Transcripts For CNBC Fast Money Halftime Report 20240713

Public. Deciding that the scrutiny directed toward him had become too much of a distraction. The resiliency of facebook, despite the backlash over big tech. I get that. Im not the ideal messenger for this right now. We have work to do to build trust. What does the future hold as we head into 2020 . A special edition of Halftime Report in San Francisco, begins right now. And we welcome you to 1 market we have a great lineup today were going to be joined exclusively in a little while by snowflake chairman and ceo Frank Slootman as he prepares to take the Company Public in the year ahead. Frederick kerrest, the cofounder of okta, that stock up more than 90 this year were joined by Brad Gerstner who helped us take stock of whats happening in the valley throughout the year. Deirdre bosa is with us, covered the ipo and Venture Capital markets closely as anybody its great to have both of you here so brad, interesting year to say the least. Uber, lyft, they go public wework blows up. What do you make of the whole thing . I think last time we were together you heard bill gerly and i said risk premiums in the late stage Venture Capital market were too low. So since we were here a lot has changed. Wework was pulled, radical change in its valuation, weve seen the Public Markets pull back in how theyre treating money losing businesses and demand they perform before the value correct. So i think weve had a healthy reset of that latestage market, but its left the mid stage and early stage largely uneffected in Silicon Valley. You have a front row seat. Yeah. I started out the year by sitting down with adam neumann and him telling me they were ready for an ipo at any time now were at the end of this year that definition of what it takes to be ready for an ipo has drastically changed. You saw postmate ready. They were going to go and now they decided to delay the plans. I spoke to the grab ceo and cofounder who want to be profitable before they go public you cant imagine one of the gig economy platforms saying they want to be profitable before they tap Public Markets but thats what youre hearing now really that drive to show profitability and perhaps not strict profitability, its always ebitda, or ebit profitability, but that is one of the biggest differences ive seen throughout the years. Sounds like youre saying the party is not necessarily over out here, its just maybe the party is in a different place, the size of the party is a little different. I know. We always look for the headline as though Silicon Valley is a light switch on and off. Think of it as a continuum the late stage market has corrected. Theres no room for moneylosing businesses with no prospects of positive economic chix to get public. Growth at any price is over. Its been reset theres stuff being done theres structure on latestage deals getting done i dont think its corrected as much as i suspected it might have. Why do you think . Rates are still low tremendous amount of capital on the sidelines. Nontraditional players still investing in late stage from foreign sovereign funds to Family Offices and the nasdaq is at an alltime high remember the nasdaq is still at or near that alltime high which is attracting those late stage wework was a shock to the system. Was it as big a shock to the system as it should have been . I mean the muscle memory here can be quite short, right. I wasnt too long ago that Travis Kalanick was pushed out of uber and look at what happened to them in the Public Market Silicon Valley never took real ownership for wework because its a new yorkbased company and there wasnt a lot of Venture Capital relative to other companies. Brad, do you think that the less than has really been learned youre seeing more money go into Bigger Companies with more distinct paths to profitability, but do you think this all happened a few years ago part of the health of the ecosystem to be an investor in technology you have to suspend disbelief sometimes and you have to believe that, you know, that Creative Destruction will take out those businesses i mean it was just a few years ago, groupon was the hottest late stage deal that got done. Now where is it in the Public Market zinga and now where is it . Those late stage markets we refer to as quasi Public Markets over a billion in valuation, have attracted a tremendous amount of capital from the Mutual Fund Industry and sovereign wealth industry thats different. I would say earlier stage venture is as healthy as ive ever seen it. Are there other companies you look at and say theyre in the danger zone in maybe not as a drastic as a wework but ones spending a ton of money that need to maybe tighten their belts . Right were seeing belt tightening deirdre referenced postmates there was an article last week about them laying off employees, resetting the timing on their valuation. I suspect that all of those companies that compete with uber or lyft in the food delivery business, watching what has happened to grub in the Public Markets, grub hub going from 150 a share to 30 a share f youre door dash or swiggy or postmates youre tightening your belts and realizing the markets will be more demanding. What are you doing if youre an airbnb and we will talk to Frank Slootman, its postmate, casper, made well, palentear others in the pipeline to go public, how are they impacted . Im glad you mentioned airbnb this is a different kind of unify korn theyve come out and said theyve been ebitda profitable over the last couple years their challenge is probably regulation as they come to market thats their problem as you see cities around the world crack down on what theyre doing, similar to what uber and lyft are now having problems. Certainly the most anticipated ipo of next year and i cannot wait until they open their books and you can see exactly how theyve managed to be this asset light model, but be able to be profitable and the amount of money theyve raised 3. 