With buyout, Cloudera hunts for relevance in a changing market

When Cloudera announced its sale to a pair of private equity firms yesterday for $5.3 billion, along with a couple of acquisitions of its own, the company detailed a new path that could help it drive back toward relevance in the big data market.

When the company launched in 2008, Hadoop was in its early days. The open-source project developed at Yahoo three years earlier was built to deal with the large amounts of data that the internet pioneer generated. It became increasingly clear over time that every company would have to deal with growing data stores, and it seemed that Cloudera was in the right market at the right time.

And for a while things went well. Cloudera rode the Hadoop startup wave, garnering a cool billion in funding along the way, including a stunning $740 million check from Intel Capital in 2014. It then went public in 2018 to much fanfare.

But the markets had already started to shift by the time of its public debut. Hadoop, a highly labor-intensive way to manage data, was being supplanted by cheaper and less complex cloud-based solutions.

“The excitement around the original promise of the Hadoop market has contracted significantly. It’s incredibly expensive and complex to get it working effectively in an enterprise context,” Casey Aylward, an investor at Costanoa Ventures told TechCrunch.

The company likely saw that writing on the wall when it merged with another Hadoop-based company, Hortonworks, in 2019. That transaction valued the combined entity at $5.2 billion, almost the same amount it sold for yesterday, two years down the road. The decision to sell and go private may also have been spurred by Carl Icahn buying an 18% stake in the company that same year.

Looking to the future, Cloudera’s sale could provide the enterprise unicorn room as it regroups.

Patrick Moorhead, founder and principal analyst at Moor Insight & Strategies, sees the deal as a positive step for the company. “I think this is good news for Cloudera because it now has the capital and flexibility to dive head first into SaaS. The company invented the entire concept of a data life cycle, implemented initially on premises, then extended to private and public clouds,” Moorhead said.

Adam Ronthal, Gartner Research VP, agrees that it at least gives Cloudera more room to make necessary adjustments to its market strategy as long as it doesn’t get stifled by its private equity overlords. “It should give Cloudera an opportunity to focus on their future direction with increased flexibility — provided they are able to invest in that future and that this does not just focus on cost cutting and maximizing profits. Maintaining a culture of innovation will be key,” Ronthal said.

Which brings us to the two purchases Cloudera also announced as part of its news package.

If you want to change direction in a hurry, there are worse ways than via acquisitions. And grabbing Datacoral and Cazena should help Cloudera alter its course more quickly than it could have managed on its own.

“[The] two acquisitions will help Cloudera capture some of the value on top of the lake storage layer — perhaps moving into different data management features and/or expanding into the compute layer for analytics and AI/ML use cases, where there has been a lot of growth and excitement in recent years,” Aylward said.

Chandana Gopal, research director for the future of intelligence at IDC, agrees that the transactions give Cloudera some more modern options that could help speed up the data-wrangling process. “Both the acquisitions are geared towards making the management of cloud infrastructure easier for end-users. Our research shows that data prep and integration takes 70%-80% of an analyst’s time versus the time spent in actual analysis. It seems like both these companies’ products will provide technology to improve the data integration/preparation experience,” she said.

The company couldn’t stay on the path it was on forever, certainly not with an activist investor breathing down its neck. Its recent efforts could give it the time away from public markets it needs to regroup. How successful Cloudera’s turnaround proves to be will depend on whether the private equity companies buying it can both agree on the direction and strategy for the company, while providing the necessary resources to push the company in a new direction. All of that and more will determine if these moves pay off in the end.

Cloudera to go private as KKR & CD&R grab it for $5.3B

Cloudera was once one of the hottest Hadoop startups, but over time the shine has come off that market, and today it went private as KKR and Clayton, Dubilier & Rice, a pair of private equity firms announced they intended to purchase Cloudera for $5.3 billion. The company has a market cap of around $3.7 billion.

Cloudera and Hortonworks, two key startups in the Hadoop space, merged in 2018 for $5.2 billion.Cloudera was likely under pressure from activist investor Carl Icahn, who took an 18% stake in the company in 2019 and now stands to gain from the sale, which the company stated represented a 24% premium for shareholders at $16 a share. Prior to the market opening this morning, the stock was sitting at $12.86.

Back in the day, about a decade ago, when Hadoop was the way to process big data, venture money was pouring into the space. Over time it lost some of its glow. That’s because it was highly labor intensive, and companies began moving to the cloud and looking at software services that did more of the work for them. More modern technologies like data lakes began replacing it and the company recognized that it must change its approach to survive in the modern data processing marketplace.

