 Live from Las Vegas, Nevada, it's theCUBE. Covering AWS re-invent 2016. Brought to you by AWS and its ecosystem partners. Now, here are your hosts. John Furrier. Okay, welcome back everyone. Hello, day three of the SiliconANGLE Media is theCUBE's wall-to-wall coverage of AWS re-invent 2016. I'm John Furrier, my co-student minimum this week and Peter Burris is joining us for the kickoff of day three, day two of the event, afraid to be asked really kind of a third day early, on Tuesday for the James Hamilton, Tuesday night with James Hamilton. Guys, Werner Vogels gave the keynote here more technical, down on the weeds, wearing his t-shirts due, but really it's all about the technology. You had Twilio guy up there talking about APIs and scale. And I think the big story so far is Amazon's scale and the impact of that scale. And you're seeing it now in some of the technical announcements with glue and some other things. You're seeing essentially Amazon offering as a service scale thoughts on, so far in the show, impressions, keynote today, Stu. Yeah, so first of all, John, happy birthday. Great to be here with you for the event. I'm surprised Werner didn't have the 100,000 people watching singing his song, but it's okay. Yeah, Werner Vogels, it's developers, developers, you know, things about, we're talking containers, we're talking Lambda, CI CD, everything going on in this space, every year I come to the show and there's the little joke I put out on Twitter. We love our ecosystem, they're so tasty. Because it reaches to a point that they say, okay, what are they putting out and who does that impact, a nice chef with ops work talked to some of the chef guys. They're like, we are so excited about this. We spent the last 18 months working with Amazon, we think this is a huge opportunity. Is there a long-term threat working with Amazon? Yeah, everybody understands that, but you need to be there and this is where so much is happening. So they are super excited, they should be congratulated for what they're working on. They came out with X-ray, which really looks at kind of debugging trace end to end requests. It's got built in with Lambda, works with containers and Amazon's Linux and looks like things like what New Relic does. But Amazon and Google also have similar types of things. In a lot of ways, Amazon, just filling out, Peter and I have been talking about, it's not that they're building a stack, but it's all of the different tools and therefore, if I take various pieces, it's going to look like a lot of what many here in the booths have. So a lot of activity going on there, some really interesting users out there talking about how they're really transforming their business and a very interesting way. I didn't hear, did we hear who the musical guest is? Tonight, it was somebody big. No, I didn't, I was walking down, I missed the back end of the keynote. I left great, I always left at the glub. No, no, no, it's always, it's EDM here. I mean, they had Skrillex, they had Nails. They don't go old school. You know, it's just something like that, but. Although, here's what I'd say, John, that Amazon, the normal association is that as you get bigger, you get slower. And there's always been this assumption that one of the values of great design is that great design would allow you to scale and yet remain fast. And what we've seen is that there is a room, there is significant room for doing great design with an infrastructure. Because Amazon is getting bigger and their size is allowing them to actually move faster because they've got great design in place. They have, we heard this week that they made significant investments in extending and expanding their ability to do design at scale, including, interestingly enough, design all the way down to silicon. And so the, kind of one of the big stories coming out of here is the ongoing commitment to doing appropriate vertical integration around good design so they can add one of the more interesting factoids, the equivalent of a Fortune 500 data center in capacity every single day. And yet, for what you were staying to, still be able to deliver services at an unprecedented rate. So design, good design leads to scale, leads to solving the paradox of size and speed. Yeah, Peter, I want to get your comment on something because we've talked for years here about that flywheel. New features equals new customers, equals new features, equals new customers. The new flywheel that Matt would talk to us and the analyst session was, it's really about data. More data leads to better analytics, leads to better products, leads to more users, and that leads to more data. And we go round and round. Is that kind of a new paradigm, the new normal? Well, it's what everybody wants to be able to do. And it's kind of the centerpiece of our research, as you know, Stu. It's kind of the centerpiece of our research perspective, which is that digital business is about applying data better than your competitors to create and sustain customers. And Amazon is at the vanguard of doing that. They're showing that you can even do that in something as mundane and behind the scenes as building out infrastructure for information technology. So, yes, it's true that if you do good design so that you know what kind of data to collect, you can now apply data in a way that you couldn't before to improve your targeting, to improve your design, to make sure you're delivering the right stuff, to fail faster. They're demonstrating that all these things we've been talking about for 20 years can actually work if you stay committed to doing it. Jay, John, I got a question for you. So, you've been talking to the VCs. We look at all the startups here. Adrian Cockroft, who's been on theCUBE many times, is working on the open source activities at Amazon. He actually tweeted out and said, hey, instead of joining a startup and spending lots of time on funding and marketing, just join AWS and help build a new service. Yes, we're hiring. What do you think on that? Well, Stu, good