 from New Orleans, Louisiana, at theCUBE, covering .NEXT Conference 2018, brought to you by Nutanix. Welcome back to theCUBE, SiliconANGLE Media's live production of Nutanix .NEXT Conference here in New Orleans, Louisiana. I'm Stu Miniman joined by my co-host Keith Townsend. Happy to welcome back to the program, also fresh off the keynote stage, the founder, CEO, and chairman of the publicly traded Nutanix. Dheeraj Pandey, thanks for joining us. Thank you for your time, by the way. Dheeraj, it's always a pleasure. One of the things we say about theCUBE is we want to take those conversations that we're having at events in the industry and share them out. And we've had the opportunity to have many of them over the years. So to start off with, when you take us back, some of the keynote you say, five years ago, couldn't really predict what was going to happen now. Yet, I talked in our open here. The first interview that we did with you back in 2012, talking about the challenges over time and distributed architectures, it's more real today than it was back in 2012. Cloud has matured and is a little bit more nuanced today. The application space is exploding and changing more than ever. I guess inside a little bit, when you talk about the vision that you had for Nutanix, any major learnings on things that have surprised you along the way and what things have played out exactly like you thought they would? Well, we'll start with the easy one, which is the way things have played out, what we wanted them to play out like. I think the idea of commoditization of hardware, the fact that things will become pure software, things, all these hardware devices should look like apps, was one of our sort of big prognosis early on, like six, seven, eight years ago. And largely everybody's talking about soft to define everything in them. And that's not to say that hardware doesn't play a role, it's just that it becomes more invisible in the sense that with software running on top and the fact that you have economies of scale coming with standardization in hardware, a lot of things will move to pure software. That's really worked out well. Disaggregation has worked out well in our favor, the fact that you'd stop buying big things and you start small and pay as you grow. I think consumerization has really, and this is a word that is a cliche in many senses, but what does it mean to have consumer-grade experience of enterprise-grade systems, which is a paradox in itself, to say that you have consumer-grade experience for enterprise-grade systems, but I think that has turned out really well for us. And in the staying power of everything eventually is, can you build reliable systems? Can you build highly available systems? I mean, because building trust with the enterprise is really hard and there's lots of startups that have come and gone, that have over promised and under delivered and I think that's one of the things that has really worked in our favor to be really methodical and robust with the way we build our systems, especially the backend systems and it's showing up in the front end as well. Surprise, surprise. I think the fact that it's mega-distributed now, not just distributed because distributed over a LAN is one thing, but distributed over a WAN is a very different thing altogether and you need to really think about the basic tenets of computer science about state and migration and caching and a lot of this is coherency, consistency, availability, network partitioning, there's a lot of things you need to think about in a very different way than you used to think about on a LAN itself. Yeah, I want to drill into one of the things, the move to a software model. You and I've talked since the early days Nutanix at its core, it's software you do. Changing how people think and consume and boy, getting the financial arm of companies, your channel partners, your sales people and your customers, that's a challenging piece there. There was one of the customers I've already talked to this week that said one of the things we always had was I buy stuff and you tend to over buy and you could never kind of shrink down. Now, if I go to a software model, I have a certain piece of it that I really understand and then I buy and I can even kind of dial back as needed. Maybe explain some of the nuances and some of those changes, how's the field doing with this, how's the channel adopting to this and any customer stories, yeah. I think there's a, especially for ambitious companies, there's always a Netflix moment, there's always an Adobe Omniture moment. Look at these companies. 10 years ago, Adobe was a $3 billion company in 2007 but they said we need to dramatically look at consumption model as the big differentiator going forward actually. Even though they had digitized Blockbuster and Hollywood videos and so on, they said it's not enough to digitize them further. I mean, Apple had digitized music with 99 cent songs but the music player itself needed digitization and I think that's what happened with iPhone bringing a music player on as an app itself. Photography was digitized because we could now do JPEG files back and forth and emails but the camera itself needed further digitization and the camera became an app. So I think there is multiple layers of digitization that needs to happen. I think as a company we digitize a lot of hardware devices but as a company we had to digitize ourselves even further on. This is our digital transformation. The fact that you can consume Nutanix in ways that are even more invisible. The fact that you can try out Nutanix, kick the tires on Nutanix, run it in your favorite server that you want and then after you like it, you call us. You know, all of a sudden the sales funnel is warmer because you look at sales funnel, you don't need people up there to really go do POCs and kick the tires and the technology and so on. So software provides access which is probably at the core of an operating system. If you don't have access, if you're not freely distributable then you'll always stay at the mercy of the appliance gravity. Because appliance is gravity, it's hardware. You need to ship things. There's physical objects being shipped. There are logistics, there is capital expenditure. There's a lot of things involved that really keeps you sort of anchored to the bottom and the only way to unleash this is to really bring more digital delivery models and software is one such thing. Now, our sales teams, like starting this quarter are being paid on software only as opposed to on hardware itself. And we're doing things in the channel that makes it really unique because the customer experience doesn't have to change. In some sense, we're really saying can we have the cake and