Hello everyone, welcome to episode 32 of the Cube Pod. I'm John Furrier with Dave Vellante, extracting the signal from the noise every week we get together, talk about the news that run down and what we saw that was important and things that might not have been on the radar that we think are important or things that are under reported, and just controversy commentary on enterprise and emerging tech. Dave, great to see you. We're back another week, 32 straight weeks and a lot to unpack. We're going to talk about in a deep dive segments, the Dell financial meeting. You have great insight around the cashflow and the brilliance of Michael Dell, but also is there a financial crisis coming? All the indicators are there. We're going to talk about that big time. I'm going to talk about the flexport culture clash and the rapid dismissal of the former Bezos Lieutenant Clark, David Clark, which is all the Amazon is just got killed basically. And then the whole MGM we're going to unpack the pay or not the pay. And of course, the startup ecosystem is changing radically. The finance things are down, but up valuations are changing. We'll get all that data. We're going to share that with you. I got some information there. And of course, the gender VI madness continues with super cloud coming this month. And then there's a big debate open or closed with open air. We're going to unpack all that, of course, the ranch section. We're going to talk about probably the DOJ and we the con probably most likely I have some of those there. But we're going to we're going to unpack a lot today.  And we got a couple of surprises in the middle of the podcast for you. First, the news day for MGM. We've been talking to test two pods around the hack. We were in the area for the SAS event when it went down. Well, turns out we got everything right in our story. We were right about the hack that was done and the damage and the facts that it didn't pay. What's coming out now on the Wall Street Journal and a variety of other outlets are reporting is that the damage is at least a hundred million to MGM. They'll take that hit in their third quarter earnings.  They managed through the disruption they would not give in. And we're going to talk about this in the pay or unpaid meaning they didn't pay they didn't pay the the ransom. I didn't pay the ransom. So hold back on this. We're going to move to the news first. But we're going to we're going to unpack this. This is a modern phenomenon. What do you pay the ransom hostages? Do you negotiate with terrorists? This is a classic kind of prisoners dilemma theory, Dave. And so we're going to unpack that as well as other game theory around. What do you do with with ransomware? OK, it's ransom. It's software. It's a new kind of concept. There's now strategies. I guarantee you books are going to be written on this. So we're in an unpacking big time. Other news. Anthropic is playing the field. That's the hot AI company kind of second fiddle to gen open AI in terms of hype. Open AI was first. Anthropic ran right up to the top. Our friend Jack Clark, former journalist that to register to work there. I just got a text from here. He wants to chat. That's great news. Love this company because they're the X open AI guys who started Anthropic rode the wave will probably be one of the big large language models that are going to survive. Open AI Anthropic AI 21 labs. These are the these going to be the winners. And and as you put out Dave and the Silicon Angle team, the power law is in play. People are validating that. So we'll come back to that. But Anthropic just did a massive deal. Got married with AWS big four billion dollar investment option million and a half guaranteed big deal with bedrock big deal with AWS buying some GPUs and probably some chip action with AWS now playing the field, getting Google to throw a big investment in.  Wondering I what do you call it anyway? We're this is serious stuff. And then Elon Musk is being sued by the SEC apparently he didn't show up for a subpoena to go over his in his testimony for his Twitter acquisition. He's he's going ballistic saying we should ban all three letter agencies in the Twitter and the Twitter mob is going crazy. And of course, the UK antitrust Hawks are zeroing in on cloud providers in the UK.  One of their big pieces. That's their their programmable chip business. And they're going to with an IPO slated for two, three years. So, you know, you can see Pat Gilson is shedding some of the wars that he's capping on multiple fronts, as you say. And then TSMC says at their Arizona fab will not be profitable as their Taiwan fabs implying the US is lagging behind the talent cost structures experience. Duh. You think so. And then Jeremy Burton, our friend CEO and founder of Observe raised a series around $50 million that integrates generative AI to simplify application observability. Notable friend of the cube. He's been with us since the beginning. Nice raise. Congratulations CMO VMC became a big executive president and then with the Dell CMO there started a company. He's on the board of snowflake Dave. So, you know, squinting through that. That's just not some yes, some startup. That's Jeremy Burton. That's snowflake board member. That's a senior executive. He knows something we don't. So that's something to put out there. And of course the flexport drama amid more layoffs. This is going to be a story I'm going to unpack in the section there. A lot of inside baseball going on here. Founder came out of retirement. Fired the team that he brought in to scale it. Apparently there was culture clash and there's a big expose on CNBC. The inside story of Dave Clark's tumultuous last days at a flexport apparently board Q complete assassination and then ousting by the founder. Founder came back in didn't like what he saw. And then Amazon's losing people to MongoDB. They got the new CTO at MongoDB. Jim Sharp who's joining them. So a lot of Amazonians are the early DNA of AWS. Dave are landing and there's kind of like an AWS mafia going on and we're going to do. We're going to talk a lot about this on the pod going forward, especially leading up to reinvent. And after you're seeing the shift of talent there during the jassy days moving out of the company with their experience under their belt 10 plus years more going in and leading other companies. This is the mafia move PayPal mafia, the VM mafia, the Google mafia. Now you got the Amazon web services. My people who leave the companies in groups and bring that culture to other companies. So whenever that happens, good things happen. So these so-called little migrations have always yielded amazing change. Again, PayPal called the PayPal mafia, Elon Musk, all the guys there involved in their read Hoffman, the Max Ledgekin. All those guys started some great companies. I see Google ex Googlers and then I now AWS and of course VMware. We all know Jerry Chen, Pete Sonsini, Steve Herrod and Blisco's Carl Eschenbach, list goes on and on. So I think that's going to be a very interesting trend Dave in the modern era is to see those cloud legends and companies. And then finally, the final note here in my news feed today is Iron Net, a company that I like because Keith Alexander was the founder went belly up after two years going public in the SPAC. Maybe they shouldn't have done the SPAC deal. So C5 capital, Drapeen are put money into that. Keith Alexander, great guy, great person. So it's said to see a security legend go under like that. So that's pretty much top level news, Dave.  