 Live from the Sands Convention Center in Las Vegas, Nevada, it's theCUBE at AWS re-invent 2014. Brought to you by headline sponsors Amazon and Trend Micro. Okay, welcome back everyone. We are here live in Las Vegas for Amazon Web Services AWS re-invent. This is their big, I guess, end user developer conference of the year. We, it's our second year of work, and we're excited to exclusively broadcast live from the ground floor with theCUBE. This is our flagship program. When we go out to the events and extract the signal from noise, I'm John Furrier, I was still in Angle. My co is Stu Miniman from wikibon.org. Our next guest is Theresa Carlson, Vice President of Worldwide Public Sector Business at AWS. Welcome back to theCUBE. Thank you, happy to be here. Tech athlete, as we say, we love having you on. And certainly, I wish I could go back and replay what we did last year because we were pretty high on this whole government sector business. And then this year, just boom. Yeah. CIA, you win the IBM deal. Yep. Now, and then here at this show, obviously the government's clearly the consumption. Yes. Is a winning form. So give us, how do you feel about this year? Give us, you know, your personal take. I feel great about this year. I can't tell you, it's really been a phenomenal year for public sector. You know, we announced today our government business has grown, our education business has grown, the not-for-profit. And we're starting to see a lot more procurements that just plainly call out cloud computing. And if you look at those requirements, those requirements are really Amazon Web Services. And the adoption has grown significantly since we last talked. So, pretty excited. So this CIA thing, which has been written about, so I don't really want to go too much in the weeds on the contract. And certainly the IBM thing. But it's a first of its kind kind of opportunity for you guys. In both one, government also in the consumption side. So, is there things that have come out of that that's surprised you? And what would you share with the audience as the real walk away game changer for your business? The real walk away game changer I think for our business is the fact that it was the central intelligence agency that chose Amazon Web Services and made a decision that cloud computing was the model of choice for them. And in fact, we built that region within schedule, on time, we've launched it. And now I think the customer is a happy customer. But the most important thing is it's a game changer for the traditional way that government actually consumes and delivers IT services for the mission. And one of the things that we've always said here at Amazon Web Services is, we want them to have more money for the mission and be able to do a lot more projects. And this actually really supports that whole value proposition, which is better, cheaper, faster, with security by design. Okay, so take me through what you guys are actually offering because we've got a lot of debate going on on CrowdChat that we have built on Amazon, by the way. Our new product, thanks for getting the plug in there. The student knows why you get the plug at the CrowdChat. But really more about what are you guys offering? Is there some Scuttlebut on CrowdChat that it's a private cloud? And so it's not a not real Amazon, it's the private cloud. Is that true or is it just a custom version of Amazon with what components? So is it a private cloud? No, it's really a custom version. They, in fact, their procurement's fairly public. And in fact, they wanted, that was one of their key tenants, was a commercial cloud model. So they wanted, they didn't want anything spectacular special because they had already evaluated what Amazon Web Services offered. So it's a commercial cloud region. The big difference with it is obviously it has to meet their bar on security, which is different. But it's also what we call air gapped, which it's, you know, it's within their network, within their boundaries. But it really, it's an Amazon Web Services region. Yeah, Teresa, so can you speak to us since the CIA deal, what has that done to your government business? And I'm also curious, from a security standpoint, has this had ripples just across Amazon's entire business? It really has, you know, I think a lot of people really sort of woke up and said, wow, we have the intelligence community really looking at cloud. And it's, if they say that it's secure and it's a game changer for them, why shouldn't we really be looking at cloud? So it's definitely supported our business and I think the growth of the business globally for public sector, that the enterprise probably has been the most, you know, commercial enterprise area has probably been that biggest growth as a result of this because a lot of large enterprises were evaluating cloud already and said, well, you know, hold on, again, if they can do it, why shouldn't we be out there aggressively evaluating and taking advantage of it? And just a point of that is what we really find, it's not that they weren't interested, but prior to this, it really, it's speeding up their ability to get out there and write a nice procurement so they can actually get there faster. Right, so can you also explain to us a little bit about the AWS marketplace for the intelligence community and how that builds into your