eat it too. And that's what we're really doing so that the true North, which is customer experience doesn't take any kind of hit while we can actually look at going and selling the value of software at South corner. And as you know about XI, I mean, just doing software alone is just the first step towards digital transformation. The further digitization is when nothing is visible on-prem for a new time. Everything is totally invisible and you can swipe the credit card and you can sign up in a matter of seconds. I think that is where the real epitome of digitization will be for the company. So let's talk about the impact of becoming a software company. I love some of the stories, as you said, the ability to download software and kit the tires. I've seen some really geeky stuff. People running prism on bare metal clouds, this use cases that I didn't really consider. What are some of the more interesting things that your partners and customers are doing that you didn't expect? Like, what's the surprises? Well, it starts with the tinkers. The most important thing about any good software company is tinkers do things that you never imagined you could do. And it comes down to API, then it comes down to access. I have an app on my iPhone, it's called iBeer. Now Apple opened up its oscilloscope, its accelerometer, its compass. Now you can basically fill a beer in your iPhone and you can drink it and it works for you as well. I don't think the company knew that when it opens up its API is what are the possibilities, what kind of apps people will build. I think Community Edition has been the core of access for us. People can just download it on an Intel Nook and do things with it. In fact, the Nook is part of a drone now, so you can actually have an entire data center in the drone and the drones can replicate to each other and failover from each other. And in fact, we're talking to a lot of very large oil and gas and remote vertical organizations which are really looking for, what does it mean to miniaturize a data center? And then at the same time do very serious stuff and it back it up and trypt it, compress it, replicate it, all sorts of things. When you put event processing, like how do you put a Kafka bus on a mini PC size server, I think, palm size server? These are all the things that we hadn't imagined three, four, five years ago. But the fact that Nutanix can be shrunk-wrapped into a palm size server, it takes this possibility of the edge to the next level actually. So the show floor is growing. You hit on API, critical part of building an ecosystem, becoming a true platform player. What are some of the more impressive parts of growth when it comes to ecosystem? I would bring it back to all the applications. We've done a tremendous job of applications on Nutanix. So if you look at North, South and East West, always look at things North, South, East West. North, South is apps and hardware. So hardware platforms and apps on top of us. I think we've done a really good job of that. East West, look at data protection, business continuity, security. A lot of those companies are actually part of our overall ecosystem. And we're still not happy. I think we have to do an even better job. But what's the mules of the equivalent in infrastructure? Nobody thinks of integration in the operating system world today. It's mostly point-to-point. Okay, I am Nutanix, you are Arista. We'll do point-to-point. I am Nutanix, you are F5, we'll do point-to-point. What if there's a real event bus where you could just publish topics and you become a radio station? And there's Tivo, because you can go back in time, look at three days ago, what events happened and so on. There's a whole aspect of putting a multicast tree of events that becomes a real groundswell of integration. But in different kinds of appliances, virtual appliances, physical appliances, hardware below us, software above us, I think that has yet to happen in the industry and a lot of our developers are now talking about like what's the mule soft for Nutanix. So I think there's a lot of innovation that infrastructure is not seen because we always think differently than apps. But if you thought like app companies, we'd do things like app companies. And you'd see us in the next couple of years do something really interesting with, you know, build a system bus which is a pub-sub-like model as opposed to a restful request response-like model actually. Yeah, Dheeraj, give us a little more color on some of those partnerships. I've seen Google and IBM on stage in the past. You're now over a billion dollars in revenue, public companies, so have to imagine some of these companies treat you a little differently. And the ones I kind of initially want to hear of, but you're welcome to run with it, is the server players and the cloud players as to how you see, how much can it just be, we do our thing, and how much do they need to work with you? Yeah, absolutely. Well, look, a billion is still a small number. We are more like VMware of 07. And the VMware of 07 was still a test and dev company, by the way. They hadn't done anything production at all. People are still tinkering with databases and Microsoft apps and so on and 07. So we are small. We're still not a very big company. I think there's a lot of headroom for us in the coming years. The thing is that we've taken the tougher route, by the way. Tough route being we didn't have to sell ourselves to EMC. To go to VMware, did it. If you think about it, that asset was worth 60 billion eventually. It was sold for 600 million. It's 100x smaller price to EMC because they actually seeded the ground on go to market. They said, no, no, it's really hard. We need EMC to go and really do the distribution piece. And as a company, we said, no, no, I think there is value in building go to market on our own. Look at your cap table. Our cap table is clean. We have dual class voting structure and things like that. The things that VMware would die for, looking at from a financial investor point of view that we have, that they don't. Because we took the tougher route to really come to build a business. Now, if you talk about hardware companies below us and when I say below, I don't mean pejoratively, but you know, the stuff that runs underneath us. Stop that. I think NX has been a great way to build a market because if you hadn't done Supermicro, it wouldn't be here actually. I mean, this architecture would have been a child's play, a science project, foreign thinker, more so than what it has become over time because the server vendors took note. They said, oh, you can actually come and displace me. I would rather work with you because there's a lot of value we can bring to the table as well. So in that