They held the line and well, they're paying for it. But they had all their stuff back. The thing about that is, you know, you're asking the right question. Should you pay the ransom or not? You pay terrorists. Caesar's paid, right? Caesar's paid like 10 million. I got back online. Now, you know, the FBI will tell you definitely do not pay. When I asked this question of executives, whether it's Palo Alto or CrowdStrike or Zscaler, they say, well, the best bet is to, you know, the self-serving. The best bet is not to not to get into a position where you got to pay the ransom, but that doesn't help somebody who's got to pay the ransom. Pay or not to pay. What do you do with the ransom? I think it depends on the new cultural thing. So there's a couple of things. One is if it's a nation-state attack and that nation-state is North Korea or Iran, first of all, it's illegal to pay those companies, those countries. You know, you can't send money to those rogue states. So that's a, there's legal exposure there that you have to evaluate. I think the second thing you have to evaluate is okay, what is it going to take to get us back online? You're saying MGM shelled out 100 million. No, that was the damages in total. They didn't, MGM didn't shelled anything out. No, no, sorry. The cost, I should have restated. The cost to them was 100 million. And that's, I would say at least. I mean, the damage is 100 million, but gosh, the loss productivity, I don't know if they're calculating the lost business in there, reputation. I mean, it could be a lot higher than that. I don't know what the market cap impact was. I don't follow those stocks. But so I think you have to factor all those things in it. Frankly, I think in some cases you should pay, but, but you may not, you still may not get your data back. I mean, I've talked to customers who'd have paid and didn't get their data back or they only got partial partial data back and they had to go back and continue to negotiate. So I actually do think the advice of the self-serving tech vendors is the right advice is put yourself into position so that you don't get hacked and make those investments. And so, and you know, that sounds good, but the whole game has changed. The game is all about speed. How fast can you get in and get out? And so you got to accelerate and you got to accelerate the time it takes for you to identify and protect and recover or fence. It's all about exfiltration now. It's not about dwell time anymore. It's not about saying, hey, they were in there for 172 days. Let's get that down to 90 or 30 or 50 and make it harder for them. No, forget that. That shouldn't be the focus. The focus should be on, you know, CrowdStrike says stop the breach. That's their sort of tagline. I think that's the right mindset. It's hard to do, but the more emphasis you put on stopping the breach and that mindset, the harder it is for the hackers to get in and it'll force them to go somewhere else. The thing about this time is that I think the government has to get involved and that came out of the Mandiant conference when I was there. One thing I was trying to figure out is what does the public-private partnership look like relative to these catastrophic events? I mean, think about it, MGM, you know, they're supposed to have top-notch security as does all the casinos because that's where the money is. That's what banks and casinos. That's where the money is, right? So you got to think about the fact that, you know, the government has to get involved and assist, not just an audit, but like help the military.  And so, you know, I really look at the government's responsibility like the physical military to have a digital response and there's more, we got to pay more attention to the actors involved. And we know the game. If it's China or Russia or North Korea, they can't do state on state. So what they do is they kind of create this kind of like fake company or shell company version of an attack or they enable some group with open source tooling to another group to take credit for it when it's really initiated by them. So, you know, I think we have to kind of read between the lines and say, okay, we can trace this back to North Korea and we counter strike. Well, so then you got to be careful. You got to be careful about that. But first of all, why not? Why not counter strike if it's there? Counter strike. Let me comment then.   You know, these unfunded mandates. It's like, okay, that's not very helpful. I don't think it's very helpful that, you know, the posture of the DOJ and the FTC and the FTC is let's start with break up Amazon. That's their starting point as opposed to, hey, let's have a public-private partnership. But to answer your question, again, this goes back to my conversation with Robert Gates. I said the same thing. It's like, why don't we just attack them? Take them out. He goes, we got to be careful. You attack these countries. Okay, fine. But we have more to lose than they do.    We have a lot to lose because we got the biggest economy in the world. And so he was saying, you have to take a measured response and do so very carefully and very thoughtfully. So, you know, I'm sure there are responses.  We're going to take this out, you know, that threat. And you play that game. You expose that. Well, the current military doctrine is to say, if you can't ask me harder back. Obviously ransomware is cyber warfare. Okay. It's being done maliciously for money. And so if the private companies are have to defend themselves, then what is the government's role? I mean, if they drop physical troops on our soil in the United States in Vegas and went into MGM and, you know, held everyone hostage and took the cash and ran away. You think that and they knew what they were. What would we do? It would be a disaster. It would be okay. It's like, all right, they're physically here, but they're also digitally here. So I think the conversations I heard in D.C. when I was there and I've had many of them since the Jedi contract when I started covering that many years ago is there's an awakening in D.C. in the smart military minds, the generals, not so much on the hill, the lawmakers I think are still kind of wet in this area. They're not really getting it. But I think there's a lot of smart, you know, policy and military people who actually get it and are trying to make change. And so I'm looking forward to seeing what that is. Again, the pay or not the pay is game theory, military tactics and also like just common sense. It's a first generation technical problem. Like it's okay, you know, it's ransom in case like, and it's happening everywhere. So it's not like it's like a one-off thing. I mean, if the ransomware crime wave syndicates going to have their way, they'd get everybody. So, you know, this puts companies like Dell in great position to make money, certainly commercially.  And so, you know, companies are taking their own measures. I do think that the U.S. government has to be, and I think it was rightly cautious about escalation. Because escalation could happen so fast. And as I say, we got a lot to lose. But at the same, I mean, my, hey, my instinct is like yours. Take them out. But, yeah, I mean, we do know who they are. But the unintended, we do know who they are, but the unintended concept, and I'm sure there's a lot of like black hat stuff going on and sort of clandestine things that, you know, the guys that you talked to at Mandiant and I talked to a CrowdStrike and Palo Alto Networks. All those insiders, they know what's going on. They know, you know, you talked to Kevin Mandia. They know exactly where these hacks are coming from, where these threat actors are. They know the signatures. And they know the governments are involved. They know their proxies for the government.  They know that they're behind it. And so, you know, but still, escalation is something that they want to avoid. And so... We're going to get to the super cloud, general AI industry discussion. I want to just highlight that our power law research we put out from the CUBE research team, pretty much on the money.  