Oral History of Pat Gelsinger, part 2 of 2

so thing I'd like to start out with is just get your observations on hell's ability to to identify future trends and really capitalize on them before they had become obvious movements within the industry versus being able to jump on a bandwagon that has already started and out executing somebody who may have already established a lead they're so interested in your observations as to whether that was an accurate perception and to the extent that it was what within the Intel culture whatever might contribute to that yeah I'll give three different observations on that one is actually give Intel a little bit more credit on the PC right situation right in the sense that you know the you know the crush campaign as it was described at the time was go get design ones everywhere we know we're not going to be able to necessarily predict the future so plaint as many seeds as possible right and one of them just happened to be the PC okay not on the IBM design would but you know many of those other designs actually came to fruition and became embedded businesses and other things associated with it so I think there was actually a deep realization that you know we're onto something big and we're not gonna be able to predict necessarily what circuitous route it may or may not play in the marketplace so I actually give him some credit in that regard they sort of realized that to be the case right so I'll say first observation is some of that you know that's the way things go right yeah you know could you predict the impact of an open you know computer our current architecture ecosystem at this radically different price point in the era of many computers and so on uh I I think that was actually a pretty thoughtful way to go about market creation the second observation I make is market creation is just bloody hard right you know and being able to predict the future you know and how many companies over time have successfully created major new industries very few right if you add you know those up over time obviously we give Apple credit right you know being able to understand industry defining products but the ability for any one company to have multiple industry defining creating you know product categories is very rare you know and in fact our you know one of the things and you knows we will get on to the int from the Intel story to the VMware story in a little bit but you know some of what I'm proud of that VMware is we're actually being able to successfully do organic as well as inorganic innovation which leads me to the third observation is that you know Intel's been bad at in organic right you know its ability to acquire right disruptive technologies and be able to accelerate and bring them forward it's actually something that the very strong culture of Intel right boom this is how you do it this is you know how we do innovation this is how we scale in manufacturing so on actually creates a whole lot of the antibodies you know to bring in these other disruptive forces because you know one of the magics about Silicon Valley has always been you know any idea has ten different startup companies that are trying to do it in many different ways and you know timing and so on you know bringing that forward in the right way so one of the things that you know I'd say isn't I and I learned this in the painful way of not being successful at Intel is how do you go bring a creative startup company and be able to curate it you know without crushing it inside of a big major company and that's something you know that Intel was a successful at and I think that limited some of that ability to do it because somebody is you're gonna have but you know if you if you invest in one or two teams to go do an idea you know that in the industry there's 10 or 20 all right and to be able to predict that you have the best one who has just the right combination of go-to-market core technology gets the product just right you know you're usually betting against the odds so you really need to be able to do both organic and inorganic and Intel strong culture also created Maidan creates many of the antibodies that prevented them for being successful at in organic acquisitions and making those successful as well and as I participated in a number of that though those experiences as well I sort of learned many things about how not to do it all so in that regard and in a very powerful cultural I can tell it's really going against the cultural model that they have in place so it's you know the the problem you describe in terms of doing new things within a well-established company is a problem that most the vast majority of large companies have so can you describe just one of those experiences and what you learned what was the could it have been successful or was just no way that that was ever gonna work or could you have done it in a better way and been more successful yeah you know and I remember my first acquisition that I was personally responsible for at Intel was chips and technologies right when we acquire that you know that was you know being part of the chipset company and I personally oversaw that acquisition bringing it in you know making it part of the Intel chipset business at the time and you know it was a 2d graphics capability in particular was what we were looking for you know was 3d was starting to emerge but 2d graphics we didn't have that and you know I'll say you know personally looking back on it versus what I know now you know if there are 10 things to do about making an inorganic acquisition successful you know I think I broke 9 out of the 10 rules right you know just yeah you know there just wasn't right you know I mean you know how do you make sure you keep that team well separated you know how do you make sure you have the leadership how do you can't allow their vision to fit into yours you know force as many of those organizational barriers right off the table minimize the GNA burden right that you're bringing on the you new entity right many of those kind of things if you're gonna bring right the successful company into V into this larger structure that you know if you crush the spirit the vision the innovation engine that you have inside of it you don't get anything on the other side of the integration process and you're seeing that play out on a number of occasions right it's sort of like wow you know we can't do that and you're like and tell some of the communications companies boom let's get them onto our process technology oh my gosh now you're essentially telling them the re-engineer onto the Intel process technology because you're part of the synergy case was get the fab centered or I get the cost of wafers get that thing you know now you're going to from essentially a something that was cultured for communications process technology and forcing it on to a digital process right who doesn't quite fit we don't know the library's a lot of reengineering so immediately you're sort of putting yourself off the curve of that piece of the industry and so boy you know so essentially you're sort of miss you quickly miss a generation you know you miss a Wi-Fi generation you miss you know one of the process improvement cycles that they might have gotten if they remained on tsmc but oh we can't be on tsmc we're you know when we're in town the mighty you know process companies so on every one of those hurdles that you put one of those companies through creates this barrier for success inside of a mighty powerful culture driven company like Intel so I've learned learned a lot in that process unfortunately many of those weren't all that successful for Intel and the communications areas one in particular that I think you know Intel threw through itself that harder than most and for the most part it wasn't successful over a long period of time and billions of dollars invested in many of those acquisitions okay may I ask a follow-up question whose do with these kind of characterizations of Intel I always think there's such an easy counter argument that could be made and I wanted to see if you think it's baloney or if it holds holds water which is that you can just flip the whole thing around and say focus is important by focusing on the Intel Architecture you know in micro processors of all varieties and with you know a kind of synergistic memory business what you see is record revenue and profit over and over and over again to the present time so in some ways that if if you're looking at it in terms of revenue and profit intel is following a highly successful strategy yeah and I think by the way you know there's value to that and I think that's almost a cultural statement you know why have they succeeded right and you know the maniacae s-- of the Intel team you know this execution focus this alignment you know we you know sort of joked at different phases of Intel that was the largest single cell organism on the planet right it's you know it's some aspects of that make it powerfully good but then why are you spending billions of dollars on acquisitions you know why are you wasting your balance sheet obviously you've decided as a company and as a board that we're gonna pour billions of dollars into that acquisition so right you know how do you justify the combination of saying we're going to expand into these adjacent areas yet we're gonna focus on our core that's produced such extraordinary results those are obviously incongruous right demonstrations of leadership and and I think in it right you either need to learn what you can and can't do or if you are gonna put billions into these acquisitions and put balance sheet dollars at play then you better decide the rules of making them successful as well and so I think in that in that respect you're absolutely right you know why was Intel so successful you know that single-celled organism that extraordinary execution passion right you know disciplined engineering data-driven culture right this harshness right of the execution and some very tough business areas but then if you're gonna say those are our core principles and we're never going to deviate from those then don't waste your money on you know balance sheet on these acquisitions fair enough yeah well great well well when we finished our last interview session with you we just had you you were just finishing describing your efforts in the first decade of the 2000s to really establish both some of what we were just talking about Intel's dominance in sort of servers in the world of servers after your time as Intel's first CTO and I wanted to sort of take you back into that time and if you could talk about you know as your work on the server business was kind of reaching its natural end point you know what were you thinking and talking about doing next yeah and the key you know as we were finishing that era you know we laid out the tick-tock model we laid out the multi core strategy you know the integrated memory controller you know we launched what today you know became the Nehalem Westmere you know family of products we had you know boy this was starting to right turn around and you know one of my you know as I look back on it you know Intel's market share price per socket and margin of the server business became larger as a result of those products after that period of time than it was before the whole Opteron face which I sort of say wow you know that's a turnaround that you know you just say done hey doesn't get better than that from a technical you know business architectural result and you know to a great degree given the massiveness of the dello of the data center business that came out of that for Intel you just sort of say does it get any better than that right and now I think it's you know close to 20 billion in revenue for the data center business with extraordinary margins you know market share close to a hundred percent score baby now but the other thing that we had turned our attention to and I was turning my attention to and I say this was the last on my list of things I wanted to get done when I was the head of the enterprise business for Intel was graphics and the massive multi-core right and we really saw that the space that Nvidia with GP GPUs CUDA you know that whole space and we sort of said this matters and you know they're there silicon footprint right it was always sort of this view right who has more transistors on here okay memory they're sort of commodity you know networking you know we got to go attack networking and when we started to build up the Intel networking business but that graphics footprint right and people are starting to use that for non graphics purposes with CUDA and gpgpu we didn't think of it through machine learning and AI as we would today but those you know throughput workloads we're getting bigger right so when we started the you know it became known as the Larrabee project was sort of the last big project that I was getting underway at Intel and I knew that if workloads emerged that worked on the Intel Architecture Intel lost right you know and that was just the you know and so you know that project was underway we you know had two purposes in