 From theCUBE Studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is a CUBE Conversation. Hi, this is Dave Vellante in theCUBE. And as you know, we've been doing a CEO series. And welcome to the isolation economy. We're here at theCUBE's remote studio. I'm really pleased to have Charlie Giancarlo, who is the CEO of Pure Storage. Charlie, I wish we were face to face at Pure Accelerate, but this'll have to do. Thanks for coming on. You know, Dave, it's always fun to be face to face with you. Pure Accelerate, when we do it in person, is great fun. But you know, we do what we have to do. And actually, this has been a great event for us. So I appreciate you coming on air with me. Yeah, and we're going to chat about that. But I want to start off with this meme that's been going around the internet. Yeah, I was going to use the wrecking ball. I don't know if you've seen that. It's got the executives in the office building, saying, oh, digital transformation, not in my lifetime, complacency. And then this big wrecking ball, COVID-19, you've probably seen it. But as you can see here, somebody created a survey. Who's leading the digital transformation at your company? The CEO, the CTO, or of course, circled is COVID-19. And so we've seen that, right? You had no choice but to be a digital company. Well, there's that. And there's also the fact that the CEOs have been wanting to push a digital transformation against the team that wants to stick with the status quo. It gives the CEO now. And even within our own company and pure, to drive towards that digital transformation when people were not, didn't really take up the mantle. So no, it's a great opportunity for digital transformation. And of course, the companies that have been doing it all along have been getting ahead during this crisis. And the ones that haven't are having some real trouble. And you and I have had some really interesting conversations. Again, that's I think the thing I miss most, not only having you in the queue, but the side conversations at the cocktail parties, et cetera. And we've talked about IP and China and how the history of the US and all kinds of interesting things there. But one of the things I want to put forth, and I know you guys, Tix especially has done a lot of work on tech for good, but the narrative pre COVID, PC, I guess we call it, was really a lot of vitriol toward big tech especially. But you know what that tech lash without tech, where would we be right now? Well, just think about it, right? Where would we be without video conferencing, without the internet, right? We'd be sheltered in place with literally nothing to do and all business would stop. And of course, many businesses that require in person have, but thank God, you know, you can still get goods, you know, at your home, you can still get food, you can still get all these things that today is enabled by technology. And you know, we've seen this ourselves, you know, in terms of having to make emergency shipments during our first quarter to critical infrastructure to keep things going. It's been, you know, it's been quite a quarter as, you know, I was saying to my team recently that we had just gotten everyone together in February for our sales kickoff for the year. And it felt like a full year since I had seen them all. Well, I had interviewed, I think is it Mike Fitzgerald, your head of supply chain in March. And he was saying, no, we're going to have no, we have no disruptions, we're delivering for clients. We certainly saw that in your results in the quarter. Yeah, no, we were very fortunate, but you know, we had been planning for, you know, we're doing our normal business continuity disaster planning. And actually had, once we saw COVID in Asia in January, we started exercising all those muscles, including pre shipping product to depots around the world in case transportation got clogged, which in fact did. So we were well prepared, but we're also, I think very fortunate in terms of our, the fact that we had a very distributed supply chain. Yeah, and I mean, you guys obviously did a good job. You know, some of us, look at, you know, you saw, you saw in Dell's earnings, they held pretty firm HPE on the other hand, really saw some disruption. So, you know, congratulations to you and the team on that. So as we think about exiting this isolation economy, you know, we've done work that shows about 44% of CIOs see a U shaped recovery, but it's very fragmented, you know, and varies by industry, it varies by how digital the organizations are, are they able to provide physical distancing, how essential are these organizations? And so I'm sure you're seeing that in your customer base as well. How are you thinking about exiting this isolation economy? Well, I've certainly resisted trying to predict a U or a B shaped, because I think there are many more unknowns than there are knowns. In particular, we don't know if there's a second wave. If there is a second wave, is it going to be more or less lethal than the first wave? And as you know, maybe some of your audience knows, I had, I contracted COVID in March. So I've done a lot of reading on not just COVID, but also on the Spanish flu of 1918, 1919. And these, it's going to take a while before this settles down. And we don't know what it's going to look like the rest of the year or next year. So a lot of the recovery is going to depend on that. What we can do, however, is make sure that we're prepared to work from home, work in the office, that we make sure that our team out in the field is well placed to be able to support our customers