point. So, one of my core objectives this week has been to, I'm going to have the Andy Jassy exclusive two weeks ago at his house, so I got to kind of lay the land from the chief executive himself. But at the show, I was looking at the startups because this whole premise of the show, and we want to get your comments after my comment, but it's about the old guard getting disrupted. And that's kind of been the jassy theme. I wanted to go out and look at the startups, look at the VCs because those are the guys creating the new guard. And that is the canary in the coal mine for me. So, the thing that I'm seeing is startups are certainly seeing the cloud as an opportunity to be disruptive. But the question is, how meddling will the old guard be in polluting the innovation opportunity because they have incumbent positions? So, market power from the old guard is something that could affect the startups. So, that was kind of my goal. So, with the course of the three different nights, that my takeaway is that there really isn't an impact of the old guard on the startups. I think the startups are certainly being funded. This reinvent probably is the biggest of all time in terms of startup activity with VCs. There was like six zillion parties going on. So, I think there's a healthy funding, but a lot of collaboration, a lot of M&A discussions, a lot of kind of formations going on. So, I think, Stu, to your point, the people realize that the old way of doing it, the playbook, get funding, go to market is changing. So, I think, yes, I think the marketplace is compelling, but at the end of the day, technology and the go to market are the two critical paths that are in play right now for startups. And I think the opportunity Amazon has is not to be going after the old playbook of sales forces, and that's why I've been asking the questions to James Waters around Azure Salesforce. So, I think that's going to be a very interesting dynamic. If Amazon continues to make the market on the technology as a service at scale, and can provide a seamless self-service-like cloud vibe on the market. Well, here's what I'd say, John. Here's what I'd say. I think it's a great point that, and Stu and I were talking about this this morning. It's a point that Stu and Dave Floyer and others have been pressing within the Wikibon community for quite some time. Amazon is clearly disrupting. They're doing things as a service that has enormous implications that we could spend hours talking about. But what startups and VCs and folks trying to do these new things, and the big companies, is they want to escape to where Amazon's going to. And Amazon is going to have to make a decision. Are we going to be a little bit more forward thinking about releasing information about some of the APIs we're using so that these startups and these third parties can anticipate where we're going so that they can create derivative value when we get there? Or are we going to be a little bit, you know, tighter to the vest, not reveal that information and everybody's going to have to catch up when we finally arrive? I think it's one of the big questions that the industry's asking right now. How am I going to anticipate where Amazon goes so that I can be there with them and add derivative value? And you know, it's a big question about how ecosystems work. But I totally agree with your point, but here's what's going on, Stu. I want to get your comments on this. I've seen so many different stories come out of Amazon re-invent this year, where headlines and the media have been kind of putting the foot in the water. ZDNet had a story on misquoting Andy Jassy's partner speech. James Waters obviously nervous calling out Andy Jassy here in the Cube. Stu, I saw Werner Vogels on stage actually saying some people in the media are saying it feels a lot like Trump kind of rhetoric where it's like, hey media guys, you don't understand. There's going to be a huge cottage industry set up to predict where Amazon's going to be. So just getting to where the puck is going to your point, I think that Amazon is not going to capitulate to the press. They're not going to capitulate to any competitive force. I think they've proven they're going to stay on track. If they could build the scale as a service, they will be the intel of the cloud or some huge enabling. And now if they have that with the marketplace, Stu, they could really create a kind of an indirect, seamless channel for sales. And if they could do that, they will make the market on the revenue side of startups that ultimately will be, to me, something where startups can stand in their own, not be second fiddle to another ecosystem. I mean, if you're Microsoft and you're a startup, you're going to be second fiddle to their channel. So it's an interesting game. I don't know what the answer is going to be. John, so just data I've been getting, talking to as many people as I can at this show. First of all, on the software vendor side, startups in this space, anybody, we've talked to companies that are 30 years old that are partnering with Amazon and how they're moving. There's always been that threat that somebody else is going to be, that you're partnering with is going to erode what you're doing, just things are happening faster. And I think most of the people I talk to are comfortable with it. Yes, Amazon is kind of, I got to partner with the devil a little bit, not to say that Amazon's the devil, but absolutely you know the relationship you're making, you know that it might not be long-term, but you need to be in the marketplace, you need to be there, or you're missing out on all of these kinds. The second piece I just want to get to real quick is the go-to market. Those channel partners, the feedback I get there is, they're a little bit nervous that, oh wait, just like an EMC used to do or Oracle used to do, it's like, well, we need to be not only your best partner, but your only partner. And if you don't do that, we're going to muscle against you. And that doesn't