5 billion they have that in cash this is not a money burning business others, you mentioned snowflake, that should an interesting one too. Its this different model, postmates is delays but airbnb and snowflake is moving forward. While were having this conversation literally, tiger global im told from the folks at headquarters cutting their juul valuation to half of what it was just a year ago. I mean, it shouldnt be a surprise that private valuations change because we watched the Public Markets and the val ways change every day a good what i suggest to limited partners, universities and endow ment, what they should do is create a public basket to their private companies and they should mark the changes in their private portfolio every day. Wework didnt go from 47 billion to on the verbal of bankruptcy overnight even though thats what it appeared to to be door dash or postmates ought to look at the retracement of the valuation of uber and understand the last mark they got in the private markets is unlikely their true value today. Theres no transparency youre looking at these illiquid private markets when airbnb is one of the rare ones that stopped financials but many others you have no idea. In the Public Markets we look at comp sets for airbnb, the comp set is expedia and booking. Com. And as the risk premiums around those assets change, you need to assume if youre on the board of airbnb, that the same type of change is happening in your business same for door dash, postmates, go down the list so youre right, airbnb is a business that is much healthier from a Unit Economics perspective, but theyre going to be compared to booking. Com, their growth rate is going to be compared to booking. Com and their profitability per room night will be compared to booking. Com when they go public next year. The behavior of investors, looking at today mutual funds, and these funds and firms that are piling all this money into either late stage or ipos, and now, are licking their wounds. I wonder what the change is going to be as a result of what youre seeing. Brad can probably speak to that too, as to whether theyre pulling back a little bit. What youve seen over the last decade really is as these Companies Stay private for much longer, mutual funds want to weigh in to force some of that upside before they become Public Companies. You look at, for example, fidelity and t. Rowe, american mutual, sorry, john hancock, hartford, they have been in some of the most anticipated flashiest unicorns like juul and wework that have seen major valuation haircuts and had to mark down their holdings jackson national, 75 is how much they marked down their wework holding theyre still in companies we could see go public next year like airbnb, 23 and me, it will be interesting it see if they pull back a little after getting a little burned this year by some of the biggest names. What would the impact be if you had some of that money dry up its already pulling back if youre a Mutual Fund Investor seeing these markdowns, theyre seeing them in their holdings, but its only natural youre going to pull back your Risk Appetite a bit i dont think its going to have that much effect like i said the late stage Growth Market is pulling back a little bit, but if the nasdaq stays at an alltime high you can rest assured there will be Mutual Fund Investors and others chasing those late stage deals to try to get that ipo pop remember as well, that in a world thats flirting with direct listings, which bill and i talked about on this set a couple months ago, it is more and more difficult to get those preipo allocations and pop so the mutual funds perhaps have an incentive to want to come into those private rounds where they can get their allocations on the books veep though they may be pushing the price a bit. They are coming in earlier. We were talking about, the series c was led by t. Rowe with involvement by fidelity. Were talking about some of the names the valuation haircuts but there are some Success Stories we should mention fidelity told us that 2019 has been successful as far more valuations have increased their decreased. They were in crowd strike and data dog, two successful ipos this year. Thank you so much for joining us and having this conversation again, as somebody who covers this day to day. Talk about a couple of your holdings before we take a break and bring in Frank Slootman. Facebook, you your biggest winner of the year the stock is up more than 50 and you havent wavered as you said time and time again, whether its on this set or on the phone or via satellite when back at headquarters youre a huge believer this opportunity. Volatility creates opportunity. The fact of the matter is facebook from our vantage is the leading Global Internet technology platform. We have the