 From theCUBE Studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is a CUBE Conversation. Hi, buddy, this is Dave Vellante and welcome. As you know, I've been interviewing a number of CEOs throughout the COVID-19 pandemic. I'm really excited to have Alan Trefler here. He's the founder and CEO of Pegasystems. Alan, thanks for being part of the program. Thanks for having me, Dave. So let's get into it. I mean, when you were 27 years old, 37 years ago, 1983, you started PEGA. Now, you've seen a lot of cycles and never seen anything like this, I know. But certainly there was the 87 crash, you saw the banking crisis in the late 80s, early 90s, the .com bubble, 2008, 2009, and now this. I want to ask you, how have you responded to crises in the past? I mean, it's the hallmark of your company, the book you wrote is being able to manage through change. How did you manage through this one? What was your first move? Well, what I'll tell you is from the inception, we've always been a scrappy company. We never took any venture capital. We bootstrapped this firm. I went public in the late 90s. And we've now got a firm that will do over a billion in revenue this year and it's 5,400 staff. So we've built, I think, a cohesive team around a set of principles that really have matched the way that software and technology have evolved, but have still taken a pretty radically different approach to how it should be used by businesses and businesses. Well, so talk about some of the big waves that you've been riding over the years. I mean, you set out to help business people really communicate better with IT. You laid out in your book some of the challenges there. And as you pointed out many, many times, it's just, it gets more complex. People trying to understand the customer better with terminology like customer relationship, management people don't necessarily want a relationship. Talk about some of the observations that you've made around customer behavior and channels and how you've approached things a little bit differently as an entrepreneur. Sure, I think organizations, when they think about how they want to engage with their customers, typically make a couple of serious mistakes. One is they say they want to do a good job for their clients, but especially if they're a big company, they then devolve into actually doing the work in their channel. I mean, they have a mobile group that builds the mobile app, which is different than the group that handles the call center, which is different than a group that handles the website. And all this business logic gets baked into that. And that just destroys their ability to implement change rapidly, which particularly in this COVID era is so important for the organizations that are going to be successful. Now, on the other side, sometimes they get overly focused on their backend system, that they're worrying about how they're going to put in the perfect ERP system or accounting system, that will somehow support customer engagement better. But frankly, it never does. We think you need to think about your business from the center out. How do I apply AI to what I want to do for and with my client? And then how do I apply workflow and work management capability to ensure that those decisions are done optimally and effectively? That's what Peg is, well, worked on from our inception. And now as we've gone into our fifth complete generation of software, I think we've really crossed some boundaries that are pretty remarkable. So, I mean, well, what you've built is actually quite amazing. Actually, since you've written your book, the stock's exploded. I don't know if that's caused an effect, but nonetheless, some of the things that you talk about again in the book, you talk about people looking at data the wrong way. You've always, what's impressed me is you've always taken a systems view. You're not trying to optimize to your point on one little either technology or maybe optimizing on cost. If you look at the whole system and think about outcomes, that is going to yield ultimately better businesses. And so, I want to ask you- Thinking about end-to-end way of understanding how the technology should be applied is exactly what we've always believed. But the key is to be able to do this incrementally, iteratively, not monolithically, because no businesses can afford to whip out things. So, you need to be able to do this, what we call, say, one micro journey at a time. One set of things that are good for a customer. In today's era, it might send, as we do with many of our clients now under stress, we help them help their customers for around things like loan forbearance. How do you get people a payment plan because they just don't have the money to pay for their loans today? And how do you do that while you keep them as customers as opposed to, well, situations that could be far worse? Let's talk a little bit about machine intelligence. When you started Pego as the same year I started in the industry at IDC, AI was all the rage. And then it just never happened. You had a very long AI winter, but now it's just starting to come back. You're seeing, obviously there are certain technical the amount of data, the processing power, et cetera, and the cost are much more aligned. You're seeing trends like AI, you're seeing things like RPA, which you've brought into your platform. Talk a little bit about that sort of incremental change that you're adding into your platform and how you go about doing that. And I want to ask you about some of your thoughts on those trends. Certainly, well, AI has been, from my point of view, a really big thing for the last decade. There was a set of false starts and we actually saw that they were false starts so we didn't get sucked into it. But come around 2010, we made an enormous push to bring machine learning and decisioning into our work management platform. And it's in there beautifully and it's doing amazing things. I just saw one of our customers, Commonwealth Bank of Australia, your CEO in his quarterly earnings announcement, led by talking about what the PECA system, what our system, which they call a customer