Cloudera taken private for $5.3B, acquires Datacoral and Cazena

https://blog.cloudera.com/turning-the-page/

by swyx • 5 years ago

153 109 5 years ago

blog.cloudera.com

erhserhdfd2• 5 years ago

This is an interesting move. Many companies are still operating on-prem, hybrid cloud or they need to have a multicloud strategy (to operate in certain geographies or to avoid vendor lock-in). If Cloudera can get to the point where they have a big data infrastructure that is competitive with the native offerings from GCP, AWS, etc but easily supports on-prem, hybrid-cloud and multi-cloud, I would imagine there would be many ready corporate customers.

Going private could give them the opportunity to make significant RnD investments away from the quarterly demands of a public company. On the other hand, the private equity backers could enact a bunch of cost-cutting, gut the company, cause its top employees to leave and load the company up with debt. It will be interesting to see how this shakes out.

streetcat1• 5 years ago

Well. Not.

PE usually is about discipline. I.e. cash based discipline. So PE change the debt/equity ratio from 30/70 to 70/30, thus enforcing the company to be much more cash efficient. I.e. take LESS risks.

To sum up, I do not envision more R & D.

markus_zhang3• 5 years ago

I think the problem of PE is 1) They need some quick return, 2) They don't necessarily understand the details of the tech (although they probably have access to some talents who do, or claim to do. So usually they just cut cost and make profit from it.

jmspring2• 5 years ago

Cloudera / Horton works merger -> President steps down -> Cloudera gets taken private. Interesting trajectory over the last few years.

ternaryoperator2• 5 years ago

Agreed. It's astonishing, to me at least, that a company that was on the vanguard of both the cloud and big data was so incapable of figuring out a way to make real money off either one. Their sale today, despite the buyer premium, is well below their IPO price.

jmspring2• 5 years ago

One thing to note, and this was seen with the Skype purchase, typically contracts as part of a private equity deal limit stock issued to lower level employees but also generally have an aggressive clawback clause.

I'm too lazy to find the best reference, but this is one re: Skype - https://www.businessinsider.com/skype-scandal-silver-lake-20...

Traster• 5 years ago

Is this surprising? I wouldn't be surprised if the value in cloud accretes almost exclusively to the big cloud companies. Exit strategies for these kind of enterprises should primarily be "get acquired by X cloud provider".

sgt101• 5 years ago

they got outspent.

they raised a bunch, built a market... then Amazon and Google came for them. Impala was great - I was a big advocate, but then I worked on BQ for a bit, and now Omni.... Cloudera cannot compete.

The only stumble I can identify is that they didn't support Spark. They backed the Hadoop side too hard and left Spark open to Databricks. They should have signed those guys before any other investors got in (told Matie and co "go get offers, we will add 30%).

StreamBright• 5 years ago

They just proved the hard way, that there is no one size fits all data infrastructure based on Hadoop that makes sense financially. Most of the value comes from deep understanding of data access patterns and having the right solution.

oriel• 5 years ago

It seems to read similar to a leveraged buyout. Easier to do things when the company doesnt have to show its books.

Also interesting is that these are market areas that AWS is starting to expand into.

zx23912• 5 years ago

I was under the impression that private equity was mainly a vehicle for the rich to get richer. Serious question: Do companies have no choice but to go this route or why are they doing this?

erhserhdfd2• 5 years ago

Many struggling technology companies will go private to all them to substantially invest in RnD. This allows then to make those expenditures without having the overhead and distractions of having to be a public company where investors are expecting short-term returns. Further, these private equity companies may then roll up several related businesses in an attempt to create synergies through sales or product.

Ultimate software is a recent example of this: https://www.forbes.com/sites/antoinegara/2019/03/01/an-insid...

bpodgursky2• 5 years ago

Yeah, I think there's a pretty big difference between tech companies going private (often to double-down R&D investment) and mature consumer brands going private (which is usually a way to extract profits and milk the carcass dry, see: Toys r Us, Olive Garden).

jeffbee• 5 years ago

The people with the authority to make the deal get paid huge sums for pulling the trigger. After that it doesn't matter to them that the company gets digested from the inside out.

api• 5 years ago

Stock markets only look a quarter or two in the future. It's hard to do anything long-term like invest in R&D unless your numbers are so spectacular you can slip it in there. Very few public companies have numbers that good.

lotsofpulp• 5 years ago

Stock markets only look a quarter or two in the future.

