 on the ground. Presented by theCUBE, here's your host, Jeff Frick. Hey, welcome everybody. Jeff Frick here with theCUBE. For a special CUBE conversation, actually in our brand new Palo Alto studio, we're really excited to open it up. It's still a little bit of work in process, but the guys are working hard. It'll evolve over time. And actually, I think it's our first production that we've done here. So excited to have back a frequent CUBE alumni, Noam Shandar, the CEO of Zadar. Welcome. Thank you. It's good to be here. We have a guest to open up our new space. Welcome. I love it. So before we jump in, we've seen you a few times. We see you at all the AWS shows. Why don't you give us a quick update on what's going on at Zadara? Sure. Yeah, a lot going on at Zadara. So probably two big things. In one way, a fantastic quarter. In the other, we have a major, major product announcement today, this day, which I'm extremely excited about both. In that order, the quarter that we just finished, we grew our revenue more than 25%, which is not only a great number, but it maintains our two-year pace of growth. So we're not slowing down, and actually, we're even accelerating at this point. At our size, it's pretty impressive. It's, to us, it says the customers are liking it. And the growth comes from both places that you want it to come from. The existing customers are growing the revenue and their new customers coming in the door, and they're coming in bigger than ever. What I mean by that is we're, as a service company, so we look at how much they spend per month, the new customers are coming in with a bigger spend than our average, when that grows our average. Well, congratulations. It's harder to keep that growth up over time as your base grows, but you guys are rolling. So you guys are, as a service, and we're gonna get into the specifics of your announcement. But I think before we go there, Dave Vellante, I always like to say, it's not what you do, but why you do it. And then looking at your mission statement of as a service, you know, any location, any type, any protocol. But I guess you had a couple little holes you needed to fill, and that's really what this new announcement's all about. Right, exactly. So first, any really matters here. We wanna give our customers the freedom to decide what they want based on what they know at that point, and things will change. That's how the world works. You can never predict the future perfectly. So we want to give our customers the freedom to change their minds. So the vision of any is not just any right now, which maybe other providers can offer, but what they don't offer is the ability to have a different any later on. And that's what we do. And the way that we round out the location, any platform, any protocol is we've added object storage. So now we have file and block and object. So now it's any kind of storage protocol. And we've added fiber channel, which now provides that protocol as well, supporting a lot of legacy infrastructures. There's a ton of fiber channel out there. So big customers who've invested a lot, we protect that investment for them. And then the last thing is your any location, right? Your cloud, your on-prem. And it really supports this concept we were talking about before we turned on about as a service is so much more than just cloud. It's really a philosophy. There's a lot of attributes about as a service that are beneficial that people wanna take advantage of, whether or not their infrastructure, their compute, et cetera, is in, quote unquote, the cloud or not the cloud. Exactly, the philosophy is around agility. And agility means doing what you need to do when you realize that you need to do it and not having to wait. So as a service is about providing that to the customer. So it's flexibility, elasticity, and it's also standing behind your product. The sea change here is that the old way of buying storage is I pay now and I'm stuck with it for three, four, five years. And if it didn't meet my expectations, well, that's on me. My vendor already got paid. And they're laughing all the way to the bank, or at least they were. With as a service, we don't get to hide. We have to make the thing work every day and we have to earn our keep every day. And the customer knows that. And that is an alignment of interest and it gives them a lot of comfort that we are gonna be there if they call. So that's as a service. So as a service is a change in mentality for the entire business and customers love it because it's the way they want to do business. So that's at the core of our everything, our personalities, our methods, and our technology. And what's great about that really is then they can use what they need when they want it. It really supports this kind of app-centric view in the world. We were at a show the other day and somebody talked about, you used to have to build your apps based on the infrastructure that you had put in place. And now you put the infrastructure in place to support the app that you're trying to build and really the objective that you're trying to accomplish. It's completely flipped the model upside down. Exactly, and this is the magic because things change and there are new things that the companies have to do in order to serve their customers. And IT departments don't want to be the naysayers. They want to be the enablers. So that's what we do for them so that they can be the heroes. The company says, our competition did this or the market changed in this way. We need to launch application X and in order for that we need more capacity or more performance or whatever it is. And now with our platform, IT can do it from today to tomorrow. They need more capacity, they got it. They need more performance, they got it. They need a new location, they need a new protocol, they need a new storage medium. We do it all and there's no penalty to changing. If the emphasis was more block yesterday and tomorrow it's more object, more power to the customer. Ramp down block, ramp up object, no must, no fuss. Right, and it's interesting today is Facebook's F8 conference, Zuckerberg had the keynote earlier today and he let off some really interesting statements about kind of political about why it's important to be more collaborative and more social in the world in which we