it one was high-performance computing a moment's graphics resort of the two workloads that we were working on again if we look at it today we would have said over five years ahead of our time right you know in terms of getting a machine learning AI workload in place it really wasn't seen quite yet as you know that but it was a class of that whole I'll say throughput oriented versus latency oriented workloads that were really driving it and that was sort of the last big thing I had underway and when the EMC offered me the job of going there as their president and CEO whoa you know I struggled because I had made a list of 10 things I wanted to get done right you know when I took the job the enterprise job took over the microprocessor development engine for Intel and the last one left was this graphics write throughput workload one and I knew that wasn't done right and so it's sort of like you know I I never don't finish with a job right and I really struggled over leaving at the time because that one was undone and but nine out of ten were done so it's right and you know I was being wooed to consider coming over to EMC and in it right I knew that was really important you know wasn't done but it was a couple three more years to get it done so you know I decided to leave at that point that one was undone and Intel killed it shortly after my departure right and you know that was that was hard disappointing to see and in retrospect you know Nvidia would not be the company it is today had that been pursued right because the workloads would have stayed on the intel architecture so you were on the felt given the benefit of 2028 hindsight you were on the right track at that point right because you know again you know if you look back then and Vidya wasn't talking about machine learning and AI they were talking about machine you know these throughput workloads your floating-point performance you know floating-point opt right and and all of that you know and again some of these workloads were starting to emerge it was more aimed toward HPC kind of workloads etc you know the graphics processor was getting generalized for the programming model we were in the right space right right and had Intel stayed with it the world of machine learning AI and Vidya would be 1/4 the size they are today right you know it's a company because I think Intel really had a shot right in that space and again right you know those new things and it sort of builds on the prior question as well you know these are hard problems right to predict the future and you know there's a lot of things going on at that point it requires extraordinary commitment top-down support you know determination you know pounding through you know not one Reb of the technology and boom it gets right you know as I I say machine learning in a I write that whole space we've worked on it on the 84 86 to add machine learning and you know AI at the time the age of thinking machines and you know Lisp and Prolog and all of that kind of stuff you know we said we're gonna make the 46 agreed AI chip that was in 1986 right so I think of AI as a 30 year overnight success right we're a lot of these technologies to curate over long periods of time you know algorithm is are being refined and then all of a sudden the algorithms get good enough the data gets big enough and the overall compute capacity gets large enough that oh we can get interesting results you know and hey you know neural networks and you know though you know you know convoluted neural nets and so those ideas were 20 30 years old but all of a sudden the algorithms had gotten good enough the data big enough in the overall compute capacity we're instead of having crappy vision it's a now better right you know instead of having crappy chess we're now better yeah we can now do gold right all of a sudden we start seeing these breakthroughs occur even though it took 30 years of building and refining those technologies and that's exactly what happened to Nvidia and I give great credit to the Nvidia team to build a Lee Jensen etc because they were on hey there's a class of workloads here that are really important and we're gonna keep hammering and focusing you know building the you know software stack that allows that to occur the whole CUDA architecture and they never deviated from that hmm we lost the Intel in the in the latency workloads right operating systems excetera Intel one but there's another class of workloads here that are really important and we're gonna win those and you know Intel gave up a shot to win those workloads at its today I say it's great demise even though you say boy that was an extra 10 years of work yeah it was 10 years of work to go make that happen do you think that it was in part that you weren't there to drive that forward that they decided to withdraw from that yeah yeah I'll say very very directly that your boy you need that harsh right us determine passionate leader and when you know they you know they leave you know hey you know the next budget psycho huh we really can't afford that boy it's a long time until its profitable and oh no we can't kill it yes we can't know yet yeah I mean you know these are hard trade-offs in a big company and you know budget cycles come and go we all know the harsh cyclicality of the semiconductor industry you know these aren't easy decisions right at the time you know what hurt me when it was killed soon after my departure but you know I also realize in a big company those kind of things happen right you realized that to be the case and at the time hey the graphics program was struggling right you know it wasn't like you know it was an obvious you know hey you know it wasn't a short chip shot onto the green right at that point there's a lot of work to be done yet and it was going to be multiple generations to really refine it yeah building the software architecture to get it right really needed a lot of top down you know leadership to go get it done so they decided to kill it after my departure disappointing to me and something in retrospect we're looking back now almost ten years later it sort of say boy the world could have been different was it the case that people were throughout your time Intel was it the case that people were approaching you with with other ideas and opportunities as this the the folks from EMC yeah of course you have different opportunities different jobs you know potential it was as I've you know I've only really changed jobs once in my career right you know I'm a fairly loyal soul yeah right at that level and moving from EMC to VMware that was sort of an in the family move I don't even consider that changing job so you know essentially I'm a very boring guy I changed jobs once and you know now 39 years right of my career and to some degree that's sort of you know you get involved you you build relationships you get passionate right you know you're always you know working on something today but also always start in the next project and the next project getting people rallying around it you can't leave your team and your people you know when it really I remember the the day I'm sitting in one of my final ops reviews at Intel and I have the you know nobody in the room knows this but I have the Intel offer to stay in hand and the EMC offer to leave in hand right and my wife and I were about to go on sabbatical and I said I wasn't going to decide until I got back from sabbatical right for you know I just needed time to clear my head you know and I started looking around there were and it's like oh there's Justin you know you know his uh you know I you know I was at his son's wedding right you know he's coming to my daughter's right graduation right you know oh there's Steve right oh my yeah he's coming to my son's graduation as well and you know all some tears start coming down my eyes cuz he's you know after 30 years you know these aren't coworkers you know these are people that you've done life with yeah right at that point you get so right you know you know where does work end and where does you know your personal begin after 30 years you can't tell right you at that point so it was a gruesomely hard decision and obviously EMC was like hey Pat you know we want you to you know lead you know we're gonna coach you and help develop you right you know be you know our next CEO and Joe was extraordinarily committed to that and board members you know reached out and you know became a good life decision at the time but it was terribly hard right because this was you know this was 30 years of life you know as I you know it's like joke you know I went through puberty at Intel right you know I started when I was feel so young and sort of like boy you know and you know I think if if Andy Grove called me from the from the grave and said Pat we need you back and I think I still lanes for the call right you know it's just yeah you know these are just so such powerful forces right in your life that boy you just can't imagine you know not being part of their legacy well this I mean it sounds so much like certainly a very big decision for you personally and professionally obviously but also from just your brief description of it it sounds like EMC was making you know a big strategic decision to get you to join them and I wondered if you could just tell us a little bit about you know EMC as you had known it and why you think you you know became such a focus of their strategic thinking at that time you know why were they making such a big bet on you yeah there was a probably three or four things play what is they did sort of lose the head of products right no Dave Donatella you know he had just you know you know left the company so they were looking for somebody who was a product guy as a company emc was known for its products and its sales but its product capacity had weakened over a year over the years so it still had you know one of the most revered sales forces on the planet yeah but its product culture had diminished so they were looking for somebody who was product through and through a strong technologist in that respect I had gotten to know Joe the CEO there because I was selling EMC to move from the Power Architecture to the Intel Architecture you know their storage array so we had gotten to know each other through that you know so I'll say he had seen the you know the passion of Pat right yes you're gonna move your storage on to our architecture right you know resistance is futile right we're you know bring you across the line so we had gotten to know each other route you know reasonably well obviously you know he became reasonably impressed with me at the time to I want to pursue me you know some of the board members you know we're very aggressive you know the E and EMC was Jack I was Dick Egan right his son Jack right became you know pretty aggressive at pursuing me and some of the other board members as well so and my capacity to interact with the board I didn't tell was rather limited you know here they were extremely aggressive and embracing me you know particularly at that phase of my career where I said you know boy I really do aspire to be CEO someday and they became very committed that were to develop you there's a bunch of things you don't know yet right if you're gonna be a CEO they invested you know one of them that was a lot of fun was they hired a personal corporate finance professor from Columbia to be my corporate finance tutor for a year right you know so yeah they clearly we're investing in you know committing to you know help them build out that skillset because you know being a product technology guy doesn't give you the range of skills that you need to be it and then and then I had a little family poll right because our family was East Coast based and when I joined Intel I says I'm gonna be on the west coast for two years you know thirty years later right so they were super excited to see their black sheep coming home right as well and you know we had a wonderful three years in Boston you know we got down to my family in Pennsylvania you know one of my sons and his wife came to you know Boston for university so they were in town and we you know what often you know get our family up my family up or go down to see him so it was really a delightful three years and then of course when I moved back to VMware in the West Coast it's like oh yeah he escaped again yeah and my wife was actually she was not happy about the move back to the Bay Area for VMware you know as I described I sort of you know took her clawing and scratching across the nation right back to the Bay Area she was really enjoying our time on the East Coast was it from the outside looking at it you know EMC I think at that time and certainly you know in in in more recent years with VMware and everything is so identified with kind of like the data center and the cloud and and and this sort of area and it sounds you know so of course you know massive amounts of server chips involved so it seems like there's a natural resonance there if they were getting on kind of the Intel platform mm-hmm you know with you comes a person who knows that exquisitely you know so