vein, I think what we've done with Dell, what we've done with Lenovo, what we are doing with IBM, Fujitsu, and what we are doing with HP's and Cisco's channel partners. There's a lot of regional love that's forming on the ground with HP's and Cisco's channel partners and salespeople because salespeople are less political than headquarters. Think about strategy tax that headquarters pays versus what salespeople do. Salespeople, I just saw a tweet, I think you talked about an HPE sales guy saying you've got to bring Nutanix to the table because they really respect market forces. For them, market forces are most powerful actually. And above us is in the cloud. I think definitely a lot of work that they do in Google, GCP. But I think as bare metal opens up from these other providers, we probably would be very interested to see exactly how Nutanix XI works in bare metals of these public cloud providers. So you guys, disrupt yourself. There was NX, business was going fine. You guys were starting to build a reputation of being able to support the large enterprise with NX, some of the logistic challenges that you had as a small organization. You were starting to overcome. But you decided, you know what? You're going to untether yourself. Let's zoom out to the industry. If you look at the industry and say, you know what, the advantage that Nutanix has because we're willing to disrupt ourselves, what are the tethers that remain in the industry that you're happy to go for your customers and say, you know what, Nutanix doesn't have these tethers. And if we did, we're easily disrupt ourselves again. What's the competitive advantage? I think it's a great question. In fact, it's a, it is the competitive advantage to say that the glass is half full and it's not a zero sum game. Because there's two kinds of people in the world. There's the zero sum mindset people who actually always think that, you know, if somebody's winning, the other must lose. And then there are growth mindset people who actually feel like, of course, legacy will get disrupted, but the new guys will actually make further progress, future progress. So, you know, as a builder, you know, there's a bias in me and many of us out there in Nutanix that you need to have a growth mindset. And then the growth mindset, just giving a software to an OEM partner doesn't mean that it will shrink yours. It's possible that there's going to be more word of mouth and the market forces will actually appreciate that. I mean, eventually, if somebody has a great relationship with Dell or Lenovo or HP or Cisco or IBM, we'd love to do business with them. And we have to relax some constraints because at the end of the day, you know, this is still not our cloud. Now, in XI, we can do whatever we want. But when we are walking to the customer, saying we want to build a cloud with you, with you is the important word. It's not for you, it's with you. And with you would mean that we'll have to bend a little bit backwards to relax the constraints as well. And that's exactly what we've done. No one else has done this. Same is true for hypervisor, you know. Look at VMware. We go in there and we don't start talking about VMware right away. Like, you know what? Let's talk about architecture. Let's talk about migration. Let's talk about security, automation. And someday we'll sit and talk about whether you need to pay for hypervisor or not. I think we'll do the same things with data protection and, you know, other things we're doing, networking and so on. We're not going to just come in and say this is us and nothing else matters. API's is everything. I mean, think of consumer companies. They've always competed with their partners. And they've done a good job at it. They're like, look, at the end of the day, Spotify is a competitor. Apple music competes with it. But I'm not going to not give them a level playing field. You know, Google Maps, Apple Maps compete. Keynote, number, pages, competes with Microsoft Office. And I think the best companies are very good at being comfortable. You know, Amazon retail, the retailer. They fulfill more than, I would say, half their things not from their warehouse but from someone else's warehouse. And both parties make money actually. It's the growth mindset that creates large companies. Dheeraj, you're a technical founder. Had great success with the company. You know, it's still one of the things I've loved in our journey on theCUBE is being able to document companies that, you know, we knew from the early days and got over 2,500 employees now. Actually more than 3,500. 3,500. Congratulations. As you talk to people in the Valley or as you're traveling around the world, what advice do you give to potential future entrepreneurs, people that are sitting like you did in the early days and, you know, have a vision for the future? Well, I've gotten a little more philosophical about organizational building. You know, at the core of companies that are building and growing over time is how do you keep reducing friction? And it's not just friction with customers and partners, but also friction within. Because orgs grow and you need to, you know, if you look at organisms, you know, we have mitosis where cells divide themselves and become smaller cells and even smaller cells and so on. There's a division of labor, there's specialization, there's all sorts of things that actually happen as organisms themselves, you know. I think an org is like an organism, you know. And over time, there's a lot of accumulated stress that develops, you know. And if you don't really go and address it, you're not a company, you're basically a business that doesn't understand culture, you know. So what I talk about with a lot of entrepreneurs is really fuzzy words like how do you become authentic in what you do and like, I was in Bloomberg and I talked about the difficulties of design. You know, at the end of the day, most people, maybe not the 10, 15, 20% impressionables, but most people appreciate authenticity. They're like, you know what, that is vulnerable and being vulnerable is the best way to build a relationship, actually. So I talk about vulnerability and trust and organizational design and reducing friction and things of that nature, because once you are so many people, it's all about reducing friction. All right, well, dear Raj, one of the things people I know love about this show is you bring speakers that get us thinking, authenticity, hopefully one of the reasons why you bring the cube, you know, to the event. So thank you so much for joining us again. Always a pleasure. Pleasure. Keith Townsend and I, Stu Miniman, will be back with lots more coverage here of the Nutanix.NEXT conference 2018 in New Orleans. You're watching the cube.