A. Richard Newton Distinguished Innovator Lecture Series – Charlie Giancarlo

(relaxing music) – A kickoff speaker is
someone who sets the tone for the semester. He has clout, or she has
clout, to command the stage, as it were. Tonight, we are honored
to have such a speaker who does have all this, and also is accomplished,
humble, driven, goodness knows. He is fairly humble, and
his least favorite thing is to talk about himself, so I’m gonna share some things
about Charlie Giancarlo. Charlie hails from the east coast. He received his undergraduate
degree from Brown, where he double-majored
in not only engineering, but classics, the classics. He went on to study and get his masters from UC Berkeley, in
eeks as well, go bears. And if that wasn’t enough,
he got his MBA from Harvard. He’s still committed to those institutions and he serves on the Board
of Trustees at Brown, and he’s a board advisor here, for the college of engineering as well. He started his working career at Siemens, I know there are a couple
of people from Germany in the crowd, so you know where that is or who that is. And then found out, after a couple years, he decided to start off on his own and found a company, which
frankly, in those days, was not something very usual to do. In fact, there wouldn’t be a
class like this in those days. So, it’s kind of interesting
that he did that. The company pioneered
switching technology, critical for today’s network devices. And after some ups and
downs, he moved out west and worked in startups, helping to launch the
first ethernet switches. In 1993, he began a near
15-year run at Cisco, a leading networking, hardware
and telecom devices company. I am sure you all have had Cisco hardware in everything that you have
at home and also on business. He’s held most positions there, including Chief Technology
Officer and CDO. In fact, on his LinkedIn
profile, it simply says he led all business units and
all divisions at the company. At the end of his Cisco tenure, he went on to become the managing director for Silver Lake Partners, a private equity firm who
invested over $45 billion. And I hope Charlie will talk a little bit about the difference between
private equity investing and venture capital investing. Or maybe you can ask a question about it. With all of his experience,
his leadership capability, and frankly, his spirit, he is a very sought-after board director. And in fact, he served
on some of the boards of the most innovative
companies in Silicon Valley, including Accenture, Skype,
Arista Networks, Avaya, BlueJeans Network, and near
and dear to us, Netflix. And just when you thought
he might be winding things down a bit, in August of 2017, he
became chairman and CEO for Pure Storage, which
is focused on innovating in areas like flash memory. The company has shown an
extraordinary dedication to customer service, and the website claims
Pure’s ever-expanding list of customers are among
the happiest in the world. And we, too, are extremely
happy to welcome, on this 10-year anniversary
of his last Newton appearance, Charlie Giancarlo. One of the things that Charlie’s
going to be doing today, is talking about some predictions. It’ll be a first ever, I think, as he finishes his lecture, he’s gonna go over some predictions that he made 10 years ago. And it will be the first time we’ve ever had somebody come back, and kind of, for lack of a better word, grade themselves on the predictions, and hopefully make predictions
for the next 10 years, so we’ll see him in 2029 again. With that, please welcome to
the stage, Charlie Giancarlo. (class applauds) – Thank you all, and thank
you very much Victoria. I really appreciate it. After all of that, I don’t
even know what to say anymore. So, let me just talk a
little bit about my time, both as a student, perhaps, and then what it’s like early
in one’s working environment and working career. I think that might be most appropriate. And then, perhaps, some things
that I learned along the way. So, yeah, I grew up just
outside New York City. In fact, right overlooking Manhattan. It was a great place to grow up. I had three brothers. And my parents came from
a medical background. Honestly, as I grew up, I
knew you could make money as a doctor or as a nurse,
or a policeman or a fireman, but I always wondered how
did everybody else get along? So, I grew up in a
rather narrow world view, in terms of just exposure
to other walks of life. And I certainly didn’t
know what engineering was. I guess I was always a
very science-oriented kid. I, probably like many
of you, was constantly taking things apart, and half of them I’d
put back together again. Always working on fixing things. I think if I have one talent, it’s that I can fix almost anything mechanical or electronic. I had been doing that since very early on. And, I just loved all
things about science. And I will say that I probably had one unusual characteristic
when I was in high school, outside of blowing things
up in chemistry lab. I, somehow, got it in
my head, that I wanted to start a company and run a company, even though I didn’t
really know what that was. And it kinda stayed with me over time. I did go to, obviously I went to college. I would say I was a good student. Not the best student, those of
you in the back of the room, that’s where I was. That’s where I, we were
known as sky-deckers. And we’d stay in the part of the room. But I did, I was widely curious,
so I took a lot of classes. As you can tell, the double major. But I was constantly curious
and wanted to stay busy. And certainly I stayed busy. But, even graduating from college, I really didn’t feel like, I don’t know how the
departments will take this, but when I graduated college, I didn’t really feel like I knew enough to get a real job and be
employed as an engineer. I felt that my knowledge
base was still pretty low. And that was why I decided to continue, well, that and the fact
that the job market in 1979 when I graduated, was terrible. So, I decided to go to graduate school, and came here to Berkeley,
which was a great choice. I did consider another
place across the bay, but decided that that was
just a masters factory and I wanted to get a real education. (class laughs and applauds) And I have to tell you, I’m
not pandering to the audience, this was where I really got my education. I really felt that
school came rather easy, and I just had to work like hell to really get through my
course load here, at Berkeley. It was a great place, and it was where theory became reality. And that was really important to me. Now, I did, as Victoria mentioned, I went to work for Siemens and
I worked for them in Germany. And that might seem to be
a bit of an aberration, but I’d always wanted to
go live and work in Europe for a period of time. Actually, my father had done that. He had gone to medical school in Italy. And I thought it would
be fun, so I did it. And I didn’t speak a word of German. Learned it, and of
course, back at that time, the Germans didn’t speak as