in the environment. And the way that we're incending our overall team now has less to do with the macro than it does with our specific segment. What I mean by that is we're incending our team to continue to build market share and to continue to outperform our competition as we go forward. And also on our customer cat satisfaction figure, what you know is our net promoter score, which is the highest in the industry. So that's how we're incending our team. Yeah, and we're going to talk about that. And by the way, I did know, and it's great to see you healthy. And I'd be remiss if I didn't also express my condolences. Matt, the loss of Matt Danziger, your head of IR, terrible tragedy. Of course, Matt had some roots in Boston, went to school in Maine, loved the Cape Cod. And so really sad loss, I'm sure for all of the Puritans. It's affected us all very personally because Matt was just an incredible team member, a great friend and so young and vital. When someone that young dies for almost unexplainable reasons, it turned out to be a congenital heart condition that nobody knew about, but it just breaks everyone's heart. So thank you for your condolences. You're welcome. And it's okay. So let's get into the earnings a little bit. I want to just pull up one of the charts that shows roughly I have approximately Q1 because some companies like NetApp, Dell, HP are sort of staggered, but the latest results you saw IBM growing at 19%. Now we know that was mainframe driven and a very easy compare, Purit plus 12 and then everybody else in the negative, Dell minus five. So actually doing pretty well relative to NetApp and HPE who as I said had some challenges with deliveries. But let's talk about your quarter. You continue to be the one sort of shining star in the storage business. Let's get into it. What are your big takeaways that you want us to know about? I'd rather see everybody in the black, right? Everybody in the positive, but we continue to take market share and continue to grow 20 to 30% faster than the rest of the industry combined. And it's quarter after quarter. It's not just a peak in one quarter and then behind in another quarter. Every quarter we're ahead of the rest of the industry. And I think the reasoning is really quite straightforward. We're the one company that invests in storage as if it's high technology. You do hear quite often and even among some customers that storage is commoditized and all of our competitors invest in it or don't invest in it as if it's a commoditized market. Our view is quite straightforward. The science and the engineering of computing and data centers continues to evolve, continues to advance, has to advance if we continue down this path of becoming more of a digital economy. As we all know, processors advance in speed and capability, networking advances in terms of speed and capability. Well, data storage is a third of data center spend. And if it doesn't continue to advance at the same pace or faster than everything else, it becomes the major bottleneck. And we've been the innovator. If you look at a number of different studies, year after year, now over six or seven years, we are the leader in innovation in the data storage market and we're being rewarded for that by penetrating more and more of the customer base. All right, let's talk about that. And you mentioned in your keynote at Accelerate that you guys spend more on R&D as a percentage of revenues than anybody. And so I want to throw out some stats. I'm sorry, folks, I don't have a slide on this, but HPE spends about 1.8 billion a year on R&D about 6% of revenues. IBM, I've reported on IBM and how it's spending the last 10 years, spent a huge amount on dividends and stock buybacks. And they spend 6 billion perpetually on R&D, which is now 8% of revenue. Dell at 5 billion, of course, Dell used to spend well under a billion before the EMC acquisition. That's about 6% of revenue. NetApp, 800 million much higher. They're a pure play, about 13%. Pure spends 430 million last year on R&D, which is over 30% of revenue on R&D, to your point. Yeah, well look, as I said, we treat it like it's high technology, which it is, right? And if you're not spending it at an appropriate level, you're going to fall behind. And so we continue to advance. I will say that you mentioned big numbers by the other players, but I was part of a big organization as well with a huge R&D budget. But what matters is what percent of the revenue of a specific area are you spending, right? So, you mentioned Dell and VMware, a very large fraction of their spend is on VMware. Great product and great company, but very little is being spent in the area of storage. Well, and the same thing's true for IBM. And I've made this point. In fact, I made this point about Snowflake last week in my breaking analysis. How is Snowflake able to compete with all these big whales? Well, and the same thing for you guys, every dime you spend on R&D goes to making your storage products better for your customers, your go-to-market, same thing, your partner ecosystem, same thing. And so you're the much more focused play. Right, well, I think it boils down to one very simple thing, right? Most of our competitors are, you might call them one-stop shops or the shopping mall of IT gear, right? The best buy, if you will, of information technology. We're really the sole best-of-breed player in data storage, right? And if you're a company that wants two vendors, you might choose one that's a one-stop shop. But if you have the one-stop shop, the next one you want is a best-of-breed player, right? And