that taken care of but it also seems like you must have been you know really living in that you know emerging new dominant area of computing of the cloud update the world of data centers while you were you know doing all this work at Intel so was that part did you see that as you know part of the connection of expertise and how you were gonna revive their their the product side of what they were doing I think there was also your part of it was clearly leveraging and moving up the stack as I would call it going from silicon to systems and when you've done your twelfth microprocessor you know number thirteen isn't quite as thrilling right in that sense she's just not learning as much right you know at that level and I didn't feel like Intel was really developing me to be that next leader so some of was leadership development capacity as you know the the skills for CEO some of it was moving up the stack I know how to do chips to know how to do systems right as well and that was something that Intel did systems as a hobby EMC did it as their lifeblood right and so learning that next level also you know essentially Intel right you know didn't do any sales right you know it did allocation that's a little bit you know crass but to a great degree hey you know when you're in the silicon business right you know if you build a hot product you're just telling customers this is how many you can have and we'll negotiate the price right and you know essentially you know half of Intel's business with seven customers right you know to get to half of AMC's business I think you had to get to almost 2,000 customers right so it was learning a lot more about sales and you know what that really meant so there was huge interest in that regard clearly I'll say you know Silicon wasn't you know and I was you know very much sensing that you know Silicon as thrilling as it was for my first couple of decades I didn't tell it was really the center the Nexus of innovation was happening at silicon where you could tell it was moving up in a way that systems a software becoming much more the Nexus of innovation and we're you know there's key inflection points happening in the industry and you know clearly cloud was starting to emerge but wasn't very clear yet what that really was you know quite yet but this idea of you know systems of software becoming more critical distributed systems becoming more critical you know I sense that you know where the core of innovation was was moving north and doing the 13th microprocessor of my career you know wasn't gonna be the thing that necessarily was you know those marks on the wall that I think we're having the industry impact you know that the first dozen had or creating USB or Wi-Fi or PCI or you know some of the other key standards impacts that we were creating so you know I was excited to move on to a faster learning curve right as he moved up into the stack you know clearly the you know leadership and skill development as well and still being the ambassador of Intel and the x86 into this whole other system segments as well so did you have you know I presume in joining EMC you must have had you know a very positive view as to what their future might be did you have a clear idea of how to get there I mean did you have a plan or a vision in mind as you joined or was that something that evolved once you got there you know somewhat you know and I was incredibly naive and what it meant hey you know a hotshots a silica guy I can go make storage systems a whole lot better you know sort of naive you and I remember one of the first meetings I was in we were having a road map discussion and mostly it was you know them teaching me but I remember this one conversation we got into it and I said no that's not right that's not how it works and literally before the meeting ended we were down to the schematic diagrams of the storage processors using the x86 and I was explaining you know how they should be using the processor and this you know cross connected redundant fashion and was you know whatever you know everybody left the meetings they're like oh we really have a product guy now for it but there's a lot of naiveness in my view but you know that's also where you grow and learn I say you know you grow and learn in times of change or challenge right yeah when you're being a successful right you know you don't learn much right you know you might be pump and arrogant and you know be I'm good right well you're not really good right you know you're mostly lucky and doing things that others have gone in success you know as they say success has many fathers and you know failures and orphan right you know and you know failure and a challenge or in times of dramatic change right and going to an East Coast enterprise software lead systems company that was radical so it was a huge time of growth for me you know and I was just really you know eating it up right at that learn you know having to learn sister you know what what's a block sword versus a file storage versus I you know what is that talking about what is this fiber channel thing anyway and you know and you know you're learning all these new things but you're bringing a wealth of experiences also into that environment many of which are highly leverageable as well so it was a thrilling time for me personally right to learn and the combination I'll say of my Intel experiences of which many of those interfaced with VMware and my EMC experiences where I had a lot of ambassador roles to VMware you know on behalf of EMC you know really prepared me to come back and I think have a you know a pretty exceptional run right as the CEO of VMware and because I sort of like to say God doesn't waste experiences you just don't know yet how they're going to be useful right in many cases so you mentioned one thing that is the what East Coast culture whatever is was that did was there a significant difference in terms of East Coast versus West Coast or certainly maybe Intel versus EMC yeah you know there was a just a few little examples of that yeah I remember one time I was meeting with one of the board members Jack Egan and I asked him Jack and this is the son of the founder right you know Jack you know how am i doing what do I need to work on and he says we're an East Coast company it's a dress like an East Coast company I dressed like an engineer because that's what I was right you know it's like okay honey we're going to Nordstrom's at night right right you know it's like people showed up for meetings with ties right and there were customers there what's the matter with you right yeah yeah some of that formality another example was I remember one of the first stops reviews I was sitting in and so on like that you know and you know in Telus just extraordinary early direct right you know it's so long like that so this one little topic comes up and you know sort of discussing it a little bit and I say so what other data do we need on this topic to make a decision and everybody services now I think we have all the data this is why don't we decide well we wanted to take it offline and discuss a little bit I said why right now let's get it done right you know and you know say well we want to discuss you know some of the you know other organizational implications well let's figure it out right now let's decide we got all the data you just said we did let's do it everybody's like Godzilla has arrived right you know and this directness is bluntness this harshness about data you know right oh we step on a few toes who cares right you know we're gonna go fast and get things done and you know boy you know it's very much much more you know well we got to consider the people of shoes and teams and organizations and you know and Intel in many respects you know and I'll say you know super successful culture but it was also harsh right and had a very hard edge and many times people were crushed in the process of that without good reason right you know and you remember the you know the famous Intel phrase constructive confrontation right and just we forgot sometimes the constructive piece right you know it's just that you know Harv you know hard-nosed confrontation and a lot of those soft skills to me we're very much lost that Intel we're you know and this is what I grew up in you know so hey I was ready to mix it up with the best of them you know I remember you know uh you know some of the interactions with the teams in Israel who are known for you know their bluntness and directness they sort of says Pat you're more Israeli than the Israelis are and because that's what I grew up in you know I remember I went through puberty here right and then you know bringing that into a culture that was much more worried about some of the people implications and again your dish different you know it's not one is better than the other they're very different and out of that you know I think I became you know much much more thoughtful on people skills and teams and relationships and how you you know build that and as you come now to a software company where you know some of those harsh skills yeah we need some of the discipline and rigors associated with it but some of the you know you know you can't piss off you know one of your key software engineers and expect them to stay right you know in a fab and environment you can't right Yeah right you know what are you gonna do right you know you're gonna you know go get the stun and the culture was so so very different in that sense so the cultural aspects of that while radically different right in East Coast culture more of a sales culture more of a people centric versus product centric culture but I learned a lot in that process as well I'll say it really rounded my leadership skills quite significantly how was when you when you made the jump to EMC in 2009 it had if my research serves me well in 2004 it had acquired VMware and in 2006 it acquired RSA security in addition to a variety of others okay so those are some some big names that it was bringing in in and big and important operations that it was kind of bringing in how was how were things organized and orchestrated were was were VMware and RSA relatively sort of like autonomous divisions or was it very integrated could you describe yeah that seemed and you know EMC I think was correctly saying hey we got to go acquire other things because the storage industry by itself isn't going to be the future you know and you know they really took this I'll say this error of the internet build-out you know the four horsemen of the internet and emcs role in that you know the huge profitability of its a storage race and saying boy we got to go acquire and build out some other assets and that was very much Joe Tucci and our seyh document right you know some of the backup products avemar you know it was a pretty you know very quickly you know going and building out a set of different you know portfolio of assets that largely were Enterprise centric I could leverage this big enterprise sales capacity but they were off to have a broader data center infrastructure set of assets to play now one of the quired VMware right Joe to Qi and I think this will probably go down as one of his greatest moves of all time you know he bought VMware everything's six hundred and twenty five million dollars I think as of today we're just at about a seventy five billion dollar market cap right you know it's like wow right you know you just you know this is beyond exceptional right again a whole lot of people a whole lot of work to go accomplish that it's not like you know boom you know it just magically happened but Wow right at that level in 2007 they had spun VMware out right they had done the public offering for it so VMware was largely separate okay right it was run separately etc and again I had the you know the role of the Ambassador to manage the emc vmware relationship right yeah so i was responsible for essentially the portfolio role that vmware had but it was largely one separately by the vmware leadership so I get it and this was EMC had like an 80% exactly exactly they had a majority stake but they ran us separately and the separate board structure that was there everything else worked for me our seyh worked for me all the storage products worked for me you know Documentum and you know the other assets that they every other product asset worked for me right except VMware right and you know the core business that was storage yeah everything else is sort of on the periphery so job one was get the storage business back to health right and we had companies like NetApp that you know we're sort of chewing into the storage business with some different ideas and you know as I would say you know that Apple's gaining market share EMC was flattening and over the course of my time as the leader there we reversed those right you know so I felt really good that we got a EMC back in a growth trajectory we had done a few acquisitions built out the portfolio data domain Isilon but also just got core innovation back into it so you know by the time I exited EMC we had gained on the order of 1215 points of storage marker share right and had