Hello, everyone. Welcome to the Cube Pod episode 24. I'm John Furrier, Dave Vellante. Our weekly podcast we review what we're looking at every week, what's going on in the world in tech and what's going on in enterprise deep dive and emerging tech. We cover what we're looking at, what we're interested, our daily rant, top conversations. Dave, great to see you. A lot of action happening this week. Pretty, I would consider this week a doldrums of summer, a lot of downer news. The Maui fires here in California to get everyone's attention because it just decimated Maui, one of the most beautiful spots in the world. Lahaina in Hawaii just got decimated down to the burnt to the ground. Hurricane force wins. A lot of people are impacted by this, certainly on the ground and it's a tourist location and it's kind of as a downer. Zias is there. I texted Zias the other night. He said, I said, how are you doing? He said, I'm okay. I'm actually at the airport because it's the only place I can get internet. Everything else is down. So everybody's safe. Lots of action, Maui fires. The tech sentiment's brutal. AI's still booming. Enterprise incumbents are retooling and revaluing their business. We had the big years with Dell.  A lot of security action this week at super cloud security event in Vegas this week. Black Hat and DEF CON part of our super cloud coverage. We got there. Cyber confidence consolidation. A lot of GNI conversations again, continuing there. NVIDIA had a huge announcement at SIGGRAPH, which is a special interest group for graphical user interfaces, which is basically now the computer graphics being show. The CEO is up there showing their new AI chips and essentially the RACA servers. GPUs are the new servers. We're going to talk about that in detail with the impact of HPE and all the server vendors will be. Of course, AWS cloud is notable there. Not even mentioned in their cloud, by the way. NVIDIA's got their own cloud offering. So you're going to see some tier two clouds come on the scene. Extremely fast, AKA super clouds. Licensing changes in Red Hat Linux. HashiCorp making some changes. Tons of Silicon Valley conversations around the startup ecosystem that is permitting through the world around startup valuations, dry powder, all that cash that's available not being deployed. Startups, we talked about in the podcast falling out of the sky. Yep, down rounds are happening. Massive amounts of news. Lowest funding quarter downturn reported in July since the reset. And of course, people catching up to our original conversation on AI plus humans is better than the humans. And then just tons of stuff. Hardware matters. People talk about hardware. And we did that a couple of years ago. Empty offices, you know, the interesting Jason Calcanus talking about this, the Barstool founder filming an empty office. Whereas everybody, it's a down market.  So I think that's going to have an impact on businesses and owners putting that. And just Sam Bankman-Free went to jail. They got a home arrest overturned. He's going to go to jail and await his trial while in jail. That's more tech reckoning. Just so much going on again. Again, I think, you know, big Nvidia story, lot of action Dave. I mean, just continuing to see some earnings, fall short, dated dog, among others, some up, some down. What a seesaw. Yeah, you know, Nvidia, I think personally I think Nvidia's got at least a five year lead on everybody else. But the impact on Intel is significant. Nvidia and AMD are making like a pincer move on Intel. And Intel is now fighting yet another front. You know, it's got the foundry wars with TSMC, it's got the x86 wars with AMD. It's fighting China, obviously, for, you know, long-term viability and it's fighting Nvidia in AI and it's fighting the arm volume battle. So it's really in a tough position. And I just think it's, even though we love Pat and think the world of him, I just, I think Pat feels like it's been execution is the issue and he can fix execution. I have no doubt about that. But I think the problems are much deeper than that. And very much related to volume and the fact that arm wafers have 10x the volume of x86 at this point in time. And that really hurts. It makes it very difficult for Intel to compete both in the foundry and in design. Now there are those who believe that the US government is gonna save them, but you know, $50 billion is nothing. Yeah, but even money doesn't help. I mean, Intel's hurting. I gotta say, when I watched Jensen give the keynote at the 47 minute mark, I just fell out of my chair. I mean, metaphorically speaking and saying, oh my God, look at that. Those are rack of servers. If I'm HP, I'm Dell, I'm Intel. I'm looking at the next generation leader. Nvidia is clearly the new Intel chip. Their GPU is now the center of other processors. By the way, they don't need to have Intel around there. So the Intel inside I think is extinct that day but this boy, I mean, I looked at that keynote, I'm saying to myself, Nvidia's run the table. They're taking advantage of the AI trend for crypto. And then Jensen's got a whole pitch of spend more, save more, that's his pitch. Spend more on Nvidia and you save more. That is unbelievable. And I think that is an on-premises mentality.  Although Nvidia is clearly partnering with Microsoft. Nvidia is the leader, they're dominating. And I think they are the new Intel. And if you look at what their impact is there, is that they're building systems. Again, the 47-minute mark of the SIGGRAPH keynote, you basically see them take their chip and they put it on a board, they show what goes around. It's essentially a motherboard. It's essentially a server. You stack them up, you got 10. You rack them and stack them. That is hardware, okay? And this is gotta put the fear of God in HPE Dell and anyone who's making servers because that is a viable play. It's modern, it's relevant, it's powering the next generation of workloads. It can be on-prem, it could be at the edge. That's Dell's business, David. And it's got a full, it's got a software stack that Nvidia's been investing in in years. The street used to hate Nvidia because Jensen said, you know, we're gonna invest in our software stack. We're gonna make a lot of money for the next several years, stock got crushed. Of course, you look at it now. And then you're right, Sean, I watched that keynote. Thanks for giving me the heads up on that. As I was heads down, you mentioned Dell Big Ears. Won't talk too much about that, but I caught it this morning. I watched it this morning at home and on the way in. And I mean, just the evolution of the hopper chip, amazing in the super chip and where it is now.  And now the other thing I'll just mention real quick is that innovations in enterprise tech come from consumer. That's why we think ARM is gonna do so well. That's how the original x86 did well because it was PCs. And you think about it, it was gaming that got Nvidia. And so they have, at least in my opinion, a five year lead on everybody, could even be more. Yeah, and the other thing about that keynote, he was basically saying, we bet the ranch on AI, bet the farm, bet the ranch, whatever he used, get the term he used. But he said he bet the company on AI decades ago. Okay, or decade ago. Yeah, and that's true. And he's pounding his own chest, see, we had it right. And I think people are criticizing AWS, specifically Charles Fitzgerald, Fitzy, our buddy. Did you see that? He came out today. He's slamming AWS at every turn. And the fact of the matter is AWS has also invested heavily in machine learning and AI. They just don't have the large language model and Titan formed yet. But, and you can't blame him, but I think he's taking a lot of potshots at Amazon. But I think Amazon might have last laugh, just like Nvidia is. I think this points to who's investing in what?  