Cloudera CEO Rob Bearden sees the transaction as a way to do just that. “We believe that as a private company with the expertise and support of experienced investors such as CD&R and KKR, Cloudera will have the resources and flexibility to drive product-led growth and expand our addressable market opportunity,” Bearden said in a statement.

While there is a lot of executive jargon in that statement, it basically means that the company hopes that these private equity firms can give it some additional financial resources to move towards a more modern approach for processing large amounts of data.

While it was at it, Cloudera also announced a couple of acquisitions of its own to help it move towards that modernization goal. For starters it grabbed Datacoral, a startup that abstracts away the infrastructure needed to build a data pipeline without using code. It also acquired Cazena, a startup that helps customers build cloud data lakes, giving the company a more modern approach to processing big data.  Bearden sees both of these services helping Cloudera reposition itself in the big data self-service market

“Both businesses will enable our combined customers to enjoy a reduction in complexity and faster time to value for their data initiatives, leading to improved insights, faster innovation, and stronger engagements with their customers and partners,” Bearden said in a statement.

Cloudera went public in 2018, closing at $18.09 a share after raising a $1 billion. The vast majority of that was a $740 million investment from Intel Capital in 2014.

Hortonworks raised another $248 million. A third Hadoop startup, MapR raised $280 million. The company’s assets were sold rather unceremoniously to HPE in 2019 for a price pegged at under $50 million, showing just how far the market has fallen since its earlier glory days.

The Cloudera deal includes a brief “go shop” provision that allows it continue to look for a better deal. It’s doubtful it will find one, and if it doesn’t the transaction with KKR and CD&R is expected to close in the second half of this year subject to typical regulatory review. The company will announce earnings later today.

Skymind Global Ventures launches $800M fund and London office to back AI startups

Skymind Global Ventures (SGV) appeared last year in Asia/US as a vehicle for the previous founders of a YC-backed open-source AI platform to invest in companies that used the platform.

Today it announces the launch of an $800 million fund to back promising new AI companies and academic research. It will consequently be opening a London office as an extension to its original Hong Kong base.

SGV Founder and CEO Shawn Tan said in a statement: “Having our operations in the UK capital is a strategic move for us. London has all the key factors to help us grow our business, such as access to diverse talent and investment, favorable regulation, and a strong and well-established technology hub. The city is also the AI growth capital of Europe with the added competitive advantage of boasting a global friendly time zone that overlaps with business hours in Asia, Europe and the rest of the world.”

SGV will use its London base to back research and development and generate business opportunities across Europe and Asia.

The company helps companies and organizations to launch their AI applications by providing them supported access to “Eclipse Deeplearning4j”, an open-source AI tool.

The background is that the Deeplearning4j tool was originally published by Adam Gibson in late 2013 and later became a YC-backed startup, called Pathmind, which was cofounded to commercialize Deeplearning4j. It later changed its name to Skymind.

SGV is a wholly separate investment company that Adam Gibson joined as VP to run its AI division, called Konduit. Konduit now commercializes the Deeplearning4j open source tools.

Adam Gibson now joins SGV as Vice President, to run its software division, Konduit, which delivers and supports Eclipse Deeplearning4j to clients, as well as offering training development.

SGV firm says it plans to train up to 200 AI professionals for its operations in London and Europe.

In December last year “Skymind AI Berhad”, the Southeast Asia arm of Skymind and Huawei Technologies signed a Memorandum of Understanding to develop a Cloud and Artificial Intelligence Innovation Hub, commencing with Malaysia and Indonesia in 2020.

Datameer announces $40M investment as it pivots away from Hadoop roots

Datameer, the company that was born as a data prep startup on top of the open source Hadoop project, announced a $40 million investment and a big pivot away from Hadoop, while staying true to its big data roots.

The investment was led by existing investor ST Telemedia . Other existing investors including Redpoint Ventures, Kleiner Perkins, Nextworld Capital, Citi Ventures and Top Tier Capital Partners also participated. Today’s investment brings the total raised to almost $140 million, according to Crunchbase data.

Company CEO Christian Rodatus says the company’s original mission was about making Hadoop easier to use for data scientists, business analysts and engineers. In the last year, the three biggest commercial Hadoop vendors — Cloudera, Hortonworks and MapR — fell on hard times. Cloudera and Hortonworks merged and MapR was sold to HPE in a fire sale.

Starting almost two years ago, Datameer recognized that against this backdrop, it was time for a change. It began developing a couple of new products. It didn’t want to abandon its existing customer base entirely of course, so it began rebuilding its Hadoop product and is now calling it Datameer X. It is a modern cloud-native product built to run on Kubernetes, the popular open source container orchestration tool. Instead of Hadoop, it will be based on Spark. He reports they are about two-thirds done with this pivot, but the product has been in the hands of customers.