much English as they do today. So, to say it was a learning experience is selling it quite short. I remember, after about a
month or two over there, I would talk to myself in
English on the way home, just so I’d have somebody to understand. (class laughs) But, after about a year or so, and you’re very fortunate, I
think, when you’re younger, your mind, you can just absorb
these things much faster. After about a year or so,
I became fairly fluent. What was more interesting in that job, and now I’m gonna give you
sort of a bit of a story about what can set you off
on a different walk of life, or look at things a bit differently. Again, not necessarily
pandering to the crowd, but, so I studied semiconductors here, when I was at Berkeley, and I won’t embarrass you all and myself by telling you what the
line-widths were at that time. You basically could drive a
truck through the line width of a transistor at that time. But, when I went to
Germany, I was about 22. And german engineers graduated about 26. And within a few months, what I found out, was that I knew more about
semiconductor engineering than most of the people
that I was working with. And it was because of my
education here, at Berkeley. And at the time, it was really
just Berkeley and Stanford that were teaching semiconductors. So, if you were not a
Berkeley or Stanford graduate, you had to learn it fresh, wherever it was that you
were working, from scratch. And what that meant, was
that, at a very young age, I had to take pretty
strong responsibility, and I found out that a lot of the projects we were working on, were
just not being done well. For example, one of the
chips I was working on was simply not gonna
work once it was made. It had several very
fundamental flaws on it. And, so, I couldn’t just
work as an engineer, I had to start to argue
with the management that they needed to take a different path, that we needed to change the design at a fundamental level. Which also meant disrupting
technology partners that they had. And it was kinda frightening, frankly, for a 22, 23-year-old kid who
just graduated from school, who didn’t feel like they knew very much to be arguing with people
that were 10 years older or maybe even more than that. Based on the fact that you
felt that it wasn’t going in the right direction. And that was really where
I learned several things. One was that you really
needed to stay true to the science, and to
the larger interest, that is having a company be successful, than just going along with the flow or just doing your job or
just doing what you’re told. You really need to step up
and try to follow the truth, wherever it goes and wherever it lies. And I’ll tell you another thing,
which I learned much later, but I guess I carried even
at that point in time, which is you need to have
the confidence in yourself, and the trust, where you say, well what’s the worst that can happen? The worst that can
happen is you get fired. Fine, you go somewhere else, right? You have to have enough trust in yourself that you’re not fearful of going down that more difficult path. That you’re doing what’s
right for the company, and frankly, for the
wider set of stakeholders by really trying to drive
down towards the truth. And what’s right. And you have to be humble, of
course, you could be wrong, and take an input. But when you’re confident
in your point of view, then you need to follow it and
push it wherever it may go. The second thing that I learned is I didn’t want to be subject
to the idiots above me, and therefore, maybe I needed
to take on a larger role than just being an individual engineer. And that’s what sorta
prompted me in management, because what I cared about was creating a successful product. At the end of the day, what really drove, I think what’s driven me
for most of my working life, has been wanting to build and
deliver successful products in the market. And it wasn’t enough
just to work on something that was cool and neat,
and maybe even innovative, but if it wasn’t successful in the market, then, well, what was
the value of your work? And what was the value that
you delivered to the world? For me, I needed that last bit, which was that acceptance,
if you will, of the product, by customers, right? Because that’s how you
know at the end of the day, that you’re successful. So, I did start, I actually
started my first company, so after that two years at Siemens, I did go to Harvard business school. ‘Cause I figured out I really knew very little about business. Now, by the way, I don’t know
that I would recommend that for everyone today. I think the world is very different now. And the amount of business
education that you get just working, especially
in this environment, in Silicon Valley environment, the amount of exposure you get
to good business practices, to entrepreneurship, I mean there are courses
in entrepreneurship now, and engineering, which
there never were before. The amount of exposure you
get to that is very high. Back in my day, I was a real, I mean I was a pure engineer. There was no gray. There was black and there was white. You either got the right
answer or the wrong answer, there was nothing in between. So, for me, it was a very important step. But, I graduated arrogant
enough to start a company right after my graduation,
which was not smart. And, to add insult to injury, I started it on the east coast, in New Jersey, where I grew up. And I learned many lessons,
many of which they teach you in your first class of entrepreneurship. That is, associate with
really strong a good people, get good venture backing, make sure that you are in an environment where you can attract strong employees. I was in an environment
where no one would leave a reasonably strong pension
at New Jersey Bell Telephone in order to go to a startup, right? So, trying to attract people
who are willing to take a risk, just, those two phrases just
didn’t go together at the time. Despite that, we made
pretty good progress. We were building early switching equipment for connecting, what at the
time, were IBM computers to their storage targets. And we were making pretty good progress. And really, what killed us,
we had good venture backing. What killed us was the
stock market crash of 1987. And, most of you were
probably pretty young when 2008 came along. But, 1987 made 2008 look like a cakewalk. 1987, the stock market
lost a third of its value in three days. A third of its value. It dropped from 1,500 to 1,000, literally in three days. And our venture capital
just dried right up. So, one of my backers, still
believed in the concept and decided to bring us out, or asked me to restart the
business out in California. And that’s what brought me and my family out here to California. And as Victoria mentioned, that startup, we built the first, so this
is gonna be embarrassing to everyone. So, back in that period of time, and it’s not that long ago. In 1989, the internet was
still a private network. It was controlled by the
government and tied together universities and different