We'll get into that later. But I wanted to ask you, Dave, about the Dell financial meeting you drove down. You were one of the only analysts, I think, and industry analysts that were invited to this. I think I was the only one there. Thank you. Well, there was the financial analyst meeting. You were the only industry analyst there. No, I was the only industry analyst there. I tell you, it was really well attended. Give us the lowdown. You did a killer tweet. So, by the way, if you're listening to this, go to Twitter, D-V-L-L-A-N-T-E. That's the last name, D-V-L-N-T-E. He's got a great update thread on this. And the last one got my attention. That's going to be the next segment around the financial crisis coming. But what did you see? I mean, you made a comment about Michael Dell just leveraging the zero-interest free money era and how he maximized that for just brilliant move. Take us through the Dell meeting and then let's comment about Michael Dell. Absolutely incredible. I mean, it was, you know, in New York City where these things take place, there were close to 100 people there. I mean, probably 70, 80 financial analysts. As I say, I was the only industry analyst there. I mean, I loved it. I had the whole reign to myself. It was awesome. Michael was there, Michael Dell, Jeff Clark, the entire IR team, Yvonne McGill, the new CFO, Jeff Boudreau and I were hanging out for a while talking. He's the new AI czar at Dell. Vivek, the new head of strategy. And I spent a lot of time together. Arthur Lewis was there. He runs ISG now. Sam Bird is the president of the client division. And basically, you know, the message to the analysts was really simple. You buy our stock, we're going to send 80% of our adjusted free cash flow back to investors. So basically, buy our stock, we're going to give you money. And the reason that Dell's in a position to do that is because they buy EMC for whatever, 63 billion. They use the cash flow from VMware in combination with the tracking stock to basically continue to de-lever. They sold assets. They continued to use that cash flow to pay down the debt. They used VM with that tracking stock mechanism to go public again from private. So, oh, and then they did a special dividend to basically completely restructure Dell's balance sheet. They spun out VMware and Dell's got an awesome balance sheet. They've got, they've got excess cash of around, they only need $4 to $5 billion to run the business. So they've got excess cash, you know, sloshing around of like $5 billion that they keep around as cushion. So they could use that for tuck-in M&A or, you know, just for a rainy day. So they basically said to Wall Street, look, we're going to give the money back to our investors. Now, Michael Dell owns a very large portion of the company. I don't know if it's a controlling interest. Does he own more than 50%? I have to do some research on that. What, the new VMware? No, he doesn't own 40% or 50% of VMware, but he might own, does he own over half of Dell? You might, I got to do research on that. I don't know, I don't know the answer.  He's owns a lot of stock. And when they, when they buy back stock, it reduces the number of outstanding shares. And so the value of Dell goes up and he benefits from that. Wall Street was concerned. The analysts were concerned about a liquidity issue. Like, will there be enough liquidity? If you keep pumping your money back in and given, you know, dividends and doing buybacks, aggressive buybacks and reduce the share count, will there be enough liquidity for investors? And will there be a market? And they, Yvonne McGill, the CFO and Michael said, yeah, we're fine. There's plenty of shares out there. Michael also said, basically, I'm going to do philanthropy with that money. So, you know, so watch for that. And so it was eight. So, you know, this guy gives billionaires a good name, Michael Dell, he's a gentleman. I tweeted today that he reminds me of my old boss, Pat McGovern, who was a true gentleman, you know, rested peace. Thanks, Pat. But so the other, the other takeaways that were interesting is they gave guidance on growth two to 3% for the client business. You know, pretty, pretty tepid growth for the PCs, but six to 8% for ISG, that's server and storage, which I thought was optimistic. And when the analysts pushed on that, Arthur Lewis, who runs ISG basically said, look, we're going to have higher ACVs through, because you know, AI is going to require bigger configurations and that's going to start to hit next year. So he's signing up for 8% growth. And most of that's going to come from servers, storage, you know, a little bit less of a factor, but that's a higher margin business for Dell. So the margin model should improve. Now, here's the big question. What's the baseline of that growth from? They won't say. So it's not a hundred billion, so they were like a hundred billion last year and then they'll do like 90 billion this year, 93, I think is the number. So is it? So they're there. Are you saying they're going for, I mean, dividends or? Wait, wait, wait, so they're opaque about what the baseline is for that growth. They won't actually tell you. They say it's mid-cycle. So they assume it's growing from 95 billion, but so they don't really know. So what they're going to do is a game that they're playing. Basically, if they only grow whatever, you know, 2% instead of 3% or whatever, they can say, oh, well, we're going from this baseline. So they can set the baseline wherever they want. They can move the bar. And that's what I think the stock dropped actually yesterday after the analyst meeting. And I think that was maybe the reason why. I'm not sure, but it was up again earlier today. But to your question, they got a lot of extra cash and they're throwing off cash like crazy thanks to this restructuring. And then the last thing I'll say, so Michael on the TV today said, you know, they were pushing them around, you know, higher interest rates and he's like, yeah, well, it's probably the way it should be and it's fine. And I'm like, yeah, I tweeted out, it's fine because he's well through the knot hole. He bought EMC when interest rates were near zero. They were given cash away. I mean, his timing is impeccable. His timing and execution are absolutely remarkable. I think that's, I think that's the key point. And then he just really maximized the corp dev machine and VMware is interesting too. That was a big piece of it. And they're getting that down to the wire day. This we're in this month, right? This is the month where Broadcom takes over. So on November 1st Broadcom will officially own VMware as the end of a chapter. So I've had so many phone calls this week from VMware folks. The CMO I had a half hour call with on some strategies we were talking about there and on some of the initiatives they have, but people are just reaching out, they're networking and people are preparing. I mean, this is where everyone below the VP layer gets notified. And the word is it's going to be a much flatter organization than what people thought. Of course, we've been saying it all along. I think ultimately it's going to be our original prediction. It's going to be right as we had been tracking Broadcom track record as well as their company for many, many years. As you know, we've been on top of this and it's very clear what they're going to do. And Hop Tan has never wavered. He's been clear from day one. Everyone's been in denial. It was like, guys, there's no need to zig and zag. It's coming. So, you know, I they gave it a good run. Let's see if they can keep cross cloud services going. Execute or be executed. Rumors are already they're folding, you know, these divisions into the cloud, under the cloud, modern apps, cloud management, gone, you know, folding in under cloud because I think, you know, you look at Hop Tan's strategy. He's all about selling more stuff. And we are the first ones to break that, by the way, that report turns out based on internal validation. I've talked to people. That's a fact. That's been validated and verified. Get clients buying more.  