founders still the leader of the business, who is allocating capital in ways that instagram, whatsapp, in ar and vr we think is industry leading, we think they have massive opportunity to still scale their monetization on a global basis in whatsapp and instagram. They started to talk about commerce and instagram which we think will be massive. If you listen to the ceos of ralph lauren and other public apparel companies, instagram is their number one source of growth and lead generation obviously its controversial around political ads obviously you know, the Company Might have done a better job in terms of how mark performed in washington, d. C. , but the truth is, we so see a Management Team and a business with opportunity. At 30 Earnings Growth it is still only trading at ten times next years ebitda one of the cheapest names in our universe for one of the best technology companies. What do you make, i dont know if you want to call ate battle, twitter banning political ads, facebook not going to the furthest lengths of that should they . Im happy facebook has not reflexively followed twitter into the political ad band i think theyre eville waiting the situation. The truth of the matter is depending on which side of the aisle youre on you may have a different perspective. The president of the United States can reach 100 million twitter followers and if you want to be in opposition to that voice you cant buy a political ad to tweet a response so to me thats sort of unilateral disarmament seems to be a Nuclear Option to a problem we all know exists so i hope that facebook continues to take thoughtful action on this certainly a review of the factual truth of some of these ads is something thats important. They have independent Fact Checkers doing that today and i would just say stay tuned as to what theyre going to do. The Stock Performance this year would suggest that all of this talk around regulation and big tech under fire is noise the market doesnt care about it at all if a stock could be up 50 and this is the posterchild of regulation and big ten run amuck. Thats what makes a market and creates opportunity. Remember the stock was over 200 last year, ended near 125, so it took a drubbing in the Public Markets last year. Thats when we built our large position in q4 because we didnt think it was a fair reflection of the actual Business Today weve round tripped back to 200 makes for a great gain this year the question is what the next two or thee years look like for facebook and we think the political ads question, regulatory question will be settled, but most importantly they are executing fundamentally in such a profound way with a great Management Team that we think is underestimated. Good stuff. A quick break. Up next one of the most anticipated ipos of 2020 the ceo of snowflake joins us next hes considered one of the top leaders in the software space. Frank slootman, that man right there, sits down with us next. As a principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. Within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. You know whats going up today . My poster. Today, there are more than a hundred thousand ptech students around the world. Its a game changer. Welcome back to one market here in San Francisco. Cloud Software Company snowflake expected to be one of 2020s most highly anticipated ipos, in part because of the man who will take that Company Public, Frank Slootman considered one of the kings of software in Silicon Valley having taken data domain and Service Public now in the past now snow flakes chairman and ceo with us in a cnbc exclusive interview. Thank you for being here. Good to be here. Good to have one of the kings of software here 25 years of experience, there are people who im sure know of your past, they may not know exactly what snowflake does. Youre not a sass company. What do you do yeah. Actually its one of the first companies, significant companies, to come to market that is using a utilization model based on consumption were not licensing use rights to the software. You essentially buy credits and you consume those. It really follows the public cloud model and completely analogous to that. It will be a wakeup call in terms of Financial Markets like this is a new animal, theyre already starting to move into utilization models slowly, but we believe the whole market will get there over time. What i find so interesting is that your customer of amazon and microsoft and others, but youre also competitors how does that work it works better on some days than others. Theres tension of course theres all kinds of friction. But youre right, were spending hundreds of millions of dollars with them so were a good customer we partner because we drive legacy on premise work to the cloud, but at the same time they have their own products and it can get pretty testy out there its a huge market and because of that, you know, we figure out how to sort of control the impulses a little bit and make sure that we perform for the customer. This is so interesting, brad, as an investor, when frank describes sort of this new frontier that the market is going to have to get its arms around, im thinking of how investors like you Value Companies like this, how youre thinking about the kind of business that franks snowflake is in. At the end of the day its not completely novel aws in the business of consumption, one