 World, I'm John Furrier with SiliconANGLE.TV. This is VMworld's exclusive coverage, and my next guest is Ping Li from Excel Partners, Venture Capitalists, number one venture capitalist in the world on big data, top 10 in the business, recently by Forbes. Congratulations, CUBE alumni, welcome back. Thanks, John. I'm calling Frank Artali, who you just said is available, so we're going to try to get him on theCUBE. He's not going to come on, but hopefully we'll get Frank Artali, who said he might be available on theCUBE, went into voicemail. Frank Artali, you missed your opportunity. So Ping, welcome back. Good to be back. So Excel's got a little party tonight. You guys have a little reception for entrepreneurs. You're out scouring the landscape for deals. So first question is, what's new with you? Tell us a quick update on what's happening with Excel and yourself. Sure, so the update on Excel is pretty straightforward. I think we continue to be very excited about a lot of the trends we're seeing in the technology landscape these days. I think the move towards software-enabled infrastructure is accelerating. I think the commoditization of hardware, CPU cycles, storage, et cetera, is driving the value to the software layer. So we're seeing this across compute storage and networking. Big data is one of the vectors we continue to invest alongside in the application ecosystem around that, but we think there's building blocks throughout the data center that are getting transformed by startups every day. So you're also on the board of Cloud Air. Any new investments you want to share with the audience and update on current investments and new investments? Anything new? Sure, I think we've done a lot of stuff in both security as well as that are going to be announced, and some more new big data applications that are not quite yet public, but there are basically applications that are right on top of the new data platforms like Adobe and NoSQL that allow business users to extract value out of those data platforms. So a lot of the areas that we're focusing on these days is not just the underlying infrastructure, but also the applications that business users can interface with. So the question on big data, I have to ask you, is it frothy out there? It still seems to be very frothy in terms of investments. A lot of things seems to have slapped on the big data. Washing is hitting the scene. So when you see that, it's getting hot in terms of the sector. I mean, obviously you guys have a fund wrapped around. You got some dedicated dollars to it. You're close to it with Cloud Air, among other investments. Talk about the impact of what's having big data. Obviously it is hot, but it's applying to a lot of different verticals. Are you seeing more diversity? Are you seeing some consistency in the kinds of startups, the kind of applications? I think there's a growing amount of diversity. And I've been pretty encouraged. I know there's a lot of hype around big data, and there's a lot of enthusiasm, but I think what's interesting is there's a lot of adoption too. If you look across verticals, I don't think there's a single vertical that's spared from the technology around big data and how they can leverage it to generate more value. So I think if you look at all the different Hadoop companies, they all seem to be getting real customers, meaningful deployments. I think we're moving from the, hey, what is this thing to now? How do we get value out of it? So we're seeing real production deployments, and now I think we're seeing real use cases get built around it across verticals. Excel's been a great investor, obviously you guys have a lot of successes under your belt as a firm. Big data, obviously you're active in that. One area that's hot right now that you guys have always had a great perspective on was infrastructure. Converged infrastructure has been around for a while. It's been a name, that's been the Holy Grail, storage, networking, and compute, converging together, that's great. And I think, I mean I first heard the term many, many years ago, but it's actually happening now. Except the new dynamic around data. So one of the things that we've been talking about this week, Ping, and I want to get your perspective on this, is what David Vellante and I are talking about called data infrastructure. Kind of converged infrastructure, but modernized with the impact of the role of data at the infrastructure layer. Enabling new data on top of it, new data applications, mobility, because obviously when you talk about big data, analytics, you've got mobile, you have a lot of new apps, leveraging data, whether it's program apps or other apps. So big data to me kind of now talks about the top of the stack, stuff's happening. Underneath that, SSDs, the infrastructure's changing, you've got caching layers, Fusion IO, we had David Flynn on again, CUBE alumni, obviously Viya Lin's hot, Flash is everywhere, we had PureStory on Scott, he was awesome. Flash and the role of data and storage has been a big part of this new infrastructure configuration changes. What's your view on data infrastructure? Can you share how you see this modernization of converged infrastructure? Do you see it? Can you talk about that? I mean obviously converged infrastructure is great, we love it, there's some efficiencies there, but it's kind of evolutionary, but it's not a breakout change. So what's breaking out around the infrastructure around data? I actually think it is pretty game changing what is going on on the storage layer. If you look at what Fusion IO has done, what companies like Nimble Storage have done, it basically inserted a whole new tier of storage called SSDs Flash that didn't exist before. If you look back in time, when's the last time a new tier of storage has come about, right? I mean there's been RAM memory, there's been disk, there's been tape, now there's a whole new layer of technology that really is changing the price performance ratio. And I think that has yielded the