government agencies, in what was known as Dark Net, right? It was open, it was so-called
commercialized in 1991. And in 1992, we introduced what we, well, the internet was
our smallest customer and we didn’t even know
it as the internet, there were two companies that
ran it, PSINet and UUNET. And their backbone speed, so the speed of the
intranet, coast to coast, the backbone speed, was
one and a half megabits. You have not been subjected
to one and a half megabits in your entire life, I don’t think. (class laughs) And this was the entire internet backbone, was one and a half megabits. Now, of course, there
were several of those across the country, but still, it didn’t add up to very much. And we introduced a product that brought it up to 150 megabits. About the speed, right now,
of your wireless router in your dorm room. That was the innovation that we brought, was that backbone. But, it was during that work,
when we were doing that, where the real prize and
the real insight came to us. And, so, let me just talk
about that a little bit. What got me into communications, was I started out in semiconductors, but then when I was at Siemens, we were building semiconductors
for communications. And that was really
what was exciting to me, digital communications was new. Prior to that, it was all analog and modem-based, right? If you wanted to put
digital over the network, you dialed up and put a modem on it. And that’s how you got it. And for the first time, digital communications was coming out. And that’s what I had
built semiconductors for. And it just, I started reading
about Shannon and others about the potential for
doing much higher speed, digital networking, and I thought that was really cool. And really fun. And really being able to
tie together computers at high speed. And I’ll tell you a little anecdote. I had already been married at this point, and I went to my brother’s wedding. And I think I was already
out here, in California. I went to my brother’s wedding, and his new brother-in-law
was working at Princeton doing research, he was a head
researcher, for nuclear fusion at Princeton University. So, he was the one that was
working on both the Tokamak and the laser ignition facility to ignite a bead of tritium and deuterium to create a nuclear fusion to power cities and countries and so forth, right? So, I was very curious about that. So, we talked a lot of the night about what he was doing
and what his hopes were for building fusion to have free and clean
energy for everyone. And that was gonna be
possible in the next 20 years. And then he asked me what I did. And I said well, I’m building
these digital networks. And he goes okay, well what’s that for? I said well it’s for letting
computers talk to each other. And he told me years later
that he went home that night and he said to himself, jeez, I don’t know why computers
have to communicate with each other, I feel sorry for this poor guy. So, you don’t really know
where you’re curiosity is going to land you. You really don’t, right? I mean, back then, and that
was probably around 1990, 1991, the idea of having computer, my family didn’t understand
what I did for a living. And it wasn’t until about 1996, when this word internet
became popularized, where people actually thought, then, that they knew what I was doing. Because they knew there was
this thing called the internet. In any case, go back now to 1993, it occurred to us that computers now, were more and more being
connected with ethernet, but it was still a shared medium. Meaning that lots of computers would share a 10 megabit connection. And since we can switch data
at relatively high speed, why don’t we just switch ethernet? And holy cow, I have to tell you that literally, in 1993,
I could draw a graph, so not a single ethernet
port had ever been sold, or ethernet switchboard
had ever been sold, and I could draw a graph
to the end of that decade and say that without a doubt, ethernet switching’s gonna
be a $10 billion market. I mean, that’s pretty amazing, right? And it was just the insight
that you were able to achieve by being in the business, and understanding the
fundamental technology, and then, where companies
and technology was going. That then, it could give you the ability to actually predict where this was going. And I did this prediction. And I did it to our CEO. This was the company that I started, but it was funded by VCs and by sort of a sponsoring company. And the CEO of that sponsoring company, I drew this out for him. And he said yeah, that’s
not going to happen, and that’s when I left and started with another
company called Kalpana, where we developed the
first ethernet switch. By the way, that guy, Dan Warmenhoven, became the CEO of Network Appliance, which became another great company. But he really blew it by not
funding ethernet switching. Anyway, so that was how I
eventually ended up at Cisco. And, along the lines of just wanting to really develop great
products, I went to Cisco, it was, I thought, a
big company at the time. It had 2,000 employees. It was just about to cross
over $1 billion in revenue. And I liked small companies. I thought of myself as an entrepreneur in starting companies. And, so, I thought, well, I
think I’ll probably go off and start something else. But, there were two things
that were holding me back. One was, honestly, I’d been working then, as an entrepreneur for probably
about six or seven years, and frankly, I was a little burnt out. So, I thought, well maybe
I stay here for a while and just catch my breath. And the other thing
was Cisco’s stock price was doubling every year. So, I thought maybe I
should vest a little bit, ’cause I still had a lot
to vest in the company. But, what I found valuable at Cisco, was that they had a great culture there, but they had a great sales force. Their sales force could
really sell the products that we had developed, and at that point, it was
both routing and switching, to enterprise customers. And what did I like doing? I liked building products. Frankly, building sales
forces were ancillary to building great products. But you need them, otherwise
they’re not great products, if you don’t have a good sales force. And, so, it gave me the freedom, then, to start working on other
technologies while we were there. And, some of them, you
may be familiar with. We developed the first WiFi systems, were developed at Cisco. But let me tell you about
the first WiFi systems because I think it’s also instructive. We bought a small company that
was doing research in WiFi, came with about 50 employees, by the way, it tripled the
number of PhDs we had at Cisco. This small company had
more PhDs than we had in the entire company. Because (stammers) who’s taking E and M? No E and M? Oh, well anyone taking E
and M, you know, right? It’s hard stuff. And, so, that’s electricity and magnetism, really understanding radio
is really, really complex. So, we bought this