government offerings? Sure, so I don't know how familiar you are with their commercial AWS marketplace. Well, this will be exactly, again, the same thing for the intelligence community and obviously for them to go big and utilize these tools, they'll have to go through some additional vetting that here's the game changer. The game changer is this provides unlimited innovation for the intelligence community. They're going to be able to try and evaluate tools that they never had access to and they have a varied and large mission and many times, a lot of the tools they've used, they've used for a long time and they're very hungry to have some more innovative kind of tools that they can evaluate and take advantage of. So I think for the short term and the long term, it's really going to provide quick access to innovation that they can start using immediately. So Teresa, what's it been like working with the government? Because you talk about cutting costs and driving innovation, those are two things that we don't hear much from our government these days. Yeah, well, so I've been working with government for a long time and I suppose I'm a big believer that government should have the same opportunity as any other company to do things better, cheaper and faster with that security and Amazon Web Services offers that and the big, the change that we're seeing is that actually integrators and partners see that they can do more projects, like more projects rapidly versus one project for a long time and that's what Cloud's really getting to. Okay, so let me get this right. So the intelligent community or as you call I see, that's your baby, right? Well, I love all my customers. Last year, I think, do we talk about FedRAMP? That's that part of it, is it a different group? Or is it similar? I would love to talk about this. So security and compliance and FedRAMP was the first security and compliance regime and this was started in the U.S. government. As a result of that, there's been instantiations other places around the world, like IRAP in Australia, MTCS in Singapore and there's other countries and groups starting to pick these up. We've met all of them, if they're out there, we're meeting them. However, the interesting thing about the U.S. government is after FedRAMP, then DoD came out with some of their own tools, some of their own controls and we met those controls, level one through five and then we met an additional bar with the intelligence community. So so far, we're doing a pretty good job meeting all the security and compliance. Don't get too comfortable because competition is coming after you, I'm sure because you guys are really doing well. Congratulations there. But I got to ask you because Stu and I with Dave Vellante were on a production meeting before we kicked off theCUBE a couple of days ago and we were talking about your interview last year and what was coming out this year. We kind of said to ourselves, we're kind of scratching our heads saying, this doesn't make any sense. Why would the government move faster than say enterprises? So I mean the CIA and the intelligence community is a massive shift in behavior. One, as an organization, as a community and two, they have kind of like hardcore basic customers, the voters. So talk about the dynamic and how did that play out? Was it an enabler? Was it just a, and do they all buy in this marketplace? Can they all buy from each other? It's really kind of like pretty amazing. Well, this is a buying vehicle for the community. So it's not just the central intelligence agency but they all have access to this. So I think that's, again, that's pretty cool. So they have access to this but in addition to that, there's been a lot more, not just with this customer, but every customer, we see there's a culture shift that's got to take place, the training, the education. How do you actually build an application in the cloud? How do you move an application and then how do you optimize it? And we're going through that with them and quite frankly every other customer that we have in public sector. So what was it like, give us some insight. Come on, share some color around the conversations. Well, they just like, look it, we have a clean sheet of paper, we know we've got a lot of baggage, the government websites are crashing. I know you guys had some role in helping that. If you can share that, I mean, I'll say, you know, the whole, how much the healthcare.gov site, the VamaCare sites. I mean, the government really is not that strong on IT but they've got a lot of requirements. So was it like, okay, we want to build from scratch? Well, the traditional model of IT and government is to do everything from scratch. I mean, the traditional model is like, okay, let's buy every server, let's procure it, let's wait, let's, you know, design, configure, wait some more, build some more, see if it works. And what they're- Over provisioning there by, they spend way too much. They way over provision, way over provision. That's been very common. And with this, what's happening is they are seeing that you can try things, fail fast, recover fast, and really take those learnings and move them into the next project. So the principles that you hear Amazon Web Services talk about are really picking up in the government. And security must have been a concern. So we heard