They say, oh, we have AI. And they never, we weren't even considering machine learning and AI a few years ago. But there are companies like Nvidia, who saw the future, they invested heavily. And we know this for a fact. As I remember back in 2013, 15 in that timeframe, we were interviewing and talking to those folks. They were basically saying, we're not a hardware company, but hardware matters, it's software. So a couple of things, they're in it early. Amazon's in it early. I think Microsoft's in there too. Google's been there from the beginning and they're gonna try to capture that. We'll follow them at Google next in a few weeks. But this is where we're gonna start to see the players and the pretenders start to separate. I think over the next six to eight months, these super apps are coming out and we're gonna see who rises out of the organic as net new functionality.  And I think this is the super stack we've been talking about for over a year and a half now around super cloud, which has massive traction. It's happening. And you got super cloud security going on at Black Hat DevCon. Dave, this is where the world is changing. I gotta say NVIDIA is relentless in this pursuit for AI hardware. And even now people are copying our Hardware Matters podcast that we did or a documentary with podcasts. Even now people are tweeting, Hardware Matters, it's back. Well, guess what? We did two years ago, a show called Hardware Matters. Again, this is why I think the fashion of outcomes is shifting to what does my infrastructure look like? What does that stack look like at the physical infrastructure layer? I need to get that right for this modern era coming up which is high velocity data, AI. So the conversations are changing from marketing speak to legit architecture. That if you don't have a strong architecture in your enterprise, you can't successfully build out and transform your organizations. This is gonna cause a lot of friction in the marketplace because people are gonna look at this and saying I'm on the wrong side of this trend. And it's not easy to get back on the right side. Now it's easy to be agile, but to absolutely reshift and refactor and replatform is gonna be very difficult for coming on. Like I said last week on the podcast, people listen to this podcast, they get stuff early. So this is the reason to listen. You heard it here first. It's gonna be a refactoring of the physical, middleware and application layers of the stack across cloud, on-premise and edge. And some people aren't gonna be able to handle it and they're gonna be out of business. You talk about the need to move fast. The other thing you turned me on to was a while ago was that internal memo from Google, we have no moat and neither does open AI. And when you unpack that thing, it's like basically say an open source is where all the action is. Of course we know that, but when you think about near the battle with these LLMs, all these proprietary LLMs and versus the open source stuff, there's like dozens of open source LLMs that have come out since the Lama 2 got leaked on a meta and the world has just taken off. And so it's just, it's really exciting times right now. And it's kind of the Wild West, but I think that one of the things that you mentioned earlier, Dell Big Ear, so every year Dell has, they bring in some analysts and they listen. And so it's kind of a cool session. I don't want to say too much about it because it's not really NDA, but it is NDA, if you know what I mean. But it's actually a great challenge. And one of the areas that it's obvious, whether you talk to Dell or HPE or a number of the other folks, IBM in part, is the discussion about where our large language model is going to be run. Is it going to be run on-prem or are they going to be done in the cloud? On the one hand, the cloud has the allure. It's got the developer tools, it's got the innovation, the pace of new features. It's got really deep, rich capabilities in terms of fencing off LLMs and not letting the LLM vendors have access to the customer data. It's got encryption at rest and in motion. It's got database optionality with different vector databases. It's got all kinds of other ML and AI tools. So the cloud is really alluring at the same time. And you pointed this out, John, when we were prepping for the breaking analysis today, it's like this can of worms of risk with legal, with compliance, with IP leakage, with copyright, and so this top-down, the way you describe it to me, I'd love to have you articulate it, you got this top-down push from the board. You got to do gen AI and then the doers go, uh-oh. So the bottoms up is just really complicated because they run into a wall of legal and compliance issues. So it's really, really complicated. So point being, when you look at the data, a lot of this stuff, it's right down the middle when you look at the ETR data. It's 50-50, going to be on-prem and in the cloud in terms of where people want to run these models.  First of all, the SuperCloud event we had security plus AI a couple of weeks ago, go to supercloud.world you're listening. You want to get here, all the CEOs in the security business, talk about this because it's now mainstream. Wall Street Journal had an article yesterday around AI is generating security risks faster. AI headline was AI is generating security risks faster than companies can keep up, of which we reported that months ago too. And here's what we'll say to your point. This is now catching up. The mandate for generative AI is clear. And everyone's talking about Andy Chasi said in his earnings report, you'll have AI in every single product. And there's a lot of stuff going on and building out new stuff. The top-down mandate is clear. That's everyone sees it. Take that hill, the directive. Okay, boss, now they turn around to their team, like they were just implementing containers and Kubernetes yesterday. Now they got that completely AI infused their entire application stack. Okay, that's not going to happen. Here's what's happening. Yes, they get the mandate. The staff turns around says, what do we do? They start experimenting. They start playing with stuff. And that's where we have that long tail power law going on that you reported in breaking analysis today where the builders, the new DevOps role of the data developers are in there, the data engineers, the platform engineers, they're creating the new infrastructure and platform as a service for AI. Call it AIOps, whatever you want to call it. That's going to power the next gen applications. And here's the problem. The risks associated with the innovation of AI is happening at the exact same time. So yes, you got innovation with AI, but you got compliance and legal factors all hitting at the same time. That's going to basically put the brakes on any kind of deployment of any real AI, generative AI systems in the business enterprises in the short term. What's going to happen next is the developer community and open source is going to put this together. They're going to figure it out. And then you're going to see new things emerge. A new brand that we've never heard of that's the next unicorn. And it happened in the web 2.0 phase. YouTube came out of nowhere. Video's hot. YouTube is what it is today. The big brands, Facebook, Airbnb, they all popped out of that revolution. That's going to happen in AI. So then that sets the agenda and gives clarity to the rest of the world who says, okay, we now see some stability and some a path to AI. And so that's going to happen. And what that's going to do is it's going to put pressure on the earnings results from the hype side. So I see, and you pointed this out last podcast that the earnings on the AI side is going to come in, but it may not be as fast as people think. I think you'll see a bump for sure. That's just spending, but you won't see the massive impact for at least a couple of quarters in my opinion. And that is because the