How does this square with the valuations of companies like Amazon and Tesla whose share price performance is certainly not based on the next quarter or two worth of earnings.

Or pick any other top companyies' stocks which are collectively driving the market, presumably because they are expected to deliver years of more growth and cash flow.

flakiness2• 5 years ago

Dell did this at 2013 and seems to be doing fine. https://www.dell.com/learn/us/en/uscorp1/secure/acq-dell-sil...

This changed my impression to going-private moves, although in Dell's case the buyer is more like a founder with a help from the investor.

htrp2• 5 years ago

Dell was a special case .... going private allowed them to avoid shooting themselves in the foot like HP

gostsamo• 5 years ago

I'm not an expert so below is only my personal take on the matter.

Being private allows for less accountability to people who might not be acquainted with the business, want short-term profits, or do not share the owners long-term vision for the company. All of these allow for more freedom in movements and limit the damages to those who understand the risks. On the other side, the company has more limited pool of liquidity sources and each of the investors might have stronger voice in shareholder meetings.

As a result, the public investor might not share the profits of the business, but it might not incur losses because of it as well. Therefore, private equity is just another business organization model which has its pros and cons.

hogFeast• 5 years ago

Not really. PE is mainly a vehicle for smart Wall Streeters to fleece credulous and incompetent pension fund managers.

But the latest boom in PE is a function of: higher than usual levels of credulity around private vs public performance (but PE funds have lower volatility???), and the wave of free money coming out of the Fed. In 2010, lots of PE funds got bailed out after making unbelievably bad bets with no economic rationale (the worst being Blackstone Real Estate, they should have gone bust, they now manage $250bn in RE).

Tech companies are hot right now because of Vista Equity's numbers. Tech companies appear nominally attractive in cash flow terms because so many tech companies pay staff non-cash. So you can acquire at an unreasonable multiple, load up with debt, and then leave employees holding your bags if it goes wrong...self-evidently though, no actual value is being created here beyond playing the capital cycle.

Most of the growth in PE is correlated to the growth in investors (both in the funds, and financing) who don't understand what they are doing. If you look at Europe, private equity activity has exploded higher with money-printing from the ECB and the growth in direct lending/leveraged loan markets (these have gone from 20bn to 150bn in five years or so...where it was in 2007, and lots of very unsophisticated private debt funds with poor incentives). Shadow banking all over again, no-one knows where the money is coming from, no-one knows where it is going.

cosmodisk• 5 years ago

To all Cloudera's clients: pack your stuff and try to get an alternative vendor. Private Equity will not bring anything valuable to this business except higher prices,more aggressive sales and poor customer service.

htrp2• 5 years ago

This 100%

bastardoperator• 5 years ago

Exactly this, don't get squeezed.

bostonsre2• 5 years ago

After the merger with hortonworks, they already went extremely aggressive and I didn't think it was possible for them to have an even dimmer future...

thirsteh• 5 years ago

Serious question: Has PE M&A ever led to an improved product?

(Maybe that's just a stupid rather than a serious question)

dimitrios12• 5 years ago

Dell? Silver Lake played a big role in that IIRC.

bombcar2• 5 years ago

You could make an argument that Berkshire Hathaway is the largest M&A firm ever. But it's not really private equity (though it's not really public, either).

markus_zhang3• 5 years ago

Limit that to KKR and you are going to see many "good" examples...

cavejay• 5 years ago

Dynatrace is a monitoring solution and company that recently went public again after being initially taken private by a PE.

I believe their offering significantly improved during period.

(I was a Professional Services employee for a few years)

missedthecue• 5 years ago

Hilton hotels in my opinion got much better after the takeover

sarora27• 5 years ago

In 2017, I joined a company that had been spun out of Ebay and bought by a PE firm. The firm invested a large amount of "growth capital" in the biz to transform the product from a software license to a cloud-based service. This transition not only increased our revenue exponentially but also gave us the ability to analyze data on how customers were using our product (prior to this, we had zero visibility into how customers used our on-prem product). Using this data, we were able to better serve our customers & partners and improve the overall experience of using the product. A few years later, we sold the company to a large company for a pretty penny (>$1B).