sort of blunt to NetApp's growth and you know that was sort of good you know that was job one for me from the board right was turned this around you know we can't let them continue to grow up so job done which did make for a very very curious moment the first day on the job at VMware right was vmworld right the big VMware conference I took over right Paul Moritz the CEO before me announced me as the new CEO I took the stage right gave the keynote for it and that night was the NetApp customer and partner event and I'm on stage with Tom jorgens the CEO of NetApp because that app was a huge partner of VMware so here's a big NetApp right you know Pat with NetApp Tom right you know we were on the pitcher's mound that PG&E Park were the Emerald was at the big customer and partner event and that picture gets tweeted out to the right bloodthirsty raw meat eating EMC sales force and I am now getting thousands of emails traitor turncoat right company my way since yesterday I was enemy number one for NetApp and today I'm partnering number for that app so it was you know rather humorous a moment there seeing how you know how your friends quickly yeah well what would you say was your primary strategy in that turnaround of the storage business for yeah EMC yeah part of it was we didn't have a good file strategy so we acquired Isilon part of it was the product engine was sort of sputtering so we had to bring innovation back into the core you know a product machine of EMC too many products somewhat scattered they had acquired you know different product lines but I hadn't really synthesized them together and then the other was data domain will you know the hot backup and archive solution and really exercising that very effectively by the way we were commenting on my acquisition learnings and to me that was sort of the first major acquisition at EMC that was under my leadership so now I had all the bad learnings right some of AMC's better experiences on how they did it right so Joe when the leadership team is saying no no do this do that you know so that combination of what not to do some of their successes and data domain became a roaring success for EMC extraordinarily successful so how to make the sales model the innovation model work they're in a you know integrating that an effective way so I really saw as sort of my first test case for many of those learnings coming together into a very successful acquisition experience was very talks one of your competitors in that yes yeah yeah yeah did oral history with Mark Lesley all right understand a little bit of that so Veritas was a you know semantics the net backup and networker and you know some of the other companies there that app was using you know its products as a store as a backup device as well data domain that I attempted to acquire them EMC took it off the table right so that sort of built a little bit more of that grudge match as well between the two companies so you know there's a nice competitive dynamic there and like I say you know in my leadership time there we're very successful to get EMC back on the right track and that's pretty quick right three years or so you were at it yeah and I I certainly felt good that you know the you know we increased the market share by about ten to fifteen points over that time period increased profitability we increase the emcs market cap by like sixty percent over that three year so I think all of a sudden the marketers at all right they're getting their mojo back as well and again with a very very capable sales force you know you start putting better products in their hands okay good stuff happens right but as I said a great learning experience for me as well well tell us if you would about then the shift to VMware what was your thinking you know what was AMC's thinking as the major shareholder for VMware how'd that how did that take place yeah it was really a Palmer it's had replaced Diane green as the CEO at VMware and you know Diane was you know moved on and you know there's clear tension because you know she was you know here here I'd call it sellers remorse right instead of buyer's remorse you know very soon after she sold the company to EMC it's like boy you know I really want all my independence but EMC now is the majority shareholder and it you know so there's clear tension there EMC did the public offering exactly like Joe committed but there was clear tension right you know this is how we you know want you to operate in this model and you know very quickly it's sort of as a parting of the ways after the public offering and then Paul Moritz was on the EMC team and Joe moved him to be the CEO right and that was from 2008 to 2012 and I'm leading the product effort Paul you know manage that and you know a founder transition is hard right if it goes well it's hard right because Diane was the founder of VMware you know everybody there worked for her her husband Mendel was the CTO so he was the sort of the brains and so on and they were sort of you know a package right when Diane left Mendel left so you had the technical leadership as well as the you know CEO and inspirational leadership so Paul had an enormous task to sort of you know stabilize the ship in that regard but you know Paul is a visionary leader right and VMware needed somebody who was more of the operational leader at that phase of its growth and so it became obvious that somebody more of Pat's ilk right fit but needed to still be very technical Paul Joe and I agreed also to form pivotal at the time right we have some data assets some developer assets that weren't being you all say well leveraged inside of the companies those who said we're gonna form pivotal and remove Paul to be the CEO of that will bring Pat over to be the CEO of VMware so as I say it was sort of in the family move and we'll make some product transitions in the EMC side and voila you know I'm the CEO of VMware moving over there and you know again you know bring you some of that organizational discipline execution discipline you know product and technology awareness you know what are we gonna focus on and VMware's core product the hypervisor the virtual machine was flattening in the industry and you know one of the things I'm super proud of now you know the VMware was less than a 4 billion in revenue when I came in and sort of growth rate was flattening you know now we're just under nine billion of revenue and growth rate is accelerating and for that it's sort of like okay you know we got this machine humming you know we sort of you know grew well past our act one the virtual machine we now have a rich portfolio of products seeing our growth rate accelerate you know it's been a great six years of CEO well could you I guess by this time by when you're thinking of of making that move 2012 you know the the cloud if you will is starting to become more visible yes more you know public clouds private clouds and this almost idea of you know data centers almost becoming a commodity environment yes yes or quite literally a kind of a commodity environment and the the turn from people's use of computers rather than being you know a physical server or a physical unit you know now people are spinning up machines as they need them and things like that and that's really starting to emerge at this time I would just be interested to hear you talk about you know how that looked to you then and how it's looking to you now you know yeah yeah and I think you know this whole notion of cloud is such a profound notion because it essentially turns you know the virtual machine turned a server into a provider of workloads right you know where you didn't have to go you know configure Hardware right boom you just spit up a virtual machine and you didn't have to require it you didn't have to provision it you know boom it just sort of magically happened well cloud does that at scale right for the entirety of an application right and you run it for me right yeah and wow that's powerful into a great degree you know some people a lot of the early positioning of cloud was that it was cheaper yeah that was bogus right it was easier right you know I didn't have to go to that stupid slow IT guy who's making me do some trouble ticket right requests for it you know he may or may not get around to it for 90 days right you know so I can spin up my next application I go the cloud I put in my Amex card I have it after lunch right you know it was just easy it was fast right and over time it got better as well in too many cases you know it was cost effective so that easy button you know became the moniker of the cloud and to some degree I would say the cloud did the data centers what VMware did to servers right and you know they did to that scale a capacity with a business model that just changed the game entirely and every cloud uses virtual machines right you know so we're sort of an underlying agreement but be ingredient but VMware didn't put the whole solution together right the API is the portals to make that easy at scale in a public cloud way because we were having so much success still fixing the compute servers in the data center so to a great degree I think VMware had the opportunity to be the Amazon right of the public cloud I asked models it had sort of the right stuff and some of the right ideas but we didn't go operationalize that business model you know like Andy Jesse and Amazon did when I got to VMware it's like boy this cloud stuff is starting to take off this is 2012 we got to go and we had a project internally that we turned into the VMware cloud and became vCloud air right boom we're gonna go get that underway so within about a year of me getting to it we launched the vCloud air product where we're gonna compete with Amazon and Azure and so on and we weren't running out to go you know run our own cloud and yeah we're struggling to get that underway we got a lot of other stuff going on we don't have all the ingredients yet trying to build it and as that's going on is we're sort of you know y'all say start ramped our own cloud Amazon it's just taking off right you know they're you know their growth rate is accelerating in this period of time right they're already you know six seven years ahead of us right and they're accelerating you know that gap became larger and larger and it's we're sort of sputtering to get vCloud air underway I really say hmmm right are you gonna be able to compete right a lot of capital compete we're a software company and you know plunking down data centers and you know building out global networks and all of those kind of things you know Microsoft they had the opportunity to leverage their investments in office 365 and some of the other web properties right and they were already you know 60 70 billion dollar company so boom they could sort of hide an extra few billion of capital into it you know I'm a four billion dollar software company I don't get to hide a couple of billion of capital to go build that out into our P&L so all of a sudden people were questioning this you know can you guys compete right you know are you gonna pour the billions into it that's required to compete as Amazon has taken off and a jurors taken off and Google well hey search you know they already have a global network that big data center so they can go and take you know how are you gonna compete and that led to what became you know the critical partnership where we exited the V cloud air business and partnered with Amazon and that was sort of the seminal shift in VMware strategy where we became you know a fundamental partner with them as I would say bringing the leader in private cloud together with the leader in public cloud to deliver the hybrid cloud and that's been an extraordinarily successful partnership you know that we forged over the last two and a half three years since we announced that relationship and now we're seeing great momentum for that we've also partnered with IBM Alibaba have a wide set of people who use our software to run clouds now it's really a software and SAS business model without owning the underlying hardware and capital for it but you know this this era of cloud if we think about it you know if we just you'll step back for a second imagine you and I had a great idea for a new application 20 years ago right oh but it's boy it's got to take a lot of data centers we're gonna have to plop them around the world right you know and build build out a lot of capacity because this is going to be a great new app big data requirements and so on you know that might have taken us two years to build that infrastructure you know maybe a billion dollars of capital right we have to all we have to put one in Singapore we probably need to have one in Japan we need one in Europe we need one west coast East Coast etc right Wow a billion dollars to go get that it underway and then we have to get the connectivity in place etc you know two three years today I can do that this weekend with my Amex card using the cloud right where I can have global resources made available at scale that I can begin to provision and run that you know years have become days right billions have become millions right