company and worked on WiFi for about 18 months to get it to market. And you would think, right, that WiFi would just take over the world,
be a huge market overnight. For two years, we couldn’t sell WiFi. This is the only WiFi
that exists, by the way. So, we couldn’t sell WiFi for
a wide variety of reasons. The security protocols
weren’t standardized, Microsoft didn’t support it, so you had to have a dongle
and software directly from us, large companies couldn’t use it because at that point, they
were using a shared secret, and if an employee leaves, well they have this, it’s like
having one key to the office, that everybody has the same key to get into the office, right? So, if someone leaves and
goes to another company, all of a sudden that
other company has the key, and you’re no longer secure. So, there were a lot, also if you put it on the ceiling, you’ve got to pass fire code in 50 states, not to mention 212 countries, and all the fire codes are different. So, it’s just all sorts of issues. So, it took two years. And my CEO didn’t support it. He thought it was a stupid idea. You should stop the project. We don’t have the money
to continue funding this. And so forth. But then, of course,
Microsoft introduced Windows, started supporting WiFi, and that’s when WiFi started to take off. But, I guess there’s a
couple of lessons in that. One is that too early can
be as bad as too late, unless you’re able to stick through it. And actually I had learned
about the possibility of WiFi back in 1992. If we had started it then, several companies had started,
but had gone out of business. And you probably wouldn’t guess
why, right from the start, but in 1992, there was
a critical thing missing for WiFi to be successful. Laptops, there were no laptops. All there were were desktops
and something called luggables, which was a desktop with a handle on it. And, so, without laptops,
you don’t need WiFi, so no one bought it. It was when laptops became
readily in wide use, that WiFi became successful. Voiceover IP was another
innovation that we made, very similar story. When we first put it out, it didn’t have all the same capabilities as a regular telephone system,
so it was very hard to sell. Customers that first bought
it went through a lot of difficulty and trouble. Wasn’t as reliable. But eventually, again, with
a lot of work and effort, and often, and this is
maybe another story. Turns out, that every
business, every new product that you introduce, even if you’re in the same business. So, routing is communications,
switching is communications, WiFi is communications,
voiceover IP is communications, they’re all completely different. The way you sell it is different. The knowledge that your sales force has to have is different. The channels, that is the
resellers that are in the market that you might work with, who work with customers,
are all different. The economic model, in
many cases, is different. And as you go through a company, probably 80% of your work is
not inventing the product, 80% of your work is figuring out how to get it to a customer in a form, and with a set of
capabilities that will get the customer to actually buy it, right? It’s a lot of training,
it’s a lot of support, it’s a lot of figuring
out small modifications to make to the product to
make it more interesting to customers. And you just learn this
lesson, unfortunately, over and over again. And every time we, even today,
introduce a new product, even though it’s in the same business, we have to relearn these
lessons all over again. So, I think Edison famously said that invention is 1% innovation and 99% perspiration. I think that’s still largely true. It’s a lot of detail that goes into making any successful product. So, with that, why don’t I, well let me just say a few
words about Pure Storage and what we do. So, Pure Storage, we will
celebrate our 10th birthday, actually, in October. So it’s a 10-year-old company. I only joined two years ago, so I can’t claim any
credit for the success that the company had early on. It was the first company
to use flash memory. So, flash is what you
have in your cellphones, and nearly in all the laptops today. But, prior to Pure, all
computers used hard disk. And in fact if you bought
an iPod 10 years ago, you probably bought one
with a hard disk in it. Hard disk, for those
of you that don’t know, is a piece of mechanical equipment. It’s a spinning disk of rust, iron oxide. And we were all walking
around 10 years ago thinking we were just so cool and we still had mechanical
stuff in our computer. Our computers were still
based on mechanical storage. Now, it’s all semiconductor. Flash is semiconductor. By the way, Berkeley was big behind flash. A lot of the early, one
of my lab mates, here, in Cory Hall, Sanjay Mehrotra, was one of the primary
innovators around flash storage. So, Berkeley has a lot
to be proud about here. These days, all storage
is gonna go to flash, is gonna go to semiconductors. That probably doesn’t surprise you at all. It’s more expensive right
now than magnetic memory, but it’s declining much more rapidly. And it’s really allowing,
I think, a revolution in terms of what we’re
going to be able to do with all the data. For example, our products
are the number one products that are used in artificial intelligence and machine learning environments, simply because of the throughput that we can enable with the data to feed GPUs and CPUs and so forth. The other thing that’s amazing about it, is it’s much more sustainable. A petabyte, do you all
know what a petabyte is? Yeah, so, you probably have
about a quarter of a terabyte in your laptop. So, a petabyte is 4,000
times as much storage memory, and we can fit that in the
size of a microwave oven. In terms of magnetic
storage, that would take a row of equipment from
here to the end of the room. So, we are much denser. And obviously use a lot
less power, as well. And there’s a lot less
waste at the end of the day. And it’s far more reliable. So, that’s generally what we do. And that we’re gonna continue
to innovate in this area, in ways that I’d be glad to take on after. With that, I thought,
Victoria teased us and me, with threatening to put up a slide that shows the predictions
I made 10 years ago. So, she said I’m gonna grade myself. No, you’re gonna grade me. So, see what you think. All right, so, I thought 10 years ago, that video was gonna
become much more common and that people would
actually be broadcasting video from home. So, that’s okay, right? Talked about software as a service becoming much more of a thing, that is applications being provided not as software inside the enterprise, but rather served out of data centers by the SaaS manufacturers. That was pretty good. (woman speaks off mic) I said, oh yeah, mentioned
confidentiality’s gonna be, that was part of what they’d be able to do was anonymize the data so that people could make use of the crowdsourced information without knowing specifically
what individuals or individual companies put up. Is that it? It’s like the Oscars? We’re done? Okay.
