 from our studios in the heart of Silicon Valley, Palo Alto, California, this is a CUBE Conversation. Hello everyone, welcome to this special CUBE Conversation with remote guest Steve Herrod, Managing Director of General Canalists. He's a venture capitalist, former CTO of VMware, CUBE alumni. Steve, welcome to this special CUBE Conversation coming in remote from Palo Alto. You're right across town, but still we wanted to grab you big news happening and also get your thoughts on VMworld 2019. Welcome to our remote conversation. Yeah, hey John, we're close and yet this makes it even more convenient. This is cool. We love the new format of bring people in no matter where they are, no matter whatever it takes to get the stories, we want to do that. And two important ones, obviously having we know VMworld's coming next week, but congratulations in order to you and your portfolio company, SignalFX, another CUBE alumni firm we've been covering since the beginning of their funding, acquisition by Splunk today for over a billion dollars, 60% in cash and 40% in stock. Congratulations, you've been on the board. You've known these guys from VMware quite a team, quite an exit, it's a win-win for those guys. Congratulations. Yeah, great group of guys, several of which were at VMware as you mentioned and as you've had on your show. That's great, they were doing a really good job of monitoring and getting metrics about applications and how they're doing it and they're marrying it with Splunk's ability to ingest logs and really understand operational data. And I think the combination will be very powerful. It brings kind of what we've been calling cloud 2.0, essentially monitoring 2.0 is really observability as the world starts moving into the kinds of services we're seeing with cloud and on-premises operations. More than ever, that game has changed it's much more dynamic and the security impact is significant and certainly as applications connect whether it's IoT or any IP device, having that data at scale is really a critical part of that. And I know SignalFX was one of those companies where you invested early and I remember interviewing them a couple of years ago and saying, damn, these guys might be too early. I mean, they're so smart, they're so on it but this is an example of skating to where the puck is as Wayne Kretzky would say. These guys were just hitting their strides, Steve, can you share any color commentary on the deal and or why this is so important? Well, they've been at this for a long time and they're a great team. I've been involved as an investor less time obviously but it was the really original team out of Facebook monitoring really at scale applications and then trying to take that technology that Facebook could use and apply that to our world. And as you just covered, we're in a world of microservices and containers and that is definitely hitting its stride right now. And so they were in the right place knowing how to monitor this very fast moving information and make some sense out of it. So yeah, really good job on their part and it was a pleasure to be along for part of the ride with them. Yeah, it's great to meet great founders that have a vision and stay the course because it's always tricky when you're early to see the future especially around, they were talking about microservices and containers way back before it became the rage and now more relevant operationally for enterprises. It's easy to get distracted and go, oh man, this fashion will just jump on this trend or this wave. They stayed the course, they stayed the nose to the grindstone and now observability, which to me is code word for monitoring 2.0 is probably one of the hottest segments you saw companies going public, companies filing the pager duty, Dynatrace, now you guys with your acquisition with SignalFX, this is an important sector. This would normally be viewed in IT roles kind of list of white space but it seems to be a much bigger landscape. Can you comment on your view on this and why it's so important? Why is observability so hot, Steve? Well, this has actually been a great market to be in for quite a while. There have been a large number of companies continuing to be built up and yeah, it's pretty simple. The amount of e-commerce or the amount of customer interactions you're having over applications and over the web has gone up and so anything that's not performing well or has downtime literally costs you a lot of money as a company and so as these applications get more complex and they're being relied on more for revenue and for customer interactions simply you have to have better tools and that's going to be something that continues to evolve. We're going to have more complex apps and more commerce is going to go through them. Complexity is obviously something that a lot of people are talking about. I want to ask you something around today's marketplace but I want you to compare and contrast it similarly to what your experience was at VMware when you're the CTO, virtualization evolved very, very quickly and ended up becoming a really critical component of the infrastructure and a lot of people were poo-pooing that initially at first and then all of a sudden it became oh we got to kill VMware and so the resiliency of VMware was such that they continue to innovate on virtualization and so that's been part of the legacy of VMware and VMware which we'll cover next week but when you look at what's happening now with cloud computing and now some of the hybrid cloud opportunities with microservices and other cool things the role of the application is being is an important part of the equation that used to be the stand-up infrastructure and that would enable the application to do things. Virtualization kind of changed that game. Now you don't need to stand up any infrastructure you can just deploy an application and the infrastructure can be code and be self-formed so you can have unique requirements as infrastructure driven by the application the whole world seemed to have flipped around. Do you see it that way? Is that accurate assessment? What's your thoughts on that? I think you're right on a bunch of fronts. People have been calling it different things but the beauty of VMware and this is a while ago now but the reason it was successful is that you didn't have to change any of your software to use it sort of slid in underneath and added value but at the same time applications evolved and so the path of looking like hardware was something that was great for not changing applications you have to think about it a little differently when people are taking advantage of new application patterns or new services that are in the cloud and as you build up these as they're called cloud native applications it really is about the infrastructure its job in life is to run applications and it sort of felt like the other way around it used to be you wrote an application for what your infrastructure was it shouldn't