And I think his strategy, Dave, the way I'm reading this is with VMware, when Broadcom buys VMware, he wants to go to the market and saying, here's everything and just get a license and then let them use everything and get as much installed as possible, then start charging, right? So this idea that, you know, this group sells that, that group sells that. I don't think that's going to happen. I think it's going to be one go-to-market motion. Here's your VMware. Go. And you can have everything. We'll see. I'm not sure how that's going to fit on a P&L basis, but, you know, that's what this integration looks like. It's going to do. Well, if they're going to charge for it, that'll be great for the P&L. If they, if it's, if it's, you know, shelf-wear. Yeah. I mean, problem. Like, vRealize and all these other services, they're just going to throw it in. Have it. Don't even charge for it. Part of the deal. Oh, come on. Yeah, but they're going to charge for it. First hits free. You know, that's what they, you know, the drug dealer business is very key. First hits free, you know? You think they're going to give this stuff away? I think they're going to sell it. I think they're going to give a chance to see what they're going to market. But the best move is to start bundling and then unbundling later. Because if you look at VMware, what are they really buying? It's vSphere, okay? And some other core products. Outside of that, everything else has got to be sold separately. Now, you don't need those separate P&Ls. You just throw it under one and have people just turn on everything. They're buying 500,000 customers that are locked in. That's what they're buying. Yeah, and so it's for, right? I mean, business school 101. I learned this in my first year of my MBA. You want to have nestedness. You want to have your tentacles in there. So if you're, if you got that operating leverage with vSphere and their core product, get more, gets more tentacles in there so you can't be replaced. The rip out switching cost is too high, right? We know that we, you and I ripped on this all the time. You point, you point this out, I think more than anyone in the industry. VMware has got customers that are, love their one thing. And it's hard to switch. Now you make it harder by getting more stuff embedded and then you increase the prices and the switching costs become astronomical. Yeah, but it's still, it's like, it's like, and lock in, when we talk about lock in, it's such a pejorative term, but you think about it. Like we have a building here. We're up for lease. You know, they give us a new lease. They raised prices and it's like, okay, they're raising prices in a situation where commercial real estate, you know, is soft. So what do you do?   It's like, you know what? They got you with a barrel. It's, it's, it's, it's worth paying to stay because the pain of moving is too great. So the business case isn't there to move. And that's the, the needle that, that Octane has to thread. And frankly, I don't think it's that hard. I think as long as they don't get egregious and as long as they keep investing, cause you know, look at, let's face it, people don't understand. Broadcom's an engineering company. They don't do any marketing really. Yeah. It's good to have a great brand. I mean, VMware brand, VMware brand is going to be the great brand for them. It's really good win. And VMware's got good engineers. And so they'll, they'll spend, they'll identify a roadmap and they'll continue, if they can keep them and they'll continue to invest. Yeah, but they'll keep them. I mean, they'll, they'll keep them. I mean, these guys are, Broadcom pays well. That's one thing. They're going to cut the, they're going to cut the, all the marketing sales. They'll keep the SDS and engineers. Dave, so I brought up, I put up VMware mainly because of the Dell conversation. Michael Dell made a great load of money in the era, era of free money or zero interest rate. Zip, zero interest rate, Zorba. So that was the, that's the acronym they've been, I've been all over the place. Zero, zero interest rates, zero. So now that interest rates are up. There's a tweet out there from Genevieve Rojdecker, who's a CUBE alumni member. I remember her from the crypto day. She's got quite the following. She's awesome. She writes, good morning everyone. I can't believe I'm saying this, but the slump in the 10 year, 30 year bonds is approaching the epic drops we saw in stocks during the 2008 financial crisis and the dot com bubble burst. 10 year bonds are down 46% versus 49% for dot com stocks. 30 year bonds are down 53% versus the 57% in the 2008 stocks. Basically, cataclysmic numbers relative to quote a crash. I've been thinking about this day. We've been talking about startups falling out of the sky. We might be coming up onto something pretty weird with the market and what do you, I mean, what's your read on this? I mean, because you know, I'm in a bubble here in Silicon Valley because this has been the summer of AI love and it's been the most euphoric time since I can remember since like the web 2.0 days and the early days of the dot com. It's super exciting. People are pumped and excited. Now, is there a financial storm coming? That's the question. So I'm looking at the, I read the paper.  There's a headline soaring bond yields threatened fed goal of a soft landing.  So my breaking analysis this week is the title of, you know, higher for longer. It's mine is lower for longer. Tech spending remains tepid. And so what I did is I use the ETR data run a correlation between the interest rate hikes from the Fed and the it spending outlook. And you can just see the sentiment drop prior to the interest rates fed tightening it spending expectations from CIOs was to grow seven and a half percent. This goes back to the end of 2021. And then when Ukraine hit and then the Fed started tightening in March, it dropped to you know, low sixes and then we exited the year at 4.6 and then in 2023, the outlook drops to 4.1 and now it's down. It started the year of 4.1. Now it's down to 2.9. They hope it's going to be 3.8 next year. I think the likelihood that that drops is greater than, than, than that it goes up. And so this kind of gets into my rant, John, if you, if you, if you will let me know early, but long-term interest rates. So I'm not really a bond guy, but my bond friends, texted me this week and said, the bond vigilantes are out. And I'm like, what does that mean? Bond vigilantes, what is, what does that mean? What are the bond vigilantes that when bond traders when they don't like what the Fed is doing and they don't like the, the, the policies, the fiscal policies of the government, they'll sell long, they'll sell their bonds because remember the Fed controls short-term interest rates, but the market controls long-term interest rates. So they'll sell their bonds and that, that because they want a better yield and that channel tanks the, the prices. And so the, the demand is going down for these long-term bonds. The point is, is that we, this debt problem is finally coming home to roost. If, if it can't last forever, it won't. I don't know who said that, but I'll just give you some stats. The U S debt is now, this is very cursory analysis. U S debt is now 33 and a half trillion.  