 Hello everyone, welcome to theCUBE's presentation of the AWS Startup Showcase. Martek is the focus and this is all about the emerging cloud scale customer experience. This is season two, episode three of the ongoing series covering the exciting fast growing startups from the cloud AWS ecosystem to talk about the future and what's available now, where are the actions. I'm your host, John Furrier. Today we're joined by CUBE alumni, Jerry Chen, partner at Greylock Ventures. Jerry, great to see you. Thanks for coming on. John, thanks for having me back. I appreciate you. Welcome back for season two as a guest star. You know, hey, you know, season two, it's not a one and done. It's continued coverage. We've got the episodic CUBE flicks model going here. You know, congratulations. The coverage on this ecosystem on AWS has been impressive, right? I think you and I have talked a long time about AWS and the ecosystem they're building. It just continues to grow. And so the coverage you did last season all the events of this season is pretty amazing from the data security to now marketing. So it's just great to watch. And 12 years now, the CUBE and running, I remember 2013 when we first met you on the CUBE, we just left the Mware, you're just getting into the venture business and we were just riffing the next 80, no one really kind of knew how big it would be, but we were kind of riffing on it. We kind of had a sense. Now it's happening. So now you start to see every vertical kind of explode with the digital transformation and disruption where you see new incumbents, I mean, new brands get replaced, the incumbent old guard. And now in Martek, it's ripe for disruption because web two is going on to web 2.5, 3, 4, 5. Cookies are going away. You've got more governance and privacy challenges. There's a slew of kind of ad tech baggage, but yet lots of new data opportunities, Jerry. This is a huge thing. What's your take on this whole Martek cloud scale market? Yeah, I think to your point, John, first, the trends are correct and the good old days are bad old days. Martek was really about your webpage and then email. Right? The email's the only channel and the webpage was only real estate and technology to care about. Fast forward to 10 years, you have web pages, mobile apps, VR experiences, car experiences, your Alexa home experiences, less not even get to web 3, web 18, whatever it is. Plus you got text messages, what's app, messenger, email, still great, et cetera. So I think what we've seen is both explosion and data, explosion of channels. So sources of data have increases and the fruits of the data where you can reach your customers from text, email, phone calls, et cetera, have exploded too. So the previous generation created big homes like responses, Eloqua, that exact target that got acquired by Oracle or Salesforce. And then the companies like MailChimp that got acquired as well, but into it you're seeing new generation companies for this new stack. So I think it's exciting. Yeah, and you mentioned all those things about the different channels and stuff, but the key point is now the generation shifts going on, not just technical generation and platform and tools, it's the people, they're younger, they don't do email. They have proton mail accounts, zillion Gmail accounts just to get the freebie. They'll do subscriptions, but not a lot. So the generational piece on the human side is huge. And then you got the standards bodies throwing away things like cookies. So all of this makes it for a complicated, messy situation. So out of this has to come a billion dollar startup in my mind. I think multiple billion dollars, but I think you're right in the sense that how we want to engage with the company branch, either consumer brands or business brands, no one wants to pick a phone anymore, right? Everybody wants to either chat or DM people on Twitter. So number one, the way we engage is different, both where, both how, like chat or phone, but where like mobile device, but also when it's the moment when we need to talk to a company or brand be it at the store, when I'm shopping in real life or in my car or at the airport, like we want to reach the brands, we want to reach us at the point of decision, the point of support, the point of contact. And then you layer upon that, the playing field, John of privacy, security, right? All these data silos in the cloud, that the game has changed and become even more complicated with the startups. So the startups are going to win, we'll do the collect all the data, make it secure and private, but then reach your customers when and where they want and how they want it. So I got to ask you because you had a great podcast just this week published and Snowflake had their event going on the data cloud. There's a new kind of SaaS platform vibe going on. You're starting to see it play out. And one of the things I noticed on your podcast with the president of HashiCorp, who was on, people should listen to that podcast, it's on Gray Matter, which is the GrayLock podcast plug for you guys. He mentioned, he mentions the open source dynamic, right? And I like what he thinks he said, software business has changed forever. That's my words now. He said infrastructure, but I'm seeing software in general more broader. Infrastructure and software as a category is all open source. One game over, no debate, right? You agree? I think he said infrastructure specifically starts to open source, but I would say all open source is one more or less because open source is in every bit of software, right? And so from your operating system to your car, to your mobile phone, open source, not necessarily as a business model or whatever, we can talk about that, but open source as a way to build software, distribute software, consume software has one, right? It's everywhere. So regardless of how you make money on it, how you build software, an open source community has one. Okay, so let's just agree, that's cool. I agree with that. Let's take it to the next level. I'm a company, starting a company to sell to big companies who pay. I got to have a proprietary advantage. There's got to be a way, and there is, I know you've talked about it, but I have my opinion, there is needs to be a way to be proprietary in a way that allows for that growth, whether it's integration, it's not going to be on software license or maybe support or new open source model, but how do startups in the Mar-Tech, this area in general, when they disrupt or change the category, they got to get value of creation going. What's your take on building on that? You can still build proprietary software on top of open source, right? So