(class laughs) Virtualization, the
rise of virtualization. Today, everything’s virtualized, and now containerized, et cetera. So, and then we talked
about Enterprise Unified Collaboration Tools, by which we mean things
like just telepresence, or just utilizing a lot
of video, like Zoom, if you’re familiar with
Zoom or BlueJeans, WebEx, all those things. So, those are pretty good. Now, I cheated. How did I cheat? It was, I think it was Peter Drucker that basically said the best
way to predict the future is to create it, right? And I was working on all
these things 10 years ago. Now, I didn’t deliver these
things, other people did. But, I knew about them at their infancy. And these were the ones that I thought had the greatest chance
at being successful. And, so, all of you have some insight into things that you’re
interested in and engaged in, and the thing you spend your free time on. You have those insights of your own. And the thing that you don’t
have, like I didn’t have, when I was in my early 20s, was really understanding
better how the world worked. What were the kind of things
that the world accepts? What were the things you
needed to have in place for them to accept the new innovations that you might bring out? That’s what you need to
develop over the next 10 years, is really getting a better understanding of the way the world operates. So that when you do have an insight, you know what the right time is, and you know that the world
is ready for it at that time, and what the ingredients are that you need to be able to deliver,
along with that innovation in order to make it successful. So, they also ask that if I might predict a little bit about the
world going forward. Well, I think that, in a sense, it is going to be much
more of a software world. A lot of things are gonna go to the cloud, but I think you all believe that already. So, that’s not much of a prediction. But, many more capabilities and so forth are going to head into the cloud. I do think that more of the physical world is going to become more software. What I mean by that, is
if you’re a biologist, I think it’s gonna be very hard for you to be able to continue as a biologist without data informatics. And to be able to really
analyze what it is that you’re studying
from a big data sampling. And in fact, even things like CRISPR and creating changes in the DNA of whether it’s humans
or plants or animals, to eradicate disease. Or for other purposes. You’re gonna really need to understand how computers operate, in order to be able to
construct the engines that will, both analyze
and be able to drive the way that you might want
to create new forms of DNA or fix existing forms of DNA. So, understanding computers,
understanding big data is gonna be, really, a critical capability as you go forward, in almost any walk of life. So, again, I don’t know that
that is a terribly profound forecast, but it is something
that I really believe. Of course, I’ve got
much geekier predictions for the data space. Right now, data is still very much tied to a specific workload environment. It’s not free in the same
way that applications are, to be moved anywhere at all. Or for applications to say, for any of you that have
asked your IT department for more storage, you know that it just doesn’t come easily. And I think that’s about to change, where basically, an application will call for the capabilities that it requires, from a storage and data standpoint, and it’ll be provided by AI orchestration. So, those are my forecasts for today. Maybe if I’m back in 10 years, I won’t be working then though, I’ll be in retirement gear, I think. So, with that, why don’t
we open it up for Q and A? – So, we have a good
20 minutes for Q and A, so, I don’t know, if anybody’s willing to start off our Q and A? Yup! I’m gonna pressure everyone in the room to get involved in questions. So, be prepared. – [Marley] Is this on? Okay, cool. Hi, so I was just reading recently about– – Can I ask you a question? – [Marley] Oh yeah. – You should just say a little bit about what you’re studying. – [Marley] Oh yeah, sure. So my name is Marley, and right now, I’m studying nuclear engineering, and I’m hoping to do some work in IOER, either a minor or by switching my major. And then I was reading recently about the medical industry’s migration into using some of the
larger software companies, Google, Amazon, using their data centers to store medical data. So, I wanted to ask about your perspective on how storing medical data
in these larger centers will affect medical outcomes, and what you think about that? – Right, well, I think there are a couple interesting elements about that. One is the whole issue of privacy. And I think that, I’m personally very
concerned about privacy. And personally, I feel that
our fourth amendment rights have been violated for the last 15 years and continue to be violated. That is, the fourth amendment
says that the government shouldn’t be able to have access to your personal information
without a warrant. But, frankly, there’s been no case law that’s ever been adjudicated about information that you
might have on the internet. Even if you encrypt it on the internet, there’s no case law that
says that they need a warrant to go after it. Which I think is critical. They need a warrant to go, if you had it on your hard
disk or on your laptop, in your home, they need
a warrant to go get it. But, if you store it
on Dropbox, they don’t. And I think this is something, or at least they don’t feel like they do. It hasn’t gone to the supreme court. So, I do worry, generally,
about our information being in the cloud, because of the lack of the US government’s willingness to actually protect it. Or any government, for that matter. That being said, I think the whole idea of having anonymized medical information assembled together and analyzed, it can only be good for
our lifespans, right? And for helping cure disease, helping to, and not just disease, but just to help
underprivileged populations, populations that are living
in parts of the country where the water is bad, or there are other
environmental contaminants that we may or may not even know of, to enjoy a better life. And we’ll only know this
by having healthcare data be analyzed in a big data format. So, on the one hand, I’m
very supportive of it. On the other hand, I
do worry about privacy. – [Ishall] Hi, my name is Ishall. I am a first year, and I’m studying computer science intended. So, my question for you,
is what are your thoughts on 5G, and I think you mentioned a lot about is something too early or too late, and right now, there’s not
a lot of infrastructure to support that 5G network, so what is your thought process on what is the next
step for data transfer? Whether it’s from our
phones or just in general. – Right, well, 5G for those
of you that don’t know, is just another step up in
the speed of communications that we will have on
our cell phones, right? So, today, you can get, I don’t know, somewhere around 10 to 50 megabits with a really good LTE