So simple math, the federal government is spending 2 trillion more annually than they take in. And the only way you can cut the 33 and a half billion dollar debt is to lower the annual budget deficit. So let's look at that four items, Medicare, Medicaid, Social Security, defense and interest on the debt make up for 1.6 trillion, 1.3 trillion, 0.8 trillion and 0.7 trillion, add that up four items account for 4.4 trillion or 102% of the annual revenue. And you know, guys like Ray Dalio say this is going to lead to civil war. We've seen this before and it's like no kidding that this is a problem. People have been talking about this forever. I hear, you know, guys like Chumat say, yeah, it's not a problem. They'll just restructure it to do 100 year bonds. Okay, maybe if interest rates come down that might work, but they're not going anywhere. I mean, they might come down a little bit, but yeah, this is bad and I think it could get worse before it gets better. The last thing I'll say is tech companies, senior man, CEOs and CFOs at tech companies have done a good job adjusting and lowering their forecasts. But if earnings have to come down again, there's going to be pain and since it's interesting. I mean, I think it's going to be interesting to see how this all gets washed out with the whole digital culture we've got now on the GameStop generation coming online. It's going to be very interesting to see and it's good to get this data out there. By the way, Genevieve post that that tweak at 1.7 million views. So here's the thing, John, is this is a question for you. Now the wild card here is AI. If productivity can grow revenue, right? Because we're now making more money. Companies are making more money. People are making more money. Productivity is better and it's throwing off more cash to the U.S. government. Maybe they can grow their way out of it. Maybe, but you know, that's how do you deal with inflation? Yeah, the AI thing. This is, I mean, we pointed out on one of our early pods and when single digit pods, you and I riffed that this is the first time the hyperscale cloud players have been involved in a major pivot point in the industrial financial economy, meaning recession or expansion. Certainly, Amazon was a big driver in the growth of past 10, 15 years with the cloud. That technology allowed so much more productivity, digital transformation. Now it's a double-edged sword. They've got to now charge the bills. They've got to run owes them and they also can be a propellant for people to get out of the bad spots they're in business-wise by being agile and more inventive and faster time to value. So that's the upside scenario there. Downside scenario is that they're impacted as well. Now the AI piece is interesting because all the covers we've been doing and I've done at least 100 interviews already on this one topic with AI startups and companies and experts. There's two things coming out of the AI revolution right now that's interesting to me that we're watching and I think could be a 20 to 50 year opportunity to change things for the better. One is this new AI system is emerging, system meaning operating system, software system, people system, a configuration of how AI is going to change, how people do everything. And that's going to impact also the tech stack from physical to the application layer. So think of it like AI, neural networks combined with compute and all kinds of magic and software rolled in data into one something that's never been done before a whole new net new generational shift like how OS is in many computers and OS is in PCs came out and the other one is the surge of this creative culture. So I mean there's always been like this creative class concepts but it's never been like tech creative culture. And so what I mean by that is that there's an emerging tech creative class emerging. And if AI continues to go down this path of automating and doing tasks that are mundane or undifferentiated heavy lifting as Andy Jassy calls it or doing tasks that are predictive then it's key. And again, today's AI is very clear and people this is what all people are talking about. There's three things that are happening today that are going to set the table for tomorrow. One, you got some sort of chat bot, you know, assistant. Number two, you got this concept of a co-pilot to augment you and then three, you got this new other benefit like predictive generative ideation. So some sort of augmentation that's net new. That's what that's what that's all that's out there today and you know, all the all the hub hub and of this that and the other thing. There's only three things that are going on some sort of chat bot some sort of co-pilot assistant whether it's coding or whatever and then predictive and some sort of net new thing. That's going to change everything beyond that because there's going to be even more stuff happening. So the if you take away the mundane labor tasks in knowledge work, then the what's left is free time. So do you think the whole world is going to hit the beach? No, they're going to do stuff.  They're going to like invent stuff. Hopefully world peace, you know, more balanced economy, more harmony, more goodness. I mean, so I think I think, you know, this AI system concept, that's going to mean a net new thing that's going to emerge out of the convergence of neural networks, compute data apps, something completely different, generationally different and then to this creative culture class from technology, not creative as an art like that's the old school, but like something new. That to me is what's coming out of the AI. The rest is all just like all in the weeds. People are toiling away playing because it's super fun because you can see results. Okay. And so these experiments are going very, very well with AI and then the more pragmatic question everyone's are pointing, the more pragmatic point everyone's illustrating is where's the production applications? They're not there yet. So we're in this era of experimentation, great demos, great use case applications, but how do you scale it? Is there enough power to do it? What's the role of compute and data? And so, you know, again, everything's math. So math needs computers. Yeah. And you know, we like to go back in history when the PC wave knocked out the mainframe and mini computer wave, the new stuff wasn't big enough to offset the rise in the new wasn't big enough to offset the decline in the old and the tech spending was soft for a period of time as that transition took place. You didn't see that as much. Well, then Internet was shot up and it was a bubble and then the whole thing, you know, burst. And so there was a similar dynamic, but it was, it was the amplitude was greater because of the, the bubble and the cloud, you know, we were coming out of the financial crisis. And so you had a slow, steady rise in, in cloud and it was almost like the clouds ascendancy coincided with a very slow, steady comeback of tech. And so in the economy in general. So that was kind of a different anomaly. So here now you have a situation to your point. At first of all, everybody's doing it like 75, 80% of the companies that are, that are, that we survey are saying we're experimenting with AI and the other 20% I'm sure are, they just respond. It doesn't know much about it. And so that's happening. And that happens, that that's happened faster than anything I've ever seen before. You know, normally you think about cloud. How many years did it take to get to 75% experimentation with cloud? I mean, it took a long time. Now everybody's experimenting. The big question, John, is where's the business value? And unless enterprises can show bottom line business value through cost savings, headcount reductions or greater productivity, those experimental projects they're going to get the, the plug pulled and they're going to, they're going to revert back. And what's happening now is the AI projects are stealing from other projects. It's not like CEOs are saying to CFOs, here's more money to go do AI. That's not happening. The data suggests that it's stealing from other areas. So unless they can show a gain share, hey, we're making money now with AI, whether it's