about the key, the encryption stuff, the keys today, you know, keys to the kingdom, if you will, security. What did you have to go through on that piece? I mean, I'll say it's an intelligence community. So they must have done their due diligence. Well, what I'll say about that, obviously, yes, they did their due diligence, but also just, if you keep in mind, governments are, have a rigorous model even if it's not in the cloud, they do have a very rigorous model about how they review and look at security. And cloud, because it's so new, this is this whole part of FedRAMP, we had to start from scratch and build these controls and work back and forth with government. And it was a lot of give and take and really them sharing with us their concerns and us sharing with them how cloud works and operates. So you're seeing a fundamental shift around how security is both understood and delivered. And of course, fundamentally we believe and we see from our customers, they tell us they feel more secure with Amazon Web Services. The question that comes up from the taxpayers like myself is this one, is this our government doing this? That sounds innovative. I mean, I'm not joking aside, it sounds innovative. It's not usually the government. And two, the other one is, how do they figure out the cost downstream? Because the perception from the outside is that government gets a big bag of money, they protect it, they hoard it, then they spend it or probably overspend it, and then go back to the well and get some more cash. So were they worried about some sort of SLA cause? Is that built into the contract? How did they deal with that kind of conversation? Well, there's actually, there's no reason why governments can't procure on demand OPEX versus CAPEX, that there's, traditional IT is trained government really well to buy CAPEX versus OPEX. So what we're going back and doing and saying, look, dollar for dollar, you're going to get a lot more with cloud. And in fact, for the first time in the budget this year, they're President Obama, they encourage in the 2015 budget for cloud or utility computing to be utilized within the budget. So what you're seeing now is more of a shift where agencies are picking up and writing procurements for on demand. Now, one of the things it's experience. So experience is the most important thing because the experience of how much they will use, when will they use it, when do they need more? Because like you said, they're used to over provisioning. So now it's about training them to be a little bit more, thinking more about how much they can deliver with the dollars they have, how much more they can deliver. But they're getting there. I mean, believe me, it's really, you know, it's not where it should be, but it's moving so much more rapidly than we spoke last year. Okay, so I got to ask you the personal question, which is, what's different this year from last year? What has changed in your life, not personal personal, in business personal? Like what surprised you this year? And obviously the total community is a great win. That fact that you wrote that in, that's a great business. It's going to have a lot of impact to how people do things, but what surprised you out there? That you didn't expect it would have happened this year? Well, you know, I run global. And I think for me, the big surprise is, going around the world and talking to my customers, I love it. And Asia is so progressive. I was just at the smart nation conference in Singapore and they want to be the first smart nation. And cloud plays a huge role in that. Australia. So smart nation, what does that mean? So smart nation is they want to be a paperless, very connected nation with lots of, you know, internet of thing points to connect their citizens, to provide information that really gets to the heart of any issue fast. And the other part of that, John that I think is really interesting is they're trying to enable that for their regional partners because as you know, Singapore itself is a fairly small nation, very powerful but small. And they have a lot of ports and shipping and finance and they are very open when it comes to regional partnerships. So as a part of this, they're actually training 100 plus partners on cloud. So they want to get there. So, you know, it's exciting to see what our customers are doing and how it's changing. Even the people they hire, they're looking to have more cloud based skills within government. So that's changing. The way education is starting to deliver in the classroom. We have a lot of work to do, but just the momentum where people feel excited about what IT can deliver for the mission, for education, changing the world. I mean, it is, you know, it's pretty cool. You're in a great spot. I got to say it's really fun to watch you guys and be close to you guys. We've been covering Amazon since it launched really, and I've been a fan. We're a customer of Amazon. We use the service as developers, so we love it. But I got to ask you, when you're sitting around the room, having a dinner with Andy Jassy, Jeff Bezos, and the team, the core team at Amazon. We work all the time. We don't eat dinner. But you work through, have a working dinner. When you sit there, Andy, right? Do you guys actually have your pinch me moments where you say, you know, we're really, we're kicking ass