to go get you know you know and that's the magic of cloud I mean it just has so compressed and reduced both the cost and the time and the scale that you have available we're literally now yeah your Amex card well at least somebody's Amex you know Michael Dell Michael right you know Michael Dell's AMX card right I can build the world's largest supercomputer right right assemble it right over a day or two and then decompose it over a day right you know it's just a so magical the computing scale that now is available to any application developer on the planet and I call us that we're entering what I call the era of the superpowers right and I call the for suit you know and the superpowers we used to refer to them as nation-states you know now they're technologies all right and as I described at the four superpowers of today or cloud mobility AI and IOT cloud like we just described unlimited scale literally I can have any capacity of computing you want how many million servers do you want all right extraordinary scale mobility you know we're now over half of the planet is connected all right you know I can reach billions of customers over that mobile network and you know under mobile devices anywhere in the plane unlimited reach a I I can bring intelligence to everything right it's just you know I have the scale I have the data I have the algorithms like a bring intelligence to everything an IRT you got to bridge the digital and physical world as never before Wow and each one is making each other better I mean it's extraordinary era that we're in you know and I'll say that's sort of part of being the fun of you know the CEO of VMware now we're sort of sitting in the nexus of many of those and if you go back to earlier in the conversation as I said it felt like you know the Nexus of innovation was leaving the silicon layer right I'm moving up and now right you know to me those four in conjunction you know that's where the Nexus of innovation is occurring today right we're cloud mobility AI and IOT you know really not just power houses by themselves but they're causing each other to get faster because if I have big cloud I can have more mobility connected more mobility I connect more more data which makes me AI better I can then you know execute it over my IOT with more introspection and you know inflection points which gives me more use for my cloud right these become these reinforcing and you know and I believe that you know as I like to describe it today the fastest day of tech innovation of your life today is the slowest day of tech innovation of the rest of your life because everybody expands and it's interesting that you know you were just seeing a few minutes ago that initially maybe when people were making the argument about cloud that it would be cheaper that that was not the case that it was faster but it was still plenty ask that easy but but but now that has changed yeah now it is just cheaper and in many cases a well-run private cloud your data center and I call it the three laws why will people run given you now have this unlimited scale of public cloud why would you ever run a data center yourself right and I will assert the three laws right laws of physics right laws of economics and loss of the land right and loss of physics hey if I need low latency I can't be round tripping to the cloud and back right you know Silla you know I need to respond in 50 millisecond if that's a shadow or a grandma am i driving and Westmarch Street you know I can't right give a 100 millisecond round trip to the cloud I mean this right so latency laws of economics right you know if I'm doing a surveillance application you know how many pictures of the cat do I need to send to the cloud right you know you need intelligence locally right you know so you know maybe learning I do in the cloud but inference I got to do locally right you know I can't be you know and bandwidth still costs right you know stores still cost so loss of economics but laws of the land right you know where certain applications certain datasets people will dictate them into a certain Providence's right of execution and those reasons as I would say and with the emergence of edge and IOT I think will see us a swing and you know one of the other things that you know I've observed this over the history of computing you know we've been oscillating between centralized and decentralized and distributed over the history of computing cloud has been a force of centralization right you know I'll run your data centers for you right well I believe edge and I of T will be a force of decentralization right we will push more computing and capacity back to the edge and then you know maybe 5g and low latency will help push it back right and we're gonna see that pendulum move back and forth you know and again it used to all just be a mainframe mmm and then we can distribute many computers and then many computers became centralized and we needed distributed pcs and Pete you know and one after the other has you know have different effects of centralization and decentralization and you know clearly it's not one versus the other and that's why we would argue that the future is the hybrid cloud right and you know this ability to operate between private resources and public resources and bind them together in flexible and interchangeable fashions where this workload that's running pretty good but I need lower latency for it I can move it to the edge you know the networks are getting fast enough I can move it back to the cloud oh the law changed in Malaysia I have to move it on premise oh you know they're now allowing me right to centralize that in UK but Germany still requires it local right you know it's not one versus the other right and it's not going to be a static picture as technologies emerge you know different laws regulations occur let me ask you a question about just for clarification on the laws of physics the latency time and so forth you said the private cloud has the advantage is that because of the control of the workload or it's certainly not location well part of its location as well right you know I can push the you know put the compute in the storage capacity locally you know or closer to where you know where the inference or the use of that is actually occurring you know if the robotic arm needs 20 millisecond response time hey you know that that mini data center is going to sit right in the factory okay so you're talking about smaller kind of scale things that you didn't need locally versus could be but even there you know imagine a you know an aircraft carrier you know there's a mini data center right on the front of the boat in the back of the boat and only has satellite connectivity so it got a freaking thin pipe you know I mean these are pretty meaningful compute capacity imagine an oil rake right oh there's and in an IOT world that oil rig is going to become much more instrumented with dramatically more data and compute occurring there and it got a teeny tiny pipe right back you know comparatively to the amount of telemetry analytics etc that's occurring so you know it really isn't just one or the other in that sense right and latency you know bandwidth laws right regulatory requirements you know one of my one of our customers you know one of the big bank CIOs he says you know every application that doesn't touch money or customers I can move to the cloud and if I find one of those I'll shoot the person working on it because everything I do touches money or customers right if I'm doing anything else tell me what it is I I want to get rid of that guy all right right in that set so you know and they're viewing the regulatory requirements are so high right on one of the cannot fail financial institutions that boy can I trust the guy to do it and again you know so some industries will be very slow right to move to public cloud enablement maybe they do some tests and have their you know but their real operations requirements resilience requirements regulatory that same CIL once he told me he said hey Pat today's a great day I only have two regulators here today right you know so many different regular and similar in health care right government applications right you know and even you know the mighty Amazon public cloud they've built the local instance of the public cloud for government that's what the FedRAMP right Gulf cloud is for Amazon right you know it's essentially their own private cloud on the other side of essentially the government's firewall right that's locally operated inside of the government by government certified personnel only government workloads meeting all the regulatory requirements so you know in that sense it's not one versus the other and that's why we say the answer is a hybrid future right because that really gives you the ability you know and maybe this app you know is running it's tied to some physical IP addresses it uses this physical store right you know that I have it still is tethered to some mainframe you know it's gonna be there forever the latency of moving that to the cloud you know the bandwidth requirements right oh boy you know it's gonna be forever so we really see it as you know a hybrid world is not a Waystation to the future it is the future how do you see this or what is a split in your revenue for private versus public cloud yeah so give to give three three different perspectives in that our revenue is over ninety percent private cloud you know that's our heritage right you know we're building up the public cloud revenues as we go as a company we're now at ten percent of our revenues at that level and I say we are disproportionally private cloud right the private data center that's where our heritage has been and we're a little bit late as I already said in building up some of our public cloud offerings the industry metric is now about 75 25 right we're about 25 percent of revenues and workloads are now public cloud based right today versus 75 on-premise and if you measure that by workloads to me that's a pretty good moniker right because you know when you're in the cloud they're operating it when you're private it's not just the hardware and the software but also the personnel costs right of running it for you so workloads I think it's a pretty good way to measure those and today it's like 75 25 you know 70/30 you know I expect it gets to be 50/50 right and some would project that it gets you know 70% public cloud but then I believe that edge becomes this force going in the other direction so my best view of the future is it gets to be 50/50 but today there's something on the order of 170 180 million workloads as measured by OS instances right you know private and public today and we expect that becomes well over a billion over the next decade because computing continues to expand the applications continue to expand and then key new technologies like containers and kubernetes will help to expand and micro services will increase the number of workloads as we go forward is it do you see a similarity between and thinking of a little bit of the microprocessor story in that in thinking about hybrid clouds where you know a could almost think of it about networked micro processors you know so sometimes where the if you have a private cloud it's it's the same structure as the the public cloud but it's just a matter of scale you know and it's server racks with lots of micro processors so that in a way you know these organization of computing into these clouds whether they're at different sizes in different you know run as privately private clouds or large public clouds it's almost like the the cloud has become the unit of compute where the microprocessor have been before is there anything to that yeah I really think I believe there's a lot to that okay you know I say the you know the cloud is now the data center right you know boom you have these at scale you have such massive resources available you know they're readily available easy to use I've always viewed that computing follows the gas law right it fills the available space right hey yo Joe always keeps expanding and it's really more a statement you know I'm uh you know we're computing how much computing do you want to do well as much as I can afford right you know how many more simulations do you do right you know before you send a chip to the fan well as many as I can get done before you know I think I've you know exhausted but it's always more tests you can run you know how many more analysis of your radiology write results do you want right running through the AI algorithms to determine if it's carcinoma core not well as many as you can afford right give me the best results you can write or you know and the list goes on and on a lot so to me you know computing has always wanted to fill the available space where the available space is often more limited by economics than anything else right and if I make the unit cost of computing lower right and the ability to reach the data right you know so data stores you know the network you know I got to be able to connect to it you know it's the whole set of computing resources every time there's a dramatic