cost optimizations going on and as that's being discussed is minuscule and petty compared to the costs if you screw up AI. Because if you screw up AI, you could be spending a ton of money on training and inference and managing the data and putting yourself at risk. That's going to, people are going to put the brakes on that. So I think Amazon smart by playing the long game. I think Microsoft might have overshot the hype. We'll see if that doesn't hurt them, but it's totally active, Dave. It's a boom. I mean, VCs are funding it, a lot of action, but I think this top down bottoms up dynamic is going to slow down at the top down and the bottoms up is going to explode in value. And I think the innovation is going to rise to the top that'll solve the legal and the compliance problems that the Wall Street Journal is talking about and others are talking about. So I think you're going to see people look at their data. They're going to take their time. They're going to keep things on premise for a while and then go to the cloud for services that they need and then maybe either put some stuff in there initially, but it's going to be interesting dynamic. And I'm predicting more on premises than on cloud. And in the enterprise early stages. So that's why Jensen said spend more, save more. What he's saying is you can't over provision GPUs because they're constrained. Right. So my forecast calls for Amazon to actually get a bump. I think growth will be flat this quarter to Q3, but I do think they're going to get a bump in Q4 as a function of seasonality. And I think there's going to be a little bit of a gen AI tailwind, not huge. Maybe even a point and a half up tick up from Q3. But I want to talk about this power law concept that you have that I stole for today's breaking analysis. And I will give you credit in my written form. I forgot to today, but John, it was really your kind of catalyst. And so, you know, two dimensional, right? Power law is like the 80, 20 rule. 80% of the revenue comes from 20% of the products, something like that, right? So, but the power law of the web was like that, right? 80% of the web traffic came from 20% of the sites.  But your premise is that with gen AI, if you think about size of models and model specificity, there's going to be, 20% of the companies are going to have sort of the big AI models. It's going to be Google, Amazon, NVIDIA, Microsoft, open AI, but then instead of the wall down, it's going to be a curve like this. Maybe Brendan, we can get a graphic of this in post, but then that curve is going to be third parties, open source, guys like Databricks and Snowflake, so it's meta, it's anthropic, it's Mosaic ML, Falcon, Coheir, Huggingface, Jasper, Replet, blah, blah, blah, blah, blah, as that shape of that curve is not so right angle. And then the long tail is going to be a lot of industry specific models, model specificity on-prem, and then out to the edge. The edge is going to have numerous models. And I think it's going to be, again, driven by consumer demand. I mean, that's where the volume is going to be. Yeah, and I think the consumption of ChatGPT shows that that's a lot of consumption at the head of the tail, okay, the head of the power a lot, so it's like a long tail. We saw this in the record industry, and we saw it in early days of the search engines, where certain queries dominated, and then they were the most popular, and then you had niche in the long tail. I see the market growing big time off the head of the neck and the torso, because the Llama 2 and these third party models going to create innovation. Those innovations will create valuable data sets that might look smaller from a consumption standpoint, but it can be powerful. So our cube language model that we have from the cube transcripts is actually very valuable, but it's not being consumed a lot. It's not that big. So we would be kind of in the niche category. ChatGPT is mainstream, Bard will be mainstream, Titan from AWS when that comes up will probably be mainstream, Google, Facebook, those will be the top of the market. So then it just, it'll grow. I think that there'll be a shift to the right in the power law big time. As that middle gets stuck fill with better content, better AI and that's going to happen over time. So thecubeai.com, I want people to go there and sign up for the private beta and start playing with it. And because it's not, it's not by no means is it perfect. But I mean, that was developed by our engineering team in weeks, right? Maybe even shorter, maybe even week, but then now to perfect it is going to take longer, but it's the real deal, right? It's using open source technologies. It's using Milvis, which is a vector database. It's using MongoDB, it's obviously got a search engine. And so that, but the point is, we were able to get that to MVP mode in one tent the time that it would take for a normal software development cycle. And it was amazing. Well, because we have the data. I mean, the key is the data. And the thing is the data is more valuable than the size of the model. And that's coming out in the AI conversations today, which is the quality of the data is more important than the size of the model, okay? Because the quality of the data is critical to leveraging scale. So the size of the model, that's why people see how this notion of hallucinations, hallucinations of not getting the right answer. When you have high quality data, it's high fidelity, it works. So I think that's very important. And it's easy to say, you know, I have a, I can do this, but making it valuable is going to be a whole nother discussion. And I think that's where on the startup community, you're going to have to see patterns forming over the next year where everyone's going to have AI and say, look, I have some AI, it's dancing, it's singing and dancing AI, but it's not going to be valuable. And Steve Jobs always said, I've never found his famous video that goes around. It's a technology looking for a solution. AI looking for a solution is not going to fly. So I think AI is going to be one of those things where it's going to be very domain specific and it has to integrate with other data. And the powerful motions that we're seeing and how we're using the AI and how successful people are talking about it in the large enterprises is the data fusion, the interaction between data. I got a data set over here and I want to enter face some, bring some data to it of which when they merge together, it changes. It's like injecting something and changes the color of it. It's like a blender. You blend it together and it's got new life. This is the chemical reaction, if you will, for data. It comes together, fuses and changes. That is a discipline, that is a data developer mindset. That's going to be a data engineering, a platform engineering kind of DevOps thinking role. I think that's going to be a critical changeover. I think that's why we've been seeing people adopt our term data developer out there in their marketing, because they see this new persona emerging where that's the new DevOps like role for data science and data engineering. Create the guardrails, let developers use data in their applications either declaratively in code or have the code itself engage with data sets programmatically. So I think this is going to be a changeover that will sneak up on the market. It will sneak up on the venture capitalist on the equity side and no one's going to know what it's going to look like until it hits us. And I think this is going to be the exciting part of the startup ecosystem. Like I said, a new brand will emerge. A new company will form from kids that are in their 20s and say, oh my God, look at this, it's popped out. And I think that's going to happen. And whoever sees that first, that's the next Apple. That's the next Microsoft. That's the next Facebook. That's the next Airbnb. There will be a generational set of startups that will come out of this. That will be a force multiplier for change. And that's going to set the agenda for all the incumbents to either adopt, get clarity around the business implications and society and consumer implications. So, you know, right now we're in a major reset with venture capital and Silicon Valley and private equity where it ain't a free lunch anymore. They've actually got to be good investors.   