00:00welcome to the a 16z podcast I'm Michael
00:02Copeland it's not just the likes of
00:04Google Facebook and Amazon that lean on
00:06a massive and growing corpus of data
00:08today every company is a data-driven
00:10company and in this world access to data
00:14and how you manage it is what matters
00:16says ash Ashutosh founder and CEO
00:18effective EO who among us doesn't say
00:21that data is not the lifeblood of their
00:23business and the largest hotel company
00:25Airbnb owns no hotel rooms the largest
00:29taxi company owns no taxis whether you
00:32are small you're large the smallest of
00:36the organization's still live on the
00:37fact that you have to be competitive in
00:39the world and data becomes a lifeblood
00:41of how you run the day-to-day business
00:42in this segment of the pod we get in the
00:45weeds with Ashutosh and a 16 ZZZ Peter
00:47Levine on how this data-driven world is
00:50changing the technology infrastructure
00:51that is the engine behind it and the
00:54companies that use it the blueprint for
00:57computing is coming from these hyper
00:59cloud environments and whether it's on
01:02Prem or cloud the fundamental data
01:06center design is changing and if data is
01:09at the core of a business being
01:11competitive in the business world
01:12requires one thing above all speed the
01:16classic example you could have the best
01:18Hospital in the world but if the
01:20ambulance takes too long to get there
01:21there's really no point right now even
01:23you're in trouble it's the speed that
01:25matters that and Ashutosh and Levine
01:28discuss ramping sales teams going
01:30international and what's driving the
01:32timing of IPOs or really the lack of
01:35IPOs finally Ashutosh offers his
01:38response to being referred to as a
01:40unicorn do you like that term unicorn I
01:45really hate it tell us how you feel
01:49Peters in the room and ashes in the room
01:51and that means we're probably going to
01:53talk about enterprise technology and get
01:55in the weeds and that's exactly what
01:56we're going to do Peter you know you
01:58have this view of the world that is very
02:01much here's the architecture of the old
02:03world and here's the architecture that's
02:05being built now how does Activia fit
02:08into that sort of worldview
02:10along the lines of hardware
02:13commoditization I've used the phrase
02:15that the mobile supply chain eats the
02:17data center and that implies that the
02:21hardware the cost of the hardware gets
02:23very very inexpensive and you know I can
02:27imagine I think I've said this that I
02:29can imagine a billion cell phones in a
02:31data center and that becomes like the
02:33commodity base and that becomes what we
02:35need to go build our next generation
02:37compute infrastructure on and if we now
02:41think about actifi o within that
02:43framework actifi o becomes the data
02:47access point for those billions of
02:51virtual cell phones that exist in this
02:53infrastructure and without a data
02:56management system like actifi o there's
02:59no way to control information no way to
03:02access information in a pragmatic
03:04fashion and it's it's a huge Achilles
03:07heel because every company in our new
03:10world is a data-driven company and if
03:13you don't have effective access to data
03:15it doesn't matter how inexpensive the
03:17hardware is you need tools to actually
03:19manage the data coordinate the data make
03:22the data fast and accessible to a wide
03:24array of users and that's the investment
03:28thesis behind Activia so in what you
03:31describe are we talking about still an
03:34on-premise world or at least a portion
03:36of that world still on-premise I think
03:38there's a very thin line there is a
03:41there's a spectrum where applications
03:44are on-premise applications are off
03:46premise applications are floating in
03:48between I think that spectrum continues
03:51to change and it really doesn't matter
03:52and for many people what you really care
03:55about is availability and access to
03:57applications where they come from how
04:00they get done that's truly something
04:02that the operations and the and the IT
04:03organizations deal with and it's not
04:06it's not the location that matters as
04:08much as the paradigm shift of the cloud
04:11yeah I agree it doesn't really matter
04:14where the data center is on Prem off
04:16from what does matter is that the
04:18architecture for the data centers are
04:20changing so 10 years ago everyone would
04:24fidelity and Morgan Stanley and those
04:27were the prototypes for the data center
04:29and it was guess what it was EMC storage
04:32and Oracle database a Sun Microsystems
04:33server and a Cisco switch and the entire
04:36wall copied that and that became the
04:38blueprint for the data center all on
