A Culture of Innovation Drives Customer Success

[Music] thank you hi this is Pat Moorhead and a huge welcome to everybody to the 6'5 Summit 2023 four years running we talking about the greatest things in technology talking to the most influential leaders out there this year the theme is navigating trouble Waters and as we know Daniel what gets us through this innovation in technology how you doing my friend four years who would have thought I know you know we started this thing right before 2020 which obviously made a huge inflection to All Things digital yeah but as the analysts thinkers that were kind of ahead of the Curve we knew the trend line would be how do we get information out quickly right put it out in front of the paywall make it available for people and talk to the innovators the disruptors the companies that are doing things and leading the way and Pat this year we all knew there was going to be some challenges we saw it coming it wasn't a massive prediction to say but for our audience that we've been focusing on Innovation with it's time to put these leaders in front of them and say Hey how do we get through this and with all these trend lines with AI with multi-cloud with security to put the these leaders in front of them hopefully an opportunity to learn so much here absolutely we've had some incredible leaders open up to 6'5 Summit we are so pleased to introduce Hawk tan of broadcom Hawk how are you good nice to be here yeah it's just it I mean you're a legend in this industry and the the changes in the dynamicism are are incredible I mean what you've done on the hardware side and now what you've done on the software side is is is impressive thank you so you heard my Preamble sometimes pad accuses me of of going on a bit but uh but it's very exciting times Hawk you know whether it has been the sort of cyclical nature of the chip industry which of course uh broadcom is weathering or it is the Innovations in software the security movements and people working on Cyber or even Ai and generative AI which of course has become top a priority for so many companies we are seeing a year of very different macroeconomic conditions we've got interest rates up we've got inflation persistent we're not sure if the rate cycle the right hike cycle is over yet that means uh future earnings are being impacted that means some stocks have been able to weather other companies not so much I'd love to just get your broad take on the macro environment and how companies should be thinking about technology and innovation in in this current market well the way I look at this and the business we are in is well it's we're very fortunate in many ways broadcom I'm referring to in the technology side of the industry and what it does is I think the business model we over the years have seen and have preferred to to adopt is one that's kind of very different from the older economy but simply put when we go when we look at a situation an economic uncertainty macroeconomy and certainly as we're seeing today the way we look at it is this is to kind of take a longer term view now we have to be mindful of short-term race uh very thoughtful about things that might change but in the broader scheme of things say technology in my view is an evolutionary process people like to talk about disruptive frankly I think it's less disruptive it's really evolutionary and the way we look at it is we should not be in technology captive to economic Cycles so as we look at what where things economic uncertainty now we do not necessarily see spending in towards technology in This Global sector going down it may pause but there still is a need that still is increased consumption so our way to drive through it is we're basically mindful of certain risks we're taking but our model gives us some advantages which I'll touch on in a second we keep on innovating we keep on designing for the Next Generation product Cycles because we know or else uh Beyond this down cycle our customers will need a new generation of products because they need to give value to their customers program has 60 years of innovation packed into it um names like ATT Bell Labs Hewlett-Packard LSI and more and obviously the innovations that you're bringing together today and I want to I want to hone on in on this evolutionary thought here because you're right a lot of the headlines get seem to get made out of this disruptive black and white life is going to change tomorrow on on the planet can you talk about um why adopting this mindset is better than than maybe going for the Black and Whites of of a revolution well to start with fundamentally people Society do not adopt technology as fast as we like them to it never happens you know it's people adopting we own Yours Truly included adopt technology slowly much slower than we like it and we like to believe technologies will always say things will change overnight never does and my customers behave the same way and their customers the customers of my customers behave the same way so from Give an example is this you know we just didn't we just were the beneficiary of an announcement made by our largest customer Apple on a multi-year partnership in providing chips and key components for 5G and other products Congratulations by the way thank you very much because we do have a very deep and Lasting partnership with apple and it didn't come out of thin air we have been work doing those components the same components the same kind of components announcing this deal in this recent announcement since iPhone 4. so you can imagine now we're going to assign next year iPhone 15. we've been there generation of the generation is an evolutionary process it's not enough to be when you to be available to your customer it's not enough you show up one day and give a product yes that is the best of its kind you have to be there again the following year and the following year and they have to count on you been there so it's not about just doing the best product at any point in time it's been able to be around to provide them with a trend with an evolution through multiple Generations awesome yeah yeah no it's tremendous and you know it's funny we had that conversation it was an episode or two back where we talked about sustainability and he's talking about sustainable business and that's a very important thing that we need to build things to last and I really like how you talked about you know that technology never really changes the World overnight now it feels a little bit like that right now with generative AI but I always say you know Google's been finishing