This is all definitely anecdata but, IMO, being backed by a PE firm forced us to focus on revenue (really EBITDA) alongside product growth. A mechanism that forced us to focus on the impacts of each product decision we made. I think this ultimately helped us keep a steady pulse on the market w/o chasing every shiny new trend that popped up.

x86_64Ubuntu• 5 years ago

As seen with ExtJS/Sencha and TravisCI. I'm sure the story will be the same. Chill for about 6 months to 1 year, and then layoff all the engineers, layoff the support while shipping it overseas and then hope long tail subscriptions and "trapped" organizations continue to pay the fees.

zx23912• 5 years ago

It's so obvious, isn't it?

moneywoes• 5 years ago

Are there any examples of tech PE companies doing good? Seems like all I hear are horror stories

chatmasta• 5 years ago

The data industry continues to hype this idea of “multi-cloud,” but then the “modern data stack” is centralized around a single warehouse and nobody sees any irony in that.

The big bet we’re making at Splitgraph [0] is that the next wave of data engineering will take a more decentralized, “data mesh” type approach to enterprise architecture. “Data gravity” really does exist - it’s expensive to move, in terms of both cost and operational complexity. And with increasing specialization of analytical databases, a single source of truth will become unrealistic. So instead of bringing the data to the query, why not bring the query to the data? All we need for that is a set of read only credentials. And yes, it should also be easy to warehouse your data, but it doesn’t need to be the default.

Cloudera mentions they bought DataCoral to help with data integration and connectors. They’ve correctly identified the problem - data sprawl and fragmentation will inevitably grow - but I’m not sure they have the right solution.

Data integration is important, but it’s a moving target, which is why it calls for a collaborative open source solution. This is why so many new startups, like AirByte most recently, are coalescing around the Singer taps that Stitch left behind after its acquisition by Talend.

We also support using Singer taps to ingest data into versioned Splitgraph images [1], so we’re excited to see more collaboration on maintenance of taps. For us it’s a useful feature, but it should be just that — a feature. Is there really a need to replicate all of your data before you can even query it? Or would you rather experiment by directly querying its source?

[0] https://www.splitgraph.com

[1] unreleased and undocumented atm, but it does work. We’re hiring, especially on the frontend if you want to help build the web UI. See profile.

halflings• 5 years ago

This comment seems unrelated to the original story or the comment you're responding you, mostly reads like an ad.

lars_francke2• 5 years ago

If you're looking for an alternative vendor: We've started a new company (called Stackable) to build a distribution for all these open source "data" tools (e.g. Apache Kafka, Apache NiFi, Apache Spark, ...).

I'm a committer for Apache HBase, Apache Hive myself and I've been in this space for 13 years now. Yes, the hype is over but there are tons of companies using this stuff in production and tons of companies choosing it for new projects.

We're trying to tackle the biggest pain points our customers had: Lack of flexibility (i.e. locked into specific versions for ages), CDH/HDP not built on Infrastructure as Code principles, Security is hard to do, ...

The three-sentence (buzzword heavy) technical summary: Our distro uses the Kubernetes control plane but we've developed a custom Kubelet that runs software using systemd as its backend as well as a bunch of operators (all in Rust...). This allows us to leverage the best of both worlds and also allows hybrid scenarios (part in containers, part on "bare metal"). We've replaced Ranger/Sentry with OpenPolicyAgent.

If anyone's interested feel free to reach out to me (E-Mail in profile / https://www.stackable.de/en ).

vasco• 5 years ago

Your cookie pop-up is in german even in the english website.

flakiness2• 5 years ago

For a reference:

Hadoop on Google Trends peeked at 2015: https://trends.google.com/trends/explore?date=all&geo=US&q=h...

"Hadoop is dead" seems to be a popular topic in past few years. https://www.google.com/search?q=hadoop+is+dead

asperous• 5 years ago

Good points of evidence, however you can't read too much into the google trends. A lot of technologies peak when they are new and then fall to a steady state.

For example "computers" peaked pre-2004: https://trends.google.com/trends/explore?date=all&geo=US&q=c...

Javascript: https://trends.google.com/trends/explore?date=all&geo=US&q=j...

Machine learning: https://trends.google.com/trends/explore?date=all&geo=US&q=m...

threeseed5• 5 years ago

In this case it's accurate. Hadoop is largely dead.