so, you know, and we feel that role for our customers. And look at this business is a technology business and technology and innovation is driven by research and development period the end. But I want to ask you, so the storage business, you know, generally, look it, you're kind of the one-eyed man in the land of the blind here. I mean, the storage business has been somewhat on the back burner. In part, it's your fault because you put so much flash into the data center, gave so much headroom that organizations didn't have to buy spindles anymore to get to performance. The cloud has also been a factor. But look, last decade was a better decade for storage than the previous decade when you look at the exits that you guys had in escape velocity, Nutanix, if you can kind of put them in there too, much larger than, say, the compelence or three-pars, which barely made it, they didn't make it to a billion. So my question is, you know, storage businesses, is it going to come back as a growth business? Like you said, you wish everybody were in the black here. Right, well, you know, a lot of what's being measured, of course, is enterprise on-prem storage, right? If we add on-prem and cloud, it actually continues to be a big growth business because data is not shrinking. In fact, data is still growing faster than the price reduction of the media underneath, right? So it's still growing. And as you know, more recently, we've introduced what we call Pure as a Service and Cloud Block Store. So now we have our same software, which we call Purity, that runs on our on-prem arrays, also running on AWS and currently in beta on Azure. So, you know, from our point of view, this is a, first of all, it's a big market, about 30 to 40 billion dollars total. If you add in cloud, it's another 10 to 15 billion dollars, and which is a new opportunity for us. So we're, you know, last year, we were about 1.65 billion. You know, we're still less than, as you know, less than 10% of the overall market. So the opportunity for us to grow is just tremendous out there. And, you know, whether or not, you know, total storage grows for us is less important right now than the market share that we pick up. Right, okay, so I want to stay on that for a minute and talk about, I love talking about the competition. So, what I'm showing here with this kind of wheel slide is data from our data partner, ETR, and they go out every quarter. They have a very simple methodology. It's like net promoter score, and it's very consistent. They say, relative to last year, are you spending, are you adopting the platform? That's the lime green. And so this is Pure's data. Are you increasing spend by 6% or more? That's the 32% the forest green. Is spending going to be flat? Is it going to decrease by more than 6%? That's the 9% and then are you replacing the platform 2%? Now this was taken at the height of the US lockdown this last year. So you can see the vast majority of customers are either keeping spending the same or they're spending more. So that's very, very strong. And so, I want to just bring up another data point which is we like to plot that net score here on the vertical axis and then what we call market share. It's not like IDC market share, but it's pervasiveness in the survey. And you can see here, to your point, Pure is really the only, and I've cited the other vendors on the right hand, that box there. You're the only company in the green with like a 40% net score. And you can see everybody else is well below the line in the red. But to your point, you got a long way to go in terms of gaining market share. Exactly right. And the reason, I think the reason why you're seeing that is really our fundamental and basic value is that our product in our company is easy to do business with and easy to operate. And it's such a pleasure to use versus the competition that customers really appreciate their product in the company. We do have a net promoter score of over 80 which I think you'd be hard pressed to find another company in any industry with net promoter scores that high. Yeah, so I want to stay on the R&D thing for a minute because you've bet, you guys bet the company from day one on simplicity. And that's really where you put a lot of effort. Others, and so the cloud is vital here. And I want to get your perspective on it. You mentioned your cloud block store, which I like that it's native to AWS. I think you're adding other platforms. I think you're adding Azure as well. And I'm sure you'll do Google. Yeah, Google's just a matter of time, Ali Baba. You'll get them all. But the key here is that you're taking advantage of the native services and let's take AWS as an example. You're using EC2 and high priority instances of EC2 as an example to essentially improve block storage on Amazon. Amazon loves it because it sells compute, maybe the storage guys on Amazon don't love it so much, but it's all about the customer. And so the native cloud services are critical. I'm sure you're going to do the same thing for Azure and other clouds. And that takes a lot of investment. But I heard George Currian today, addressing some analysts talking about they are the only company doing that kind of that cloud native approach. Where are you placing your bets? How much of it is cloud versus kind of on-prem, if you will? Yeah, well, so first of all, an increasing fraction is cloud, as you might imagine, right? We started off with a few dozen developers and now we're at many more than that. Of course, the majority of our revenue still comes from on-prem. But the value is the following