04:40prim now fast forward 10-15 years we now
04:45look at Facebook and Google as the
04:47prototype data center there's
04:50commoditize again the mobile supply
04:52chain is eaten there data center a lot
04:54of open-source components and a lot of
04:56components put together and so what
04:58we're seeing is the blueprint for
05:00computing is coming from these hyper
05:03cloud environments and whether it's on
05:06Prem or cloud the fundamental data
05:10center design is changing and so that
05:13really gives light to all of the new
05:16opportunity is that all these data
05:18centers are being reinvented in the eye
05:20of scale out large cloud environments
05:24whether on Prem or off and that's kind
05:27of the you know the next generation data
05:29center will absolutely absolutely morph
05:31to this particular model ash given what
05:34Peter just describes actifi o fits in or
05:37what's the opportunity that you saw and
05:40the problem that you're helping to focus
05:41off as they move to the world that Peter
05:43describes so take the case of the second
05:47largest airline reservation company
05:50massive amount of data that's being
05:53developed upon by hundreds of developers
05:56are constantly innovating constantly
05:58fixing issues and and the old model that
06:02Peter was describing where you add
06:04infrastructure that that basically
06:07controlled the data you move stuff from
06:09one stage to another project-based
06:11deployment of infrastructure and it
06:14would take them months months for these
06:17developers to access data to fix an
06:20issue right now if you were you know the
06:23classic example you could have the best
06:24Hospital in the world but if the
06:26ambulance takes too long to get there
06:28there's really no point right now even
06:30you're in trouble it's the speed that
06:32matters it's the ability for
06:34organizations to constantly innovate be
06:37and that's where the activist paradigm
06:40comes in it's it's the ability to
06:41virtualize this data make it accessible
06:44instantly and in the process
06:46dramatically cut out cost so those are
06:49the things that it's is the notion of
06:51allowing LA and this is completely on
06:53premises right this is this is
06:55organization that are running on
06:56premises of business that needs to move
06:58faster than before you just convert that
07:00paradigm into something that is more
07:02cloud architecture but inside your four
07:05walls an analogy here is that what
07:09VMware did for compute actifi o is doing
07:11for storage and if you think about what
07:13VMware unlocked 10 or 15 years ago with
07:16their system is the virtualized the
07:18virtualization of compute resources it
07:20led to agility and cost savings exactly
07:23what ash is talking about storage has
07:25been this incredibly slow moving market
07:28along comes actifi o two-bit to unlock
07:31the value of storage as storage prices
07:34declined to unlock this massive growth
07:36by virtualizing and providing full
07:39agility to storage and that hasn't
07:41you raise an interesting point Peter
07:44where where is the value than in storage
07:47like if storage you know as a commodity
07:50is is going to free let's say where is
07:54the value then in just that speed and
07:56agility I mean is that kind of where you
07:59guys have your reason for being well we
08:02the unlike compute unlike networking
08:06data is a very different beast data has
08:10a lifecycle data has a long tail
08:13it doesn't just appear and then
08:15disappear and independent of the storage
08:18the ability for you to truly manage the
08:21lifecycle of data through the point
08:22where it's being protected will share
08:24its analyze compliance my requirements
08:27met people are doing federal stress
08:29tests because you have to meet the
08:31requirements of those people they're
08:32hundreds of developers accessing
08:33information that whole long till till
08:36that data lives by is a much more
08:40expensive process than what you seen on
08:42the computer and storage you could give
08:44away storage for free you could
08:45literally make the entire world in fact
08:47the world is already coming that okay
08:48google has announced Amazon is basically
08:51bucks a month you can get unlimited
08:53amount of storage and this was what we
08:54were saying six years ago that storage
08:56is going to be free but it's not it's
08:59the same reason that the Peter was
09:00talking about if servers were free would
09:02you stop using VMware absolutely not
09:04it's the agility it's the speed it's the
09:07ability to come back and bring up your
09:08server put it in your pocket and walk
09:10away wherever you want to go the
09:11mobility that comes with it those are
09:14they then the the true value proposition
09:16comes in speed agility and the mobility