there's many companies out there, you know, a company called Rockset. They have a open source technology like Rockset DB under the hood, but they're running a cloud database that's proprietary. Snowflake, you talked about them today, you know, it's not open source technology company, but they use open source software, I'm sure, in the hood, but then there's open source companies data break. So let's not confuse the two. You can still build proprietary software. There's just components of open source wherever you go. So number one is you still build proprietary IP. Number two, you can get proprietary data sources, right? So I think increasingly you're seeing companies fight, I call this systems intelligence, right? By getting proprietary data to train your algorithms, to train your recommendations, to train your applications, you can still collect data that other competitors don't have and then they can use the data differently, right? The system of intelligence, and then when you apply the system intelligence to the end user, you can create value, right? And ultimately, especially in marketing tech, the highest level is what we call the system of engagement, right? It's the chat bot, the mobile UI, the phone, the voice app, et cetera. If you own the system of engagement, be it Slack or be it the operating system for your phone, you can also win. So still multiple levels to play John in multiple ways to build proprietary advantage. Just got to own system record, system intelligence, system engagement, easy, right? Yeah, oh, so easy. Well, the good news is the cloud scale and the CapEx funded there. I mean, look at Amazon, they've got a ton of open source, you mentioned Snowflake, but they're getting a proprietary value project. So I need to ask you, Mark Tech in particular, that means it's a data business, which you pointed out and we agree, Mark Tech will be about the data, the workflows. How do you get those workflows? What's changing and how these companies are going to be building? What's your take on it? Because it's going to be one of those things where it might be the innovation on a source of data or how you handle two parties handling encrypted data sets. I don't know, maybe it's a special encryption tool. So we don't know what it is. What's your outlook on this area? I think that last point you just said is super interesting, super genius. It's integration or multiple data sources. So I think either one, if it's a data business, do you have proprietary data? One, number two, with the data you do have proprietary not, how do you enrich the data? And do you enrich the data with a public data set or a third party data set? So this could be cookies, it could be Dunham Brand Street or Zoom info information, how do you enrich the data? Number three, do you have machine learning models or some other IP that once you collected the data and enrich the data, what do you do with the data? And then number four is once you have that model of the data of the customer or the business, what do you do with it? Do you email? Do you do a tax? Do you do a campaign? Do you upsell? Do you change the price dynamically in our customers? Do you serve a new content on your website? So I think that workflow to your point is you can start from the same place, what you do with the data in between out of the side of this pipeline is where you as a market company can have that. So like I said before, it was a website to an email. Go to a website, have a cookie, fill out a form, I send you an email later. I think now you can't just do a website to an email. It's a website plus mobile apps plus in real world interaction to a text message, chat, phone call, Twitter, ad, whatever. It's like they're playing checkers in web two and you're talking 3D chess. There's a huge gap between what's coming and this is kind of interesting because now you mentioned machine learning and data and AI is going to factor into all this, you mentioned Rockset, one of your portfolios has under the hood, open source and then use proprietary data in the cloud. Okay, that's a configuration. It's an architecture, right? So architecture will be important in terms of how companies posture in this market because Martek is ripe for innovation because it's based on these old technologies but there's tons of workflows but you got to have the data, right? And so if I have a best journey map from a client that goes to a website but then they go and they do something in the organic or somewhere else, if I don't have that, what good is it? It's like a blind spot. Correct. So I think you're seeing folks with the data be it Snowflake or Databricks or an Amazon that S3 say, hey, come to my data cloud, right? Which, you know, Snowflake's advertising. Amazon would say the data cloud is S3 because all your data exists there anyway. So just, you know, live on S3. Databricks will say S3 is great but only use Amazon tools, use Databricks, right? And then build on top of that. But then he had our SaaS companies like Oracle, Salesforce, whoever and say, you know, use our Eloqua, Marketo exact target, you know, application as a system record. And so I think you're going to have a battle between do I just work my data in S3 or where my data exists or do I work my data as some other application like a Marketo Eloqua exact target or, you know, it could be a Twilio segment, right? That was a combination. So you'll have this battle between these giants in the cloud, easy to castles, right? Versus the contenders or the challengers, as we call them. Well, great, always chat with you on that. We always talk about castles in the cloud, which is your work that you guys put out. Just an update on, so check out graylock.com. They have castles on the cloud, which is a great thesis on, and a map by the way of the ecosystem. So you guys do a really good job. Props to you, Jerry and the team over there, graylock. Okay, now I got to ask kind of like the VC private equity market question, you know, evaluations, first of all, I think it's a great time to do a startup. So it's a good time to be in the VC business. I think the next two years, you're going to find some nice gems, but also you got to have that cleansing period. You got a lot of overvaluation. So what happened with the markets? So there's going to be a lot of M&A. So the question is, what are some of the things that you see as challenges for product teams in particular that might have that killer answer in Mar-Tech or might not have the runway if there's no cash? How do people partner in this modern era? Because scale's a big deal, right? You can measure everything. So you get the combination of a new kind