or so-called 4G network. And with 5G, hundreds of megabits. We should be able to get
hundreds of megabits. And there’s even some question
as to whether we’ll need wired connections in our home with 5G. Personally, I think we will, because the airwaves are
expensive and they’ll get busy. But, that being said, it’s going to allow many more devices and a lot higher speed. Now, I’m personally having
trouble understanding what I would do with higher
speed on my cell phone. It’s already dangerous enough,
driving two hours here, getting texts on my phone as I come. And I think all of us already do videos and other things on the phone, but it will allow for many more
devices to be in the field. So, IOT-like devices, internet of things, sensors in the ground for farming, the ability to have temperature
sensors almost anywhere, maybe it’s gonna be more
data from your phone, I don’t know how you feel
about your phone giving out more data about itself
and its surroundings. That kinda scares me a little bit. But, it does mean that we’re
gonna make more things possible in the sense of the
community is that it means that a lot more data
is going to be shared. And, right now, the wireless networks are not really designed
to handle a lot more data, and especially from a storage, this is somewhat self-serving, but largely from a storage standpoint, the networks don’t store data. But, if we have a lot more data that’s going across those networks, it’s gonna need to be stored
and processed somewhere. And the biggest load on the
networks, by far, is video. Video is just a huge amount of information and it’s stored as a large
amount of information. It’s something like 80%. So, when I got my start, 80%
of the internet was porn. Today, 80% of the internet is video. Mostly not porn. Yeah, it’s cat videos. And, I think that it’s
gonna want to be stored. So, I think the other thing about 5G is it’s an incredible
amount of technology. As I mentioned, some of
the most complex technology in the world, is
understanding radio, right? And all wireless is radio,
that’s what we mean. And it’s a very complex technology. To give you a sense, the
way it gets so much speed, and bandwidth, is if
you hold up a 5G phone, there are probably
something like five or six different antennas in different locations that are all sending you information. And they’re sending you bits and pieces of the same information, and that’s how you get so much speed. And coordinating all of that so it gets to your phone
at exactly the right time in exactly the right order,
is really complicated. And that’s what 5G is about. So, it’s very expensive. It’s gonna take time. Personally, I don’t know
that we’re missing anything by not having it, but it’s gonna be very
big for the carriers. So, we will definitely see it. There’s a lot of controversy right now that we’re not first. That China might be first in 5G. Somehow that doesn’t
really bother me too much. I’d rather be right
than first in this case. – [Victoria] Come on, over
on this side of the room. All right, got one up here. Charlie, while I’m getting
there, a question for you, for all the students. We’re all looking, well not all of us, but looking for different
jobs and thinking about that, and you’ve been on boards
for different companies, you’ve invested in different companies, I’m just wondering what you look for when you decide to spend your
time or money with a company. – Right, it’s a great question, and actually you had also
asked about private equity and venture capital,
what the difference is. So, I do invest in companies. And when I invest, I
look for several things. One is just a management team that really knows what they’re doing. Not just a great idea. I have to tell you most great ideas, there’s not just one team
pushing a great idea. Usually there’s several dozen teams that all have something pretty
much like the same idea. And, so, you’re looking
for a management team that is very capable, very experienced, sort of has been to the movie before, has maybe not started a company before, but has built something similar before, can attract good people,
so you’re looking for that. I’m just one of maybe a set of investors, so I’m looking for other good investors. There are probably only a
dozen venture capitalists that consistently make money in the world. Venture capital groups, that
consistently make money. And you might think it’s
because they’re smarter, and there might be a little bit of that, but it’s also because
they’re known as the best venture capitalists, so the best companies go to
the best venture capitalists and they get to see more
companies than anybody else, so, they get to select the best companies. So, you want that as well. And then third, and this is,
maybe, more specific to me, I’m looking for something that honestly, will change an industry. I’m not looking to just invest
in the second or third player in something, nor am I looking for, I like to talk about the difference between innovation and invention. And a new innovation is
the latest dance craze. That’s an innovation. An invention is something
that takes time and energy and research, and it’s something that
can change the world, not just be a fad for a day or two. So I’m looking for things that
are really quite different. And if I can, before I
let you ask the question, the difference between venture
capital and private equity. Well, sometimes they use
private equity as the umbrella, of which, venture capital is a piece. But, generally, private
equity means something else. So, venture capital will write checks of, generally, $5 million, $10 million, maybe as high as 40 to $50
million into a new venture. And if you’re a venture capitalist, you’re expectation is that
you’ll invest in 10 things. Five of them will go out of business and you will lose all your money. Three of them, three of the 10, will just, they’re known
as zombie companies. They don’t die, but they
don’t become successful. And they just kinda live
on an suck on your blood for a long time. But two of them are
gonna be 10x-ers or more. And you’re gonna make back,
not just your entire investment in all 10, but more than that. And that’s how venture capital works. Private equity is much more conservative. They’ll write checks of
100 million, a billion, several billion, in companies
that already exist, right? Are already somewhat successful, but not as successful as
the private equities guys think they can be. And, so, the private equity
comes in with a plan. It’s either a turnaround plan, you’re either buying companies
that have had trouble, or it’s a plan to combine
it with other companies in order to create a
healthier environment, or you just think that
they are not well-managed and you can manage them better. So, Skype, for example, we bought Skype when I was with Silver Lake,
we bought Skype out of eBay, and we thought it was
just terribly managed, and wasn’t growing as fast as it might. And, I’ll be direct,