You're going to see the pretenders fall away, the players rise to the top. And right now, we'll get into it later, but my rant is the Silicon Valley conversation is all about dry powder. You know, VCs are playing this rigged game, Dave.   Bend and Snap works every time. That's what the VCs are doing. They bend the market and they snap it back out. So right now the VCs are bending valuations down. They're pulling the bend and snap move. Now, boom. When the market hits, they all say, we got all this dry powder, we don't need to deploy it. Let the market crater, let all the recaps happen, prices drop, which includes net new seed rounds. The market's tight. And then the best entrepreneurs will come out of this and I think that's what's going to happen. The prices will be low. And then they'll raise it back up again. It'll be free money and then pop. Pop goes the bubble. So Bill Gurley at Benchmark and Josh Wolfe at Lux Capital, but they're all over this. But, you know, come on. That's not, they're kind of like hiding the lead. Well, they want the prices to go down. The, of course, but the IPO market is dried up. You know, maybe it'll come back next year. I know, you know, there's a number of companies that we're looking to do IPOs. Obviously Databricks, we talk about them a lot. SAS is a company, SAS Institute, which is formed in the early 70s, but it's a $3 billion American success story. They want to go public maybe in 2024. Click is another company. It's a private equity company that I think wants to go public. So people, they're just waiting. Nobody wants to be first.  And if interest rates are going to be higher for, if interest rates are going to be higher for longer, that means that, you know, stock market's going to be less attractive. Why take that much risk? So, you know, we could be entering a long phase where we're going to be building a base for quite some time. I totally agree with you on some of my point is, we talked about this like multiple pods ago. We said, you'll see startups falling out of the sky, zombie startups. The information had an article this week, title headline. Their headline was title wave of down rounds hit startups. Down round is when they reduce their valuation and get crammed down, if you will. Crunchbase venture a monthly VC funding, recap seed rounds downturn this year is the lowest it's ever been. This Bill Gurley, Josh Wolfe, you know, dry powder, they're trying to make it sound like, you know, it's not a, all this capital that they have in their funds is a signal that it's healthy. And they're saying, no, we don't have to deploy capital. Why would they to your point? And they're not obliged to by their limited partners. They want to make money. So they, they're going to do what every VC does in this cycle. Because remember, Dave, we've been through what four cycles of VC down rounds, three or four. It happens every single time. Hold on, don't spend for the reasons that you mentioned. And the prices drop. The recaps lower the valuations of existing. There's a recapitalization or cram down on the financing and then new startups that come out have lower entry valuations. And that's where the next cycle comes in, that next batch of when it kicks up when the market's a better environment, those VC investing are looking for that and not looking for the cram down.  Okay, so let's put it that way. So those are dogs with fleas, as they say. So I think too, John, during the run up in 2020 and 2021 the tech bubble, a lot of people were making bets on remote work, hybrid work and things of that nature which really aren't necessarily holding up, right? People are sort of forcing folks, employees back to the office three days a week, four days a week. I know Amazon's like three days a week. Even Snowflake, which basically vaporized its headquarters. So for a while there was like no headquarters but you have to have headquarters if you're a public company. But even Snowflake has sort of planned back to work in-person activities. And like I say, Amazon's I think three days a week. Dell, even Dell, which is bring your best self. Dell, if you're within a certain radius, I forget exactly what it is. I think it's within an hour or something. You got to be back to work in the office three days a week. I tell you right now, you and I talked about this a couple of pods ago again. I think there's going to be a big pressure in this economy to get people working together. And I think the work at home thing is going to change to work at home if you project-based. If you need to interface with teamwork, you got to be in the office with some frequency period, full stop. This idea of being remote and being teamwork online, I think it's going to go away. I still think it's a mental health issue for doing Zooms all day long. I don't know how anyone can do that. Maybe I'm old school generation, but in-person collaboration makes a big difference for people who need to work together and have teamwork. So I definitely think that's going to be coming. And you're starting to see some of the pressure. Jason Calcanis on Twitter was like, come on guys, what's going on? Am I old school? The work ethic? Where's the work ethic? And then the Portnoy, the founder of Barstool Sports who got it back was like day one back in his old company with the pirate ship. And we're going to bring back the old Barstool Sports because he made a great deal to sell out that gambling side with ESPN and his other companies. So he's got Barstool back again. So he's got that energy. Well, he did it. Cat, he pulled it back, man. What a deal. He made a serious bank when he sold Barstool. Oh yeah, well, yeah, it grew. And they spun that back out. It took Barstool Sports because of the risk on the regulation side. But he went into the office, David, took a video. No one's here. Where is everybody?  He's just funny because he doesn't hold anything back. But his point was, get in the office. You know, I'm here. So I think that was just funny joke, but he's like that. I think that the big thing is that if you have a choice of making people come to the office or going out of business. Yeah, of course. Then you've got, people have to come together. And that's what I think. Everything falls to the side when you get to that critical path of old school versus new school and work styles and millennials versus the Z generation. At the end of the day, how you work doesn't change work ethic and ambition and persistence and intelligence and goals. I think it's mixed. I think it's mixed, John.  They're definitely, in some cases, more available on weekends. But the flip side of that is, a lot of people have side hustles, right? So they're working their side hustles in with their day job.  