of the Largest Software Companies weve been following nearly a decade. At the end of the day, the question how much value do you deliver to your customers and how are the customers consuming. It in a consumption model we see a leading indicator every day of the health of the business, how those customers are using it, what benefits theyre getting from it. A subscription model, sass, weve talked about in some ways is backward looking. Thats what the customer thought at the time they signed the annual contract. So we like the consumption model. I would say and turn to frank on this, its really a reflection of the massive data shift and prize associated with these new data wars. Can you talk to us a little bit about this mega trend around data the thing that attracted me hugely to snowflake was that the data wars are starting anew in the 80s and good part of the 90s at oracle and microsoft and a butch bunch of companies out who was going to own the database platform, right because of the cloud and the movement to the cloud, that is now starting again, right. Things are up for grabs. This time, data is a thousand times more important to the economy than it was 30 years ago because data is literally powering the economy at this point and we see that from Companies Like google and facebook, of course. All new enterprises, Digital Enterprises, and Legacy Enterprises are trying to become and theyre all fueled and propelled by data. Databases are they were very important. They are way more important now than theyve ever been. And you feel like theres a big Playing Field regardless of the munsters who have been out there as you said for 30 years if not longer, the oracles and microsofts and other firms. Big markets, you know, forgive many shortcomings. Thats its a huge opportunity. One other thing i would point out about that is, you know, what weve observed over the last three years is a great acceleration, reacceleration, be of fortune 500 moving to the cloud. The United Airlines of the world finally moving their data center to the cloud theyre voting overwhelming they want multicloud architectures, right. Amazon has a competing product, yes, that works on amazon, google has a competing product that works on google, but snowflake really is the only cloud native application that works across clouds and maybe frank, you can talk a little bit about the power of that data replication. Yeah. For cios the real prospect they get completely locked in to a single public Cloud Platform and its like handing over your wallet to a used car salesman. Its not a dynamic youre going to be happy with they want to make sure they can arbitrage the public cloud to some extent that workloads can be moved from a to b to c to maintain a negotiating level in these relationships. These relationships are enormous, the amount of money Large Enterprises will spend on the public clouds are so huge that having a multicloud, crosscloud posture is critical. Youve said that youre preparing the company to go public is that still on track it is on track. We are preparing the company. Just in 2020 . We have the scale and the velocity to go out, but, you know, were sort of waiting for the right time it will be at our option i mean one of the things that when we come out i want to and we want to present the company in its best form possible rather than try to rush it. We have no pressure from investors or other parties to take the company out as fast as we can its not necessary a lot of things were doing theyre easier to do as a private company than public company. Weve done this a few times so were not as enamored with the process than we might have been in earlier days. Well figure out when the right time is. Next year we have elections to contend with that can confuse the markets for a period of time until it settles. You said you may not raise capital at all, so that says youre actively looking at the possibility of a direct listing . The only reason to do a direct listing if we are not looking to raise capital we are looking to raise capital in an offering in all likelihood go for straight ipo instead of trying to do a private placement. Essential an ipo is a process, its not perfect, but its a good process time tested cant say that about dls youve said you have to mature yourselves to be a public company. What does that mean in this current environment especially good question as i said, we have the scale and the velocity i would like to be better, you know, on profitability, i would like to be better on cash because the core economics are really important just having scale and growth as we now know, is not enough with the growth we have we can normalize these things and help ourselves. A couple of quarters is not going to make a huge difference for snowflake. Were in it for a long period of time. One last question before we take a break and we have a lot it dive na you wrote in your book that some companies are going public when they shouldnt that was about 2007, i think what about now are you revisiting some of those same thoughts because of whats happened companies that shouldnt go public are the ones that cant guide markets on their numbers by the way, you may go, whats the big deal i will tell you in the case of snowflake, because were utilization based and were a pure play, by the way, its easier for amazon, microsoft, they can sort of hide those things quite well, the numbers are huge, for us theres nowhere to hide. You look at our revenue youre looking at our consumption by the way, we dont control our customers, what theyre consuming. Guiding the business is a serious issue. You shouldnt go out until you have a good sense you can do that it takes a few quarters to sort through that. Much more ahead with Brad Gerstner and Frank Slootman. 