decrease in that right you open up new opportunities for computing right if we use the AI example you know the you know hidden Markov models you know convoluted neural nets etc those ideas were around all of a sudden that got economical right and cloud made it economical and all of a sudden cloud made data sets large enough that I could use learning algorithms that before we're infeasible now became feasible as well so that combination combination of compute capacity and data sets right you know allowed AI to start demonstrating meaningful breakthroughs and now it's sort of like wow how much computing do you need for AI what learning algorithms it's almost unlimited right you know really you know if you give me you know another a thousand GPUs and my GPU farm I'll use them all all right you know you know how it you know and you know things you know we have many of you know the hardest problems in computing I've always demonstrated this characteristic you know whether it's you know weather prediction whether it's you know predictive modeling whether it's computational fluid dynamics yeah these are you know and you know uh you know n complexity algorithms that boy you can just keep throwing computing Adam you come up with a different algorithmic breakthrough right it just keeps expanding and I think that's one of the things that cloud has done right it's making you know not just the accessibility but also the cost characteristics very predictable right you know forward and you can look forward I can tell you today you know what you know a thousand cores will cost you right you know with a terabyte of memory next year with high accuracy you can access it you can predict where it's available you can start experimenting with those and then you know why are people putting GPU farms now into the cloud oh it has a lower economic cost for certain workloads to run them through GP GPUs Oh Jensen's a happy guy right oh boy I need more of those and then people are saying well some of the core AI algorithms maybe I commit them to FPGAs right you know cuz I'll get another order of magnitude improvement in the cost of economics and if that happens what's gonna happen I'm gonna do more and more right because now I can you know start taking more aggressive use of some of those learning algorithms maybe it's gonna be inference out or those boy I you know I can't afford to put inference at the edge yet hmm you know so I might have to compress those and do some algorithmic breakthroughs you know maybe I have to start putting more fixed function into some of my compute capacity so I can get it to the edge because I really if I could do inference at the edge wow I can start open up a new machine learning new vision algorithms new detection algorithms at the edge but I need to get them maybe two orders of magnitude cheaper or lower power and pull mic and go make it happen and every time you do that oh all sorts of new applications emerge right when you do it and that's really the beauty of technology sort of over and over again right because remember we started out just doing you know all of computing started out by you know computing you know a missile you know bomb paths and you know being able to compute census it was just you know I just need to add right you know so we've just been doing calculators at scale right you know further our entire existence well it's it's it's interesting because you know this the notion of a hybrid cloud because inside of kind of the data center with you know it's not just it's not a monoculture inside there you have the GPUs and FPGAs yes standard and a server backbone that I think is fascinating but also you know listening to you talk about the economics of the cloud if you will it has so many features that are similar that are familiar to you from sort of the economics of the silicon transistor yeah absolutely as the price goes down you you experience over decades this hugely elastic market and it's the I mean maybe it's the same phenomenon at different registers levels of abstraction but it's so similar you know you know continues to sort of replicate the same model of you know hey if I make computing a lot cheaper I get to go do new algorithms and the beauty of the cloud is you benefit from Moore's law because you're putting you know then the latest processors in there with more cores you know clock rates etc you know bigger memory footprints but you also get to benefit from the distributed nature right because I now can assemble a thousand course right for a few hours and then I can disperse them yeah right you know as well so you know don't just get the right I'll say the scale-up characteristics you also get the scale out characteristics of the cloud so you actually get to dimensionalities right working for you when you go to the cloud and clearly you get it through this easy to access API portal right and now as clouds are competing with each other on raw economics right you know you got all these people finger at all you know I can tie them together better if I make the network's faster oh I can tie them together better if I use this Nick offload all right you know I can tie them better together if I you know change my you know distribution algorithm is o one by one all you got all this engineering capacity saying how can I really drive that competitive advantage of making more available more rapidly you know imagine if you and I were you know we were in a corporate datacenter before right and somebody came running to us this is yeah I got a great idea right I just need you to stitch a thousand GPUs into your data center and you can start running these machine learning algorithms and I think you're gonna be able to predict consumer behavior in your marketing programs more effectively than ever before right now imagine tomorrow well it's a pretty good idea right you know it's showing some promise and I'm gonna go to the CEO tomorrow and ask him for you know an extra hundred million of capital so I can put up the GPU farm so that I can do new marketing insights how do you think that's gonna go probably a hard conversation probably a hard conversation but now I get to go to the cloud and I say hmm let me try that experiment and I'll rent the and I'll rent the thousand GPUs and combine it with the thousand cores I had I'll run the experiments over the weekend I'll produce some insights and I'll walk into the CEOs office a saint you know what you know I spent a few thousand bucks on my Amazon bill this weekend right I apologize you know take it out of my budget or my height or someone like that you know here's the bill for ten thousand bucks but here's the insight that I got from running though rhythms over the weekend let's give this a try right to mark it this way oh my gosh right I've changed the economic model from a hundred million dollars of capital right to you know over running my budget by ten thousand bucks this weekend and giving you write something in a few days that is just changing our ability to leverage compute capacity and that's really the thrilling aspect of I'll call the super power of the cloud could you tell us a little bit about forming that relationship with Amazon Web Services and some of the other kind of public cloud providers that you mentioned you know this I would imagine you know that is a big deal you know if I'm thinking of it the right way and please correct me if I'm not you know it's almost choosing like the operating system for your cloud yeah yeah so that's a big choice can you talk about how you know you've approached that and you know the Amazon partnership was one of those seminal you know sort of the shot heard around the world right sort of changing the cloud industry as we partnered with them and as I described that five years ago I stood on stage and said if you used Amazon right you were stupid and you know and ejs you stood on stage and said if you run your own datacenter you're stupid right now we're on stage doing bro hugs and announcing a joint future together and you know it really has been you know one of those you know fairly significant changes for both companies and you know Amazon does not have this long and deep reputation for partnering you know they're chewing up and destroying and disrupting industries so as I also described that we had the last and final board meeting on seven different occasions to approve the strategy right because it was sort of one of those can I really bet on this partnership how is that gonna go what's the future here you know what's the give and the gets you know how sustainable is that relationship are they really you're gonna be in it for the long term and you know you're gonna throw hundreds Engineers at this partnership and you know go build that out and it's worked out to be extremely positive for both companies you know there was just a big information article the information that was released recently on you know hey you know the bet that the two companies paid is starting to produce dividends for both companies now and you know we really are seeing that momentum starting to emerge that yeah you know the idea of the hybrid cloud as we've already discussed is a very merited sustainable strategy well into the future and I'm also thinking about you know in the move to VMware and thinking about the sort of people building the technologies in VMware versus the sort of people who are building the technologies when you were with Intel it's it is it is it very different you know working in the software context versus working in the silicon context could you talk about the similarities and the differences and yes offer versus silicon was a pretty and you know it's a pretty radical shift and you know you know understanding and you know how those engineers work and you know in a silicon project you know a major microprocessor you have to get your satisfaction on about five-year increments you know for you know four for four years and 364 days you're in the salt mines and then you have one day of glory when you announce the chip and then you go back into the salt mine you know for five years you know it's a very you know boy and you know you build these teams you know and you know a big microprocessor project now might be you know six or seven hundred engineers so you ramped it up over time you got test people and fab people and right you know package design and all this kind of things and clearly you know by the time you release a new microprocessor you might have had you know to three thousand engineers touching it right you know five years thousands of engineers oh my gosh right you know I mean this is some of the largest scale engineering you know one time I had the the general I think was a two-star general who was in charge of the Joint Strike Fighter program for the military come and talk to us about techniques used for large-scale engineering because you just don't find many projects that are of that scale right you know five years thousands of engineers right you know name all the projects at that level you know boy you know okay we got airplanes right you know what else right there just aren't that many at that kind of scale now a software project hmm you know it might be for engineers is the nucleus right and they get a prototype running in three four months right you know particularly and you know very much in a agile cloud driven microservices world you know the time scales are so dramatically different right you know for you know thousands of engineers five years you know five engineers for four months all right and the type of talent is very different right you know hey you know in a silicon project you know you have a few I'll call prima donnas you know those core architecture people at the center of it but for them you know you need lots of execution machine right you know people around a many different skill sets very type of things you know a course offer team come very small in comparison right yeah and again it's not one but boy you know as long as you get those four or five that can work together okay boom you know go for it you know right over here it's like you're trying to create this distraction free focused environment right for them over here everything's distraction right you know have you worked on the packaging team well what about the test team you know have you lined up right you know the process thing you know is that occur always you know you know working across all these different idols so it's quite different at that level but there's also a lot of also a core engineering disciplines that serve you well right at that level where you know you really just you know dig deep into the technology understanding how the systems work and obviously big products you know this is a for people forever you know projects get bigger over time you have all sorts of other interconnectedness you know the core beefs for your team today is probably five or six hundred people but it's modular iess than the many components as well and I'll just say good engineering skills and disciplines work across any industry right you know they really do and the place like Intel you learn good core