Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Exclusive: Cloudera Closes Massive $65 Million Funding Round at $700 Million Valuation

Whenever you hear the phrase “big data” these days, and depending on whom you’re talking to, the word Hadoop usually isn’t far behind. When companies and large organizations seek to tackle the biggest of their big data problems, they usually use Hadoop, the open source software framework that essentially makes those problems easier to manage.

Hadoop has become a big thing, and in fact there are numerous flavors of it and numerous companies offering their own version of it, while others are building things to work with it.

The biggest and best known company in the Hadoop world is Cloudera. Started in 2008 by a trio of engineers from Facebook, Google and Yahoo (Jeff Hammerbacher, Christophe Bisciglia and Amr Awadallah) plus CEO Mike Olson, a former Oracle exec, it has in four years gone from the start-up that few really understood to the company you have to talk to if you want to stand a chance wrestling your data challenges to the ground.

Today, the company will take a significant step forward. AllThingsD has learned that Cloudera has landed a $65 million Series E round of venture capital funding. The funding round is being led by Accel Partners. Accel is not a new investor in Cloudera — it led its $5 million Series A round in 2009 — and it is leading a round that includes all repeat investors, including Greylock Partners, Ignition Partners, In-Q-Tel and Meritech Capital Partners.

The round brings Cloudera’s total capital raised to about $140 million. And according to sources familiar with the terms, this deal values Cloudera at about $700 million.

The round was to be announced after a closed meeting of Cloudera employees at its Palo Alto headquarters led by CEO Mike Olson and other senior executives. The meeting was scheduled to take place at noon PT.

The company also said it plans to expand its European operations with the opening of new offices in the United Kingdom in the first quarter of 2013.

Coming as it does on the heels of Cloudera’s hiring of a new CFO — Jim Frankola, the former CFO of Yodlee and Ariba who started his career at IBM, joined on Oct. 3 — the questions about a possible public offering of Cloudera shares will begin to increase.

I asked Olson and Frankola about it in an interview Monday. They both said they’re interested in the long-term future for Cloudera, and if that includes an IPO, then great. “From the very beginning we’ve seen the opportunity here that is big enough to create a long-term business,” Olson said. “You don’t often get a chance to step up to the plate in a ballpark that is as exciting as this one,” Olson told me.

Frankola hearkened back to his days in corporate finance at Big Blue. “At IBM we got to make really big, multibillion dollar bets, and then you go to smaller companies and you sometimes have to play it safe. But the space that we’re playing in is one of the biggest bets there is in technology.”

I also talked with Accel Partner Ping Li, who has long been a Cloudera fan and created Accel’s Big Data Fund in part to fund companies doing interesting things with Hadoop. “These guys pretty much created the big data wave when they decided to take Hadoop out of the bowels of the data center and into the enterprise,” he said. “They really created the idea that there’s all this data and Hadoop is a really critical layer in the stack.”

How’s the business doing? No one would say exactly, though Frankola said Cloudera has been seeing its revenue and number of customers roughly doubling every year. Li put it this way: “You don’t see this type of growth in software and infrastructure companies that often.”

When you consider that four years ago people sort of scratched their heads and wondered what they would actually use Hadoop for, the list of companies that are Cloudera customers is impressive. It includes AOL, CBS, eBay, Expedia, J.P. Morgan Chase, Monsanto, Nokia, Research In Motion and the Walt Disney Company.

Cloudera is sometimes compared — not inaccurately, but perhaps imprecisely — to Red Hat, which built a business on helping companies deploy and manage the free Linux operating system. Like Linux, Hadoop is technically free, and any company can go out and download it for free. The trick comes in knowing what to do with it, and managing it, and getting value out of it. And that’s where Cloudera’s money-making value comes into play. It sells its own software that runs on top of Hadoop, plus it also distributes its own flavor of Hadoop that it supports and helps its customers manage on a subscription basis.


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