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Im sue herera your cnbc news update at this hour russia is being severely punished for sports doping violations the World Antidoping Agency announcing it is bab banning the russian flag and National Anthem from Olympic Games and other major sporting events for four more years the banding of russia from the olympics, paralympics and all run for four years and the banning of russia hosting any of these major events within that time frame paris commuters slowly making their way to work through exceptional traffic jams as strikes to preserve retirement rights halted trains and subways for a fifth straight day citing safety risks Frances National rail network warned travelers to stay home. Credit cards. Com released a survey about Holiday Tipping 60 say they never tip their male carrier, 70 say they do not tip their trash collector and 40 say they do not tip their childs teachers or caregivers if you do tip, you can only give your mail carrier something with a maximum 20 value, but not cash youre up to date. Thats the news update this hour back out to you. All right we appreciate it thank you very much. We are live at 1 market here in San Francisco Brad Gerstner and snowflakes Frank Slootman are still with us im wondering, its been a great year for software, the etf best year since 17 valuations too high, multiples stretched . I mean weve seen a fair amount of volatility going on with multiplesp we look we have our own growth index and look at forward multiple of sales. Weve seen that as high as 12 times today. I think its about 9 1 2 times, the median about 7. 8 times people are enthusiastic about the category, they want to invest in the best Software Companies, but were right we bounced off of that median the thing i would ask, frank, the question is, when you look at these averages, what companies are better than others and why . One of the things, frank, you talked about in your book the tape sucks growing quickly is something you have to plan for, you cant just start piling on bodies with a pulse blowing money on marketing, the business will start thrashing when you look at Silicon Valley Software Companies today, do you see some companies thrashing about . Plenty of them. We have a bit of a simplistic attitude in Silicon Valley where people say things like just spend 4 billion just spend and hire and just go as hard as you can oftentimes people start spending and hiring in an unwise fashion. The reality when you build companies, you hire one salesperson and then two and then four. You dont hire ten at the same time it is an organic process and you can only push that as fast as it will go. Youre efficient in scaling. We always like to say okay we cant spend, you know, to a billion but we can organize for a billion so that we can prepare ourselves to take the resources and then deploy them efficiently so they yield. We use the term yield a lot. We invest. Will it convert to an outcome. Often times we apply resources and they dont convert to outcomes and the companies become unhappy. You said at an event of ours back in november that the valley is, quote, fundamentally in a good place you pointed to all the capital thats sloshing around out here. But that there arent enough good people to be running these companies. Yeah. We have plenty of capital, plenty of ideas. We dont have enough people to take that money and take those ideas and convert them. Why is that thats been true. Ask Venture Capitalists thats been true forever. Theres always been a shortage on people to run companies. What do you think about that fact if you know, youre a venture guy as part of what you do. When theres excess capital in the world, when you have large platforms like google and amazon and microsoft growing at the rates they are particularly around software, theyre going to vacuum up the talent. Youre going to have an escalation of what it costs to hire that talent there are have some fresh students out of university today in Machine Learning that are earning over half a Million Dollars a year in year one as an engineer and so there is this war for talent but i fundamentally believe that ecosystem in Silicon Valley, the capital, the people, et cetera is as vibrant as its ever been. Remember, Silicon Valley builds on itself generation after generation theres an organization thats gotten started recently called operator collective, group of largely women operators, the best operators in Silicon Valley, that are investing their expertise and their capital into these companies to help them scale. So im very bullish on the state of affairs in Silicon Valley, but the reality is, we will have more remote work forces. Whether you look at the tax regime or the lack of Human Capital here, there will be other places that snowflake hires talent in order to achieve it goals. It takes time to produce good operators because it takes time theyre scarce, right. Ive worked with plenty of companies where the cios are in their