09:18not in terms of whether the
09:21infrastructure around it is free or
09:22expensive or cheap anymore
09:24you said ash that that most companies
09:27are rely heavily on data if not are
09:30completely you know beholden to data as
09:33let's say Airbnb is know you've talked
09:36about customers that sound like their
09:38large enterprises does this sort of
09:40apply to everyone now and are you seeing
09:42in your customer base sort of a shift
09:44from very large customers to to everyone
09:47yeah absolutely I mean I think who among
09:50us doesn't say that data is not the
09:53lifeblood of their business and the
09:54largest you know as you pointed out
09:56hotel company Airbnb owns no hotel rooms
10:00the largest taxi company owns no taxis
10:03and we expect to be the largest data
10:06company that owns no storage that's
10:07that's active user and whether you are
10:11small you're large the smallest of the
10:15organization's still live on the fact
10:16that you have to be competitive in the
10:18world and data becomes a lifeblood of
10:20how you run the day-to-day business and
10:22access to that data speed of that data
10:23becomes even more competitive for you so
10:26unless you are you know sitting
10:27someplace where you are a hundred
10:29percent niche market and own their own
10:31the entire monopoly in that business but
10:33even those people have a website
10:35presence to come back and try to figure
10:37out how to deal with the data that comes
10:38from there do you have to sell
10:40differently to large enterprises versus
10:42these smaller and medium businesses or
10:44does everyone have you know understand
10:47this problem and have a real incentive
10:48if not a you know a fire under their
10:51butts to get it done definitely
10:54dramatically different for many many
10:57so a smaller let me start with a simpler
10:59one the smaller organizations have a
11:02problem to solve they have a budget to
11:05there's a person who's responsible for
11:06solving it they go online they figured
11:09it out they talk to a few references
11:11somewhere and they make the decision
11:13it's it's about faster cheaper better
11:17version of whatever the problem that
11:19you're trying to solve
11:20larger organizations are much more about
11:23predictability much more about about
11:26organizing the operations of whatever
11:28they're trying to do and so it goes
11:30through a four-step process it starts
11:32with technical validation does this
11:34thing actually hunt right everything
11:37really meet my requirements then you get
11:39get through a business case validation
11:42yeah this is great it hunts but does it
11:44apply to my business then you want to
11:46get to the operation side somewhere in
11:48somebody's building a cloud do these
11:50people know how to operate this cloud
11:51this component of the cloud and finally
11:54it comes down to somebody actually going
11:57through the procurement process and
11:58that's probably the longest pole in in
12:00every enterprise sales ten is the
12:03procurement perches and especially
12:05organizations like us that are private
12:06right that sometimes it's twice as much
12:08three times as much as the front end of
12:10the entire process is there any
12:13difference now between being a private
12:15company and a public company in terms of
12:17what you know the willingness of
12:19customers to jump on board and give it a
12:20shot what's the difference there these
12:22days if people are trying to move so
12:24fast you know they have time to sort of
12:26wait for you to go public
12:28ya know ten years ago as I mentioned a
12:30while ago or ten years ago maybe 15
12:32years ago much of innovation in
12:34enterprise space was incremental it was
12:37about finding a hole in somebody else's
12:39product portfolio as Peter was pointing
12:41out you are DMC Cisco Oracle and rest of
12:43the folks your job was to find some
12:45opportunity there and fit into that
12:47architecture that was already defined
12:49and then there's a massive rapid shift
12:51on this architecture that requires
12:53organizations to move faster and
12:56therefore if you are one of those
12:59organizations who is used to buying from
13:00your existing vendor and that existing
13:02owner is basically not helping you move
13:04fast which means you're basically dying
13:06you have no choice you have no choice
13:09but to go to whoever can solve the
13:11problem it turns out some of them are
13:12private now that's a problem for the the
13:15back end of the process the procurement
13:16legal and rest of the process but for
13:19they need a problem to be solved and it
13:21is too hard not to go back and find
13:24somebody who was you know
13:26well-established brand and so I think we
13:29have seen this more and more often now