cost savings, headcount reductions, better productivity or even new revenue, which I think is harder to find, then unless that happens, something's got to give. And so the question is, how long is it going to take for that to take shape and the real enterprise apps to hit? Well, that's the, that's the billion dollar question. I think you're right. And this is where the conversation, but, but, but there's an other side of the coin that first of all, I agree with what you said. And I think that's why I brought up the production workload question. And I had a long chat with the Anthropic, not Anthropic, the AI 21 Labs co-founder, Ori Goshen, just the other day, he's going to be in our super cloud event, one of the headlines, and he's one of the darling LLMs. It's, he said exactly that. I mean, there's so much creativity. People are building stuff that's working right now, but it's not requiring the horsepower that you'd need it at scale or as they say in the enterprise production apps, which means that it's fully deployed. When you have stuff fully deployed with AI, it's also a system. It's not like a server with an application on the old days for the folks that are young. That's how things are.  And when it needs more horsepower, you add another machine.  When you got AI, a lot, a lot's integrated. This is like a neural network involved, a lot more data. These large LLMs cost billions of dollars to build. They'll be always proprietary and those add value. And so there's a lot of action happening and the enterprises have to figure it out because there's a lot of things below the application layer that can be applied, all the infrastructure stuff. It's still not even the first name, it's pre game on that. All the conversation though, Dave's on the consumer side and there's no doubt people are buying into the productivity. People see the AI stuff that's out there now. The large foundational models are essentially knowledge worker productivity tools. Like I said, you got a chat bot on your machine answering all the dumb questions that people ask over and over again, there's no human in that loop. You don't need one on a chat bot. Come to my site, my app got a chat bot. Co-pilot, this concept of having a computer helped me write stories, helped me write code, helped me brainstorm for my wedding or my party or whatever you're doing, that's adding value. This is clear and then this predictive side's emerging. That's where it's going to get interesting and now assume that goes that next level and it will because it's legit.  That is a complete blind spot. And I think everybody is kind of publicly saying it but not saying it out loud too much because it's like the elephant in the room. This shit's going to cost a lot. And that's why I think you're seeing deals like and cohere and anthropic and doing monster deals with the big clouds because they're probably getting discount off their bill, right? So because they got, they need compute, they need chips. So we're in a game of formation. This is a Cambrian explosion. It's a renaissance, whatever you want to call it. AI is happening. It's completely legit and it's going to change everything but it's right now we're in the formation stage. And it's just as an aside, you know, I was talking at the Dell financial analyst meeting, you know those guys, I'm not a semiconductor analyst. I love the dabble and semiconductor and you know, where I stand on arm and Intel. But anyway, one of the analysts was saying to me, there's an interesting dynamic going on and you may be all over this. Of course, we've read about how there's a riff between AWS and NVIDIA. NVIDIA wants to put its full system into the AWS cloud and sell it as a service. AWS won't let them. So one of the analysts said, and so the result is NVIDIA is somewhat squeezing Amazon on GPU allocation. Not if that's true or not, but this is the information that they were sharing. And I'm curious, do you know anything about that? This could, this actually could benefit some of the on-prem companies because a lot of talk about, hey, a lot of this work is going to be done on-prem and what do these things cost? What's a H100 cost? Eight grand a pop, right? I don't know, but there's been a report there's billions of dollars being burned by open AI. In fact, there's a report we had on SiliconANGLE that open AI is looking to develop their own custom AI chips. Now, even if they start that going now, that's good. Good luck. See you in 10 years. Amazon has, they've been with Anaperna and all their chip investments. They are locked and loaded. They got the new CMO as former Intel executive Regene, Scalarin, former Cube alumni, Matt Garman's, no stranger to compute and infrastructure at scale. Sileski gets the game. You know, they have a management team and of course, Dave Brown, right?  They have people that know what they're doing, right? So I think Amazon is well-positioned for the chip game on the ISI because that's infrastructure that serves. That's their wheelhouse. I think, I don't think Amazon is going to be in trouble now. It might get started in the short term, but they can write it out. They started partnering with Anaperna and like, I mean, 2015, I want to say maybe before that. Dave, Amazon can write it out. I mean, look, let's face it, let's just say NVIDIA does squeeze them.  Because they're controlling the supply and this is the negotiation that they do as suppliers. So it's all fair and love and war, as they say. So, you know, I think Amazon has to have a strategy and show the card that they're going to do their own chips. Just like OpenAI, they, OpenAI has to say that. They have to go down and spend money to build chips as an alternative. That's like the U.S. with our energy policy. If we don't have energy, then we're going to rely on oil and then we're going to be literally over the barrel, pun intended. So, you know, this is the tech version of that because when you have a supply chain and you get, you know, hosed by it either on the demand side, it's crazy. The numbers just, you can be tossed to the side in a second. So Amazon has the money and the deep pockets to handle it on the iOS side. I don't see that being a problem. I think NVIDIA is playing a dangerous game, but if they go with their cloud, and I remember I pointed that out on the pod a few times ago, like, you know, that NVIDIA announcement didn't had Azure app, but not Amazon. Interesting. But, well, the thing is that NVIDIA with NUMA and its architecture and its software that have developed to allow people to more easily take advantage of, you know, the unique characteristics of GPUs.  There's a lot of talk about all these other, you know, chip startups and Intel, you know, Intel with its innovation day, which was very underwhelming. Now, the best, the truth is that you don't necessarily need these giant GPUs to run, you know, inference at the edge. But you know where I stand. What's going to dominate inference at the edge is low-cost ARM processors. And that's eventually going to create economics to trickle back into the enterprise. And guys like Apple and Tesla and AWS are miles ahead of the market on this stuff and, you know, no compression algorithm for experiences, Andy Jesse loves to say. That's totally true. All right, let's get into our rant section as we kind of wind down. We hit all the news. My rant's around this flex port thing because I got my attention because Theresa Carlson works there. And I've been following the founder on Twitter and sometimes in entrepreneurs, young generation, kind of the class and a half behind us, very wealthy, smart guy. But the founder, and he brings in flex port, brings in, they're in the logistic supply chain and platform business software, you know, for big cargo and stuff. They're moving stuff across the country.  