early and mid 30s, smart, aggressive, energized, all the right stuff. What they dont have is experience how do you get somebody experienced that quickly right. Thats the hard part let me ask you this, obviously your broad experience im so curious to hear your answer to this, the founder culture. Youve been brought in to this company to execute whatever that next step in its journey is. Is there still a place for a founder to run a company out here in Silicon Valley i ask you that on the heels of the wework blowup, were talking last week about the google guys stepping back but they still have voting control. What is your broad thought on the founder culture here in Silicon Valley my broad thought is, it depends. We have some spectacular successful founder ceos, steve jobs of the world, bill gates, larry ellison, it would be wrong for us to be dismissive of that option but as you point out there have been spectacular failures with founders being at the helm that shouldnt be or were there too long. Right you know, just coming in on that, scott, you know, our largest Public Investment earlier this year was tablo. A few years handed the baton from the founder to adam who built aws who shepherded that company from a few billion to over 10 billion sales to sales force, so its not just whether its founder or not founder. We have a founder coming on later in this show, freddie from okta, who has done an amazing job at scaling, you know, helping to scale okta. I agree with frank, that it is a very Different Task to found a Company Versus scaling a company or running a public company. Very few can do those equally well but we shouldnt dismiss it out of hand. Well take another quick break and more coming up with Brad Gerstner and Frank Slootman, next the Halftime Report from San Francisco is back in just a couple minutes theres a lot of talk about value out there. But at fidelity, value is more than just talk. We offer commissionfree online u. S. Stock and etf trades. And, when you open a new Fidelity Brokerage account, your cash is automatically invested at a great rate thats 21 times more than schwabs. Plus, fidelitys leading price improvement on trades saved investors hundreds of millions of dollars last year. Thats why fidelity continues to lead the industry in value while our competition continues to talk. Talk fidelity. Talk so servicenow put your workflows immhm. Cloud, huh . Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. Were back live with Brad Gerstner, and snow flakes ceo slootman china apparently pushing for the removal of Foreign Tech Companies in a move away from foreign hardware and software. Whats your reaction to that do you have business in china at all . We do not im on my Third Company now. I have not had dollar one out of china over a 15year period. We couldnt figure out how to do it effectively as well as responsibly. Certainly a company like snowflake was super concerned about intellectual property. Another consideration, its extremely different to do business with the federal government if you are doing business in china. It immediately becomes a very complicated set of questions d andit will be a long time before i give up the federal market to china. You care about intellectual property theft of technology. Whats your take on the whole trade war with china and how you think it plays out to the end . Well, you know, obviously it is unsettling more so for Certain Industries than others, but youre going to see people adapt. Its already happening in other words, the announcement that you just referenced is already showing ajudgment on the chinese side, but theres also adjustment happening on this side is could take 10 to 15 years to play out things are going to shake out over time. I also asked you at the top about your plans to go public you say youre on track in terms of how youre looking to grow, whether organically or through acquisition. Are you activelylooking for companies to buy we are evaluating technology and talent all the time. Theres a lot of adjacent Market Opportunities for us its a very big market we cant do everything ourselves. That sounds like a yes. It is some wonder, frankly, whether youre here, you know, to dress this business up and put a nice bow on it and sell it. You know, the fact that im here is an indication that board of directors did not want to sell this company. They want to run it. They could have sold it without me. Thats an emphatic dont plan on that i suppose. I mean listen, i dont think anybody around the table of snowflake is a seller. You know, we referenced at the top of the show this massive, mega trend, the intersection of data and a datadriven economy with the cloud and i would turn to frank, you said, you know, that the prize in data will be a thousand times larger than it was during the old data battles between microsoft, perhaps and oracle maybe double click on that a little bit how do you see Companies Utilizing this and why is it going to be so much bigger all businesses are Going Digital and businesses are becoming clouds themselves that means that all the interactions are programmatic. There are no longer people involved the newer enterprises have no sales force or support or phone numbers. The entire business process end to end from targeting to price and closing the deal its completely digital we learned it from the likes of google and facebook. Now that is coming to a new generation but also to fortune 500 global 2,000 they are trying to become Digital Enterprises as well. What drives Digital Business data. I want to thank you very much for being with us today. We are going to follow your company closely into 2020. Frank slootman, thanks for being here. Thank you. Up next, a big year for Cloud Company okta shares surging 90 cofounder and coo Frederick Kerrest joins us on the half is helping doctors asts provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. We need a solution. Ut their phones down. Introducing. Smartdogs. The first dogs trained to train humans. Stopping drivers from liking. Selfieing. And whatever this is. Available to the public. Never. Smartdogs are not the answer. 