possibility to have all new set of applications that can come on top of it, right? And I think one of the things that I'm excited to see is a lot of the cloud applications that are starting to emerge, whether they're internet data centers, et cetera, are assuming high performance, but a low cost points. And I think the new storage infrastructure is emerging so that it can meet those needs. It can be truly scale out and truly elastic so you can add storage resources on demand as opposed to having a very siloed scale up architecture of the past. And I think that kind of elasticity is driving a tremendous amount of innovation, not just at the storage levels of the applications on top. I want to ask you a question. We asked Pat Gelsinger and he talked about this on one of our previous CUBE interviews around how to stay relevant in new technology. And he's got the classic line. If you're not out in front of that next wave, you're going to be driftwood. And you guys deal with this every day as investors. You got to read the tea leaves, you got to talk to young entrepreneurs, connect the dots and make good investments that's your business, right? So that requires essentially having an internal team which you guys have. The other two elements are university access and access to startups. So you see in deal flow. So Mike Olton and I talked about this all the time about how systems, the systems guys and the operating systems kind of mindset has been shaping the big data world. What are you seeing in the university level and what's trickling into startups around new emerging tech and mindset that's kind of changing the game on the infrastructure and the big data side? I think it's more than a big data thing. I think historically what you've seen is anytime there's new platforms that get created there's a sea change of innovation that follows, right? And I think what VMware has done with virtualization is a fundamental platform that cloud computing has been built off of. And then there's incredible startups that in innovation and entrepreneurs that flock to that platform to deliver new applications and change how things were done previously. I think mobile you're seeing the same thing whether it's iOS or Android. These are new platforms that are ushering a whole new set of applications and new ways of doing things that couldn't be done before. So what we look for is kind of platforms that can potentially change past paradigms. And then usually there's a lot of derivative or ancillary companies that get created around that, right? And I think Hadoop is an example of the one in big data, right? That's a fundamentally new platform that a lot of an ecosystem can get built around. I think we're in a very unique time in the data center where there's so many new platforms getting proliferated. And that's why there's so much innovation in startup activities these days. Let me ask you a question that's maybe a little bit more kind of a step back. Watch the trees, the wind blow and the trees sway. We had a conversation last week on SiliconANGLE around how the Hadoop error is different than the Linux error. And I'm on record of saying, just so I'll put my bias out there, that the Linux error is not the same as the Hadoop error. Mainly because in the Linux error, I know Benchmark might feel differently, but the Linux error had one big guy with a billion dollars trying to kill it. And that's Microsoft. I don't see anyone with a billion dollars trying to kill Hadoop. So that's kind of like my main core thesis, but really it's different now. Hadoop is really much more of a multifaceted architecture. So the question is, what do you see in this Hadoop error that you can share with folks that points to, not so much against the Linux argument, but that makes it different because there is breakout tech going on right now. It's more disruptive, less evolutionary, more revolutionary. What do you see now in this Hadoop error this modern era of infrastructure that's different? But you can point to it. That's because of this, it's not the same as the old days. I think the biggest difference is, if you look at Linux and some of the other kind of open source platforms, they were a commoditization place. It was very much saying, hey, I don't no longer want to buy expensive proprietary operating systems from Sun Solaris or Windows. And I think Hadoop is not that. The goal of Hadoop is not to commoditize the relational database. My SQL already did that, frankly, right? Hadoop is about value creation and it's about looking for new applications that couldn't be processed before. So it's about focusing on unstructured data and unstructured data. It's not about trying to move SAP legacy workloads onto a new data platform. It's about enabling new applications to operate on a new data platform. So I think it's actually quite different, as you know. I think one is about commoditization, one is about value creation. And I think the opportunities around value creation are, I think, are bigger, frankly. And I think that's how you build a unique ecosystem around it. Well, I just got confirmation that Frank Artali is on his way, legendary investor for Ignition Partners who's been on theCUBE before. He's going to come on. I know you mentioned that you guys just talked. Oh, he's here. He's in the house. We're here at Ping Li with Excel Partners. What's on the radar for you guys as a firm? Also, you invested in Facebook, had a great return there. And quite frankly, Facebook saved many funds besides, well, you guys didn't want to save, but other funds had made some good dough on Facebook that were kind of hanging around. The question's more about the current state of investment in Silicon Valley and beyond. Obviously there's big talk about transparency in the VC community. And Theresa Horowitz has been pretty disruptive in terms of how they're investing. How has the VC landscape changed and is it different in terms of going after these new territories like big data and data infrastructure? I