we fired half the team, the entire management team,
and I can tell you why. I mean, they didn’t really
understand what they were doing. And replaced it, it was 50% larger after we had turned it around, and we sold it to Microsoft
several years later, and now it’s a very
healthy part of Microsoft. And, so, that’s what private equity does. But, why did I go back into business? And then I’ll let you answer. The reason is that private
equity is largely turnarounds, and you work hard when
companies are successful and you work hard when
they’re not being successful. And you work hard when
they’re zombie companies. It’s just a lot more fun when
you’re growing a company. And I got tired of
turning companies around. It’s not pleasant work. And preferred growth. So, sorry, go. – [Cody] No worries. My name’s Cody, I’m a mechanical
engineering major here, and I’ll have my masters and bachelor’s, both from here, at the end of next year. And I’m curious more about
your thoughts on the MBA. ‘Cause you went through
that masters in engineering and then after that,
went back, got the MBA. But you’ve mentioned,
also, that we already get a lot of exposure to that here. So, I’m just curious what your
thoughts on the pros and cons are for it, both as a CEO, but also if you were, as a parent, speaking to one of your children, and they were asking this question. – Right, now I’ll give
you exactly that answer, which is that I think it’s very personal in the sense of, as I
said, was a real engineer and did not have any real sense of, I was raised in a medical family, so that’s stereotypical, right? Medical families know
nothing about business. And, so, I felt I really needed, and I did, I really needed that education and it helped me a lot later in life. I look at a lot of our engineers at Pure, and also when I was at Cisco, especially in the later years, and saw that you could get
as close to the business as you had ambition to, as an engineer, and those companies could teach you a lot about what it was like, what you needed to know
to be more successful in a business orientation. I think MBAs are good
for a couple of things. One is for that reason. If you just really are much more intrigued with the business side of things, and would rather shortcut, if you will, the longer learning that
takes place in a company. It’s also good, frankly, if
you want a change in careers. So, the reason why a lot of people do it, is that, and I’ll tell you a truth about being in any business. You are pigeonholed no matter what you do by what you did in the last two years. Whatever you did in the last two years, your employer and other
employers say well, that’s what you are, that’s
the only thing we can give you. So, I’ll give you a great example of this. So, I had started, when I was at, by the time I had gotten to Cisco, I had started three companies. Cisco bought one of the companies that I didn’t start, per se, but I was employee number
12 or something like that. This was the ethernet switch company. I was general manager of
that, and they asked me to take over business development. So, business development is M and A, and strategic planning and all of that. And, for reasons that I
won’t go into right now, I decided to do that. So, for two years, I did that. And I went back to John Chambers, the CEO, and I said okay, I’m done with that now, I’d like to get back to the operations. And he said, well, what
do you mean operations? You’re a BD guy, a
business development guy. I said I’m not a business development guy. Anyway, it took almost six months and my threatening to leave before I finally got back
into an operating role. So, no matter what you do, oh, and then before taking this job, well I was then a private equity guy. I wasn’t an operator anymore. So, whatever you do, you’re
stuck in the last two years. So, a lot of people will get an MBA because they feel like they’re stuck in whatever role they’re
in and they want a change. And taking that break as
an MBA, it’s a fresh start. You’re reborn. You have no pedigree, other than your MBA. And that’s the way new
employers look at you. So, that might be the
other reason to do it. All right, you chose. – (mumbles) Go ahead. Actually, let’s do a woman. (speaks off mic) Right here, fantastic.
– One in front. I’ll repeat the question, go ahead. (woman speaks off mic) Right, right, yup. Yup. Yeah, well no, I did the MBA
first and then I came out and did it. But even then, I obviously
didn’t know enough. I made a lot of mistakes. I think, maybe another way–
– Would you repeat the question? – Yeah, I’m sorry. She said would I do it the same way? She said that is self-describe
myself as arrogant after getting my MBA and
starting a company right away, but if I had to do it all over
again, would I do it again? I will tell you that it was a very difficult number of years, during that period of time, but would I do it again? I probably would. But knowing what I know now it’s cheating, because I would do it differently, right? Look, I think that, as long as you decide that whatever experience you have, you’re gonna use it to learn. Because learning, well, first of all, my best advice is learn from
other people’s mistakes. It’s a lot cheaper than
learning from your own mistakes. But then learn from your own mistakes, ’cause we all make tons of mistakes. And make sure you’re saying,
well, why did I do that? And how could I have thought
about it differently? And what was the lesson
I should have learned from that set of errors or that situation? And then roll that in to your
next set of decision-making. But learning from your own mistakes, or especially from
other people’s mistakes, I think, is really, really important. And as long as you do that, you’ll roll from one thing to another. You’ll learn from your mistakes, and as long as you’re, then, brave enough to change what you’re doing
based on that, you’ll be fine. So, don’t be afraid to make mistakes. Just be afraid that you
don’t learn from them. – All right, from the
back part of the room? Right here. So, we’ll take about three more questions. We have a good five minutes. – [Hudson] Hi, I’m Hudson. I’m studying business
right now in undergrad. And I’m just kinda curious,
you mentioned how you and your team were struggling
to get that WiFi project off the ground, running. So, from the entrepreneur point of view, why were you so confident in that project? And why did you continue
to push forward with it? – Well, I had a laptop. I liked being able to be free in my home. So, probably not unusual, before the WiFi, I would
have to go connect, I did have internet at home,
but I’d have to plug in. And either I’d plug in in my office, in which case I’d be away from
my family for the evening, or I’d have cables
halfway through the house to connect in to the den, where
the rest of my family was. And I just thought this is stupid, and we’re gonna want to
connect laptops with something. And the best thing that
was out there was WiFi. Or from my opinion, was WiFi. Now, there were several
