 From London, England, it's the Cube. Covering Discover 2016 London. Brought to you by Hewlett Packard Enterprise. Now, here's your host, Dave Vellante and Paul Gillis. Welcome back to Excel London everybody. This is the Cube, the worldwide leader in live tech coverage. And we're here for three days covering HPE Discover 2016. Peter Schrader is here as the senior vice president and general manager of the ProLiant server group HPE. And Nick East is the co-founder and CEO of Zinstra. Gentlemen, welcome to the Cube. Thank you. What is this little guy? This little guy is what we call Easy Connect. Let me tell you a little bit about what Easy Connect is all about. So, you know, we have committed ourselves completely HPE to a hybrid infrastructure as the solution of choice that's going to lead basically all of our customers into the next generation of IT. Making it simple. Making it simple. Well, you certainly made it small. So what we've done is we've developed synergy and other ProLiant solutions for large enterprise customers. But there's a group of customers, small medium business customers, the education schools, as well as some remote office branch office for large enterprise who don't have the IT sophistication, the staff don't have the capital to spend on a complete solution like Synergy. This is where Easy Connect comes in. Easy Connect is a converged system. Compute, storage, and networking, all in this really cool small form factor that stores your data and your applications locally, or it will connect to the cloud, either a public cloud or your own private cloud. So this is a true hybrid IT solution for the SMB or for the education customer, as well as, as I mentioned, remote office, branch office. And this was a subscription basis. You manage it for the customers? Absolutely, so this is another innovation for us at HPE. We actually are wrapping the hardware, managed software from our partner Zinstra, as well as the services in one monthly subscription, a consumption model. So if I want an exchange server there and a SharePoint server, you're going to configure that all for me? That is exactly right. You couldn't have said it better because that's the type of application that this thing is wholly suited for. So Nick, your company developed this, obviously integrating components from HPE technology. So tell us more about Zinstra and how you came up with this. Sure, so we provide the virtualization platform that sits on the server and the cloud management platform. And I guess the pain points we were looking to address, I'll give you some examples from people who've come here at the show to look at deploying Easy Connect. So an IT manager has 150 sites to manage or 50 sites to manage, and needs a critical mass of some IT. Sorted out his data center, he's got his cloud strategy in play, but there's something he needs on site. It may be just classic DNS, DHCP access, needs to be able to run Active Directory for authentication, file and print services for the office. And exactly as you mentioned, we had somebody say exactly that yesterday. You know, I have a small SharePoint or SAP implementation. So what our software does is it lets them cookie cutter every site, one site, five site, a hundred sites, a thousand sites. They can cookie cutter the site, they ship this out, they connect it to the one. It lights up in our cloud management platform. And from there, the IT manager can do everything that they need across all of those sites. So the concept is to make it super simple for them. And if they're a stretched IT team, they don't need skilled IT resources on site. They can retain their core IT skills locally around their DC, or the partner can run that for them. So they're running one view, they want to manage it with one view. Where do you fit into that equation? We integrate with the one view guys. So I think the thing that's super cool about this appliance in particular is we actually worked with the design team, the HP server design team hand in glove. So the reason this is such a small guy is that we've been able to kind of cost optimize, access to ILO, access to one view, access to the management tools and make sure that the platform we've built here has everything that those sites need. It's just right for those sites in conjunction with our software and the rest of the HP software portfolio. And you said you developed the virtualization platform for this, what is that? Well, it's a virtualization infrastructure sitting on top of open source end server. We can use other hypervisors, but the important thing about the virtualization infrastructure is really how you lay this out to be remote managed. So classically in a data center, you run single purpose virtual machines to run a workload. You mentioned like a SharePoint workload. You run that in one virtual machine. On the site, it's much harder to keep and maintain all of that virtualization infrastructure if you're running lots of sites. It's difficult to keep them all consistent. So you have 20 sites. This one starts to look different from the other one. And then you have a maintenance nightmare because you don't have an IT guy on that site. You have to ship people out and everything looks unique. Everything's different. So we make sure that that virtualization platform, when it's set up and it's structured and it's configured, it looks identical everywhere. It's like having a distributed data center. Is this inherently a more secure platform than a remote office server? You are 100% correct for lots of reasons. One of the reasons it's more secure is exactly that infrastructure, right? So the attack surface is much smaller for any of those virtual machines. But also we have inline as part of it. We actually have an optionally, you can add a network gateway and firewall, just tick the box and it'll spin it up so we can do inline AV. And it automatically securely connects itself into the management cloud that you can run it from. If I want to upgrade, if I run out of capacity, I need to upgrade my server, how will you manage that? You can ship another one. So you can see the back here, there's a separate port, you can plug