Cloudera finally ready for the public stage

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When I first met Cloudera CEO Tom Reilly in 2015at the Intel Capital Summit, we were about to go on stage for a fireside chat to discuss among other things Intels 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 sufficient size to IPO, they had just raised over a billion dollars and had plenty of cash. He was willing to wait until, in his words, when we feel its the right time.

Apparently it was yesterday when the company filed its S-1 paperwork with the SEC indicating its plans to go public. The announcement had been rumored for some time, and made sense, especially giventhe number of enterprise tech companies that have gone public (or announced their intentions to do so) recently.

As weve seen, in the first quarter of this year, enterprise tech IPOs are suddenly a hot commodity with Alteryx and MuleSoft already having gone out, and Cloudera joining Yext and Okta as the next ones up in the queue.

In spite of the name, Cloudera isnt really a cloud company, at least in the pure sense. Its a commercial product built on top of the open source Hadoop project, the one with the cute elephant for a mascot. In spite of the cuteness, Hadoop is very serious technology used to process massive amounts of data, which should come in increasingly handy in a world with increasing amounts data to deal with oftenreferred to in industry parlanceas big data.

Separating from the pack


Photo: Christian Heilmann on Flickr. Used under CC by 2.0 license.

The problem is that while Hadoop may be a powerful way to process thatdata, and it may be available as open source, it is not simple to use. Thats where companies like Cloudera and Hortonworks, which went public in 2014 come in. These companies, and others like MapR, are attempting to package Hadoop in a way that makes it more consumable for large organizations.

While Hortonworks came strong out of the gate after its IPO, it has not fared all as well since. After a high of over $27 in July, 2015, it was under $10 a shareas of the close on Friday.

But just because two or more companies share the same market doesnt mean they each share the same fate or are even completely comparable beyond both being Hadoop vendors.

Carl Olofson, an analyst at IDC, says there are some fundamental differences between the two companies. He describes Hortonworks as a pure open source company, one that packages, coordinates and manages that open source as a product for a subscription fee, and also sells support. He says the companys products are aimed mostly at big data technologists.

Cloudera is a bit different, he says. [It] offers packages that are mostly open source, but with tooling that is proprietary, and that are aimed at various classes of business problems. They sell to business managers. So their approach is different, and as a result, they have a higher percentage of their income derived from software than does Hortonworks, Olofson told TechCrunch.

The Intel connection

One of Clouderas chief investors was none other than Intel, which sank $740 million into the companyin a single investment in March, 2014, obviously seeing some serious potential to take such a substantial stake. And as you would expect, the S-1 revealed Intel and Cloudera have a special relationship and a deep partnership, and that too could give it additional investor credibility as it heads into the public markets.

Certainly Reilly thought so in our interview saying, While everyone focused on the dollars behind the investment that Intel made, what was so important to us was the partnership, and the value that Intel brings us as a partner goes way beyond the dollars they gave us. The S-1included multiple examples of the two companies working together including developing a way to speedup encryption at the chip level and launchingan open source cybersecurity projectcalled Apache Spot, a platform for advanced threat detection using artificial intelligence and machine learning.

Clouderas has been around since 2008, and the market should appreciatethat longevitysays Olofson. Compared to others, Cloudera could be seen as a relatively mature player, with steady growth, a good market position and significant momentum, he said. While markets can be fickle, it could be that this is finally Clouderas moment.

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