13:30private companies absolutely getting an
13:33opportunity together get a big chunk of
13:35data center share partly because they
13:37there are 10 X 20 X 100x more beneficial
13:41than the incumbents Peter what what
13:45makes it so hard for incumbents to get
13:46there quickly and they're certainly
13:47smart they're well-funded a lot of them
13:49are sitting on a lot of cash I think
13:51that the big issue facing incumbents and
13:54this has been since the beginning of
13:56time certainly around technology here's
13:59what tends to happen is a company starts
14:02out and they build a product and you end
14:06up spending a lot of money supporting
14:07and incrementally improving that product
14:10line so while large companies have a lot
14:12of cash on their balance sheet it's not
14:14like you can just use that money to go
14:16fund a whole bunch of new initiatives
14:18typically that becomes operating cash
14:21and in big companies there's a lot of
14:25fingers that grab for that operating
14:27cash that may not be in the best
14:28interest of innovation because large
14:31companies have a lot of factors in terms
14:33of you know kind of short term revenue
14:35objectives and profitability it is very
14:38very difficult for large organizations
14:40to create new products or carve out
14:44dollars for new products when there's
14:46sort of the existing run rate business
14:48and profitability metrics and that
14:50really hamstrung hamstrings a large
14:53organization it's not that they don't
14:56know conceptually what to do when I come
14:59in after them yeah it's it's you know
15:01they're these are very smart people who
15:03work at large companies you know it's
15:05just that you kinda get boxed in and
15:08I've been at large company so I know
15:10exactly how this works and you know when
15:13it comes time for budgeting all the
15:15existing operating groups say we need X
15:18dollars you expect us to grow 100
15:20percent a year therefore we need a
15:22hundred percent of the dollars and after
15:24everyone jumps in there are no cookies
15:26left in the jar to go do innovation the
15:28natural result from that of course is
15:30that large companies
15:32you know to get out of the bottleneck
15:33end up acquiring companies and that's
15:36becoming somewhat problematic due to
15:37activist investors so like there's all
15:40kinds of issues that large companies are
15:42faced with right now but the innovation
15:45issue really is one of allocating budget
15:47dollars it may sound really simple right
15:50but I'm telling you when you're in it
15:52it's a whole different thing
15:54yeah companies right and then I think
16:01the other part that is lost it's not
16:04just coming up with a new product many
16:07of these large companies have phenomenal
16:09R&D and patterns for that they do
16:10phenomenal job of innovating yeah it's
16:13the two-thirds that the stuff under the
16:15iceberg there are the water iceberg
16:16under the water which is marketing it
16:18and selling it right they've got them
16:20they became large because they have one
16:22of the phenomenal most of the best
16:24marketing and sales organizations that
16:26are used to taking massive amounts of
16:28product into that system you want to
16:30inject something that is completely
16:32disruptive that is a problem that is a
16:36problem yeah one of the things I
16:38observed from from you guys at actifi oh
16:40you guys have gone global and you've
16:43been around for five years but like
16:44literally global I mean you guys are
16:45everywhere or not everywhere but I'm all
16:47over the globe why like what countries
16:51did you pick in terms of geography and
16:53was it a push or appall it is not that
16:55simple I mean it was some upward as
16:56absolute pool and we started with the
16:58selling in within 50 miles of our office
17:01first in Boston and then we took o took
17:04over quite a bit of the northeast and
17:06East Coast and that led to some of those
17:09companies that are based in UK so we
17:11went to UK they were in Australia we
17:12went to Australia some of them were in
17:15Singapore and Japan and next thing you
17:17know we were we were supporting many of
17:20these enterprises that do have either
17:23either subsidiaries or offices outside
17:25and that led us with before we knew it
17:27in 37 countries and so it was completely
17:31by the the relentless focus activeview
17:33has about just delighting the user and
17:36doing whatever it takes
17:37including going out and and being in
17:40countries that we probably would not
17:41have been organically and that was there
17:45important reason for us and it's
17:47supporting those 37 countries difficult
17:49I mean for a start-up it certainly adds
17:51all sorts of layers of complexity
17:54enormous enormous number I mean it's not