other reasons as well. Now, remember, I had been
watching it since the early ’90s, but there were no laptops. So, when laptops came,
that’s when I decided it was the right time. But there was more to it than that. Ethernet was this sorta magical thing where it just kept going up in speed, and even though there
were lots of other options at the time, it was
always ethernet that won. And WiFi finally got
up to ethernet’s speed, the first one was 11 megabits, which was the speed necessary
to get real work done. And, so, I thought this
is all coming together, and therefore, it should be successful. I was just confident it
was going to be successful. What I didn’t anticipate, and
I think some of the times, it’s rather difficult to anticipate, is all of the ancillary stuff. Like, the science was 10% of it. But then, you had to have
the management system. And you had to make sure
that yeah, it was fire-rated so it could go up in the ceiling. And you had to have the
security system right. And Microsoft had to support it. And, and, and, and it wasn’t
until we got all these things where it finally took off. And, I suppose that our confidence was because we knew, once we started, we
knew okay, we need this, and we need this, and we need this, and we felt confident that
once we had all those things, that it would be more successful. – [Victoria] Two more questions. Start over here. – [Man In Audience] Can you
just define some of the terms that you used? Like, operations and business development? And maybe contrast them and compare them with the position you’re in now, as a CEO? – Sure. Well, you know, once you’re in any senior management position, whether you’re a general manager or a business development
person, or a sales leader, you’re interacting with the CEO and the rest of the
management team very actively. And, so, once you, and by the
way, if you’re an engineer, or an engineering manager, you’re working with your
general manager, very actively. And this is where you start to learn about other parts of the organization, and how they work and what
their care-abouts are. What’s really interesting in a company, is that you’re dealing with so
many different constituencies that have so many different interests. Like the interests of a sales team and how they’re motivated
and how they work and the things that they need
in order to be successful is so different than the things that an engineering organization
needs to be successful. And they’re motivated by different things. At the end of the day,
they tend to be different kinds of people that gravitate towards these different communities. And, so, at one level, you
start to become part of a group where you really wanna
understand what their needs and activities are, so that you can support them
better and service them better. And really, being a CEO,
is probably where you get to the point, where you’ve learned that. You understand what their needs are and you’re trying to best
satisfy each of their needs. One of the things I tell
my employees all the time is that I work for them. It’s not really the case
where they work for me, I work for them. I am there to make their jobs easier. To reduce bureaucracy, to reduce
things that get in the way of them getting their work done. Oh, who was it? I think, again, yeah it
was Peter Drucker again, sorry I like to quote
Peter Drucker and others. But, Peter Drucker said
most of what we call, and he wrote this a long time ago, most of what we call management, is largely getting in the way of allowing people to do their jobs. In other words, it’s a lot of blockages to letting people get their jobs done. And my job is to make sure that I’m running an efficient
and effective organization, allowing people to spend
90% or more of their time focused on the customer and the product rather than internal bureaucracy. And you might think that
that’s easy, but it’s not. Bureaucracy happens, and just by growth, bureaucracy happens. And by growth, by the way,
companies have to change the way they behave or they get stuck. They become siloed. They become stagnant. And, so, you actually
have to actively change the way companies operate,
in order to stay lightweight, in order to stay agile as you grow. And seeing the way that
companies and groups operate, give you better insight on how to do that. I hope that answers the question, at least partially.
– Does anybody have the mic? – It didn’t answer the question? (man speaks offline) – Oh, business development
and operations, okay. So, business development
is largely considered a staff position, and what you do is strategic
planning, partnerships, mergers and acquisitions, so if you identify a company to go buy, actually execute that M and A transaction. But, when you talk about
being in an operating role or operations, you’re largely talking
about delivering products to customers. So, you’re either on the
product development side, or the product management side,
or you’re on the sales side. That’s more of an operating role. – [Victoria] So, we’ll
take one more question. But this is our first, our kickoff class. So I wanted to let you know
that after that question, I’ll put up our attendance link. But I believe that Charlie will stay here for about 15, 20 minutes? And you all are welcome,
in a very nice way, to orderly come up and ask him questions. So, we’ll take one more class
question before we close up. – [Prenav] All right, my name’s Prenav and I’m a junior majoring in CS. I just wanna ask a question
from a VC standpoint. – [Victoria] Can you put
the microphone closer? – [Prenav] Yeah, sorry about that. Okay, so, from a VC standpoint– – From a VC standpoint? – [Prenav] Yes sir. When you’re analyzing
a company’s potential, do you think it’s more important for them to have a strong engineering
brand or managerial structure? – You know, so not just
from my own perspective, but I’ll also answer, for example, I’m familiar with a
number of the senior VCs. They are looking for a
really strong technical team, there’s no doubt. But they also want a strong
managerial team as well. Now, they may decide to
go with a really strong, if a managerial team has
a weak technical team, then a VC’s gonna say, well
it’s not a good managerial team. ‘Cause a good management team’s gonna have a good technical team, that’s part of what makes
them a good management team. If they see a really good technical team and they believe in the idea and they believe they are
the best team to go do it, the VCs will still invest, and they’ll fire the management team and get the management
team that they want. So, that’s what they’ll do. – I hate to end on the firing note, however, we know that
you’ve had a two hour trip to come up here. – No, it’s okay. – It has been phenomenal
to actually hear you speak about so many different topics. I know the students will
have a lot of questions. Thank you for being a real
kick ass kickoff speaker. – Thank you, thank you. (class applauds) (upbeat drum music)

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