my sentences in in in Gmail for two years now I mean generative things have been happening in our lives and then all of a sudden there's this inflection or a waterfall that comes over the edge and everyone's like whoa The Whole World's changed but these things do happen more gradually than most people tend to notice and I think you're really able to take advantage of that the other thing though that I think is very interesting about your approach in studying the business and spending some time analyzing it is how you define value so in your in your annual in your annual shareholder meetings and your quarterlies you talk a lot about delivering more value your m a strategy is about delivering value your your partner strategy value talk a little bit about broadcom's approach to Value because I think the the word can be interpreted differently by by different stakeholders and shareholders in your community how do you define it how do you make sure you continue to deliver it and truly be a company that provides meaningful value to your customers your ecosystem your partners and Beyond well I mean a folk technology company like us the most obvious way we deliver value is what can we want technology what features I mean what how do we make our the our customers products better it's an aim better in the sense that they can whether it's cheaper whether it's very often more feature-reach lower power depending how it is it's all about delivering to what they need so when they say we deliver technology I would say really we deliver products from core fundamental technology that meets the needs of our customers and it varies depending on the end markets we're in you know and also it used to be speed speed speed today is speed weighted against Power in today's environment and so the same thing no the core technology we deploy goes towards products they mean what the customer needs and put it directly a most important partner are really the customers because they're the ones who tell us what we need and we developed the technology and the products that addresses it and that's intended to create value that a particular than any customer or set of customers of ours one in any end markets at any particular time and it's about the ability to adapt and evolve as the customer evolves and we do that and we try to do it on a sustainable basis through multiple generations and that's what creates for us a sustainable business and by doing that creating that value we're basically an event in the wooden and a nutshell monetize the technology we have for shareholders you know it's it's I'm sure a lot of viewers are fascinated at how pragmatic uh the the approach is I mean essentially helping to make your customers customer more successful in some way shape or form either through the experience either through uh lowering costs but at its fundamental uh and that is what value is is all about that you capture now none of that is free right it takes a lot of r d to make that happen in fact based on our numbers I think r d is outpaced your Revenue by 50 percent since uh 2009. which is phenomenal when a lot of people today are are winding down r d to even cut costs over time the other thing the other approach that you've taken is is your r d is an evolutionary approach uh as well and I'm curious how does that evolutionary r d approach affect your customers and your customers and users as I mentioned indicated earlier our ability to keep coming up with diff uh Pro product roadmap in any of the areas we focus on is extremely critical to our customers because the whole thing the whole idea that we all like to be in technology it never stays the same and you know if we we have to keep progressing customers want to keep progressing because they want to be able to and create a van a reason for coming out with better products for coming out with more value to their own customers as we do and one of the nice things about technology is it doesn't say stay stagnant and our ability to keep coming at one next Generation products is great having said that not all products not online markets evolve at the same rates give a sense right the phone that we that we and that we saw ubiquitous it changes every year our business with our largest North American customer we come up with a new generation of products to adapt to one day one in uh to to attract their consumers every year we got more new generation every 12 months then we talk about data centers in networking which we come up with new generation of switches every two three years steady speed and our customers come to count on it now they would tell us frankly if I can give you know today our switch goes and basically 25 terabit per second which is pretty fast they will tell me they would love to have 100 terabit per second tomorrow but I know the ecosystem doesn't support it right not necessary do they have all the needs to be able to address it so we know we'll go from 25 to Next Generation which will happen in 2024 50 terabits per second and it'll be another two more four more years before we get to 100 but the ability to be very to be counted on to be able to deliver that trend of products is one I think makes us as valuable to our customers as the fact that we have the technology so it's you know it's funny I'm it's timing right it's timing it right and not going for the latest shooting star or fad that's out there it's just sticking to it on a consistent basis hammering hammering away at it and from a resource allocation standpoint that's that's optimal yeah you know we've seen a lot of different models and mixes but I think the longer term tends to tell the goods the best story meaning that you know you can get it right once but companies that tend to get it right over many decades tend to have some things that they've learned along the way and what I'm hearing here is durability you know in in strategy Hawk and and you're showing a lot of that because the results have been consistent persistent you could even say um you're in the process of a pretty big deal uh VMware and I'm sure our audience this is something they're going to want to hear from you about um vmware's you know I've heard you on the record you've said you know they have some very very good capabilities to help bring the multi-cloud to its potential but you've also said there's a ways to go and the company has I think VMware made a billion dollar r d commitment you actually came out and said you would like to put another 2 billion towards r d to bring the multi-cloud to life everyone out there wants to hear share a little bit about a