another one into it and run them in a high availability cluster mode, active, active cluster mode. So what that will do is it'll let you use both systems, but it also means if one of them fails, if there's a failure of power supplied, it'll fail over to the other. So imagine this is a similar discussion you have with customers. They had me at Simple and we talk about the business benefits and so forth. And at some point, somebody's going to ask, what's inside? Where do I get? How much horsepower? How much storage? What kind of networking? Tell us what's inside. Okay, so there's two models. There's a base and the premium model. The base model's a 32 gig of memory. The premium model is 64. It has SSD accelerated disks. You can go up to 24 terabytes. There's actually a disk expansion unit. You can plug on the back and it'll say tiered storage. So for things like SQL server applications, we found some of the customers who are running on much bigger server arrays have run in their lamps to just make sure that the performance is okay. And it absolutely flies because of the SSD acceleration. And if you know a little bit about the, I'm sure you do about the storage infrastructure inside, so that actually runs a full copy-on-write ZFS file system, which means if you do add more, then those disks are just available to all of the virtual machines that you're running. So you make a synchronous copy locally, and then you asynchronously, I was going to ask how you protect it, then you'll trickle that up to the cloud. Cloud backup, either way. So you can check the box and you can say encrypted public cloud backup is encrypted on the box, stream it, it has, as part of the networking, it has quality of service parameters built in, so it will only use the available upstream bandwidth that you need to do that backup, and it will back up into the choice of public clouds, typically people are choosing Azure, or into your data center. We do have a set of customers who are asking for more compute power. So we've recently launched a bigger tower, the ML 110, and as we scale, and as our customers scale, I'm sure we will continue to scale the compute power to meet the needs of all the customers here. You've been on the market about eight months with this. In fact, you and I talked back in April. You did, you're absolutely right. I just found the story right now. It's about eight months on the market with this. How is it selling? What kind of volume are you talking about? I'm going to grab this one real quick, Nick. So we actually didn't get the product out and into the customer's hands until June and July, just to be fair to, yeah, fair. We have got significant momentum behind this product, and what we've seen so far is that the majority of the sales, which are just UK-based and US-based right now, because we're trying to get this right. We're trying to build the model that's going to be repeatable around the world. But we've seen significant interest and have sold subscriptions into the education space as well as the small SMB retail space. But we have a huge pipeline that is built around not only are those education customers, but lots of large enterprise customers, retail customers, convenience store customers, those that have a lot of remote office branch offices. So we're thrilled about that. You've got a pipeline, why do you have a pipeline? Are you capacity constrained? So everybody needs to have a proof of concept before they're going to replace 6,000 stores. And you're intentionally sort of throttling the role out there. Absolutely, yeah, because we don't have the resources right now as a team, we're trying to incubate this within HPE so we can keep it alive and well. And so we want to make sure that we build the model correctly in the US and in the UK, and then we'll scale. How did you do your TAM analysis for this? You take IDC price bands or something, but you got the subscription model? How big is the market for this? The market is enormous for this. And so we've had to throttle it back significantly, but you can imagine, so 40% of the market is small, medium business. But then you've got maybe another 10 to 15% that is specifically remote office branch office, large enterprise customers. Another 20% is education. And then you've got telcos and service providers who could sell this product into their customer base as well, so that the market is enormous. But the TAM's got to be tens of billions of dollars. It's tens of billions of dollars, absolutely. And Zinstra is a systems integrator, you're a value added reseller, you're a technology company. No, we're a software company. We're a venture backed software company. So our background as an organization is in making bulletproof software platforms that go out into the fields and they just work. And you don't need a lot of skills to run them. So the heritage of the DNA of the team is all about making sure you can deliver infrastructure remotely, and you can always manage it consistently from one place. As I recall from our earlier discussion, this is a channel play, right? HPE is not selling the product that your channel is. This is an absolute channel play. And it's a perfect channel play for our managed service provider partners because they can, as Nick mentioned earlier, they can provide that service, that remote office service, and they can also sell curated software applications. So for them anyhow, it's a real true value added proposition. So is this an on ramp for your conventional resellers to get into the MSP business or is it the other way around? Well, we'd like to think it's an on ramp for our traditional resellers to get into the MSP space because, you know, It's still a box. Yeah, it's still a box, but it's a great proof point in their ability to sell a solution. And then again, there's different consumption models that they'll be able to sell. Whether we have the monthly subscription, but we also, you know, have the traditional CapEx model as well. Have we talked price? We haven't talked price yet. We have not talked price. So I can buy it as CapEx infrastructure. So give us some rough sort of ranges. So the price varies on the