engineering disciplines and skills and how to program manage big projects and teams and organizations and you know I just take great respect for all the learnings that I got in my decades that Intel I wanted to ask you if you could talk a little bit about in more recent years the whole relationship between EMC and VMware and Dell I have to admit in that preparing for the interview I was trying to parse out all of those moves and it was very complicated and I'm quite certain that I didn't understand it properly so I thought maybe you could help us understand that yeah so in you know 2012 I became CEO of VMware the storage company EMC yeah right and a few of the other businesses they had you know it was starting to flatline right and people were looking at okay where's the next phase of EMC and he also was you know 15 is coming around and Joe Tucci is coming to the end of his tenure right as CEO it's sort of like what's next and EMC started to look at its options and you know essentially you know a handful of options emerged right one was spin-off VMware and give give it to the shareholders right you know what's going off pretty nicely another was we should merge with HP you know maybe merge with Cisco maybe merge with Dell all right so a lot of turmoil both of CEO transition right as well as company transition yeah so it was a very tumultuous time I described it as the worst year of my life really um you know a variety of personal things going on as well you know I'd broken my foot so I'm on a knee scooter or an invalid for a year and it's my right foot I couldn't drive so I'm being a rolling around everywhere I had a son who had cancer so he was going through treatments he's you know thank the Lord he's healthy now we had two weddings that summer so right yeah I remember I was walking my daughter down the aisle with my broken foot and as I described but this I was tears of joy and the son was tears of pain right right and the Dell EMC merger gets announced the vmware stock cuts in half through this process you know it's being described that i'm being fired right and i'm gonna emerge as the CEO of dell right as a security also everything right rumors I'm you know being spit out we're gonna be spun out you know I'm gonna be fired here I was in fact sitting next to Michael Dell on an event at the time and one of the rumors comes out that I'm about to be fired so I took my phone and I showed it to Michael something I don't know yeah you know all this tumult is going on you know when the stock price is CEO it's sort of like your scorecard right for everybody to see all right you know we're at half we had a joint bench for that collapse yes are just huge tumult in this period of time and out of there was that so this is 16 15 16 right and out of that the merger gets announced you know it gets consummated and we you know essentially laid out a path to be leveraged to leverage Dell to remain independent and to really see the vision that we had been working on for several years start to be accelerated and so our low so we hit a low of 43 dollars a share not that I remember the exact number but 40 $3.58 to be exact and today we're trading at a hundred and eighty eight dollars a share right so you know over a two and a half year period you know we've seen an extraordinary acceleration the business we saw accelerated growth rate and revenue obviously the valuation the new business areas you know Dell as a partner is accelerating our growth rate as they're highly motivated to sell and bundle our products into their solutions so you know I liked the Churchill quote you know when you're in hell keep going okay and it's sort of one of those things where you just sort of learn resilience in those periods of time one night I came home in the middle of that and my wife looks at me and she says you have become unlivable she was right I had you know I was wild like you know a spring or you know a coiled snake you know it's a very rough time but now we're on the other side of that and you know seeing extraordinary success but you also learn and I'll say again a lot of this I look back on my Intel development and training where you know there's cyclicality in the semiconductor industry and you know boy you have this harsh times and you know how to deal with having to layoff and restructure and you know you know none of those learnings right we're wasted in the process and getting the company through to the other side and now we're enjoying extraordinary success as a public company but with a majority shareholder named del Sol independent yet seeing great benefit to the interdependence right so what percentage does elem eighty percent so essentially they have taken ownership of the EMC portion and the remained it yeah and the other 20% is publicly hell publicly traded I hope you're a shareholder you would have been well rewarded right you know with one of the highest was just thinking that that would have been if I yeah one of the highest total shareholder returns over the last five years right you know we had a major special dividend last year so between dividends and stock appreciation you know we're now at like 50 percent per year over the last four years or so so it doesn't get much better than that so well I thought I'd more to come just unless there's there's an aspect that we've that you know we've missed about the the VMware story that you know we you think we should capture that I've missed I did want to talk to you a little bit about your life outside of work oh sure and the interview but is there something that I missed I think we've hit the big ones okay you know well I wondered if you could you know in preparing I just saw you know some just amazing snippets about your life outside of work just a very active like climbing Kilimanjaro I think I saw and also I believe you're very involved with the creation of a school somewhere so I was just I'd love to hear about those those other activities and interests that you're finding your time to pursue yeah and you know very you know early in my Intel days you know I became a Christian and that faith perspective has been central to character and wrote a book you know the juggling act balancing faith family and work and really integrating those together so you know this idea that each of us has a higher purpose you know well beyond our day jobs you know it's always just permeated right me my family and you know I can show up for every day and hey I work for God but I'm happy to get a paycheck from VMware or Intel or whoever it was so you know lots of charitable activities you know my wife and I committed many many years ago that we give an increasing percent of our gross income to philanthropy and so we made that commitment we were giving away like 10% and now we're at close to 50% right and you know it was 10% of nothing you know when I was a technician at Intel and now it's 50% of a CEO salary so you know it's a it's a big number now and one of the examples was the work in Africa in Nairobi and the Kilimanjaro climb was a fund raiser for the schools in Nairobi and when we first started to work there it was a couple hundred kids about 200 kids were in the schools in Nairobi now it's over 17,000 kids are in 22 different schools in Nairobi and the statistics are exceptional right the mortality rate for the slum kids and again a lot of these are born of AIDS parents and you know just you know extreme poverty you know well below $1 a day kind of environments that the mortality rate was 30 percent for the school kids the kids in school it's less than 5 percent right 25 percent of these kids right would it be alive you know because it's not just a school it's also health care right spiritual training the life training and jobs training the average schools in Nairobi 20 percent go to college right most of those in the state schools 40% of the kids from the schools go to college right so these are slum kids that are now having 2x the efficacy in to graduate you know into beyond high school education right as well one of those is in a second year at Stanford on an international scholarship a slum kid born of to AIDS parents raised by his grandmother and extreme poverty right in some of the darkest slums is now in a second year of Stanford just extraordinary so the fundraiser the Kilimanjaro climb was a fundraiser specifically for building a girls boarding high school girls are particularly susceptible to tribal patterns right you know a you know 11 12 year-old girl boy you know being raised by a uncle or grandparent or something like that hmm you know a tribal leader maybe for cows well maybe three cows and two camels okay great you know she becomes the third fourth fifth wife and being able to keep girls in particular in school was the purpose of the fundraising climb so we raised you know about three hundred thousand dollars so our goal was one hundred and seventy five thousand right so we you know us I never like to meet a goal it's always be to goal and so now there's a girls high school that's gonna open this fall as a boarding school just outside of Nairobi to keep girls in school and quite excited about that but you know it's also we're looking to expand my wife and I just you know we are funding building out STEM education into all the 22 schools so you know bringing you know being able to have you know science technology computing labs etc into those environments and really I'll say you know building you know I call it building a city out of a slump right you know where you're building structure and infrastructure and capacity you know to see these kids emerge and looking at extending that to other countries not just Kenya in Nairobi but also some of the adjacent countries in the area and that and a variety of other philanthropies but you know we've had extraordinary impact you know way beyond you know what it might mean to be the CEO of a great software company would you say that that system of schools has been one of the areas you've concentrated in the most with your your kind of philanthropy and service it's certainly what you know as I say we have you know we're very involved with the schools in Nairobi you know visit it often you know invest it in those that's one of the big ones we also worked to create a church planting organization that's now a national church planting organization when we started to partner with them they just did work in California doing a couple three plants per year now they're this year they're gonna do about a hundred and seventy church plants but also do ones in South America we're working with compassion where I call it a community in a box where the compassion wants the sponsor kids but they'll only do it where churches in the community to provide an infrastructure for the kids that are being sponsored so our church planting organization is partnering with compassion to plant the church sponsor kids right and transform communities right and so a number of those in South America Bolivia Peru Brazil Mexico Colombia right are now participating in that model so US church plants as well as South American sort of sister church plants as well so that's another one we've also been super involved with the William Jessup University Christian liberal arts university where I was on the board for many years for that and really helping them to go from a little school in San Jose to now while closing in a 2,000 students at William Jessup over in the Sacramento Rockland area so super involved with that one we've also been very involved with the Luis Palau Association the you know a worldwide evangelism and ministries that's another one we've been very involved in and then the final one is and coming back to the Bay Area you'll felt that there was a higher purpose to come to the bay and the Bay Area you know for characteristics for the bay it is arguably the most influential area on earth it is the richest area on earth as measured by per capita income it is one of the least churched areas in the nation right one of the lowest rates of people attending church search participation form and it is one of the least philanthropic areas of the nation yes so you have the richest that are not giving right the influential that are not based on a faith perspective in any way so we started an organization that I'm the chairman of called TBC transforming the bay with Christ and it's has three missions one is to unify the Christian leadership of the Bay Area I second is to amplify works of service to the bay and third is to multiply the churches of the bay so we started TBC and now that's in its fifth year I think at this point to be this influence for bringing you know transformation to the Bay Area and having great success so those are the big five ministries that we're involved in but you know you know very philanthropic and you know one of the things I'm super proud of a CEO of VMware is that VMware it really has developed the reputation as a company of being philanthropic giving back being you know a champion for tech as a force for good you know we have what we call our citizen philanthropy program as well that we're trying to make you know all of our