PL: Starting at the core, we are at a really fertile time, from an innovation perspective, for enterprise technologies.
During the last bubble, there were a lot of innovations. It takes time for those things to be tested, deployed and mainstream and adopted, and that's happened in the last decade or so. One of those topics is virtualization, and that has provided a layer of capabilities for things like cloud computing.
We're seeing a tremendous amount of activity around the enterprise. They're ready to embrace new technologies and they're ready to grapple with it.
In the last five to seven years, there's been a ton of activity on the consumer side, and a lot of those [technology trends] are hitting maturity. These cycles go back and forth. It's almost the renaissance of enterprise technologies. We're trying to solve a lot of problems that have been in the backlog for awhile.
ZDNet: Not to mention the bleedthrough between consumer and enterprise.
PL: At the end of the day, people in the enterprise, the IT guy -- they're consumers. They spend more time out of work than in it. They adopt behaviors at home and bring it into the office. The consumerization of IT.
There are two dimensions of that. One, people are used to using things like Facebook and Apple and mobile [technologies]. Those things are changing the way people are looking and interacting with technology. Those things have just begun. We're excited about how Apple has fundamentally changed the enterprise IT department. I just look at the number of entrepreneurs that come into our office that present [a pitch]: three years ago, 75 percent had a PC; now it's all Mac. That has tremendous impact. The Microsoft operating system created an entire ecosystem around it. Now the Apple and Android operating systems will do the same.
Video will do the same. A company I work with, Blue Jeans [Networks] -- it's amazing to see how people just expect to click in and interface with video.
For a lot of the big data stuff, a lot of those technologies really emerged from the Internet datacenters. We work with a company called Cloudera, which works with [open source software framework] Hadoop. You look at Google, LinkedIn, Twitter -- you know, they're data companies. Enterprises realize they have a lot of data, too, and they should be able to take advantage of these technologies for their consumers.
The revolution started in the consumer services space, and how it's hit the enterprise in a way that's meaningful. And it's not because they want to change out their datacenters. It's because they want the latest and greatest. It's fascinating to see how the trends always cross-fertilize. People are people -- you're the same person whether you're at home or at work.
ZDNet: What in this revolution excites you most?
PL: The other thing that's exciting is how you sell into the enterprise. Software is clearly the category behind all the technology I just talked about. Not all technology needs to be as heavy as Salesforce; take Dropbox for example. There are a lot more viral grassroots distribution models. You have the ability to build a software product, cloud-based, and develop and get value from it very quickly.
Everything depends on the particular product, who you should be selling to or attacking. There are some [technologies] you still need to sell to the IT decision-maker and buyer. But there are an increasing amount of applications and infrastructure technologies that are more distributed. You can appeal to the user. The end user -- employee or developer -- is more in power these days than ever. Before, IT gave you what you have to use. Now, the bring-your-own-device trend? That's happened. That's empowering the user. If you're a developer now, just get it in the app store.
Open source has been one of the more empowering distribution models. In the end, the IT guy needs to support it. The reason Amazon EC2 has had so much success is because you don't need an IT guy anymore. Developers will have a lot more say in what technologies they'll have to [use to make their products]. Certain products still require the top-down sell, but the grassroots approach is really taking hold.
We have a company called Atlassian, in Australia -- it's profitable, but it doesn't have a single sales guy. Dropbox is another example of that. Even Hadoop -- people were aware of it before Cloudera even showed up. That ability to intersect with the person who's going to use it and get them excited about it and have them push it through in the enterprise, that's really unique and we're seeing more of it today.
ZDNet: What do you find encouraging?
PL: What's encouraging is that the adoption cycle in the enterprise is really there. I look across our portfolio...sometimes you can be too early. (Laughs) This time, the timing is good. A lot of the problems these enterprise startups are tackling are really top of mind. Some of these aren't just evolutionary, they're revolutionary. Some of these shifts are going to create the next Oracles, IBMs -- fundamental shifts, technologies and applications that are really hard for incumbents to adopt overnight. There's a lot more oxygen for startups.
ZDNet: What do you find discouraging? What keeps you up at night?
PL: The thing that I worry about all the time in these cycles is, there's a lot of money flowing around right now. You get these flash crowd effects. Lots of companies following [others] to finish problems. There's a lot of competition early on.
It creates more noise in the system, which makes it more difficult for adoption. It's confusing for customers. You're solving problems, but talent is spread thin. How do you get the answers when you can't hire fast enough? You have copycats -- that's natural for this period, but it takes time to get through. Every company in our sector right now is dealing with the other 15 companies.
ZDNet: Tell me more about the talent thing; I find that an interesting contrast to the global economic condition. Is it really that critical?
PL: The recruiting thing has become a real bottleneck. It's brutal. The talent wars you read about is understated. The reality is, the good ones find them. That's how you see winners and losers start to emerge. The entrepreneurs who have the vision and tenacity to hire the very best people. It's all related, though: those companies can raise more money, because they have more traction, and they can become more aggressive with salaries.
Some development skills are able to be outside the Bay Area; some companies have been able to build out teams outside this little bubble. But what's amazing to me is the tech hiring outside the Bay Area is starting to get competitive for the very top developers. People are getting much more aggressive for recruiting kids right out of school. Every tech company has an active recruiting effort on college campuses, extending the pipeline earlier.
That's on a day-to-day basis. The valuations creeping up, but there's nothing I can do about that. The global economy -- the longer it persists as a problem, the more it's going to have an impact on the tech landscape. Right now, the technologies are so young now that you're still trying to grow the business. If there's a real fundamental technology shift, you'll find $20 million.
In the last downturn, the good tech companies continued to grow. ServiceNow, Palo Alto -- they lived through that 2008, 2009 timeframe and they were still growing very rapidly. That's not going to be the case for everyone, but for the category leaders, will continue to grow.
I worry a little bit more about what's going on in China. It's one thing if Greece slips, but that's like, less, than one percent of China's GDP. It helps to get some perspective. If China's growth slips a few points, that is a huge deal. A lot of our enterprise companies aren't looking at China as their first market. Even the big guys have a hard time at it. That's further down the maturity curve. But the global impact -- if China has a hiccup, that will impact our companies in the U.S.
I think people are just scratching the surface on the enterprise and the data that they have. The data layer that Oracle created, or led -- the ecosystem around that was hundreds of billions of dollars of value created. You look at Microsoft, and all the stuff built around that -- hundreds of billions of dollars. That's what we're looking at. I've been amazed at both the volume and quality of companies working with that data.
Anytime you have these massive platform shifts that allow ecosystems to be built around them…it's a holistic view, but that's where the next generation of enterprise companies are going to sprout from.
In an early category, the market estimates are either way under or way over. They're never right. You don't know in a new category.