of M&A market coming, a potential growth market for the right solution. Again, value's got to be there. What's your take on this market? I think you're right. Either you need runway, so cash to make it through this next two, three years, whatever you think the market term model is, or two, you need scale, right? So if you're at a company of scale and you have enough data, you can probably succeed on your own. If not, if you're kind of in between or early, to your point, either one, focus a narrower wedge, John. Just like we say, just reduce the surface area in the next two years. Focus on solving one problem very, very well. Or number two, in this Mar-Tech space, especially, there's a lot of partnership and integration opportunities to create a complete solution together to compete against kind of the incumbents, right? So I think there are folks with the data, there are folks doing data privacy security, we're folks in the workflow or market workflows. You're going to see either one, some M&A, but I definitely can see a lot of cooperation and partnership. And so in the past, maybe you would say, I'm just raising another $100 million and do what you're doing. Today you might say, look, instead of raising more money, let's partner together or merge or find a solution. So I think people are going to get creative. Like I said, scarcity often is good. I think it forces a lot more focus and a lot more creativity. Yeah, that's a great point. I'm glad you brought that up because I didn't think you were going to go there. I was going to ask that. BizDev activity is going to be really fundamental because runway combined with the fact that, hey, you know, if, you know, get real or you're going to go under is a real issue. So now people become friends. They're like, okay, if we partner, it's clearly a good way to go if you can get there. So what advice would you give companies? Even most experienced founders and operators, this is a different market, right? It's a different kind of velocity. Obviously architecturally data, you mentioned some of those key things. What's the posture to partner? What's your advice? What's the combat manual to kind of compete in this new BizDev world where some, it's a make or break time. Either get the funding, get the customers, which is how you get funding or you get a BizDev deal where you combine forces and go to market together or not. What's your advice? I think that the combat manual is either, you're partnering for one of two things, either one technology or two customers or sometimes both. So it would say, which partnerships are gene for technology, e.g. solution completers? Like you have, you know, this puzzle piece, I have this puzzle piece, data and privacy, let's work together. Or number two, it's like, who can help you with customers? And that's either A, they can be a channel for you or vice versa, or it can share customers and you can actually go to market together and find customers jointly. So ideally you're partner for one, if not the other, sometimes both and just figure out where in your life cycle do you need friends? Yeah, great. My final question, Jerry. First of all, thanks for coming on and sharing your insight. As usual, always awesome. Final question for the folks watching that are going to be partnering and buying product and services from these startups. There's a select few great ones here and obviously every other episode as well and you've got a bunch you're investing in. It's actually a good market for the companies that are lean and mean have value and the cloud scale does provide that. So a lot of companies are getting it right, they're going to break through. So they're clearly going to be getting customers. The buyer side, how should they be looking through the lens right now and looking at companies? What should they look for? And they like to take chances with seeing that. So it's not so much they got to be vetted, but how do they know the winners from the pretenders? You know, I think the customers are always smart. I think in the past, in Marktech especially, they often had a budget to experiment with. I think you're looking now the customers, the buyer technologies are looking for a hard ROI, like a return on investment. And before I think they might experiment more, but now they're saying, hey, are you helping me save money or increase revenue or some hard core metric that they care about? So I think the startups that actually have a strong ROI, like save money or increase revenue and you can like point empirically how they do that, will rise to the top of the Marktech landscape and customers will see that. Customers are smart, right? They're savvy buyers, they can smell good from bad and they're going to see the strong ROI. Yeah, and the other thing too I'd like to point out and love to get your reaction real quick is a lot of the companies have DNA in the open source or they have some community track record where community is now part of the vetting. I mean, are they real good people? Yeah, I think open source, like you said in the community in general, like especially all these communities that move on Slack or Discord or something else, right? I think for sure, just going through all those forums, Slack communities or Discord communities, you can see what's a good product versus next, versus bad, don't go to like the other sites, these communities would tell you who's working. Well, we got a Discord channel, theCUBE now, had 14,000 members, now it's down to six, losing people left and right. We need a moderator to get on, if you know anyone on Discord and you're watching wants to volunteer to be the CUBE Discord moderator. We could use some help there, love Discord. Jerry, great to see you, thanks for coming on. What's new at Greylock? What's some of the things happening? Give a quick plug for the firm when you guys working on. I know there's been some cool things happening, new investments, people moving on. Yeah, look, we're Greylock partners, seed series A firm. I focus on enterprise software. I have a team with me that also does consumer investing as well as crypto investing, like all firms. So, but we're seed series A, occasion of the later stage growth. So if you're interested, find me at Jerry Chen on Twitter or jerrygraylock.com. Thank you, John. Great stuff, Jerry, thanks for coming on. This is theCUBE's presentation of the AWS startup showcase. Martek is the series this time, emerging cloud scale customer experience where the integration and the data matters. This is season two, episode three of the ongoing series, covering the hottest cloud startups from the AWS ecosystem. John Furrier, thanks for watching.