here. I mean, do you guys sit back and reflect? Not in a way to get cocky, but like in a way to say, you know, pinch me, is this really happening? I think we are all, all of us are in awe at where we are. But I think that we also never feel that we're doing enough. Because if you looked at the slide today that Andy showed on stage, the innovation curve at the services we're launching, obviously you can see by the number of services that we're launching in 2014, that we just continue to see all these amazing opportunities to do more. So while we're, of course, yes, we're excited we love our customers, I think we're constantly being sort of self critical of what do we need to do next? What can we do better? What are our customers asking from us? And, you know, quite frankly, John, I think that's the best part about what we do at Amazon Web Services is the true customer obsession of delivering on these features and services that are coming as a result of our customers. And you're global too, you mentioned that earlier. Having a global footprint and having companies that can go global, we heard Intuit on stage say we went global in two months. I was pretty impressed with it. So that's cool. I guess the final kind of question I'm curious about is, every company has a unique DNA, you know? Moore's Law for Intel, Cadence of Moore's Law, they marched to that Pat Gelsinger was talking about, talks about all the time on theCUBE. What is the Cadence, what's the Amazon Web Services Law? What's the core DNA? There's always that one unique thing. What is it? I don't know that I could say one thing, but the people are so passionate about our leadership principles and they're not just words. So if I could maybe encapsulate that, they're not just words. It's something that we live by. And if you look at all those principles and you start with customer obsession, you work down from there. And Andy talked about it today, the working backwards process for us. We begin with the end, was what would our customers want? What would they be asking for? And we want to hear honest and open feedback about what's working and what's not working so we can literally make that a better experience. And we don't take any of those items that come back to us as we don't want to hear it. We're like, great, give us more feedback and let us iterate and improve what we're doing on that. So really I think it encapsulates how we operate our leadership principles. And again, just the core of that is if you begin with the customer, I think things happen for the right reasons. And you guys are really good at packaging kind of that retail culture. All right, so we're getting the hook here, but I want to ask you, what's next for you this year? What's on the, what are we going to be talking about next year? What government agency global phenomenon deal are you going to do? So next year what I want to be able to talk to you about, we just won the state of Texas cloud procurement, which is very large, and Texas and Oklahoma can buy plus many others. I want to tell you a lot more about that. I also want to talk to you next year about global, what we're doing in a lot of the countries, because it is pretty cool. And I actually think in the US, they can learn a lot from what other countries are doing. And it's, and again, I love just seeing how they are taking cloud to the next level. So I want to share some more of those with you next year. I mean, internet of things is people and computers and other things. So like that's connected society. It's really powerful. I think you're in a really unique policy and social change is really radical. Yeah, it is. And the ability to take data and analyze it and these open data sets that are game changing now that you can open up genomics, weather, you know, science space, they're open and we have young researchers, educators that can use these and make new discoveries. And that wasn't possible almost just like six years ago. Think of how that's changed. So much more possible now. People are reinventing the way they do business. Hence the show reinvent. This is theCUBE. We're extracting the signal of noise. Theresa, give me the final word. If you could put a bumper sticker on this show this year. What would it say? What's the theme of this event? This year, definitely much more enterprise, much more enterprise. Last year I saw a flavor of it, but definitely this year. We have a huge executive summit. You were at the analyst with the breakfast session this morning, very much enterprise dialogue. And that's very much changed. And I would be remiss if I didn't thank you both for being here with us at AWS and helping us sort of promote and educate everyone about what is happening here. So I want to thank you all as well. Theresa, thank you. We're really honored to exclusively cover it. Thanks for the space and shout out to Mary Camarad and Andy Jassen, the team. It's our honor. It's fun to watch and document history and making. So we are live here. This is the Q's, what we do, we extract the signal from the noise and share that with you. I want to thank all the sponsors out there, Amazon and Trend Micro for supporting our passion, our vision of bringing all the data to you here live. We'll be right back with our next guest after the short break. I'm John Furrier with Stu Miniman. We'll be right back.