on and so forth. And so the payload to be successful, I think they understood that too. So, you know, they didn't let themselves get distracted by like the initial shiny glittery we need to get out of this business. I love the parallels with payloads and rockets, because of course we had Leland Melvin in their keynote this morning, I'm a former NASA geek. Talk to us about your thoughts on their cloud strategy, the evolution of the partnership with AWS. We talked about that yesterday, sort of this customers bringing this forcing function together but being able to sort of simplify and give customers this pure management plan, the software layer, wherever their data is. Your thoughts on how they're positioning themselves for multi-cloud hybrid world? Okay, two thoughts, one cloud, then you also use the word simplicity. So I want to talk about both of those things if I can. I don't know, I'm sorry this is not a very good answer. I think it's the truth. I mean, you can't exist in this world if you haven't got a cloud story and it better be hybrid or multi, whichever you prefer. I think those have very distinct meanings by the way but we would be here for an hour and a half, it would be a cube special to really get into that. However, so you've got to do this. I mean, there is just, none of the clients they're dealing with, almost none. That's not research, I'll talk research in a second but you know, glib statement, everyone's got a cloud strategy. It doesn't matter which analyst company you put up the data, we all do it. I want to talk about a cup some research we've done in a second, but everyone will tell you a high number of people who have a cloud first strategy, whether that's overall or just for new applications or whatever, so they've got to do it. What's crucial to whether or not they succeed is not the AWS branding, because everyone's got AWS branding. It's true. They meet people that they don't work with or will not work within the next year or two. I mean, I'm sure there's one. Go on, you look like you were anxious to say something. No, let's go, you're on a roll. But simplicity is really important. So David knows we do a lot of research at ESG. One of our cornerstone pieces of research is I think all the IT spending intentions we do every year. One of the questions this year has been for a couple of years now is basically saying, simple question, excuse the overuse of the word, is how much more complex is IT in your experience, more or less complex than it was two years ago? IT broadly. And you know the answer. I love this question, yeah. You know the answer. And 66% of people say it is more complex now than it was two years ago. People don't want complexity. We all know that there's not enough skills around. Got the research to back that up as well. And so simplicity is really important. Cause, who was sitting in this seat before me, I think, will say that the company, Pure, was founded on simplicity. That was the point. They were to be the apple of storage. I think that's why people love them. They were just very easy to use. And so coming finally back to your question, if they can do this and keep it simple, then they have better chance of success than others. But how do you define success for them? Is it keeping their customers or getting new ones? That's a challenge. They do have a very high net retention rate. I want to say like 140%. But things like we have a 140% retention. Yes. How do you do that? So this is interesting. It's actually 150% renewal rate by the Mike Scarpelli CFO math of renewal rates on a dollar value, a net dollar value renewal rate for the subscriptions. Mike Scarpelli was a CFO of ServiceNow, invented this model, and ServiceNow had like a hundred and whatever, 1,500, whatever, 20%. That makes sense. And so it's a revenue-based renewal. Makes sense, sorry. For one second I thought you were retaining more people than you'd go. But 150% is insane. I mean, 105% is great. 150% is- Sorry, interrupt to do a question. Unbelievable. Well, I was just saying- No, it's good nuance though. Yes, and thanks for clarifying. It's, you know, companies can say whether it's one of Pure's customers or Pure themselves or a competitor. We are cloud-first. We have a cloud-first strategy. And a company like Pure can say we deliver simplicity. Those are marketing terms until they're actually put in the field and delivered. So in your perspective, how does Pure take what IT professionals are saying? Things are so much more complex these days. How does a Pure commit and say simple, seamless, sustainable like Charlie Giancarlo said yesterday and actually make that a reality? Well, I mean, obviously that's their challenge and that's what they have worked to do. To some degree, and this comes back to what I was saying at the beginning, to some degree it becomes self-fulfilling because that's why your customers come back with more money because they bought into this. And so as long as they're kept happy, they're probably not going to go and look at 20 other people. I'm not saying they never had any of that simplicity to start off with, but it's very interesting. If you go to a Pure event, their customers, and this might be sacrilege sitting in this environment, don't talk about the product. They talk about the company. You're right. We have the same thing yesterday. And they talk about the experience, there's that word again, of being a Pure customer. Yes. And so they're into it. They bought into whatever this is. And as long as the product, please do not strike me down, is good enough. I'm not saying that's all it is. I think it's a lot better than that. But as long as it's good enough, but you're really well looked after. A few minutes ago when I was saying, that's why I think this market is about so much more than just how fast can you make the box? How big can you make the box? How smart can you make the box? All of those are interesting. But ultimately, I'm only looking at Dave because he's so old. Ultimately, technology is a leapfrog