There's a difference between flexibility and work standards, right? That's my big thing. So, you know, I think, hey, if someone's got a long commute, they should take their time, but be in the office or you want to have, take your meetings from home because you get back to back to back and you want to go from, you know, 830 to 1030 or 11 at home, no problem. And then, you know, roll in or stay home or yeah, that's all about flexibility. Again, that's work style, not work ethic, right? So there's a difference and I think a lot of people confuse the two. You can be a hard worker and work at home and if you're that good to get side hustles in, good for you. That's my philosophy, but a good employer would be like making the most out of that project-based work or whatever work they're doing. So, again, that's a whole nother ball game. Well, let's see, what else is going on? You know, China, President Biden did an executive order this week. She said you really didn't dig into that, but it's, I wonder what you think of this. Americans, they're going to prohibit American companies from investing, particularly VCs and some Chinese companies developing advanced semiconductors and quantum computing starting next year. So essentially stopping investments from VCs in China, trying to block access to key technology. So escalating the US-China tensions, Janet Yellen was trying to calm China down when she made her trip over there. I don't know, do you think this is a big nothing burger? Personally, I think it's kind of the wrong direction, not that the US shouldn't put restrictions, but I think ideally I'd like to see the two superpowers trading and not trading barbs, rather the trading goods and not trading barbs. I think, first of all, it's an executive order. So that's a presidential thing, but I think it's a signal that sentiment of the people in the United States feel like is why is China getting all this competitive advantage without spending the R&D to get it? And that's the core of the issue. They stole everything. Okay, and everybody knows it, but nobody wants to do anything about it because the labor market's so strong. I mean, I was talking with someone the other day who saw an article in the Wall Street Journal again about sneakers that are made in America, but name one brand that makes sneakers in America, New Balance, okay, that's it. Nobody else does, they all own China. So China is a great labor- It's a new balance, Boston is. Yeah, they're Boston-based, right? So China's got labor market, but also consumer market iPhones had their biggest quarter there, last quarter. But I think that this is a political thing for the election coming up as well. Look, we're tough on China, we need an executive order. I think it does have a lot of teeth because it's an executive order, but it does, I think it's the right thing to start having conversations about China. Like, look, it's gotta go both ways.  So they got people being jailed. They have counter-espionage campaigns. Some are saying that the fentanyl crisis in America is based on the fact that it's a war by China subverting our culture and getting in there and doing shit. So there's more and more deaths from fentanyl happening more and more every year. And people wanna raise awareness about that. Where's that coming from? Is that, are they enabling our borders to carry over more and more lethal drugs as a under the line paper cut to feed into our country? So again, that's a legit conversation that people are having right now. It's not really popular because people wanna look the other way. But these are things that people are talking about. And so I think Biden's issue was more of a signal, signaling than teeth, in my opinion. And I think that's a good thing. And this is aligning with everything else, Dave, we've been hearing about doom and gloom and tech. What can the tech companies do to make better? And this is the issue.   Alibaba had a good earnings and all the Alibaba bulls are back. But I mean, Alibaba is basically trading, basically slightly above where it was in its IPO day. And so would you wanna invest there? I'm not a VC, but I would not invest it. If I wasn't, I would not invest in China period. I would invest against China. I think the time you invest in America, so I would agree. I mean, the time to invest in China, so my old boss, Pat McGovern, was early on in China, kind of the China literally like 30 years ago. And he got in to invest it in companies like Tencent. But he started Computer World China like a long, long time ago. I remember I had lunch with him one time and he said to me, the problem is, I can't get my money out of there. So it's gotta stay there. So sometimes I'll buy things like tea and ship it over or whatever it is. And so, but that changed. And then now, I mean, I think that window, at least for a time period is closed. I'd be much preferred as an investor to, or if I were an LP for my firm to invest in America. Yeah. And I worry about the cybersecurity aspect of it. This week, super, super cloud security conversations were continuing in Vegas with Black Hat and DEF CON.  Okay. What's happening is that there's so much fragmentation, Dave, in the security products, there's so many cracks that are being exploited.  And this is a reality. And I think the opportunity for AWS, Azure and Google, hyperscaler clouds is to work with their platforms to fix all these cracks. So I think the security business is a disaster right now. And I think that you're going to see the leaders working harder to be much more less tool oriented and much more platform oriented. So it's going to be very interesting to see. I mean, because it's still big business, right? Because no one's stopped spending on security and data protection, which we have been doing a lot of specials on, I would say with Dell for instance, they're kicking ass there, but like data protection, how do I protect my from ransomware? All there's so much out there and it's just incredibly hard. I don't know how they do it. I would say this, the data suggests that, security remains the number one priority for organizations. The spending has been somewhat compressed. And I think what's happening is you're seeing, so spending on AI sort of bottomed in October, the month before chat, GPT was announced and you can see in the data, it's been up into the right sense, but budgets are still constricted. They're only, they're growing less than 3% this year when at the beginning of the year, it was expected they were going to grow 5%. And so IT decision makers have had to shift budgets as they shift spending toward AI, they have to take it away from other areas. And so security has felt that a little bit. And so the winners in security in my view are the guys with the consolidation plays. And that's the likes of Palo Alto networks. I think CrowdStrike has an interesting consolidation play. I think Zscaler as well has an interesting consolidation play. So it's like, it's like we were talking to Jay Chaudry about you have to be best to breed within a certain, you know, wide, fairly wide domain, but you can't go too wide. You can't be all things to all people. Like, so for instance, you know, Zscaler is they're not going to do identity. We will leave that to Okta, right? But they could do cloud security and they could do that really well. CrowdStrike, yeah, they can do endpoint, but they can also do threat detection, XDR and expand. They're not going to do identity, okay? That's so you can carve out chunks and be best to breed there. But if you try to go too far, you're going to run into tools that are better. And so, but right now that the security business a little bit soft, but I do think it's going to favor those guys that I just mentioned that have consolidation plays. And I think, you know, it's a gift that keeps on giving. The other thing I'll mention, just FYI people, I did an interview with Keith Bradley from Nature's Fresh Farm. They got hacked a while ago. I sat down with him at Dell Tech World and I said, would you talk about it? He goes, yeah, I'll talk about it. We did the anatomy of a ransomware attack. He took me through how they got in, they got through an open port, how he knew that they got hacked, what he did about it, how he called them the consultants, whether or not he paid the ransom, he didn't pay the ransom, why he didn't pay the ransom. What he did as a result of all this, was he afraid he was going to get fired? It is an awesome interview. Just use this Google anatomy of a ransomware attack, Nature Fresh Farm. And he was very open about it, which was cool that he was sharing for his peers.  