you know what you can about how the deal is progressing and then of course you know with these big Investments kind of what do you see coming out of this deal you know presuming it gets done what's next that's a very good question and first of all no broadcom has gone through it has a model of acquiring technology acquiring assets which is very good technology because we are fine bottom line technology company the difference we think is our ability to deploy that technology in terms of creating very successful business models and VMware fits that model perfectly I mean they are first and foremost in a very proven and rapidly growing Market still even in that stage and what's that market is really about tracting it's about enabling application workloads to run in data centers that is it run as efficient as possible in data centers and that's a big market today it's like 400 billion dollars Enterprise Market between on-prem and in the public cloud now VMware started 20 years ago and it has the technology it was one of the earliest companies government with technology that enables uh basically a vote and I'm able virtualization virtualization of Hardware started with Computing Hardware why it enables workloads to be run so much easier and that much less expensively they were earliest it's very successful in compute the double is things change today we talk about a cloud environment what does a cloud environment means it means you run not just Computing virtualized you run an entire Data Center computing storage networking management all on virtualized cloud software environment what you call software defined Data Center well VMware is has been overtaken by the public Cloud companies the hyperscales today you go into a hypers into the public Cloud environment you have a totally very elastic very resilient virtual environment but VMware has not been that successful been able to deploy it's technology into Enterprises not in an escape in not in any skill on a virtualized data center so what we're coming in to basically uh address is simply this Standalone VMware doesn't have the scale the financial where we fall to make the kind of investment to be able to create that dream of creating a cloud environment for Enterprises on-prem just as they get it in a public loan and for and you you hit it right on they're investing but inadequately and what we propose to do is invest in two directions one is increase r d by a billion dollars a year to basically make their products the full stack of products much more easy to consume much more easy to use and operate and the second part which you is you can't do it on your own you need to create an ecosystem you need to create Partners it's to invest additional billion dollars a year to create to train certify professionals who can deploy who can use who can practice on VMS or VMS virtualized products that's what we first see ourselves doing as soon as we are able to in closing this deal and if you do that what you create on-prem among the Enterprises is private cloud which also enables that workloads application with loads running on the Prem to go hybrid public cloud and back again it's really to great then you create that multi-clown environment that you're talking about and that's the long-term plan we have for VMware but it's a journey and something that will take us a few years to achieve Hawk there's multi-cloud is one of my favorite topics that I'm talking with Enterprises or other people out there in the industry and the great news is we have arrived at the point that multi-cloud is accepted if nothing else because all Fortune 500 companies have multiple is providers uh what I'm really excited about with broadcom energizing VMware is the ability to solve the problems that those Enterprises have because of all the resources that they're putting in in essentially stove pipes so I'm excited about this the Enterprise is excited about this and quite frankly it's going to require a company who's more Switzerland who can go between the public Cloud vendors can go between the on-prem uh companies out there so known Challenge and I think right now with the extra added investment that broadcom can bring to VMware and acceleration of that capability and that digestibility of that for for Enterprises so I'm excited about that so am I exactly so let's I mean it wouldn't be a high-tech conversation if we didn't talk a little bit about AI okay of course right and I know we've talked about Evolution uh versus Revolution but I think we can all agree that uh we're not talking about nfts which was clearly a fad okay but also on the other side AI is not something that's new in fact you go to the early days of AI algorithms they're from the 1960s and then we had AI followed by Machine learning and deep learning and now here we are with generative AI a lot of the hype has been driven by the consumer applications okay and at the back end I mean there's a lot of processing that goes on there some have talked about a 10x increase in what it takes to train a generative AI model but aside from consumer applications what other type of benefits with generative AI have you been thinking about or maybe talking to your customers about maybe Enterprise capabilities of this well that's a very very interesting topic and one can approach it in a couple of ways and you're right a lot of the hype today is on consumer applications right right poems to your wife girlfriend get GP chat GPT to do it for you just say that because they have a database it's well trained but you got to go sign up and go to the cloud to do that now if you're an Enterprise and if you are particularly say your bank and you want to get your employees to ride the you know to do certain crates or run certain models and you don't have it on Prem you want to go to uh Google or Microsoft Azure to run it you first you've got to transfer data from your company over into where the models are sitting where the training is happening and you know what you're not allowed to do that these days so many companies including broadcom have put in place checks and balances that says that if any employee hooks up to uh to a cloud with generative Ai and we start seeing data from the company any data starting to flow we'll shut it down yes and we can do that through information security secure tools that we have so the bottom line is for Enterprise applications data it's what perhaps stops the potential of create of basically shooting for the Stars instead of trying to create all kinds of applications for generative AI is on so they you can get data over so when