game. Yeah? Funding is not. But you bring all the... Yeah, so that's a good point. But we've not seen the competitors be able to leapfrog Pure or be able to neutralize them the way, for example, that EMC was able to somewhat neutralize 3-par by saying, oh yeah, we have virtualization too. Yeah. Or thin provisioning rather. Yeah. And even though they had a thin provisioning bolt on, it was good enough. Yes. And they could get the check box. Yeah. The competitors be able to do that here. I'm not saying they won't. But thus far, they haven't. I think I was going to say, basically this on my MBA, but I don't have one, so I can't say that. But I've read the books. If you look at Harvard Business School cases, I think the mistake made by the competition was to assume that Pure would go away. That they would either buy it or that it would fail. And will make fun of the fact they don't make any money for the first few years. And the people going to them are going to be sadly mistaken when they can't add all these features, whether that be cloud or whether that be analytics or flash blades or whatever else they're going to add. And they thought they would just go away. There are great parallels in history when you let competition in and you just keep thinking at each point they're going to go away. Spot the accent. British motorcycle industry. When the Japanese came in, they literally said we'll let them, there are records, we'll let them have the 50 CC market because we don't really care about that, but we'll make the big bikes. Well, okay, we'll let them have the 150, 200 CC because really that doesn't matter. And 10 years later, there was no industry. Well, and I think what happened with EMC in particular, look, let's face it. Pure hired a bunch of EMC reps, they took their product and as I've said before, they drove a truck to the Symetrics VNX install base. EMC responded by buying Xtreme I.O. And they said, you know what? We're sick of losing to Pure. We're going to go really aggressive into our own accounts and we're going to keep them with flash. And then what happened is their account said, hey, we're good. We don't actually really need more stewards because EMC tried to keep, and is trying to keep both lines alive and now they're conflicted. Pure, you know, had a clear mission. I was going to say, you brought up a great point. Sorry, just for a quick bit. Yeah, come on. I can just say, well, no, just because, I think what's interesting about that is if you look at how EMC, using my words accurately, yeah, used to act, I think you said that too, so I'm not criticizing. Dell is, they were exceptional organized marketing organization. We go that way. And if you're not going that way, you've got a big problem, both as a customer and as an employee. And so, but the problem with that is also, is that way would sometimes become that way. And then it would become that way on the product, depending on what was doing well. So for example, they had, you know, tens of thousands of feet all marching to the Xtreme I.O. beat for a few quarters and then they would go off onto the next product. Pure just carried on and marching to its beat down that runway escape velocity. Sorry, question. A point you brought up a minute ago before we wrap here that I think is really interesting is that you're right, pure customers talk about the experience. I think we were talking with a customer yesterday and Dave was asking him, well, what technologies are you using? He started talking about workloads. So when we're at other events, you hear other names of boxes brought up here to your point, it is all about the experience. So interesting in how they're, you know, continuing to just be different. But to wrap things up, since they're in my ear, we're almost out of time. I just want to take a minute to ask you kind of upcoming research. What are some of the things that you're working on that are really intriguing you and ESG land? I think right now from my perspective, I mean, as a company, we're continuing to do 27,000 different things because there's so much going on in the market. So whether that security is massive area of focus right now, even improvements in networking. So it's not just the regular run of the mill, you know, bigger, faster, cheaper, which is always there. So AI, of course. And in all these, as again, you may both know, you will now, Dave knows, I mean, we're always looking at buying intentions rather than counting boxes. So it's really where people are moving over the next few years. That said, to me, I think what's really interesting is two other things. Number one is to what extent, I don't think we can really measure this easily, but to what extent can we get people, talking about pure again, to acknowledge that emotions, attitudes, experiences, are an important part of this business. I'm old enough that I'm not scared of saying it. And I think pure as a company is not scared of saying it. Do you know what I mean? I think a lot of companies don't want to admit that. And we all know that they have different corporate cultures and mantras and views and their customers reflect that too. And the other thing just generally is, the future of IT as a whole. I know that, I mean, I'm doing this and because none of us really know what that is. But clearly, we've got to stop talking about the cloud at some point. It's just part of IT. It's not a thing as such. It's just another resource that you bring to bear. I don't know that we're yet at that point, but that's got to happen. Interesting. Thanks for looking into it. I'm imagining this was a crystal ball. But Mark, I wish we had more time because I know we could keep talking, but it's been a pleasure to have you back. Yeah, that whole multi-cloud, hybrid cloud for an hour and a half. We'll come back and we'll have that discussion. Like what that all means and love to have you back any time. Excellent. Thank you for joining Dave and me. Thank you. For Dave Vellante, I'm Lisa Martin. You're watching theCUBE from Pure Accelerate 19.