It's devastating because you'll be handicapped. So I think ransomware is one of the hottest areas we've been talking about for years. And zero trust, not 100% baked at this point. So I think the silicon angles of this is going to be really interesting. I think you're going to see a root of trust model come out, we've got to get more of that going. That's clear. But it's scary, David. And so I appreciate him coming clean on that because it's almost like therapy, like come out, share your story. Don't be seen, because people are gun shy right now. They're very nervous of getting hacked because that puts the business at pressure and then obviously getting fired is obviously instantly things. So again, that's always a concern. By the way, I asked them, were you afraid you're going to get fired?  And I asked them, were you afraid you're going to get fired? He goes, never. No, my management was very supportive and they wanted me to fix it because I was in the best position to do so. So I thought that was pretty forward thinking. Yeah, I totally agree. And I think one of the things we're going to see going forward is when we start looking at the enterprise companies, and we were talking about this at the top of this podcast, all the enterprises are retooling, right? All the incumbents, like Dell, HPE, Oracle, they're reevaluating their businesses because like we said with NVIDIA, they could be putting pressure on Intel and the server vendors, right? Then you got the hyperscalers with AWS at Microsoft Azure and Google GCP, Google Cloud. I think the conversation of, that's going to come back quickly, and I'd love to get your thoughts on this because I haven't talked about this publicly yet and came out of the conversation with the enterprises, companies are going to start launching their own clouds. I think it's time where the idea of, they missed the cloud boat, remember HPE tried to do a cloud, VMware tried to do a cloud, OpenStack tried to have a cloud, everyone tried to have a cloud, but that was to compete with AWS, right? Microsoft kind of had a cloud because they had large global scale with MSN and their global infrastructure. So they could easily, Azure was a cobbling together of pre-existing large scale data centers. So hello, Azure. So they can catch up, they had scale. Google has scale because Google runs the biggest largest search engine on the planet, 90% market share, and now Gmail and other things. So those companies had large data centers that became clouds. Other people didn't have that DNA and fell to the side. That's chapter one of cloud. Now, the NVIDIA keynote at SIGGRAP, they announced a cloud. They said NVIDIA's DGX cloud has all the stuff in it, but they don't include AWS. They had GCP and Azure in their Oracle cloud, no AWS, which a little bit of a gesture, negative gesture towards Amazon, which is could be interesting, but they had other clouds in there. So I think Dell should launch a cloud. I think HPE already launched GreenLake. That's their cloud. Well, Dell has Apex, Apex is their cloud. I think GreenLake is more mature, but it's still like way behind the cloud guys. I think it's time, I think it's viable now for Dell, Apex cloud to be a legit cloud for the enterprise because it's a super cloud, Dave, because it's not going to compete with the CapEx of Amazon. It's going to coexist, okay? NVIDIA is not initially competing, although they kind of are, but they're coexisting because the use cases for NVIDIA's cloud is for NVIDIA's software stack, hence their customers, which now become developers. Snowflake has a cloud. That's on AWS Azure, right? So this is a super cloud phenomenon that it's now viable to have clouds. A cloud is as a service, elastic service. I think we're back on a second bite at the apple, so to speak, for cloud. And I think the difference is, is that the expertise of their cloud is specific to how they do business with their customers. So if I'm Dell with Apex, I'll be like, okay, you have infrastructure, you have edge and distributed computing, hybrid and cloud. If you're HPE, here use all our servers with GreenLake and we kind of make it easier to consume and provision, provision and consume. So I think we're back, I think we're back to a second wave of cloud growth, but it's not going to look like before. It's going to still have the tier one AWS, again, a power law potentially, Dave. You know, what's interesting, John, it gets kind of lost in all this, is we talk about NVIDIA, I love talking about ARM, we unfortunately talk about Intel, because I think it's such trouble. And we're talking about the clouds. A company that is sort of under the radar, but they will be in front and center this month is Broadcom.  And their value prop is they do all these chips that nobody else does. So they sort of lock up the value chain. And it's really about the connectivity, like talking, all these components talking to each other. So it's not just the CPU, it's all the flow of data inside the complex, the system.  They're not doing their competitive with Melanox.  And so, you know, they kind of have a contrarian view of everything, they buy businesses that are sustainable. And by that, I don't mean like climate sustainable. I mean, businesses that have a very, very long future, long legs, big customer base, sticky.  I wrote about this, how Broadcom will tame the VMware beast. I think that's exactly what's gonna happen, although I think, you know, Tanzu is obviously part of the multi-cloud, seems like Octan is believes in that. I can't get a read on Project Monterey. I've been asking everybody, what's the story of Project Monterey? That's essentially VMware's version of Nitro. And I can't get a read on it. I can't get anybody to really give me specifics and haven't heard much. There doesn't seem to be much marketing going on there. So that's sort of a question. Broadcom has semiconductor shops. So you would think they either have an answer and will kill Project Monterey or they'll take it in-house and make it their own. I don't know. I have a huge perspective on Broadcom. First of all, Broadcom is well positioned. If you look at Broadcom's position with VMware and their position as a chip leader, they have an end-to-end security opportunity. I was talking about this with the Dell folks on the data protection. We're doing a special series called The Road to Cyber Resilience with the data protection team at Dell, okay? Which is all about data protection. And so the conversation came up around, you know, silicon. And so we've been talking about silicon at the physical layer and the middle layer and the app layer are super silicon, super chip, super computing, super cloud and super apps, okay? I like how NVIDIA calls it super chips. But Broadcom's got super chips. They have an end-to-end, they control all the protocols and they can lock down the firmware. And remember, zero trust. The one hole in zero trust is, you know, taking someone's laptop. So I think the opportunity to close the end-to-end gap on security is definitely at the silicon layer. So, you know, if you look at how Broadcom's positioned, I really like that there's no, it's a very subtle message, Dave. It's not talked about. And even things like data protection with Dell. Broadcom in the silicon layer has controls over all the products that can track how changes happen. So, you know, full stack security is from silicon to applications. Broadcom is going to work in with VMware and can they unleash vSphere to be unlocked from NSX? That's going to be something I'm going to watch, but building devices is another thing. We just, you see all these conferences with IoT devices, Dave. You know, this is the new technology trend. Hardware is the new focus, not just business outcomes, hardware matters. We did a whole thing on that with Dell. Remember that we did that whole program that hardware matters. To me, hardware is about the software, but