So they hire this guy, Amazon Bezos as lieutenant, Jeff Bezos, the CEO of Amazon founder. David Clark to come in. He ran logisticsforamazon.com, which is like the whole thing. Kind of knows what he's doing, obviously. Yeah, yeah, yeah. Exactly. Been there, done that. Master of that. And then of course, he comes in and the place is a mess, apparently, they want to go public, markets great, zero interest rate.   So the guy's essentially got a board to have a board meetings and he's running, he's got ball control as CEO and the founder is executive chairman and he just one day just fired his ass, Ryan Peterson.  So what happened here was the guy basically tried to run this company the way he wanted to run it to make it better. The founder didn't like it.  He didn't like some people on the Amazon team and then, you know, there was a back and forth and then they had a secret board meeting and they came in and fired them basically. And then they tried to walk that back and then it's a little kind of a mini smear campaign happened by founder and then obviously the Amazon guy, Clark, he fights back. Now he's not quoted, but the whole journal article, I mean, CNBC had an article big in depth story called Insight on CNBC's inside story of Dave Clark's last days. I mean, that basically was, they got access to internal documents that was probably set up by the people there. It doesn't make the founder look good, okay? Because the founder came in and said, I'm gonna put the company back to profitability. Okay, they had an operator, an epic operator all time who didn't work out. And then this guy's like, from Amazon, I was like, I learned my lesson basically calling him somewhat no integrity kind of saying that. So this is the back and forth, but this is like when founders and, you know, they try to bring in operators. It's dynamic. This is the relationship with between good and bad companies and like founders are tough people. They love their baby and you can't really get them out of the kitchen. The partnership between the operator and the founders have to be there. Respect has to be there.   You know, Frank Slutman is an operator. He likes to put the founders stay in your lane kind of thing and some founders like to be more engaged and some operators like to bring the founder in for leadership. So the roles of the rules of engagement and roles have to be clearly defined and companies to be successful. If you don't get the founder operator relationship right, it doesn't go well. And I've seen so many examples of it failing and examples where it works. Another example where it worked well was Larry and Sergey brought in Eric Schmidt and they had a three-way there. So that worked extremely well. Schmidt kind of ran the table, ran all the trains, made them all run on time. Larry and Sergey set the agenda on technology and they just print, let's sat back and watch the money be printed every day.  So that's the cautionary tale. That's my rant for the week. I guess the rant part of it is that it's never really by design, but founders, yeah, if you have founder writers, you got to admit it. You got to know it. You got to know that. It could be good and bad. And you got to bring someone in to run the company. You got to let them run it. So I read an article where, and you know more about this than I do, where Ryan Peterson was given a speech at a logistics conference and Dave Clark showed up and sat right in the front row. Like just, you know, with the... Yeah, after he got fired. Yeah, after he got fired. And then Ryan Peterson to your point, walked it back and said, hey, can't thank Dave Clark enough for helping with the acquisition.  Which was, wow, okay. I know a lot about that. So here's the bottom line. Basically, he rushed to judgment and then he was over a legal barrel and he had to walk it back for legal reasons. Clark had a case. He basically got trashed. He left his zillion dollar job at Amazon. Who knows? He could have been CEO. Jazzy has to be running AWS. You don't know. He could have left that job on the table. You don't know. He was baseless his right hand on the, on the logistics side. So he was a... And so he left that to go run this company. I mean, think about that. I mean, talk about a step down.   You know, it was classic startup that grew to a point where it just needed to get retooled, put in process, put in operations. And that's just essentially a wholesale change over operationally, not business wise.  Shipping doesn't happen as much. You got a recession. Then it's like, uh-oh, we built up for growth.   That's not really the issue here. So, so... Founderitis or what?  He had to essentially clean up the operations because it was a good business. And then the market turned and they're over their skis and then the founder came in and then it was, and apparently there was some number reporting issues around the sales forecasting and they were optimistic under the founder's watch apparently and he was trying to clean it up. So it was kind of just, it's just, it's like an organ transplant. It either takes or it doesn't. In this case, the David Clark coming in to take over Flexport just wasn't a fit. It got rejected by the founder and ultimately the culture. And that's just the way it is. You know, and say I'm bringing in new new person and it's like an organ transplant for a big company. And that's, that's the cautionary tale here. That's my, my rant is this damage to people's reputation is because of this, but you know, it is, it is what it is. It's a cautionary tale. Yeah.  So what happens now? I'm Googling some stuff, the layoffs coming and dial back and start. They're laying off and yeah. I mean, they're, the founders apparently really smart experienced. I don't know personally been following his tweets. He seems very cool to me. I don't get any bad vibes from him, but you know, founders can be behind closed doors.  And if they're not managed properly, as you know, we're founders. They're, they're, they're double edged sword. They're either propellant or they could be dangerous. And I think Silicon Valley is well documented with the old playbook of, you know, bringing a, bringing someone and bounce the founder out, which by the way, this past generation of startups that didn't happen. The founders got smart and they put into the bylaws two different stock tiers. Zuckerberg's a great example of that. He made sure he never would ever get bounced. So I think we're in a new generation now where it's kind of old school to have that mentality. I think the new school is much more agile, transparency is much more commonplace and founders are a part of day one and continuing unless there's some sort of like, you know, personal thing that happens or some weird event. But for the most part, it's not normal culture to bounce a founder out. So I think you got enough VCs now that have been there done that versus the old era of venture capital where most of the guys never even started a company. Now you have pretty much 80% of the VCs that are great have done it and they get it. They have empathy, they understand the, the pressure, the loneliness, the mental anguished ups and downs and the journey. And you know, Paul Graham was on Twitter that they say, if you do a startup, it's 10 years of your life, pretty much out the window. You know, don't have any expectations of doing anything else. And that's what he actually wrote in some way.   The journey is the passion and the passion is the life. There's no work-life balance. It is life. That's what I'm saying. And you hear all the successful people out there that's what they come to grips with that is that their success is because they've gone from being guilty about not having a work-life balance to my work is my life. And that's okay because I love what I do and it's passionate about it and, and it becomes my life. And I think that's a cultural shift that I've seen happening from the whole work-life balance movement. I mean, I'm for work-life balance, whatever that means.   