don't think it's changed. The VC industry itself hasn't changed. I think it's always about finding the unique entrepreneurs. I think what's different in the last couple of years has been there's been a lot more emphasis around software and enterprise companies is an area that Excel has done a lot in the past and are excited about going forward. So I think a lot of the Facebook, LinkedIn, Zingas of the world ushered a whole new wave of consumer applications. And I think those consumer applications are having an impact on what enterprises want. Enterprise users want the same type of experience on the consumers within the office. And I think that's driving a whole new change in enterprise infrastructure as well. So I think it's a really impactful change that the consumer side's had on the enterprise and I think that's an area that we're very focused on. Let's talk about Cloudera, one of my favorite companies. Obviously I have a close bias to those guys and known Amr and Mike Olson over there as part of that Cloudera Labs. They were a first mover in the market. Can you talk about the dynamic thing? I know you sit on the board so you may or may not want to share confidential information, but just kind of a general perspective. Cloudera as a first mover really kind of created the category Amr Awadallah saw the future, created a company you guys financed and a lot of people jumped in as well. How are they doing and what do they need to do to continue to be successful? They've taken a pretty straightforward approach, continue to lead the market with putting out great code and leading the market. But if that red hat of Linux is not going to happen as it did with Linux, what do they need to do to be successful to go to the next level and ultimately move forward? I think there's plenty of work to do to take a do from where it was when Doug Cutting started years ago to an enterprise-grade data platform. There's tremendous amount of management features, governance features, security features, all that stuff that you need to have in order to operate a data platform. I think there's plenty of work to be done on that. I also think there's a lot of opportunities around creating an ecosystem around it, so providing a platform that is rich enough for ISVs and developers to build interesting applications on top to really extract the value from the platform to the business user. So I think those are all areas that the company is excited about. We just had Frank Slubinon, who was an industry legend in terms of operational successes, and I asked him, Frank, what's your strategy for scaling an operation? He said growth, right? So, obviously, Cloudera's doing really well. Any update on Cloudera in terms of growth? Obviously, that's their focus, and you're agreeing with that, that's continuing to be their focus, it's a growth-ass and the market. Yeah, I think what's exciting is the market is growing fast, so I think they have an opportunity to grow along with the market and hopefully lead it, so I think it's a market where, I think if you're not growing, you're going to be left behind. Okay, I want to welcome our new guest who just jumped in, Frank Artali. This is real-time communications with text messaging. Yeah. Frank Artali, welcome back to theCUBE. Glad to be here. Frank Artali is a CUBE alumni, also a venture partner at Ignition Partners. They make big bets, they spend a lot of dough, do big rounds. Also, you're an angel investor, you've done some angel work, you've invested in Cloudera, and you do some seed deals at Ignition just to kind of keep the action going. Question for you, what do you think what's going on in this marketplace today? I see VM, we're just scaling up, IT's hot again, and I think we called that last year. Yeah, we did. Pretty easy. What's happening? Yeah, we did. Yeah, IT is cool again. I mean, just witnessed the amount of people that are here at the show. Anytime you can fill Moscone, it's usually a good indicator in terms of people's willingness to spend their time, and also their money to come and learn things. And I think if you look at even the keynote from yesterday, the transition from what to how, that was something that I talked about last year as well, but now a completely new infrastructure is coming to place, and to me it feels like it's the early 1990s again when the changeover from mainframe to mini computer went over to the client server. Now everyone is trying to figure out how do I get my applications and all my infrastructure that's on client server on-premises today, how do I get that into a cloud format being a public, private, or hybrid? And it's happening. And I think it's interesting to see all the new workloads that virtualization is now eating into or being able to support. I think in the past it was test dev and then maybe some production. Now it's beyond just production, but new applications, right? So I think it's- Up and down the stack. Up and down the stack. You got low level virtual machines, some, anyone who's got the big server farms, commodity farms are all looking at some of the cutting edge work at University of Illinois around low level virtual machines. It's hot all the way up to the top where you have VM spanning across data. So obviously virtualization's hot. The question I have for you guys, and I'll start with Frank because he's got a good view about Microsoft, Pat Gelsinger's out here now, the CEO. We had him on theCUBE officially this morning as the first time as the CEO of VMware. He's got to be the peacemaker now. He's not just EMC anymore. The VM, and VMware is looking beyond VMware now. They're looking at an ecosystem. You got Hyper-V, you have other hypervisors out there. So they got to start expanding out this ecosystem. So at the same time, companies like Microsoft are adopting Hadoop. And we're seeing open source not be that renegade replacement, beat the incumbent. We're seeing incumbents adopt open source and Hadoop in particular as a business model, not just as a R&D thing. So