in our case, which is that we literally have the same software operating from a customer and from an application standpoint. It is the same software operating on-prem as in the cloud, which means that the customer doesn't have to refactor their application to move it into the cloud. And we're the one vendor that's focused on block. And while what NetApp is doing is great, but it's a file-based system, it really designed for smaller workloads and low performance workloads. Our systems designed for high performance enterprise workloads, tier one workloads in the cloud. So there are, to say that they're both cloud, sort of washes over the fact that they're almost going after two completely separate markets. Well, I think it's interesting that you're both really emphasizing cloud native, which I think is very important. I think that some of the others have some catching up to do in that regard. And again, that takes a big investment in not just wrapping your stack and shoving it in the cloud and hosting it in the cloud. You're actually taking advantage of the local services. So, you know, it's- One thing I'll mention was Amazon gave us an award for which they give to very few vendors. It was called the Well-Architected AWS Award because we've designed it not to operate, let's say in a virtualized environment on AWS. We really make use of the native AWS EC2 services. You know, it is designed like a web service on EC2. And the reason why this is so important, just again to share with our audiences, because when you start talking about multi-cloud and hybrid cloud, you want the same exact experience on-prem as you do in the cloud, whether it's hybrid or across clouds. And the key is if you're using cloud native services, you have the most efficient, the highest performance, lowest latency and lowest cost solution. And that is going to be, is that just going to be a determinant of the winner? Yes, I believe so. Customers don't want to be doing, be working with a software that is going to change, fundamentally change and cause them to have to refactor their applications. And if it's not designed natively to the cloud, then when Amazon upgrades, it may cause a real problem, you know, with the software or with the environment. And so customers don't want that. They want to know they're cloud native. Well, your task over the next 10 years is to tell me, look, it's very challenging to grow a company the size of pure period, but let's face it, you guys caught EMC off guard, you were driving a truck through the Symetrix base and the VNX base, not that that was easy, you know? And they certainly didn't make it easy for you. But now we've got this sort of next chapter. And I want to talk a little bit about this. You guys call it the modern data experience. You laid it out last accelerate kind of your vision. You talked about it more at this year's accelerate. I wonder if you could tell us, you know, the key takeaways from your conference this year. Right, the key takeaway, well, so let me talk about both. I'll start with modern data experience and then key takeaways from this accelerate. So modern data experience for those that are not yet familiar with it is the idea that an on-prem experience would look very similar, if not identical to a cloud experience, that is to say that applications and orchestrators just use APIs to be able to call upon and have delivered the storage environment that they want to see instantaneously over a high speed network. You know, the amazing thing about storage even today is that it's highly mechanical. It's highly hardware oriented to where, you know, if you have a new application and you want storage, you actually have to buy an array and connect it. You know, it's physical. Where we want to be is just like in the cloud, if you have a new application and you want storage or you want data services, you just write a few APIs in your application and it's delivered immediately and automatically. And that's what we're delivering on-prem with the modern data experience. What we're also doing though, is extending that to the cloud and with cloud block store as part of this, with that set of interfaces and management system, exactly the same as on-prem. You now have that cloud experience across all the clouds without having to refactor applications in one or the other. So that's our modern data experience. That's the vision that drives us. We've delivered more and more against it, you know, starting at the last accelerate, but even more now. Part of this is being able to deliver storage that is flexible and able to be delivered by API. And so on this accelerate, we delivered our Purity 6.0 for Flash Array, which adds not only greater resiliency characteristics, but now file for the first time in a Flash Array environment. And so now the same Flash Array can deliver both file and block, you know, which is a unified experience, but all delivered by API and simple to operate. We've also delivered more recently Flash Array 3.0 on, I'm sorry, Purity 3.0 on Flash Blade that delivers the ability for Flash Blade now to have very high resiliency characteristics and to be able to even better deliver high, the ability to restore applications when there's been a failure of their data systems very, very rapidly, something that we call a rapid restore. So these are huge benefits. And the last one I'll mention, yours as a service allows a customer today to be able to contract for a storage service on-prem and in the cloud with one unified subscription. So they only pay for what they use, they only pay for what they use when they