The company also announced Neebo, an entirely new SaaS tool to give data scientists the ability to process data in whatever form it takes. Rodatus sees a world coming where data will take many forms from traditional data to Python code from data analysts or data scientists to SaaS vendor dashboards. He sees Neebo bringing all of this together in a managed service with the hope that it will free data scientists to concentrate on getting insight from the data. It will work with data visualization tools like Tableau and Looker, and should be generally available in the coming weeks.

The money should help them get through this pivot, hire more engineers to continue the process and build a go-to-market team for the new products. It’s never easy pivoting like this, but the investors are likely hoping that the company can build on its existing customer base, while taking advantage of the market need for data science processing tools. Time will tell if it works.

With MapR fire sale, Hadoop’s promise has fallen on hard times

If you go back about a decade, Hadoop was hot and getting hotter. It was a platform for processing big data, just as big data was emerging from the domain of a few web-scale companies to one where every company was suddenly concerned about processing huge amounts of data. The future was bright, an open source project with a bunch of startups emerging to fulfill that big data promise in the enterprise.

Three companies in particular emerged out of that early scrum — Cloudera, Hortonworks and MapR — and between them raised more than $1.5 billion. The lion’s share of that went to Cloudera in one massive chunk when Intel Capital invested a whopping $740 million in the company. But times have changed.

2018 china ipos

Via TechCrunch, Crunchbase, Infogram

Falling hard

Just yesterday, HPE bought the assets of MapR, a company that had raised $280 million. The deal was pegged at under $50 million, according to multiple reports. That’s not what you call a healthy return on investment.

Qubole launches Quantum, its serverless database engine

Qubole, the data platform founded by Apache Hive creator and former head of Facebook’s Data Infrastructure team Ashish Thusoo, today announced the launch of Quantum, its first serverless offering.

Qubole may not necessarily be a household name, but its customers include the likes of Autodesk, Comcast, Lyft, Nextdoor and Zillow . For these users, Qubole has long offered a self-service platform that allowed their data scientists and engineers to build their AI, machine learning and analytics workflows on the public cloud of their choice. The platform sits on top of open-source technologies like Apache Spark, Presto and Kafka, for example.

Typically, enterprises have to provision a considerable amount of resources to give these platforms the resources they need. These resources often go unused and the infrastructure can quickly become complex.

Qubole already abstracts most of this away and offering what is essentially a serverless platform. With Quantum, however, it is going a step further by launching a high-performance serverless SQP engine that allows users to query petabytes of data with nothing else by ANSI-SQL, given them the choice between using a Presto cluster or a serverless SQL engine to run their queries, for example.

The data can be stored on AWS, Azure, Google cloud or Oracle Cloud and users won’t have to set up a second data lake or move their data to another platform to use the SQL engine. Quantum automatically scales up or down as needed, of course, and users can still work with the same metastore for their data, no matter whether they choose the clustered or serverless option. Indeed, Quantum is essentially just another SQL engine without Qubole’s overall suite of engines.

Typically, Qubole charges enterprises by compute minutes. When using Quantum, the company uses the same metric, but enterprises pay for the execution time of the query. “So instead of the Qubole compute units being associated with the number of minutes the cluster was up and running, it is associated with the Qubole compute units consumed by that particular query or that particular workload, which is even more fine-grained ” Thusoo explained. “This works really well when you have to do interactive workloads.”

Thusoo notes that Quantum is targeted at analysts who often need to perform interactive queries on data stored in object stores. Qubole integrates with services like Tableau and Looker (which Google is now in the process of acquiring). “They suddenly get access to very elastic compute capacity, but they are able to come through a very familiar user interface,” Thusoo noted.

 

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TechCrunch's Ron Miller on stage with Cloudera CEO Tom Reilly at the Intel Capital Summit in 2014. When I first met Cloudera CEO Tom Reilly in 2015 at the Intel Capital Summit, we were about to go on stage for a fireside chat to discuss among other things Intel’s massive investment in his company. While on stage, the conversation inevitably turned to when the company might go public. As you might expect, he gave me the standard startup CEO answer. While Cloudera was certainly of… Read More

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data integration concept diagram. Talend, the big data integration vendor that went public last July, announced its winter release today with new tools to help automate data preparation, a sticky problem for enterprise customers. Surely, there are ever-increasing amounts of data and companies struggle to keep up. There aren’t enough data scientists in the world to fill the need. It requires software to pick up some of… Read More