there are engineering roles now in making the silicon work. And so from building small devices that got to be smart on the internet to end-to-end security in the stack is where I think Broadcom shines. And that's the angle that no one's talking about with Broadcom is that even with companies like Dell and HPE and all their companies that they partner with and soon to be owning VMware, they have the end-to-end action. That's going to be kind of a hidden gem for Broadcom, but they're going to be enabling that opportunity for software up the stack. So Superchips powers the supercomputing and powers the super cloud, which powers the super apps, hence the super stack. We've been seeing for years. They managed the internal fabric. I remember I was trading notes with somebody one time to try to better understand this a while ago. So what's their unique differentiator? They've managed the internal fabric between CPUs, NICs, storage, whereas NVIDIA manages sort of how the GPUs work together. So I think that, you know, Charlie Cowis who's the sort of number two guy underneath talk 10, I saw a couple of years ago, he did this talk about how we're shifting from a compute CPU-centric world to a connect-centric world. And that obviously is self-serving for Broadcom, but that's their premise. That's their bet that they're making is that there's going to be need for connectivity across all these different components inside of the systems complex. It makes a lot of sense because everything used to be handled by the CPU, that's changed. We know that 30% of the CPU cycles are wasted on offloads. So that we're going to need specialized systems to do that specialized processors. And all the x86 would do all the memory management. Everything would have to go through the x86. That's changing. Arm is blowing that away.  And you think about Telco as well. So it's going to be interesting. They're very quiet about it. They don't do a ton of marketing Broadcom, but they're obviously doing something right and the street loves them. Well, Dave, let's get into the rant section. I did my Silicon Valley conversation on the VC's quasi-rant, but I'll add a little bit to my rant, but let's get into what you're looking at this week from what's jumping out at you. That's either a rant or a focus. I'll give you my rant. Okay. Lina Khan is back at it. Amazon to meet FTC officials next week. So basically they're calling this. There's an in-person meeting where representatives of Amazon are set to meet with the Federal Trade Commission officials. The person who's familiar with the matter refers this as a last rights meeting.  That's what this is. And I just hit so, okay. So that's what I ran. So I want to talk about one of my favorite books of all time is a book called Think and Grow Rich. Okay. It's by Napoleon Hill. And he wrote it just after the depression. Unless how you're waving your Wall Street Journal in your hand, yesterday's news. Okay. Well, that's what we do. We review yesterday's news on your show. So Napoleon Hill wrote this book. He took 25 years of his life from Andrew Carnegie who inspired him to write this book. If you've young people out there, if you've never read this book, this will change your life. Okay. Think and Grow Rich by Napoleon Hill. And in there he says, now remember this was written in the 1930s, but it applies today, like I said, but he said, steam ships and railroads do not spring up from the earth and function automatically. They come in response to the call of civilization through the labor and ingenuity of organa and organizing ability of men and women who have imagination, faith, enthusiasm, decision, persistence. These people are known as capitalists. They are motivated by the desire to build, construct, achieve, render useful service, earn profits and accumulate riches. And because they render service without which there would be no civilization, they put themselves in the way of great riches. Now I just want to say this, I've said a million times, if companies are abusing their power, the government should check them. But I would just like to have in the conversation with all these bureaucrats a recognition of what tech has done that has enriched our lives because it's been amazing and the price drops every year and the competition escalates and we all benefit from it. So. All right, way to go. Standing ovation. That's my rant. Well, that's a great personal grant. It's more of a preach and a rant at the same time. It kind of was a preach. First of all, I applaud that.  I think that book, obviously at the time, I like it, it had women in it too because it's actually a capitalist. I would add that entrepreneurship and building something, taking a risk and a reward is capitalistic too. And I think I remember when I was in business school, I went at night because Eula Packard would pay for people to go to business school at night. So they paid for my tuition. I went to Babson College at that time in the early 90s was the number one business school and at that time entrepreneurship. At that time, Harvard, Babson, MIT had something, very few schools had entrepreneurship programs. Harvard was probably most notable for it. I'm not sure Stanford. Stanford probably had something going on. I think Berkeley was then followed on later. It was very niche. Entrepreneurship was not considered a glamorous thing, okay, in the 80s and 90s because it was hard. I mean, it was very difficult. I mean, the idea of starting a company, oh my God. Because of all the reasons of the cost. Then it became like a fashionable thing. I'm an entrepreneur. I want to play entrepreneur. I want to be as a career. It's kind of not a career. It's like, be careful what you wish for. And that's, you know, in Silicon Valley, the whole bro culture became, I'm going to get rich. They watched the social network of Mark Zuckerberg. They think it's so glamorous and easy. Well, welcome to the world. But I think entrepreneurial thinking, okay, to the Iran and this day and age, for whether it's the woke culture or government, should be rewarded. And I think people should understand it and celebrate it because not everyone can do it because entrepreneurship now is a catalyst for creating value, but it has now history to it. It's got an ecosystem. So people, I know people here in Silicon Valley that have spent their entire careers with their friends building companies together.  No, but they're the builders who build it. They're the mercenaries, so to speak. And they travel from company to company every four years and it's a good thing. I don't think that's a bad thing. I mean, I think that's cool. They work together and they understand each other and they say, DC say, we got a great idea. We need a sales team. Someone comes and brings all their team. I need some engineering. A team comes in and it's like building a building. That just happens. That is the art of building value, not so much entrepreneurial leading. So I think your idea of that book is capitalism isn't bad. It's actually really good. And I think that's where I think people think I get a free meal ticket. I want to work for free. The culture is changing a little bit to be more... I'm owed something. And I think this whole cultural shift is moving in the direction of, wait a minute, it doesn't work that way. So I guess that's my quasi add-on rant. And then my rant to add to that piece of conversation is what I was saying earlier about how the capital markets for entrepreneurs and specifically the Silicon Valley conversation around this dry powder and the lux capital guy calls it wet powder means I'm not going to deploy it.  