be like that anymore it's about what you need to do to get the job done and so we see the evolution of the clouds and their services that are there certainly the notion of containers and a lot of the stuff that VMware is now doing has been focused on those new applications and making sure VMware adds value to them whatever type of application they are it's interesting one of the exciting things in this way that we're on this year around multi-cloud, hybrid cloud and public cloud now that we've kind of crossed over to the reality that public cloud has been there done that succeeded I call that cloud 1.0 you saw the emergence of hybrid cloud even early on around 2012, 2013 we were talking about that at VMworld you know certainly Pat Gelsinger but now you're seeing hybrid cloud validated you got Outposts, you got Azure Stack among other things the reality is if you are cloud native you might not need to have anything on premise like companies like ours with 50 plus people we don't have an IT department but most enterprises have stuff on premise so the nuance these days is around you know what's the architecture of IT these days when you add security into it's complicated so there's debates can there be a sole cloud for a workload? Certainly that's been something that we've been covering with the Amazon Jedi contract where it's not necessarily a sole cloud for the entire department of defense it's a sole cloud for the workload the military application workload or app the military it's $10 billion application and it's okay to have one cloud as we would say but yet they're going to use Microsoft's cloud for other things so DOD is having a multiple cloud approach multiple environments, multiple vendors if you will but you don't have to split the cloud up per se this is kind of one of those conversations that's really evolving quickly because there's no real school of thought around this other than the old way which was have a multi-vendor environment split the things what's your thoughts on the workload relationship to the cloud is it okay to have a workload have a single cloud for that workload and coexist with other clouds? It's funny I've been thinking about this more lately where if you went back earlier in time for getting cloud there used to be a lot of different type of servers that you could run on whether it be a mainframe or a mini mainframe or a Unix system or a Linux system and to some extent people were choosing what would run where based on the demands of the application sometimes on price, sometimes on certifications or even what's been ported to the right one so this is updating myself, that's a while ago but it's not too different to kind of think about the different kind of cloud services that are out there whether you're running your own on your own data center or whether you're leveraging one from the other partners I really do think in the ideal world you get your choice of the best possible platform for the application across a variety of characteristics and it's kind of up to the vendors of management software and monitoring software and security software to give you more flexibility to choose where to run and so forgetting VMware exactly but think of a virtualization layer that really tries to abstract out and let you more fluidly run things on different clouds I do think that's where a lot of the core software is headed these days to really enable that to work better and a million other use cases with storage being moved around for disaster recovery or for whatever it else might be but that core flexibility reminds me a lot of choosing what application would run where within your own company and the Kubernetes trend and container certainly really makes that so much more flexible because you can still run VMs on the covers or put stuff on bare metal lot of great opportunities, that's exciting and you slap an API on front of them and microservices sort of works in tandem with that so that you could really have your application composed across multiple environments and I think the observability is so hot because it takes what network management was doing in the old way which is monitoring making sure things are operating effectively and combining with data and so when I heard about the acquisition of signal effects into Splunk I'm like, there it is, we're back to data so observability is really a data challenge and opportunity for using what would be a white space monitoring but it's more than monitoring because it's about the data and the efficacy of that data and how it's being used whether it's for security or whatever, your thoughts. So there's more data than ever for sure and so being able to stream that in being able to capture it at cost all that is a big part of the environments we all work in the key thing is turning that into some actionable insight and whether you're using interesting calculations for that or different forms of machine learning like that's where this really has to go is with all this data coming in how do I avoid false positives how do I only alert people when needed then that allows you to do what everyone's talked about for 30 years which is automatic remediation but for now let's talk about it as how do I process all of this rich data and get me the right information to take action. Steve I want to thank you for coming on this remote CUBE conversation you've been with us at theCUBE since 2010 I think our first CUBE event was EMC World 2010 that show doesn't exist any longer because that folded into Dell Technologies World so VMworld next week is the last show standing that has been around since the CUBE's been around of course you guys had VMworlds had their 10th anniversary I think it was 2013 as a show but this is our 10th year I want to thank you for being part of our community and being a contributor with your commentary and your friendship and referral appreciate all that so I got to ask you looking back over the 10 years since you've been with theCUBE VMworld what's the most exciting moments what are moments that you can say hey that was an amazing time that was a grind but we got through it funny moments your thoughts. Yeah boy that's a tough question I've enjoyed working with you John and theCUBE there have been so many really interesting things for me the some of the big acquisitions that we went through at VMware were I think the NSX acquisition when we get Nasera I think that really pushed us in an interesting spot but we had gone through IPOs and acquisitions ourselves by EMC we had gone through some pretty vicious competition from whether it be Citrix or Xen or Microsoft yeah that's just the joy of being at these companies is lots of ups and downs along the way that they all kind of fit together to make an exciting life. What were some moments for you I know you had left was it 2015 or 26 what was it your last day at VMware about six years ago now yeah about six years What do you miss about VMware? The team is what