The Six Five team talk about the recent Splunk .conf.
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Transcript:
Patrick Moorhead: Splunk had their big annual conference called .conf, which is pretty cool. Same week as Cisco Live in the same city. I wasn’t there for Cisco Live, and I wasn’t there for Splunk. So why don’t you kick this one off?
Daniel Newman: Well, you were there in heart. You were there in heart, because I sat down with CEO Gary Steele at their news desk, and it was a Six Five on the Road. And every once in a while, the bestie crew. We’re like the other besties, the better besties. We’re the better besties.
Patrick Moorhead: I don’t know, man. I don’t think it was a Six Five on the Road, baby. I think you went solo. I think it was a…
Daniel Newman: It was kind of like… It was supposed to be you and I, and it was very last minute. And then it wasn’t, and then it was. But my point was, it was sort of marketed that way. It just isn’t. It was kind of like at MWC when I was laying flat horizontal on my back with whatever virus that goes around every year. Sometimes we cover for each other. But the point that I was making is they wanted the Six Five there. Let’s just put it that way. Doesn’t everybody, Pat, want the Six Five?
Patrick Moorhead: Well, I think that’s our goal. My gosh, I mean, we cooked this idea up three years ago. The third year of the conference, I mean, 75 speakers, 25 CEOs. I mean…
Daniel Newman: Out of this world, buddy, straight out to Mars. But no, the fact is I had a great chance to sit down with their new CEO, Gary Steele, who’s really getting acclimated to the role, into the chair. Interesting moment for splunk.com, because over the last couple of years, Splunk has been in what I would consider to be a major business transformation. You’re talking about a company that had moved all of its efforts from a traditional ingestion-based monitoring and for IT SecOps and ITOps to a full-stack observability focused 100% on recurring revenue and moving and migrating customers to the cloud. So that’s been the company’s multi-year goal. They’ve also had a pretty significant leadership transition. Not only has Gary Steele came in for Doug Merritt as CEO, but we saw major roles pretty much across the entire senior management has changed. So that’s what I would say is a company in transition.
What’s interesting, though, is despite a lot of uncertainty, transition, new leadership, and having some decent competition… IBM’s investing in observability, acquired Instana. You saw what Cisco’s doing around observability. All the public cloud providers are offering varying levels of observability, application performance management. Splunk is actually… And by the way, you spoke at a LogicMonitor event. They’re doing some interesting things in this space. But somehow Splunk has sort of kept itself as a kind of uniquely best of breed, as seen as for their observability. They have almost the entire Fortune using their products. Their growth of million-dollar customers, subscription customers, is growing extremely quickly, and they’ve been able to keep that reputation.
But at the same time, you also saw some vulnerabilities. I mean, like I said, they almost… I believe… No one knows for sure, but I believe there was almost a deal to be done, and Splunk was almost taken into another company during this kind of interesting market time. So at the event itself, though… I guess the reason I kind of point all these external factors out is it wasn’t a big announcement event, which is historically what .conf has been. It’s been announcements. This event was more what I call a reassurance event. It was the opportunity after multi years of not getting face to face with customers to have a heavy-duty dose of in-person interactions with this new leadership team, with this new business model, to reconnect and create confidence in the market that this Splunk strategy is, in fact, going to work.
So having spent some time with Gary Steele learning about the business and also having spent time… By the way, he spoke at our Six Five Summit. I’m starting to see this guy gets it. He comes from a background of working with companies that are in a similar size, taking them public. He’s also been in the process of taking companies private. I don’t get the sense that that’s what Splunk’s looking to do here, but obviously, everything’s on the table if market dynamics get weird enough.
In terms of the big focus, though, there was basically one, and that was really this general availability of this Splunk Enterprise 9.0. So if I turn the direction just to kind of on the product side, that was the big thing. That’s the big focus. It’s the 9.0 release. And it’s really getting people to the Splunk platform. And if you don’t hear this word platform enough, they… Just like every other company on the planet gets, you don’t win business by selling features. You don’t win business by selling software in a vacuum. You have to have an extensible platform.
Pat, I feel like you and I had a conversation the other night. I can’t even remember what it was exactly about, but I remember we talked about essentially the difference between features that became companies during this last wave of growth. And companies that are going to grow and become successful in the long term are the companies that figured out how to grow from having one kind of killer app or one thing that people are buying to having a platform that people are building on. So that’s the big opportunity for Splunk. That’s also the big question. Release 9.0, their cloud migration, and their subscription consumption model gives them more depth there. But I see a lot of competition coming, and they’ve got a lot of work to do to stay seen as the leader in the observability space.
Patrick Moorhead: Listen, observability is hot, hot, and more hot. And the reason is, is because the complexity and the bifurcation of every piece of an application is spread all over the place, right? It’s not just the good old days, where you had on-prem, and then you built your application, and then people came in. Now you have resources: IaaS, PaaS, SaaS, different APIs, multiple APIs. You need to figure out what the heck is going on. Then you’ve got devices, right? You have multiple devices that are out there. You have smartphones. You have tablets. You have PCs, and you have to be monitoring your infrastructure. So it is a complex world, and I think all I’m doing there is establishing the market case for observability. But listen, there is an incredible amount of competition there. And I do think that Splunk is at a crossroads, where what got them to the game is not necessarily what’s going to take them to that next step.
CEO Gary Steele, he hasn’t been in the chair long enough, I think, for him to bring the tablets off there. But listen, there’s a reason he’s in that space and that there was a CEO change. The board was obviously looking for something different. So there is change coming. The conference just wasn’t the place to do it. But I mean, you have companies like LogicMonitor. You have New Relic. You have Startup Observe that’s sitting on the back of Snowflake. You have some of the more traditional companies, like Dynatrace, out there. There are a lot of people coming for this company.
One of the benefits that I see from a value standpoint, Daniel, is some of the traditional on-prem infrastructure folks, the HPEs, the Dells, folks like that, I see a huge opportunity for acquisition of some of these observation companies. Why? It gets them into the game of monetizing the public cloud and SaaS, where they really weren’t doing that before. But listen, I look forward to actually meeting Gary. You’ve got the jump on me on that, and I’d love to go to one of their events coming up.
Daniel Newman: We’re working on it. We’re working on it. We’re going to get the Six Five in there and truly the Six Five, which isn’t ever really a thing if it’s not the both of us, buddy. So listen, I’m on it. This is on me, but this is an interesting space.
Patrick Moorhead: It is for sure.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