live today which has kind of got some ragged edges that are fraying around the edge. But he said their mission, their reason for existing is so that, to give everyone the power to share anything with anyone as we were talking a little bit before. Anytime anyone says anyone, every all, I always have like red flags, try to use those words. Those are really big words. But they're very big words to deliver but they're fantastic words really for a vision and to drive a vision. And it's something that you guys have continued to really drive towards even if you had a couple of holes, a couple of things that you hadn't completed to get to that vision of any location, any type, any protocol. Exactly. Even the location, if you look at our evolution over time, when we started back in 2011, we were black only and we were cloud only. But we had this vision from the very beginning. So that's something we tacked on later. We knew that we wanted to get to this any, any, any state. So we started with what made the most sense and was also the fastest for us to get to where we can deliver a compelling product that is stable, reliable enterprise class. So that was block in the cloud. And then we added file in the cloud and then we added on-prem. And at that point, now we have the any location. You want private, you got private, you want public, you got public, you want hybrid. Do a mix of both, you got that too. And then today we're round out the protocols and the storage media types with object and with fiber chain. Now the other piece you mentioned before we came on there was the large flash cache. What's that all about? What are customers using that for? What's really the benefit? Yeah, that's, I really like this one. I'll say upfront, it's not sexy because it's about making magnetic media be basically extending the life of magnetic media. So the cool hype is around all flash, everything flashed, the all flash data center, da, da, da, da, da. We're not anti-flash. In fact, we use a lot of flash. I just put in an order for another two gigantic crates of flash drives, so we eat up a lot of flash. And we have partnerships with Toshiba and with Intel for that. At the same time, for things like media, for things like geospatial information, for big data, there's a lot of capacity and still by far, magnetic capacity is way cheaper than solid state capacity for that. Our cost is 20 times cheaper per gigabyte for our magnetic, SATA-based capacity versus SSDs. So the large flash cache is about accelerating that magnetic media. If you can put your data, your very large data on magnetic media in front of that with a flash cache that is big enough, then you get the best of both worlds. You get solid state performance at a magnetic price. Who wouldn't want that? Right, right. And then it's interesting just the cloud and the on-prem conversation, the hybrid cloud, it continues to kind of rage on. I think it's horses for courses depending on the application. We're at Oracle Cloud World in DC a couple of weeks ago and they talked about now basically putting a cloud inside your prem, again, to offer these kind of as-a-service benefits of flexibility and pricing and operating expense versus capital expense, but have it behind the firewall. And it really opens up the question because you guys have seen it. You really play actively in the cloud ecosystem, the public cloud ecosystem. You've got it now as-a-service and on-prem. What are you seeing in kind of the shake-out of public cloud, hybrid cloud? I want cloud-like stuff as-a-service behind the firewall. How are you seeing customers sort through this minefield, if you will? Yeah, it's not a surprise. It's actually for us a validation of what we've been saying. So our on-prem offering that we announced less than two years ago is now a full, fully a third of our revenue. So it was zero in August of 2014 when we announced it, and it's grown very rapidly and is now fully a third of our revenue. That tells you something. It tells you that customers are not going to move everything to the cloud, but it does tell you that they do want as-a-service on-prem. And we talked about this last time. You know it's as-a-service if it doesn't come with the headaches of ownership. So it's not just about consumption, consumption pricing is a small part of as-a-service. But what customers want is the convenience of having the nitty-gritty be somebody else's problem, and not just somebody else, the somebody else who knows the product best. You want us servicing the product. You don't want to have to go through elaborate training seminars to become not quite as expert as we are. You want just us to be responsible. So that's as-a-service, and what we're seeing is as-a-service is winning everywhere for obvious reasons. It's convenient, it's more reliable, it's a better way to do business, it's more agile. But the answer to as-a-service is not all cloud. Cloud is as-a-service, but there's also on-prem as-a-service, and the world is shifting to a nice balance of the two in crowding out the old way of doing business, which is the capex way of purchasing energy. Right. And when you say, when you talk to customers about cloud, hybrid cloud, and on-prem, how do you define hybrid cloud? It's always an interesting debate. It's really a hybrid cloud, is it just, I have some on-prem and I have some cloud, is it a split application that draws data from both places? How do you guys define hybrid when you're kind of working out solutions with customers? So we define it as your desired mix of on-prem or private resources and public resources. And that's a nuanced definition, because someone just defined it as that plus that. With some called a federated cloud. It has some off-prem and some on-prem elements. But we think it's a little more than that. It's the ability to balance and rebalance those two types of resources as needed. There's some studies that were done. eBay had a fairly well-publicized study showing that the lowest cost way to do IT is to have your baseline capacity on-prem, because the baseline capacity used 100% of the time. So that's a good return on investment to buy that equipment. And everything else that's variable is to put that in a cloud. So you have a rectangle, if you will, of usage on-prem, and you have a very spiky, irregular pattern