everyone kind of cliche says but it's totally true the chance to kind of work with all those people at the executive staff all the way down to like these awesome engineers with cool ideas so I definitely miss that I miss shipping products you don't get to do that as much directly as a venture capitalist but on the flip side this is a great world to be in I get to see enthusiastic very optimistic founders all day long pushing the envelope and while that was existing at VMware it's what I see every single day here You've been on theCUBE 10 times at VMworld that's the all-time spot you're tied but first congratulations on the leaderboard well it's been a great 10 years going forward we've seen more so looking back I would say that Paul Moritz taking over from Diane Greene really set the table he actually laid out essentially what I think now is clearly a cloud SaaS architecture I think he got that pretty much right again or maybe early in certain spots of what he proposed at that time those some things that didn't materialize as fast but ultimately from a core perspective you guys got that right and then went in tried to do the cloud but then this year it comes in for software defined you're aligned with Amazon and since that time the stock has been really kind of up until the right so you know some key moments there for VMware from some really important stuff it's fun to see Pivotal now possibly coming back in too after getting started there but I think there's a hugely talented team of executives there Pat Yeltsinger's coming and done a great job I think Raghu and all these folks that are in there are good thinkers and so I think you'll continue to see it evolve quite a bit and probably some cool announcements next week Talk about the role Raghu and the team played because he doesn't really get a lot of the spotlight he avoids it I know we've talked to him privately about it he won't come on theCUBE and I'll let the other guys go on other guys and Gail so he's been instrumental he was really critical in multiple deals could you share some insight into his role at VMware and why it's been so important? Well I'll push him to get on especially now that you have remote you can probably grab him but now he and Rajiv and Ray O'Farrell just all the guys are I think he and Rajiv basically split up half and half of the products but I know Raghu is very very seminal in the whole cloud strategy that has clearly been working well he's a good friend and a very smart guy well I want you to give me a personal word that you're going to get him in a headlock and tell him to come on theCUBE this year we want him on he's a great great great guest he's certainly knowledgeable going forward Steve 10 years out we've still got 10 more years of great change coming if you look at the wave that's coming you're out investing in companies again you had one big exit today with a billion dollar acquisition that was happened by Splunk and SignalFX a lot more action you've been investing in security what's your outlook as you look at the next 10 years there's a lot more action to happen we seem to be early days in this new modern era a historic time in the computer industry as applications are now dictating infrastructure capabilities is still a lot more to do what are you excited about? Oh and there's a million things I get to see every day which are clearly where the world is headed but I think at the end of the day there's infrastructure which the job in life of infrastructure is to run applications and so then you look at applications how are they changing and what is the underlying fabric going to need to do to support them and if you look at the future of applications it's clearly some amazing things around artificial intelligence and machine learning to actually make them smarter it's all different factors form factors that they're running on and being displayed on I think we clearly have a world where with the next generation of networking you can do even more at the edge and communicate in a very different way with the backend so I kind of look at all these application patterns and really try to think about what is the change to the underlying clouds and fabrics and compute what's going to be needed to run them I think we have plenty of headroom of interesting ideas ahead Stu, Dave and I were talking about as infrastructure and cloud get automated as automation comes in new waves are going to be formed from it what new waves do you see? Is it like RPAs, AI? I mean because as those things get sucked in the shifts to new waves what are some of the key ways people should pay attention to? I'm not saying the infrastructure is going away but as it becomes automated and as the shift happens the value still is there where is those new waves? Well I think today it looks like most applications are going to be composed of a lot of services and I think they're going to be able they're going to need to be displaying on everything from big screens to small screens to purely as headless API front-ends and so again I think at the end of the day this infrastructure is going to have to have a lot of computation capability have to crunch through tons of data but also have to stitch together these connections between components and provide really good experiences and predictability in the network and all those are very hard problems that we've been working on for a while I think we're going to keep working on them in new forms for the next 10 years at least. Awesome. Steve thanks for being a friend with us in theCUBE. What's your funny favorite moment of theCUBE? Can you share any observations about theCUBE and your experiences, your observations over the 10 years? We've come a long way. You've come a long way. Actually I've enjoyed it. I mean it's a microcosm of all the other stuff going on but I saw your first little box that you built and used for theCUBE that was really cool but now the fact that I'm on my laptop doing this over the network and it's showing up is pretty awesome so I think you're following the same patterns of the other applications moving to the cloud and having good user experiences. CubeNative here, software, it's going to be all CubeNative. Steve thank you so much for staying in the time commenting on the acquisition I know it's fresh on the press a lot more analysis cut to come next week it's certainly I'll be co-hosting at splunks.com later in the year so I'm looking forward to connecting with the team there and again thanks for all your contribution into the Cube community. We really appreciate it. I want to thank you for your time. Thanks John, you guys are awesome. Thanks for chatting. Okay Steve Herrod, managing director at General Counsel top tier VC from here in Silicon Valley and the offices around the world. I'm John Furrier breaking down the news as well as a VMworld preview with the former CTO of VM where Steve Herrod now a big time venture capitalist. I'm John Furrier, thanks for watching.