employees a citizen philanthropist right and giving them you know being the geeky culture we are you know every year we give multiples of Pi dollars right right and you know so last year was a hundred PI that we gave to employees that they could go invest in the charity of their choice you know will will match ours right with ten pi dollars so every hour up to a certain you know level will match that that you can contribute dollars to that for every hour that you contribute to that to philanthropy so you know it could be you know Habitat for Humanity it could be you know tutoring in your local school and you know could be working you know we do what we call good gigs right which are will assemble teams to go participate and you know give them time to go and like one of them a couple of years ago we connected up I think it was 700 schools in the jungles of Malaysia became networked right and that was a good gig of a team that you know of like 50 people that we sent there to write go build out that so you know lots of these kind of things so my own values of philanthropy giving back you know investing in causes that are higher than yourself are well represented in the company and those were many of those were there before I got there right many of these programs but we've really been able to accentuate and extend them in significant ways how did you get involved with Africa some of these others I can understand one of our mission one of our the people at the church that we went to was a missionary there and so we became somewhat loosely associated with it then we took our kids and visited the missionary friends in Africa and then our hearts were stolen right and we really you know I'll say you know once your hearts been moved to something like that you know and you know like you know we you know different picture singing you know where I'm I'm lecturing and teaching to a thousand boys in their school uniform right remember these and these kids you know a school uniform you might consider that in the u.s. oh that's so old school for there that might be the only nice set of clothes they have right you know and it's a it's a picture of dignity you know for them to be able to do that and you know boy you know kids screwing around in school here you know why do I need to do this over there they realize that that might be the only opportunity they have to leave a life of squalor right and their commitment to studying and you know they'll just come you know you know I got pictures of my wife where you know maybe you know a hundred little kids are you know just crowded around her just wanting to touch her right at that and yeah you've been in a few of those experiences right and you sort of say yeah you know what I do for my day job is good but what it enables me to do right in my spare job right it's truly transformational and touching lives for eternity that's wonderful so sort of bringing us back from the philanthropic side the more practical Bay Area thing and that is the story of VMware and the Sanford industrial park sort of what is what has been VMware's experience in the industrial park what you know is being there been of any value impact or it was just a place to land and what are your observations having been there for a period of time in terms of the impact of the industrial park on companies like yourself yeah and some of those I'll say you know things I'm you know decisions were made and some of those were happening without me so right you know there probably a few others I can get better perspectives on that than I might be able to but your VMware your typical startup company is trying to you know slavish ly find anywhere to meet write write and its initial location was actually what's called the cheese house right uh I think it's uh anyway you know it was a little you know a couple of rooms on top of a restaurant a little sandwich shop sitting in the craw at the Embarcadero mall right you know and so that was its first location and then you know I've heard that a couple of times and then you know essentially its first permanent location was a few buildings at the end of the Stanford Business Park triangle where it's located now all right and so that became a sort of first place that it really landed as its true home of scale and there it's been this phenomenal relationship one is there's been a strong affinity to stay close to Stanford right you know be nearby and I call them hey I just want to build a thoroughfare between us and Stanford you know I want our people going over there lecturing interaction I want every bright capable student to come our way you know we do different research programs you know fellowships etc you know where we really see that ongoing vibrancy of ideas innovation talent people right both in both directions going back and forth is achill proximity is important absolutely absolutely and you know to me if you're more than a bicycle right away you're not effective right so being you know that boy you know literally a graduate student on you know can be finishing finals on Friday and on campus on Monday right and boy if they finish finals on Tuesday morning let's get them Tuesday afternoon right yeah it was just yeah you really want that vibrancy of relationship and the Business Park has just worked out pretty fabulously for us because you know started us a couple of buildings and then became six buildings and then we took over some more property from s AP and then Genentech Roche right you know we had the opportunity to take over the rest of the campus and you know it was a decision that was made just as I was becoming CEO right for it and we renegotiated all the leases on the property there from the business part and you know established ourselves I think we still have I think about 30 years left under lease right with the Stanford Business Park so you know my view is you know if we can negotiate a hundred year lease we'd go do it right because we really find you know that that proximity to Stanford you know the location that we have is just exceptional right if you come on to our campus you I think the fortune best place to work article described this as the zen-like setting right you know you know and I I've always said when I when I Drive on to stamp Stanford campus or go for a walk on Stanford campus you know I feel better right my blood pressure goes down right yeah my ability to think right goes up right and the interactions that you get with the energy right the creativity and we want the VMware campus to be identical alright you know people gonna show up there so like ah I can relax here oh come and eat my peanuts right you know come and walk around campus our redwood walk or you know our alleyway or right our you know areas that we have for you know community to come together or come and see my turtle pond and there's all these kind of things where people just feel like oh there's a place I can work I can feel good I can innovate here and there are great people right and that's really that other connection that you know if you're working on great problems you know you have great people you can attract great talent you treat them that well and you have a very value centric culture people will be here a long time and that's what we've been able to create and even as a worldwide company now right we're you know 5,000 people in Bangalore site and you know our sites around the world thousand people in Atlanta you know probably 500 in each of Seattle Boston we're closing in on a thousand and Sofia Bulgaria you know there's no doubt that Palo Alto is the center of VMware right it is it has been and it always will be in that campus setting is pretty how many people's you have there on the we're closing in on 6,000 okay right and we just took a building across the street as well so I plan on keep building up the site so every time something adjacent becomes available we'll just keep spreading our tentacles oh dude is there a feeling on the park that day I want don't want anybody like yourselves to get too big like say say you've got enough they want some diversity or whatever within the thing or what percentage of the total Business Park do you occupy I don't even know so I'll just I'm not even sure what percentage we do represent we've never had any pushback because I think they have viewed us as great partners great tenants we also have great relationship with Paulo the city of Palo Alto all right where I think everybody's sort of use it this is good let's do more of this and you know one example one more little story on this that I absolutely love I was walking by the office of my head of HR and sitting there waiting for my head of HR was my head of sustainability so I go popping in and you know sit down and you know looked at her and I said so we set a goal of being carbon neutral by 2020 yeah I says what would it take to get that done like a lot faster all right she says well what do you mean this is like let's get it done two years sooner right you know and she's like hey you know what Nicole is having this like sort of you know the CEO was just telling me how can I go a lot faster right you know for the core of what she believes in with our sustainability program so you know and I'm you know this interaction last two minutes I says come back with a plan I want you to come back and you know you know break the envelope you know come up with some creative thinking because we've said are one of our corporate models is innovating everything all right you know not just in the R&D in the product so out of that came the program that we're now well underway and implementing called a community micro grid we're we're building out you know a large solar capability large battery capability and the ability to be both you know generating more of our power locally right storing it locally but also becoming part of the grid for Palo Alto which is own mini utility for Palo Alto as well so we can both receive as well as feedback and the objective of working with the city of Palo Alto that will become a sustainable Emergency Response Center as well right where emergency happens earthquake you know something like that boom you know VMware's campus is not only you know cuz you know yeah power right we're building more redundant communications and capacity into will build out some you know basic medical capabilities as well will become a Emergency Response Center for the city of Palo Alto right so you know some of those kind of things right unless you're doing projects like that you know where people sort of say well the can this is beautiful let's you know representing our community values or the source of innovation and we're doing things that just make the community better like okay yeah we like you guys hanging around right is there any interaction with any of the other companies in the industrial park uh somewhat right as well but I don't that that's not the sort of scent or the relationship with Stanford mr. Center okay would you like yeah so we have a final request that is as you've probably seen on the wall downstairs we have this program where we ask innovators and entrepreneurs and venture capitalist like yourself to provide us one word of advice and that you would give to an entrepreneur starting off and you write the word on the card you sign your name to it and we take your picture okay and so you own that that it becomes your word and yes there are duplicates and so forth when everybody has their own flavor and taste and so forth on it's um having so can I give you know can I give a a two-word answer - yeah - right normally I would say no but it we've had a few you know yeah yeah cuz I was just saying because yeah you know the the core of I you know who I've been it's always just been hard work right I'll say what I lack in intelligence I make up and hard work right you know one of my you know favorite you know little uh you know who Steve Prefontaine is he was the Olympic middle distance runner from Oregon where we lived for many years and he says I may lose but the other guy will bleed to beat me right and they're sort of this you know this is grit aspect and when you've been born and raised in a farm you know as I say when I when I when I came to Intel it was sort of like no horses kicking me no cows biting me I'm not covered and sweaty hay dust at the end of the day this is close to heaven I just not worked everybody right yeah and you know why would I leave I like to work right you know right you know I you know you know showing up for milking time was you know before 5 o'clock and you know if you quit before the Sun went down right you were pretty lazy so you know just so that's great that's perfect yeah

Channel: Computer History Museum

Views: 3,754

Rating: 4.9473686 out of 5

Keywords: Semiconductors, Microprocessors, Intel, EMC, Data Centers, Cloud Computing, VMware, Virtualization, Philanthropy

Id: MxZe1i8z-8Y

Length: 117min 38sec (7058 seconds)

Published: Fri Jun 21 2019

Reddit Comments

[u/thatyouare_iamthat]

Linked to where he talks about Larrabee project.

Part1 of the interview - https://www.youtube.com/watch?v=JTKkY2kZuEw

[u/kryish]

sounds deep