use it, and they only pay for it regardless of where it's used on-prem or in the cloud. And it's a true subscription model. It's owned and operated by pure, but the customer gets the benefit of only paying for what they use regardless of where they use it. Awesome, thanks for that run through. And a couple of other notes that I had, I mean, you obviously talked about the support for the work from home and remote capabilities. Automation came up a lot. And you know, you and I, I said, we have these great conversations. And one of the ones I would have with you if we were having a drink somewhere would be, you know, if you look at productivity stats in US and Europe, they're declining, you know, pretty dramatically. And then if you think about the grand challenges we have, you know, as in the global challenges, whether it's pandemics or healthcare or feeding people, et cetera, we're not going to be able to meet those challenges without automation. I mean, people for years have been afraid of automation. Oh, we're going to lose jobs. We don't have enough people to solve all these problems. And so I think that's behind us, right? The fear of automation. So that came up. Yeah, go ahead, please. I once met with Alan Greenspan. You may remember him. This is after he was the chairman. And he said, look, you know, I've studied the economies now for, you know, for the last hundred years. And in any 20 years, and the fact of the matter is that wealth follows productivity. You know, the more productive you are as a society, that means the greater the wealth that exists, you know, for every individual, right? A standard of living follows productivity. And without productivity, there's no wealth creation for the society. So to your point, yeah, if we don't become more productive, more efficient, you know, people don't live better, right? Yeah, I knew you'd have some good thoughts on that. And of course, speaking to Greenspan, we're seeing a little bit of rational exuberance maybe in the market today, but anyway, it's pretty amazing. But you also talked about containers and persisting containers and Kubernetes, the importance of Kubernetes. That seems to be a big trend that you guys are hopping on as well. You bet, you know, it is the wave of the future. Now, like always the future, it's going to take time. But containers work entirely differently from VMs and from, you know, machines in terms of how they utilize resources inside a data center environment. And they are extraordinarily dynamic. And they require the ability to build up, tear down connections to storage and grade storage and spin it down, you know, at very, very rapid rates. And again, it's got, it's all API driven. It's all responsive, not to human operators, but it's got to be responsive to the application itself and to the orchestration environment. And again, you know, I'll go back to what we were talking about with our modern data experience, you know, it's the exactly the kind of experience that our customers want to be able to be that responsive to this new environment. My last question is from John Furrier. He asked me, hey, Charlie knows a lot about networking. We were talking about multi-cloud, obviously cross-cloud networks are going to become increasingly important. People are trying to get rid of their MPLS networks, really moving to an SD-WAN environment. Your thoughts on the evolution of networking over the next decade? Well, I'll tell you, you know, I'm a big believer that even SD-WAN's over time are going to become obsolete. That, you know, another way to phrase it is the new private network is the internet. And what that, I mean, look at it now, what does SD-WAN mean when nobody's in the local office? Right? No one's in the remote office. They're all at home. And so now we need to think about the fact, you know, sometimes it's called zero trust. I don't like that term because really what, you know, nobody wants to talk about zero, you know, anything. What it really is about is that there is no internal network anymore. The fact of the matter is even for, let's say I'm inside my own company's network, well, do they trust my machine? Maybe not, they may trust me, but not my machine. And so what we need to have, it's going to a cloud model where all communication to all servers, you know, goes through a giant, call it a firewall or a proxy service where everything is cleaned before it's delivered. And people, individuals only get an applications, only get access to the applications that they're authorized to use, not to a network. Because once they're in the network, they can get anywhere. So they should only get access to the applications they're able to use. So my personal opinion is the internet is the future private network. And that requires a very different methodology for authentication for security and so forth. And if we think that we protect ourselves now by firewalls, we have to rethink that. You know, great perspectives. And by the way, you're seeing more than glimpses of that. You look at Zscalers results recently and you know, that's the kind of the security cloud. And I'm glad you mentioned it. You don't like that sort of zero trust. You guys even today talked about near zero RPO. That's an honest statement because there's no such thing as zero RPO. So, Charlie, great to have you on. Thanks so much for coming back in the cube and great to see you again. Dave, always a pleasure. Thank you so much. Hopefully next time in person. I hope so. All right, thank you for watching everybody. This is Dave Vellante for theCUBE and we'll see you next time.