Arik Hesseldahl

Recent Posts by Arik Hesseldahl

MapR Lands $30 Million Series C Led by Mayfield Fund

Everything is coming up Hadoop. Another company in the business of selling a version of the open-source big-data platform has landed another round of funding.

MapR, a company that prides itself on having built an industrial-grade version of Hadoop tuned for high availability and data protection, has closed a $30 million Series C round of venture capital funding led by the Mayfield Fund. Prior investors Lightspeed Venture Partners, NEA and Redpoint Ventures also participated. The round brings MapR’s total funding raised to $59 million. AllThingsD reported on MapR’s $20 million B round in 2011.

I talked with CEO John Schroeder last week. He told me that about half of MapR’s customers are the traditional Web- and cloud-based companies, while the other half are financial and telecommunications and manufacturing companies. “Our approach to the market is heavy on investment in research and development,” he said. The reason? “Hadoop is early technology and there are a lot of must-have technologies that Hadoop is going to have to add in order to be a real big data platform.”

Its approach is different from the other primary players in the Hadoop market. The best known of that set is Cloudera, and the second is Hortonworks. “Hadoop needs a tremendous amount of innovation,” Schroeder says. “It’s really early in the technology cycle. It needs large infusions of focused R&D and development of IP.”

Compare that to Cloudera, which announced its own $65 million Series E round of funding at an implied valuation of $700 million, late last year. Like Linux, the open source operating system that runs on so many servers, Hadoop is technically free, and any company can go out and download it for nothing. The trick comes in knowing what to do with it, and managing it, and getting value out of it. Cloudera’s primary approach is to sell value-added services around it, and help companies get more out of Hadoop than they otherwise would. Hortonworks has a similar approach.

To Schroeder, that’s a costly model. “Our competitors’ model is very cash intensive and you have to wonder whether or not they’ll ever be cash-flow positive,” he said. “We want to provide our customers with the best technology.” Practically all — 92 percent, Schroeder said — of MapR’s customers pay primarily for licenses and not for ancillary services and support.

Instead, the services come from third party systems integrators and Accenture and Booz Allen Hamilton. “If you look today, and 24 months down the road, certainly all the systems integrators are expanding and will continue to expand their big data practices. It’s not a great business model as a company to bank on long-term services revenue. I think the route to growing a successful company is around license revenue.”

To investors like Mayfield, it means a lower cost basis and higher gross margin. To customers, it means money generated from the sales of software licenses get plowed right back into improvements that are the result of R&D.

For now, the investment will help fund expansions around the world. “We’ve figured out how to approach and service customers, so it’s about building out the market.”

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