17:57only just from a technology perspective
17:58you know the internationalization of
18:01just a product part but there's I keep
18:04coming back to the the operation side of
18:07the business that becomes even more
18:08challenging cultural issues you have to
18:12have folks that are native to those
18:15areas you have to have practices that
18:17are native and there are some countries
18:19we decided not to be in business with
18:21because it is very hard to really go
18:22back and and build a practice around we
18:25would rather support them from some
18:26other places so it is it is an
18:30educational process it requires a
18:32tremendous amount of overhead we need a
18:34finance and G and a team that actually
18:35does the payroll I mean it comes down to
18:37something as basic as that why is it
18:39worth it it's worth it for one simple
18:41reason I've got a user he what he or she
18:44wants us to go to every other place that
18:47they already have adopted active you as
18:49a global standard and we have to be a
18:51global standard I cannot be extended in
18:53333 Wyman Street right in office I have
18:57to be you know wherever the user is and
18:58it may be the the choice of having
19:01picked enterprise market as a first
19:03market to go after versus a more mid
19:05pier more localized market and that that
19:08probably is the reason you know why we
19:10have to go back and support these users
19:11I want to switch gears and and ash
19:15actifi o is one of the few of a very
19:17small herd of unicorns in New England do
19:22you like that term unicorn
19:25I really hate it just how you feel I
19:29think I think it would rather be a mule
19:32that my customers love then a unicorn
19:36that some investor does and I think my
19:39investors feel the same way too
19:41Peter your investor sitting right here
19:44mule unicorn I love mules but there you
19:48go the hard working and the real hard
19:50working real can kick them in the ass
19:54it's all good all right we'll take that
19:57ash you've talked about going public but
20:01it seems like you're not in a big hurry
20:03why is that and and Peter how do you
20:06kind of view this stage of company and
20:08and act if you in particular yeah
20:10but so it's a very interesting time we
20:13live in I know there's a massive shift
20:15and transformation as Peter calls it the
20:17cloud architect architecture
20:19transformation and it requires a very
20:24very different way of going out going
20:26out and running a business and it's an
20:28opportunity to continue to go back and
20:30build a very viable business
20:32well independent of independent being
20:36public or private and you go back and I
20:38would take one more step back and say
20:40okay why did companies go public before
20:42one was because it was a way to come
20:44back and raise some money that isn't
20:47much of an issue these days and more
20:49importantly it was a way for validation
20:52of a company so that the buyers could
20:54buy it from those people that isn't also
20:55an issue today so if I have my users
20:58saying I really don't care either
20:59private or public I love what you do as
21:03long as you're supporting what I what my
21:05initiatives are the overhead and the
21:07burden of being public company and we
21:10have phenomenal investors who are
21:11committed to building a company that is
21:13transforming industry as opposed to
21:14cashing out after the lock up here and I
21:17think that helps a lot sad sound about
21:19right Peter it does absolutely I mean
21:22look we want to for all of our companies
21:25we want to invest in transformational
21:28technologies and industries and these
21:30things take time and we want the you
21:34know for for actifi oh we want the you
21:37know the we want this to become a
21:39platform just like they do and that just
21:41takes you know kind of years of heavy
21:43lifting it there's no easy sort of line
21:47between here and there and if it takes
21:49if it takes time and you know the
21:51predictability of the business is
21:52important and the internationalization
21:54is important as we've talked about like
21:57those things take time and look when the
22:00company's ready to go public it'll go
22:02public and when Ash says it's ready
22:03that's when it's ready when my customers
22:06when they say it's ready we're ready so
22:09you mentioned earlier today what is the
22:11average now for companies going public
22:12these days 11 years the median for tech
22:16companies is 11 years so it's a lot
22:20higher it's longer than it's ever been
22:22yeah yeah and I know that we are on this
22:2425 year cycle now and so it's not not
22:28surprising well we will check back in
22:30before then I hope ash thank you so much
22:33and Peter thanks is why thank you thank
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