Go to the beach. I'm listening to and reading. That's the way I like to do when I listen to books on tape. I listen in them, but I also get the hard copy so I can go back because it's hard to go back and forth on audio and get to the right place. And I like to highlight stuff. Anyway, I'm listening to the Elon Musk book. And it's amazing.  And I feel like, you know, I feel like we work pretty hard, but man, okay, man, the people at Tesla and SpaceX, it's insane. There is no work-life balance. Walter Isaacson is so good. Cube alum, remember, Stu got him on it. Dell Tech World one year. And by the way, you know, the SEC is going after him. You mentioned that in the news. So there's something in the book. And I think he tweeted this. He says, Elon tweeted it. And I think he tweeted it, but he said, SEC stands for SEC. The E in the middle is Elon's. And I'm listening to Becky Quick this morning on CNBC. She goes, I don't get it. Like, S Elon's C. I'm like, and they're like, you don't get it. Like, we can't even tell you off the air. Exactly. Hello. It rhymes with Puck. And it rhymes with Puck. Brandon just sent me a text, Brandon our producer. Work-life balance means getting more golf incorporated in the schedule. Absolutely right. Brandon, the key is to make golf part of the biz dev. Hey, get the clients and let the go. There you go. Yeah. Speaking of golf, I'll be at the SASS championship next week, Dave. They're SASS as a big Carolina company. They're having the SASS championship. I'm going to be playing in the Pro-Am. I got invited by Brian, the CTO and I'll be down there. Actually, Brandon and I are going to be heading down and we're going to, we're bringing our cameras. We're going to have a good time. We're going to be inside the ropes. It's part of the senior tour. They call the championship tour now. And we're going to do our podcasts from there. So definitely, we're going to definitely hit it down the middle of the fairway there, Dave. We're going to keep it in the short grass, as they say. I got a 15 handy cab. You better go practice, bro. If you're going to play in a Pro-Am. I bet I haven't had time. It's busy. I mean, I got, I wanted to do three extra interviews this week and I couldn't get them done. I think we did a bunch of interviews over 10. Yeah, just golf takes up a lot of time. So like Brandon said, you got to incorporate into the work. So here's the, here's our, here's our strategy. If we can get the podcast done, that's at least four holes in, that's an hour. You probably get how many holes in, you know, six holes and get our podcast done on the course. Okay. I guess. I don't know. Unlike you guys in the West Coast, I don't have time to golf. Okay. And then it's hard to, it's hard to golf in the snow.  I don't know. I tell you, John, the weather this week has been so amazing. Like with the shittiest summer, not to like talk about the mundane weather, but it's that time of year and the leaves are changing. I had to drive down to New York yesterday because I drive down to New York because it's like, you know, you and I, we can talk on the phone and it's like four phone calls down, eight phone calls back because the traffic always sucks. But the ride down, it was like 75, 80 degrees, got warmers, it went south. The trees were beautiful. I mean, it's just amazing. And of course it's probably going to rain tomorrow.  I'm out of here because everyone, everyone, I was there for, I spent some time the past month there, you know, was down there visiting you and my sister and whatnot.  So I kind of imagine that people just took the week off and just kind of like, check it out. So I stopped on the way back yesterday. The traffic kind of blew. So I said, I'm going to stop at Rhine's deli. You know, Rhine's in Vernon, Connecticut. It's like sort of close to the mass, the Connecticut mass border on 84 for those of you don't know. It's a great deli. It is the best deli outside of what you can get in New York City that I've ever been to. So I stopped in. It was like quarter of five. There's a couple of people there, but, but I usually sit at the counter and the counter was closed. They're like, close, close, close, close. I'm like, what's going on?  How come the counters closed? They said, Oh, blue flu. I go, what do you mean? They go, look at the weather. Everybody called in sick. Well, well, the, the it's fall and I was speaking of whether it's going to get colder and the, I'm wearing my Bruins jersey today in spirit of the season starting on, on Monday. So let's get it going. Bross and Bruins. Let's see it. Yeah. Tuesday's open Tuesday's opening day. October 10th. I have it somewhere. Where's my showman's at? And there it is. Well, we, we got a lot of stuff going on as we wind down the pod. I just want to say if you, if you like the pod, give us and drop us a DM, tell everyone, share it, spread it around word of mouth. Traffic's up. Got a couple more downloads. The downloads are up until the right, Dave. And so 30, 32 straight weeks of the podcast will be podcasting from the golf course with the SAS championship. Shout out to the SAS team out there. It looks like they're going to go public. SAS, this is the awesome software company that's been private for so many years. They're going to break it out. They're well positioned with AI. So I'm going to meet the management team down there and there's some AI policies, conversations that might be involved in, but so look at angle.com, check it out. And by the way, if you have a list of podcasts, one of the things I'm starting to do Dave, I'm getting back to my old podcast roots for the people know me. I've been following podcasting 20 years ago. The 20th anniversary is going to be coming around next year. I'm going to start putting together a podcast list of the best enterprise tech podcast. So if you have one that you like besides this one, like the cloudcast, Brian Graceley's podcast is very awesome. Send it to us. If you have any other podcasts you think that are kind of related around leadership, tech leadership, trend griffin just shared one today that I've never heard. I haven't heard before about the stories about a Microsoft executive who worked with jobs, Gates and all the top people and also what's his name? Who bought the Seahawks? Who is the other Microsoft founder? What's his name? Bomber? No, Paul Ryan. Paul Allen. Paul Allen. Yeah, Paul Allen. Okay. Of course I knew him. He's the guy. Paul Allen's the big story that Paul Allen is is that he, if you remember, he's the one that convinced Bill Gates to drop out of Harvard. He's the one that showed Gates the popular science article that gave them the idea to start coding and building an operating system. I mean, that's how they, that's how they ideated back then they would read popular science.  So if you got a podcast out that they like, let me know. Let us know. DMS shared on Twitter. We want to grab it when I start a little podcast role, like a blog role of our favorite podcasts, because I just find it very helpful to share that David because I'm always looking for a good podcast, especially not all of them are good out there. Some of them kind of are long in the tooth. Some don't really are shallow hot takes or they're kind of pay a payola podcasts getting paid by the vendors. So you see a good podcast. Let us know and we'll put it up here. All right. That's episode 32. Dave, thanks for taking the time. Have a great weekend. We'll see you in a couple weeks. Yeah. Next week I get UI path forward six, sixth year of forward UI path forward. It's always a fun event. So I'm looking forward to that. Yeah. And then two weeks super cloud to three weeks. Yeah. All right. See you there. See you in the next pod. Thanks everybody.