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Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Welcome back to one market in San Francisco another Cloud Company in the midst of a big year is okta. Shares have nearly doubled Frederic Kerrest is the cofounder and coo its been a great year for your stock as i said. Thanks for having me. Whats the outlook for 2020 enterprise, do you think were very bullish. I think theres a lot of opportunity in the times ahead these markets that were in, enterprise software, Enterprise Technology in general, these are very big markets and were in the very early stages of some big trends the movement to cloud obviously, digital transformation, most overused term in the industry but means everyone has to become a Software Company, everyone has to become a technology company, everyone has to find better ways to interact with their customers and vendors. You spent a volatile year out here what do you make of what youve seen i think you have seen some of the thrash with the newly Public Companies i know you talk about on this show i think getting out into the Public Markets is an exciting time and one you have to deal with the right predictability and forecast and longterm approach i think weve seen a little bit of a lot of things lately in the markets. You ipoed traditionally, you ask not do a direct list listing. We had a vibrant conversation about the future of going public. Yeah. Is it about to have a sea change i dont know. We went public 11 quarters ago, not that im counting, but if i did it would be 11 for us, the process was very good look, i think weve been in business coming up on 11 years for the first seven, eight years as a private company we spent time building relationships with our private investors like brad and others and then when you go into the Public Markets its a brand new set of customers but also Business Partners you want to get to know them for us i feel as though the process of the road show, of getting to know Public Market investors, of telling them our story, which is sometimes complicated when you think about traditional on Premise Software and the cloud, i think that was a very good process and give us the opportunity to meet some of these folks and build these relationships and they get to buy stock at the ipo, they get to Start Building a position, Start Building a partnershipp for us its been a good process. You were captivated enough by the story youre ap investor in this company. It really comes down to something that we talked about nearly a decade ago, which is we have a once in a probably our lifetime rearchitecture of the entire enterprise into the cloud. Okta was up with of the leaders. You cant move to the cloud without choosing a solution like okta im really intrigued, frederic, by the idea were still in the early innings. The push back i get from our investors, how can we be in 2020, Everybody Knows about the cloud, how can we be in the early innings . Talk about how the time to value for cios at company like United Airlines, what are they seeing and why are we seeing this reacceleration in the fortune 500 to the cloud and Companies Like okta . If you look at the data over the last ten years ept price it from 3. 2 to 3. 8 trillion. Thats 20 growth. Enterprise software has gone from about 220 to 440 billion thats 2 x cloud has gone from 7 to 100 billion. Thats small thats why when you think about how people implement software, how they deploy it, if you think about software, deploy it, think of the manufacturers of the microphone we have their job is to build the best microphone in the world. How they run an email server is not a competitive differentiator whether it is collaboration, financials, hr, this should move to the public cloud. It should be run by experts who do this for everyone at scale. The microphone manufacturer should focus on how well they can build the microphone if you look at the data, thats why when you talk about time to value, people say, look, i dont want to spend my precious resources. You talk about developers on the show, theres few of them. Theres shortage of hundreds of thousands of them in north america alone. If youre fortunate to get Awesome Developers in your country, you dont want them running an Exchange Server you want them to focus on the best technology for whatever your business is when you can get Services Like the cloud, and ive been in the cloud 25 years, so i grew up in the Client Server world, implementing software, resetting it, maintaining it, upgrading it, very little value with Services Like snowflake, you just had frank on, or a lot of the cloud services, you