play in the channel. Here's my take on that. I think that the rules are changing. So I think everything that we speculate on is kind of old data, how it used to be done in the 90s and other markets. If there's new rules that are developing that Amazon's creating, we're seeing stuff unprecedented scale. We're seeing services with the marketplace, too. 150 partners announcing products here, the ecosystem's robust. The question is, will there be new rules of engagement for, one, componentizing services that can stand alone as independent companies inside of its marketplace and ecosystem? And two, what are the new rules of engagement? I think that is to me, the one thing that Amazon has a trick up their sleeve on is if they can continue to pioneer that approach, then essentially the competitive strategy of Microsoft and others are going to fall on them by the wayside, in my opinion. So it's something to watch. And again, we're watching it closely. Well, John, we had conversations earlier this week about this as well. It's hard to create a new technology. It's really, really hard to create a new segment and category. It's really hard to create a new industry. What we're really seeing, and to a student's point, is Amazon saying, you guys are going to have to follow the rules that we're setting about how technology gets created, how it gets packaged, how it gets delivered, and how we all go to market. They are not compromising their approach to creating value for customers. And that is what's not being compromised. What's going to have to happen is all these other companies are going to have to decide, am I going to be a product play, which follows certain sets of rules, and the customers pay up front so that I can get my money now and I can use that as a basis for further investment, or am I going to be willing to be a service company which says that the customer pays later and I have to use other means to determine whether or not I'm going to be successful, which goes back to the point about using data as a way of engaging to determine what's going to happen. Amazon seems to be being pretty clear. We're setting some new rules. You want to play with us? You got to follow with them. And here's what they look like. And a lot of companies and a lot of startups and a lot of ECs are going to have to agree to play by those new rules if they're going to play in the Amazon. Yeah, I think one of the things I see happening right now is from a competitive standpoint with this new rules and the new environment that's in there, it's a speed game. And I think speed is everything. And scale, they're knocking down the scale. They're constantly raising the bar on the scale side. They're interested in new services. But to me, I don't think that the competition can actually run at the speed Amazon's doing. So I think Amazon's key competitive advantage is to stay on their course and just, it's a speed game. The competitive strategy is not about lock-in. It's about speed, sets of services. And I think Microsoft and whoever's out there, can they move fast? So here's an interesting question, John. And Stu, again, it goes back to this notion of the role that data plays as the difference maker in a digital business. Is Amazon going to be willing to share its data about the customer ecosystem with partners? What do you think? If they do, then a lot of the problems that we're talking about get solved, although you may end up with- I mean, to me, ecosystems are kind of a generic formula. It's kind of like communities. Value creation with a path to a market, exchanging cash for value is a business model of ecosystems. The question is, can Amazon do it in a cloud-like way that feels like self-service? And if developers of the core constituency, they have to provide their service in an easy way You're right, John, but at the end of the day, a VC, a startup, a big company has to make capital bets on where they go. And the historical norm has been, we place capital bets, customers buy our products, they pay upfront for the service that that product provides over the next three to five years, but they pay upfront, and that's how we return, generate our return. Amazon's saying, we're going to place that capital bet because we have data, and we will reap the rewards of that over time. So the question of data becomes critical, and the question of Amazon's competitiveness and partnership is, is Amazon going to be willing to share some of that data so that people can place better bets in their ecosystem? Well, analytics was certainly on stage today, it's a big component of that. I think the data is one of those things in the stack that's going to be a land grab, but to your point, if it's product-centric thinking, go-to-markets, everything. If it's not product-centric, service-based, the go-to-market isn't that much of an issue per se. If it's product-centric, it's old school. That's Amazon. I mean, what do you think, Stu? You're close to these, to what's going on here. Yeah, no, I mean, it's an interesting, really interesting discussion, Peter. You know, we see that Amazon is willing to work with partners and talk, but I mean, the information, that seems to think they hold it real close to the best, so I'd like to see them being a little bit more open on some of those things, but time will tell, and the other thing I'd say is, there's so much that came out at this show that are like the seeds of where they're going, and they barely started. We're still so early in this adoption and where Amazon can take this, what's this going to look like when it's 50,000 people next year at this show and beyond? Well, there's a lot more work to digest. Go to wikibond.com for all the research from these guys, but it's still going to angle.com. I've got a three-part series with Danny Jassy and a lot of great coverage. We're coming day three, wall-to-wall here on theCUBE, live in Las Vegas for AWS ReInvent 2016. I'm John Furrier with Stu Miniman and Peter Burris, kicking off day three. We'll be right back.