in the cloud that's super efficient. You're renting what you don't know how much you'll need of and you're buying what you know you're going to need. To me, that's hybrid. That's a perfect example of hybrid. I have some here, some here, and I can rebalance. If my baseline changes, I can add my on-prem elements. If I change my business, maybe I need to be more flexible, then I just push more to the cloud. Right, but as you say, if it's application-specific, there's just some things that can't be on that piece that's outside of the core infrastructure. So I can kind of reshape that, reshape the squiggly part of the curve down underneath the box of my-prem and kind of get that same type of economics without necessarily having to rely on a public cloud. Exactly. And the way that we do the pricing, it's identical in the cloud and on-prem. So there's no penalty to changing, which is part of our philosophy. So if you want to rebalance toward the cloud or away from the cloud, doesn't matter. Your cost is the same on a per gigabyte basis and a per hour basis, et cetera. So it's really freedom. Excellent. Next question. Applications, we hear a lot about cloud native versus legacy. What are you seeing with your customers in terms of the use of this type of technology on new apps, cloud native apps, mobile apps? Are they migrating old stuff or are they just kind of keeping that thing on and the lights turned on? What are you seeing in your customer base as they start to adopt some of these new technologies? We see a really nice mix, which is nice. I'd be worried if we were niched into a corner of just this or just that. Our customers show everything that you mentioned. They're cloud native apps. They're very traditional apps. We announced since the last time we talked, a customer in Germany by the name RWE, RWE is a utility. It's like RPG and either the second largest utility and in Germany, they were founded in 1898. They're almost 120 year old company, very traditional and they're using us for an SAP application. So that's as far away from cloud native as you can be. An old SAP that you're moving some capacity onto your infrastructure or is it new functionality or expanding? No, old existing SAP moving from traditional CAPEX, one of the very famous large storage vendors that's not doing as well as they used to and shifting to us. Because it was an end of life on that old, was there some catalyst to get them to move beyond just simple economics of end of life or older performance or why did they make them move? What was the motivation? So the timing is end of life. So in the old CAPEX model, things depreciate and become old. Depreciate of a new alright. Yes. It's an accounting thing. It's like anything else. So and they become obsolete too or behind the times and that's when you do a refresh cycle, which is painful because you have to migrate all the data and all of that. So the timing was spurred by that. The motivation to picking us as opposed to getting yet another box for the next three to five years was this model, their job is to make power and they want to focus on new energy and renewable energy. They were founded as you can imagine in 1898 on coal and their mandate today is to provide renewable energy. That's a big project. That's a big change. They want to focus on that. They don't want to focus on being storage experts. That's where we come in. We say that's a perfect match. We want to focus on being storage experts. We don't want to be experts in renewable energy. You go focus on that. We focus on our deal and together great things happen. So that begs another question. One of the great lessons I actually heard brought this up too in our interview with him is that as more the value of as a service is moving your own resources to other things and letting your providers do your kind of non-differentiated heavy lifting. Are you seeing that in your customers like this people as they are now moving from CAPEX to OPEX on what was probably a very expensive storage bill. How are they redeploying those resources that are now freed up? What do you see? As every IT manager and every IT individual contributor knows there aren't enough hours in the day. So what is happening in every single one of our customers is we free up the IT department to focus on the strategic things. They finally can take a breath and look ahead and say we can actually be forward looking for a change and not worry about firmer updates and hot fixes and swapping out drives and that kind of stuff. Excellent, all right. So when we're coming to the end of our time you've got any location, you've got any type, you've got any protocol. You're partnering with Azure, you're partnering with AWS. You guys are doing a great job. What's next? What's on the roadmap for the next six months for Zidara? So that as always we alternate between focusing on new capability and then focusing on enabling that which means getting the awareness out in the marketplace, getting customers up and running on it. So because we have the ability to run very fast and we've demonstrated that. We've had major releases with a regular cadence every year and sometimes twice a year ever since we started. But we actually, it's possible for us to move faster than the market can absorb what we're doing. So the focus for the rest of this year is on adoption of the new capabilities and it's on growing. We're growing rapidly, we're hiring, we're growing in different places around the world. So we have new people coming on board in the UK and in Germany and in Australia. And that's something that we focus on as well is making sure that those people are successful. So it's kind of, we have really exciting capabilities, we have really exciting growth and the way that we keep all of that coming is by focusing on the really boring things which are execution and doing a really good job for our customers. Absolutely, nothing, revenue is always a good thing. Well, no, thanks for stopping by and helping us open the new studio. It's great to have you, you're officially our first guest in the new studio. So thanks. Yes, thank you too. Absolutely. Noam Shendar from Zidara Storage. I'm Jeff Frick. You're watching theCUBE, special CUBE conversation from our new studio in Palo Alto. We'll catch you next time. Thanks for watching.