question for you is multi-vendor interoperability and what is Microsoft doing? What's your take on Microsoft relative to all this? Because they got a big stake in the game here. So I think when VMware says multi-cloud, let's be clear. Just like VMware has always been multi-infrastructure. So you didn't say, oh, I'm going to buy ESX and only, I can only run it on Dell as an example. So as VMware moves up stack, like it was depicted in the keynotes of yesterday and today, you can clearly see that the customers will require a choice. If a customer has a cloud that's not a VMware cloud, VMware does need to embrace that. Just like when the hallmark of VMware in the past has always been embracing server infrastructure of choice. Microsoft, my previous employer of 10 years, on the other hand, has always been a company that's lived by embracing choice on things like server and also on interfaces. Now the question I think that'll be harder for Microsoft since it does have its own cloud property. Can it really go and embrace other clouds in the way an independent vendor like VMware accounts? I think it'll be a challenge for them. So I want to ask you, I have to ask you because obviously it was a big bruja on the blogosphere and SiliconANGLE covered it. My commentary on it was pretty much, yeah, it's kind of accurate, but really unfair on Microsoft. So Vanity Fair wrote a really negative article on Microsoft's calling it 10 wasted years, really chronicalizing all their failures and stacking them up as a total colossal failure. They've had a lot of other successes. So can you comment on that and what your opinion is on one, the article and around Microsoft as a whole over the past 10 years and kind of how their position going forward today? Well, interestingly enough, I left Microsoft 12 years ago, so it was 10 years that I wasn't there. You started failing when you left, okay. It's true then. Yeah, yeah. I think one of the things that really happened, let's call it at the tail end of the 90s into the decade of 2000, again the quote unquote lost decade in IT, is that a lot of the venture investing, a lot of smart money was going into investing in the things that are powering the big e-commerce and big consumer websites today. So if you look at the things that have come out of places like Facebook and Yahoo and particular technologies like Hadoop, but also techniques for managing storage, techniques for managing service, a lot of that investment was done in the way of facing consumer properties. And in the first half of the 2000 decade, it really still was about deployment. And I think in the end of the 90s, deployment in enterprises, we made an expectation as insiders that everything was done, but there was still an awful lot of work to be done on inertia and momentum to get things done. And so we didn't see the smart money really swing back into enterprise until the last couple of years. And I remember I was an invention development at Accel when Ping came on as a general partner. And sometimes he and I would be looking at each other like, we're the only ones crazy enough to do enterprise stuff. Like, no one was really interested. And to an extent, I think it was, if you want to point to a lost decade from Microsoft, I'd say it's a lost decade for enterprise IT in general. And so I think it's more of an industry-wide thing than Microsoft's only Ping. I know your thoughts there. I think that's why the enterprise startups are getting so much traction these days. There's been such a scarcity of innovation for a long period of time. Not just from Microsoft, I think from a lot of the incumbents. If you look at what's happened the last five years, the incumbents have consolidated, not innovated. And I think that creates a tremendous opportunity for startups that, whether it be compute, storage network, or the application side of the data layer, I think we're excited about all the different pockets. Okay, I want to ask you guys real quick what you're investing in, Frankie just joined. So tell us, what are you investing in right now and what are the hot deals you're doing? So, again, I invest in the things that I know primarily, and that is data center infrastructure and solutions. And so I still think there's plenty of work to be done on security and networking, networking at the management and policy governance level. Hybrid Cloud, to me, is very interesting, especially as businesses of all sizes want to move their applications into that format. So those things that I find particularly interesting. Well, we had Bromium on, by the way, Simon Snuckam, we snuck Simon in. He was actually sanctioned to actually walk the hallways here at VMworld. Yeah. Hey, what are you investing in? I think if, I agree with Frank, I think the networking layer is finally starting to get turned over as the hardware becomes commoditized and the value becomes in the software. So I think a lot of the areas around networking is interesting. I think we talked about earlier, but I'm seeing a lot, but not enough, applications of big data, less about the data. And what particularly, how would you filter those deals? So for the folks watching, honestly, everyone's working on some stuff. Describe the kind of deal you'd love to see. I'd love to see companies that are, whether it's data visualization, business intelligence, data analytics. Companies that are building data products on top of the next generation data platforms that can actually get a business user to get value. I think right now it's very focused at the data guy as opposed to the business guy. And how do you bridge that gap I think is, and there's a lot of startups doing it. I think there could be more areas of innovation. I want to kind of go on a kind of abstract questioning here for you guys. So I want to get your insight because you see a lot of the emerging deals, but you also have a vision for the future and you got to kind of read the tea leaves as VC. So we were talking to Dell yesterday, Tarkin Maynard who