size of the unit, base unit or premium unit, and then on things like the amount of backup that you use. But, you know, ballpark, you could be talking, you know, on a three year contract, anything from six to $15,000. Okay, for the full service, including backup over those three years. And typically what we see, so we have, you know, we have down in a number of the booths here, we've got some reference videos of the first customers who've deployed this and the experiences they've had. And typically what they're saying is they're getting, you know, between 30 and 50% TCO reduction compared with how they would normally operate this type of solution. And that's largely what they're coming from, just not having to have people in suits managing. That's exactly right. It's operation cost. Operating cost. And then you'll swap out. Truck rolls out to size. You'll swap out the box after three years, you'll upgrade them. That's part of the contract. That's right, yep. The, one thing I remember is you chose to run the, you're going to the Zen hypervisor, you're not running VMware. Is that, has that changed since we've... No, you know what, so you could use any hypervisor, right? It's not the hypervisor that's important. We've chosen, we chose Anserver. It's, you know, it's a very, very widely deployed in cloud infrastructure. No VTACs. Sorry? No VTACs. Yeah, right. So, there are some reasons why, you know, some technical reasons why it's a really good choice. Some of those cases for security, particularly if you're running on a very, very small platform like this. If you think of what we're trying to do, we're trying to provide the sorts of systems tools that the big data center providers use to manage that biggest date. We'll do it all here. We can't move, if we want to do an upgrade and a patch, which is what we do, we keep these things completely consistent and completely current when they're in the field. If we want to do that, we can't just throw the VMs off to some spare capacity and run that upgrade. So we have to shrink everything right down. And there's some capabilities that we've been able to do very, very easily in Open Source Zen. But actually, you know, we'll follow the market. If people want to run it on, you know, alternative hypervisors, that's a validation. Nick, is Bath that become a tech center? Are you mentioning a VC Bath? It's a really interesting, it is, the tech center has been for some time, actually. So is it the university? The university and Bristol, you know. There's a lot of, recently, the local government there, it's known as a tourist city, right? They discovered they get forex revenue in tech in fact, the tourism. And HPE's got a facility down in Bristol. Bristol Labs, that's right, absolutely right. Been there. Okay, and to history of the company, you've been around for how long? You said you venture back, what can you tell us? Yeah, venture back. So we founded in 2011. So we're five years old. The history, the background of the team, we also had a successful startup that we built in Bath and exited for $400 and something million. We took VC investment from a venture firm here in London with offices out in the valley. So we spent a lot of time sort of back and forth. We took a VC round in 2013. How much money did you raise? We've raised, so far we've raised about $25 million. Awesome. I just want to be sure of one thing. You said you were a software company. Now who is actually running the operations? Is it the partner MSP? Is it you? That's a really good question. So I think most software companies now are service companies, right? So you build the software, you deploy the software, but most of what you have, so our cloud management platform, guess what, we have to run that. We have to operate that. So we have a team who operates the cloud management platform, but it's multi-tenant. So the partner logs in, they see their systems, their deployments. They can manage those. We can help take over parts of that if they want to. If they want to curate it like an active directory or as you mentioned, an exchange, a SharePoint, a SQL server, we can take over and operate that for them as long as it fits the standard model, but we can also just give them admin access into that VM and they run it themselves through the cloud platform. So we have an operations team across USUK, but actually a lot of the time the partners are wrapping their own services around that capability. Do you want to hand that off to the partners, though, ultimately, right? Right, and that's what they want as well, but they don't want to do the low grade run out, do an install, run a latest service patch, run a hypervisor patch, that's low value stuff. So we just make that automated and part of the platform. Love it, love the innovation, the business model. It's fantastic for partners. Last question, where do you want to take this thing? What should we expect? So, as I mentioned, we're going to do a couple things. We are going to continue to roll this out geographically, expanding beyond just the US and UK once we really get the model humming and we understand exactly what the MSPs need because what we found at the beginning was they needed a little more hand holding than we thought. So we'll be expanding geographically. We'll be expanding the product, as I mentioned, beyond probably the ML 110, which we just announced a couple weeks ago. And then we'll be expanding partnerships. So we just recently announced partnership with our brethren, Aruba, to provide the systems management dashboard as part of the applications as well. So those are really the three areas that we'll be expanding in, partnerships, location, geographic locations, and products. So we see a huge future here. And everybody can go to booth 523 in transformation area one if you're here on site and get much more information from the guys who really know about this. Excellent, Peter and Nick, thanks very much for coming on theCUBE. Congratulations, this looks great. Thank you. You're welcome. All right, keep it right there everybody. Paul and I'll be back with our next guest right after this. We're live from Excel London. Right back.