you're going to run in on-prem and if you're trying to run generative AI on-prem in terms of large language models llms huge parameters to do all these fancy stuff it costs you a lot of money and again your point exactly Pat this thing has been AI has been going on for law for the last 10 20 years right you know bank stress test is AI and they run it on CPUs right you know you put your model in you run on badge you go for a cup of coffee you can't make the results a day that's good enough you don't need to do it in real time generative AI gets really large scale is when you won results in real time and who does that social media right some consumer applications search engines most of us we don't need it so it will take time to be adopted and like all Technologies it it is it's been something that's been evolving and my belief will continue to evolve this is not a disruptive phenomenon yeah it's going to be really interesting though to see how this does proliferate into the Enterprise because I think we're really in the you know we found I guess what you would call that sort of killer app for inference because we kind of knew the training you know has been taking place and by the way all this kind of flow of immediate spend is really about training every Enterprise every hyperscaler every wants to get as much compute as possible to get training these models but the inference is where you know we experience this whether it's running your erps and crms or it's it's some sort of knowledge base of company insights that helps you know an employee figure out how to deliver service or help say customer figure out what product to buy and so these things will continue to proliferate in really exciting ways but it is going to be a combination of your proprietary data has to be over here and there's going to have to be some sort of wall Garden that separates you from the kind of open internet consumer experiences that we have or else every company is a competitive Advantage goes away because that data is so much of the competitive Advantage sits there was then now the prophecy rules you cannot send your data out yeah you shouldn't just in case anybody's thinking about it right um so something that I learned that was really interesting actually when we were doing some research on broadcom is that um I think it's around 75 percent of the employees of broadcom our engine years yes and you talk a lot and you know well you don't actually come out on the record a lot which is why we love having you here but when you do you talk a lot about kind of an engineering driven uh organization and culture and you know I'm interested how you know and as we kind of wind down this interview to talk a little bit about that talk about why you've gone the route of having you know an engineering like LED culture how does that shape The Innovation the product development um you know and broadcom's ability to be this durable sustainable company over over the long term well it's such a very simple and in the word simple is what drives the entire business model abroad you know we are a technology company first and foremost and we pick through Acquisitions but some organically mostly Acquisitions we pick specific areas in technology where we chose to be very successful and part of the reason we have been successful and being sustained that success within that within that scope narrow scope is simply because I mean you know we are very focused it's all back down to focus and keeping the business simple and so from that Viewpoint your technology company what are you driving like Engineers you know you don't and when you and you get an engineer to create that technology you want to monetize the technology into products into how you get it deployed in customers make it simple do not create anything more complicated than that and the less you have of non-engineers in a technology company the more likely you're to keep it simple so that's why we have 75 75 percent of Workforce engineers and the other 25 percent making the models supporting the model as it goes along and that's and it's really a culture of innovation but more than it is about culture of getting the talent so our 15 000 Engineers roughly under 20 000 Workforce among the best engineers in the areas they are in in a world and it's not they don't fall into a lamp one of it is when we acquire leading companies we inherit some the rest we go out and find the talent where they are and one of the nice things in America is the a lot of talent from the rest of the world show up in American colleges right and they want to stay in America after they graduate so we go out and make sure we find the best of the best and if they don't come to America we go look for them elsewhere in the world and we set up at least 10 12 design centers all over the world where they are and they work in close collaboration with design with our design centers in America and that's what we create as a very globally competitive technology company wow this has been a incredible 30 minutes here Hawk and I just want to thank you so much for coming on and what I know that the listeners and the viewers are going to appreciate is is the wisdom that that comes out there and sometimes it's one thing to say oh we don't agree with some company's approach right I look at the results and the results speak for themselves and the core focus of value proposition of customers and customers customers that may not that that's that's very unique in a world that is focused many times on the flash and the fireworks of what's new and broadcom's consistency its focus on Evolution versus Revolution doubling down on engineering and r d that 50 increase since 2009 uh on on R D I mean it it it's working and it continues to work and and not just in Hardware right I mean here we are moving moving this game into into software and and whether it's Mainframe braced applications whether it's Cutting Edge cyber security and now my hope is with multi-cloud and VMware so thank you so much for coming on thank you thank you enjoyed being here thanks yeah that was great everyone we want to say thank you so much for joining us this year it's our 2023 opening keynote here at the 6'5 Summit you just heard from Hawk tan CEO of broadcom now we've got three full days ahead so much more content for you we hope you'll subscribe if you don't watch it live all these sessions are available on demand stay tuned with us for Patrick and myself we're signing off for now see you soon [Music] thank you [Music]

2023-07-07 11:23

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