sold wise to Dell and he's trying to wrap services around, oh IT computing, it's a huge market, okay. But you look at the success of Apple, single digit hardware market share, massive profits, the most valuable company in the world. And I was kind of saying, can you imagine if Apple hits 20% market share of overall hardware, kind of what that financial picture might look like given their current business model. Okay, so we kind of took a leap of faith there, but what if HP or Dell or somebody else actually commoditized their hardware and they had a similar strategy where there was other business model dynamics going on in IT. So with that premise, the premise being that it's not so much about the margins on the hardware, it's just create a good hardware relevant product and have wrapped around services. What would they be? What kind of IT like services would you see out there that would kind of bring that Apple model into Dell and HP's sweet spot? Right, well. Or IBM. Something that I think will happen over time and it's always hard to make a truly bold statement, but I think there will be a day when you don't actually buy a server compute or even desktop compute power anymore. I think it will come a day where you actually subscribe to it. And sometimes hardware may appear with it and sometimes it may not, but it'll have all the kind of characteristics that we see with the solid cloud infrastructure today and that means things that are kept up to date automatically. The IT department doesn't need to worry about patches, doesn't need to worry about security settings and fixes and things like that. And so to the extent that you just subscribe to it and you pay a monthly service for what you're using or what you desire in terms of performance or features, I think that is a business model that will see over time. And it does rely on the ability for these vendors to be able to have capacity on demand and be very elastic. And so in terms of a vendor like that, I think that's a possibility for them. I think they have to embrace the cloud more fully. I think this innovating in hardware, I think is a losing battle. Apple is unique in its ability to do that. So Apple's just going to take the market? No, I think Apple, who knows if their next revs of the hardware can be as interesting as their past ones, but I think what they've done is they create an ecosystem. What's valuable, is it your phone or is it the applications, right? It's the apps, right? So I think- Phone's great too. Yeah, but I think if the other vendors are to take a page out of Apple, it's you got to create an ecosystem where developers want to build on top. And I think you do that. Developers are spending their time in the cloud today. So the more that you can enable them through cloud platforms, the more they're going to be building on your technology. It's basically kind of the common sense, create value and let everything take its course. Well, final couple of questions I want to get to you guys before the break, and it's great to have you up here, is what surprised you this year in terms of like, in a way that almost knocked you out of your chair, like, oh my God, I got hit over the head with that trend or that dynamic was that it could be an M&A deal, it could be something else, could be a new trend, it could be the Facebook IP. What Frank, we'll start with you. What surprised you this year from last VMworld to this year? What's the big, you know, aha? Yeah, so one of the things that did surprise me was the, I'll just say how much people underestimated Microsoft's ability to bring a viable infrastructure as a service to market. So if you sat here a year ago, everyone would have just said, no way, it'll never happen. And I just see an awful lot of both ISV, independent software vendors, and also business customers really looking at Windows Azure as an alternative to other clouds. And I think, maybe last year, I think I was even less bullish on that and I've been surprised. Okay, so let me add another part of the question so I get one more piece from you. What surprised you from the investment as a VC? What surprised you? So two questions, a market trend surprise and then as an investor surprise. Right, so again, for me as an investor, I think it's still just pace, the amount of deals that were done early and late in the first half of this year. It's been an incredible thirst from the venture community to place money into enterprise deals. And that pace is faster than I thought it would be. Again, sitting here a year ago, we talked about the amount of enterprise quality VCs and it's usually paying an eye and about eight or the guys that we know and go to dinner with from time to time. And we just see more and more people come in to start investing in enterprise. I think the pace is something that I was surprised by. Ping? Market and investment surprises. Yeah, I think from a virtualization perspective, from VMworld to VMworld, VDI actually has been an area that I've been pretty surprised. In terms of the growth and adoption of VDI, I just did not expect to see that level of activity that I'm seeing. I think it's very exciting and encouraging. I think maybe it's the BYOD trend you're seeing in the enterprise that are driving some of the need for that technology, but I think that's exciting. I think the other area that has been interesting is just the appellation of IT for lack of a better work and how the Mac and the iOS platforms are really turning over the landscape for IT administrators and how they're grappling and leveraging those technologies. I think they're going to be incredibly interesting as well. The appellation of IT, mobile, app stores is happening. Service-oriented stuff, self-service, great stuff. King Lee and Frank are two amazing VCs. I've gotten to know over the years, fantastic. Smart, making great moves, big deals. Thanks for coming on theCUBE. Thanks for your perspective. And we'll be right back with our next guest after this short break. Great. Thanks.