get up and running quickly. The roi, return on investment is there. The total cost of ownership. The time to value. They get value out of the Services Much more quickly than the past. Lastly, i want to ask about the founder culture notion we discussed with frank youre the cofounder of this firm theres a lot of scrutiny around founders, given what happened with newman and others what are your thoughts look, my thoughts are if youre trying tobuild a compan for the long term, culture is a very overused term it is one even that when we started 12 years ago, i was like, what does that really mean what youre trying to do is set a standard of how people are going to act were fortunate now. We started with two people we have over 2,000 company is growing fast. That means im not in every place with all the customers you want to make sure youre leading from the front youre acting the way you want everyone else to act its not so much what you say but what you do. How do you act in the right way . How do you teach them the right things how do you teach managers . It is something we focus on every day. Its hard. Unfortunately unfortunately, not everyone gets it right you have examples like frank over 15 years doing it time and time again theres a lot of good examples out there. Appreciate you being here. Thanks for having me. Well see you in the new year frederick joining us there outswell have brads final thgh straight ahead on the Halftime Report from San Francisco. Do you have concerns about mild memory loss related to aging . Prevagen is the number one pharmacistrecommended memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Um houston, weve had a problem its human nature to hate problems. But why is that . Problems inspire us to rewrite the rule books. The history books and future books. Thats why so many people work with ibm on everything from city traffic to ocean plastic. From flight delays to food safety. Problems even got us to the moon and back on one tank of gas. And who knows where theyll take us next. phone ringing a phones offers big button,ecialized phones. And volumeenhanced phones. , get details on this state program. Call or visit and accessoriesphones for your mobile phone. Like this device to increase volume on your cell phone. phone ringing get details on this state program call or visit health care jumped 5 in the last month after similar moves, the trend tends to reverse with the sector underperforming the s p 500 a month later. For more, go to cnbc. Com kensho. When it comes to your customers expectations, theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. Is that pgim, we see alpha emerging in the trendsete . Cool. Driving specific sectors of outperformance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Every day, our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. Welcome back we have another big show from San Francisco tomorrow were going to be joined by former twitter executives, dick and adam the cofounder of defi, as well. Early stage Venture Capital firm thats noon eastern. Lets leave our viewers with an actionable thought, if we could, as we look ahead at the next decade in tech investing what kinds of companies are you going to be looking for . As you heard from frank and freddie, i mean, the next generation of Cloud Software is going to enable this datadriven economy. It is a thousand times larger than what data economy was in software when it created monster Companies Like microsoft and oracle so the future is a lot more what were seeing right now around Data Infrastructure enabled by the cloud. Well keep our eyes out for that lets talk a couple things United Airlines. Youre a big investor. You tweeted out your overwhelming support, it is fair to say, for scott kirby, the new ceo. Yes even before that, we have to give oscar credit for overseeing an amazing management and board transformation at this company now, to have scott kirby, who is not only one of the best executives in the airline industry, but id say hes one of the top three ceos in any industry we cover. He is an exciting and fantastic new ceo of the business. As owners, we could not be more thrilled with zoscott at the he. He could have gone to other airlines was this make him ceo now, dont let him out the door. If you have steph curry on your team, make sure steph doesnt go to your opponent. Free agency is tough, even in the Airline Business expedia, talking about changes there at the top two top executives out you said you were youre in favor of this move yeah. Listen, business is tough. At a personal level, im fans of mark and alan. Im friends with mark and alan the reality on the ground is the company hasnt performed the board took steps we think is important to put new leadership in place. Appreciate you so much being here, helping drive our Coverage Today from out at 1 market that does it for us. See you tomorrow the exchange starts now. Scott, thank you very much welcome to the exchange. Im Tyler Matheson on a monday heres whats ahead. The longest economic expansion and bull market on record has some people asking just how late in the cycle are we . Well break down the areas that say were only halfway through it potentially and those who are screaming that we are in extra innings in this game plus, an exclusive interview with the new viacom cbs ceo, bob bakish his visions for the company, take on the media