engagement engine, is doing for them. During the fires that earlier this year were ravaging Australia, they used that to send personalized, not just messages, but also relief to people whose homes were burned out so they weren't going to be able to pay their credit card bill. They didn't have to call the contact center. We reached out to the brilliant work that they did using our technology, reached out to preemptively make those customers feel great. And now with the COVID epidemic, that organization is doing the same types of things which really both endears them with their customers but also gets tied into that efficiency layer because you stop doing needless work because you're being smart as a result of using AI to figure out what to do and to learn from the outcomes that come from that. So we've seen the playbook of, you see startups, they get out, they're well-funded and they point to the large established companies and they say, oh, that's an old stack, they can't respond, innovators dilemma, et cetera, et cetera. One of the things about PECA is you've been able to transform yourselves over the years, build for change, I guess. An example, for instance, going from perpetual to an ARR type of model which you very successfully have done. And now, like I said, bringing in RPA, but I want to ask you about RPA. A lot of competitors out there, big valuations, kind of pointing at you guys as the incumbent, you have RPA, but what do you see within that space specifically? I see a lot of delusional behavior. The ability to put robots in to do little pieces of task work can make sense in some situation, particularly if you don't have a good API, a good application programming interface to get data in and out. A robot in that sort of situation can be a very, very helpful stopgap. But you really need an engine driven by AI and driven by process, process automation that has to be at the heart. That's the dog to the robotic process automation tail. And a lot of these RPA vendors are running around saying, all you need is the tail. I'll tell you that in the last week, two of the quote biggest leaders have both had massive layoffs in them. A little Google work you can find out exactly who they are. And it's because their stuff isn't working well. I want to ask you about entrepreneurship during and coming out of a pandemic. Is it a good time to do a startup? Not that you're thinking about doing a startup, but advice to entrepreneurs? Well, I think it's a terrific time to have a startup mentality. Part of why I think we've been able to reinvent our technology, literally five times over our years is that we're always prepared to look from a new angle and apply that sort of entrepreneurial thinking and scrappiness. However, in terms of starting something right now, it's a very uncertain time. It's uncertain as to when customers will be back in the market. It's uncertain as to exactly how hard certain industry segments would be hit. And so whereas I think that even during recessions, it could be a fine time to launch a startup. And in fact, that's when I launched a startup was during a time when the economy was not doing that great. I would wait a little bit right now to see exactly when things were going to stabilize. I think that it's just a little too uncertain, but that time will emerge again. So I want to ask you. So again, again in your book, you talked about big data, big problems. I always joke to my friends who have little kids, little kids, little problems. And so little companies, little problems. You're now a billion dollar company and you're bringing in new talent. You've set your sights on becoming a multi-billion dollar company. You've got a great track record. I wanted you to talk about sort of how you see the future and what your aspirations are. You don't have to give specific numbers, but just frame that for us. Well, first of all, just to be clear, the numbers in terms of billion, that's an actual revenue number, as opposed to some of these valuations which we've seen with companies like WeWork might be a little bit tentative. So what we see as being central to our growth and value prop are a couple of things. First, we've made our software tremendously easier to use, particularly in our last release, which came out about six months ago, really, really straightforward for business people even to take ownership of their projects and work really collaboratively with IT. So that's one aspect of how we grow and want to accelerate the growth. The second aspect is Pegger Cloud. Last year, Pegger Cloud grew enormously. It's now more than half our business. And for people to come on Pegger Cloud, where we do all of the database work, we do all the heavy lifting for them from a technology point of view, also provides a route to growth. Though we also support what we call client cloud, which is where one of our customers wants to run it on their own cloud. And I think the third thing that we're doing that we're hoping is going to allow us to accelerate our growth is to broaden our go-to market function, to make our go-to market function just larger by continuing to hire. And by the way, this is a great time for a company with a half a billion dollars of cash in the bank to be out looking to hire talent. Looking to hire and broaden and deepen our go-to market and how we work especially with those awesome customers, some of whom are suffering, but are going to come back and they're going to increasingly need to change their digital infrastructure. Their digital transformation, we think, is going to benefit from platforms like ours in unique ways. Well, Alan, I love the story. I just pointed out, you just tap the credit markets, you got a fantastic balance sheet. You got a lot of tailwinds despite this pandemic. And as we often say, you've got a founder as the CEO and we've seen how that really culturally makes huge differences at companies. Alan, thanks so much for coming on our CEO series. Really appreciate your time. Thank you, Dave, it's been a real pleasure. All right, thank you for watching, everybody. This is Dave Vellante for theCUBE. We'll see you next time.