Bill Gurley did a Bill Tweet storm on this. He's like, just because we have billions under management or hundreds of millions of dollars in the bank doesn't mean we're going to deploy it. They don't have to, they're not obligated. They're obligated to make money for their LPs, not necessarily deploy it. Where the markets like, you have cash, you have to deploy it, give it to us. No, no, no, no, no, it doesn't work that way. So that's the PR side of the VC, which by the way is true. The other side of the VC story is why would you deploy it? There's too much risk out there and the prices are dropping. I can get the same value at a lower price. So my rant is, is that let's just be transparent about what's happening in the Silicon Valley VC community. The market's going down, there's a lot of bad stuff that needs to be repriced, crammed down, get it done, get the price locked in, and let's get back to business. And that's capitalism, that's entrepreneurship. So I would add to that. So I think the other piece of that is, I think a lot of people aren't sure where to put capital right now in AI. Either you throw it at AI and spray and pray, okay, I get that. But the ROI of AI is still elusive. And I think that enterprise AI, you have to have a value proposition. I hate to say it, but it's true, that basically says we can eliminate jobs. I mean, that's the truth, okay? And so when nobody wants to talk about that, but that is the fundamental value proposition of AI. It's going to eliminate human labor. Okay, now that doesn't mean that unemployment's gonna rise, but it does mean it's a whole set of different skill sets. But if you go into a company with a clear value proposition of we are going to be able to reduce your hiring and reduce your labor costs, that's gonna resonate. And if you can prove that, you're gonna make a lot of money. Well, there's a maximalist and minimalist in AI and a professor from Harvard Business Review, but the most, you know, captain obvious with his, oh, AI plus humans is better than human. I mean, we talked about that months ago, Dave. He's right. And he's actually right, and we were right too. Humans plus AI is gonna have an advantage over the human by itself, period. We talked about the data in the chess world.  And beats a computer straight up every time. And so now the, yes, and beats the computer up every time, again, exactly, that is the data. Now I think chess is part of the best data because it's been online the most. It's been a very active community. They've engaged with the data, they debated it. So I think the chess experiment with AI, even though a little bit different, but the impact of the AI conversation is data to look at and they've thrashed that argument down and I think they have the results. And that's why it's clear that that's the precursor, the tell sign to how AI is coming. So I'm on the maximal side of AI and I think that the chess conversation proves that humans plus AI beats humans by themselves and computers by themselves every time. And that's what people don't know that the child's being replaced were meant to be replaced and that's not a bad thing. It's a good thing. The child's will shift to other places and that's where people should be mindful of. So I think anyone who's on the wrong side of this just needs to open their eyes up a little bit and think it's not gonna be doom and gloom. So that's a second rant on that and a preach. I like it, John. I mean, I don't think it's doom and gloom, but I do think it's reality. And follow the money. The money is in cutting labor costs. The tech doom and gloom has come from, I think, and this is just my personal opinion given I've been in the tech world for all my life and seeing technology go mainstream, especially enterprise and emerging tech with AI, go mainstream where it's hitting lawmakers and Congress and policy and world economics and global trade is that tech companies have become global powerhouses and their impact is everyone, the entire world. Before that, it was a cottage industry, it's a little Silicon Valley that sent lawyers down there, policy gurus who sit there and explain, don't look at us, we're good.  That's when tech wasn't as influential and impactful. It's so legitimate now that it impacts everybody, the world cannot ignore what tech is. So I think that's why people are freaking out over it because they don't understand it and they don't understand where it's come from and where it's going. And I think that's gonna require a whole other policy reset around understanding it and understanding what it is and where it's going. And I think that's where everyone's freaking out. Well, and I think, again, people like Lena Kahn feel like that big tech reduces competition and so she wants to reset the laws and the framework for how monopolies are regulated or large tech is regulated. And I understand the intellectual thought behind that. I just don't think that the government, Lena Kahn should be else. But I don't think, I agree, but I don't think that she never should have been put in. I think the way she got in was sort of really not ethical. But regardless, I think the government is not smart enough to understand the unintended consequences.  And you may even agree with this, but I don't. And that made them take their eye off the cloud. No, what made them take the eye off the cloud was they had a myopic focus on Windows. And so it's self-infliction that will regulate these companies better than the government. And I've ranted before AT&T, the breakup, Bell Labs is now owned by Nokia. You know, well done US government. They gem, like Bell Labs, not even owned by the US anymore. Ridiculous. Well, my future rant or commentary coming next pod, we're gonna dig into this for next week is open source. Open source is really booming with AI. We've been talking about that. Open source in licensing is gonna be a big issue. Red Hat has been under fire for their, how they're handling their license, they're changing how they do business. Hashi Corpse in the news with going to a business source license, getting a lot of crap for that. But the question is how to run a company. How to be entrepreneurial and be a capitalist in open source software, Dave, is our topic for next week. Interesting. And I think we're gonna, obviously we'll be at KubeCon, we're gonna be at DockerCon. We're covering open source like a blanket. As you know, we're gonna have on a perspective on that. I think that's gonna have a capitalistic ring to it. We actually predicted this at the open source summit in Vancouver this earlier in the year that open source is so big now. You're gonna have competing projects with each other. So I think that's gonna be a big topic next week. And real quick, real quick. I mean, for you and I used to talk about during the big day-to-days is anybody gonna be able to be the next Red Hat? And to prove an open source model, well, guess what? Databricks did. And the way they were able to do it was with a managed service. And so they've combined open source with their own proprietary value add and did it as a managed service. And it's obviously working. Yeah, my quick hot take on Hashi Corpus is simply this, like at what point to become too big that you can't really be open source pure anymore where you're so commercial, you're so business oriented, you have to keep building and innovating. People are pissed. Well, you know, it's an innovator's dilemma because you want to keep innovating and building but is it a constraint or an accelerant for you on the good side? So we'll get into that next week, Dave. We're wrapping up here. Episode 24, great chat and see you next time. Thanks for listening. If you like the pod, share it with your friends. Let us know what you think. Hit us up on all the social networks where all DMs are open and let us know what you think. Go to SiliconAngle.com and theCUBE.net. SiliconAngle.com is where all the content is. That's where the traffic is. theCUBE.net's catalog of videos. Of course, check out theCUBEAI.com. That's our new generative AI, generative AI kind of co-pilot assistant. It's wait list. 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