YARN, Hive, HDFS, MapReduce have been replaced by Kubernetes, Snowflake, S3, Spark.

DebtDeflation• 5 years ago

Yeah, very few companies are running Hadoop clusters on premise these days the way many were at least trying to 5 years ago.

wardb3• 5 years ago

Worked at Hortonworks and post merger Cloudera. Was interesting to see how market demand changed over the years and how the company worked on re-inventing themselves. Databricks and Snowflake seemed to understand SaaS earlier and better though. Still have some great friends working at Cloudera, and hope this will indeed accelerate a great next phase.

swyx2• 5 years ago

for the uninitiated, do you mind diffing what Hortonworks used to do and what post merger Cloudera is now focused on?

threeseed5• 5 years ago

Before the cloud took off Hortonworks and Cloudera owned the Big Data market.

They both offered a Hadoop distribution but had different strengths e.g. Hortonworks had fine grained access control, Cloudera had a better SQL product with Impala.

Then AWS came along and built their own which was significantly cheaper and more flexible as you could easily scale your cluster up/down. And so companies moved to it when they over time began to move to the cloud.

The Hortonworks/Cloudera response to this threat was to put away their differences and merge together.

Over time Big Data has evolved from being Hadoop centric to being much more ML/AI focused i.e. not just manipulating and querying the data but doing something interesting with it. And AWS, Azure, GCP have really jumped in with a whole suite of products that are tightly integrated with the rest of their cloud offerings. And it's a large part of what differentiates their offerings so they compete very hard.

So Cloudera has no choice but to do things that cloud providers won't or can't do: (1) focus on non-cloud or multi-cloud and (2) offer a much more integrated and cohesive solution.

But having spent 10+ years in this space and deployed many Hadoop clusters I can tell you that Cloudera is going to struggle. Companies that I never thought would move to the cloud e.g. banks are figuring out the security and regulatory challenges and eagerly moving across. And so it's going to be a Cloudera versus Amazon/Google/Microsoft which is an impossible fight.

macksd3• 5 years ago

Worked at Cloudera pre- and post-merger. I thought of on-premises CDH clusters (and similarly HDP clusters) as trying to be the majority of your data infrastructure, but open so that it can integrate with other stuff. It's not just about having big data, but one place to store all of that data regardless of schema: massive database tables, logs, etc. all on shared hardware. AND frameworks to process it different ways in-place: SQL queries, Spark jobs, Search, etc. Data gravity was very important to the business model.

As more people moved to the cloud, Hadoop-style storage was extremely expensive (naively moving your Hadoop cluster to 3x replication on EBS volumes would result in a nasty case of sticker shock) so the data would move to S3 / ADLS / GCP. And now you've lost your data gravity.

Post-merger Cloudera focused less on on-premises clusters and tried to offer those same diverse workloads as a multi-cloud SaaS, with more focus on elasticity. This is hard because (a) there's a massive amount of surface area if you want enterprise customers to bring their own accounts, run all these managed open-source services in those accounts, and be multi-cloud, and (b) you're just competing more directly with the cloud vendors, on their turf as both a customer, partner and competitor.

andyxor• 5 years ago

AWS, GCP and Azure ate Cloudera's lunch.

bombcar2• 5 years ago

A huge portion of the growth in cloud was the relatively cheaper aspect for a VPS vs places that sold physical server rackspace. Once the foothold was in there the value-add of services on top became a huge revenue generator.

markus_zhang3• 5 years ago

Clayton, Dubilier & Rice (CD&R) and KKR.

When I see the name of KKR mentioned...

kolbe• 5 years ago

I don't even know what they do anymore. They used to make money by just raiding their portfolio companies' pensions, but now that corporations don't offer private pensions, I just don't know. Maybe they're actually improving the companies?

ralph84• 5 years ago

The elephant (no pun intended) in the room continues to be most data in the enterprise isn't big data. You don't need mapreduce when your data set fits in RAM.

peterthehacker3• 5 years ago

Yes! And if it doesn’t fit in RAM, then most businesses will only need an OLAP data warehouse, like Snowflake or Redshift.

threeseed5• 5 years ago

And if you want to join data from different SaaS and internal systems e.g. Google Analytics and a Pega decisioning system.

Are you going to spend months upfront carefully modelling the data in order to ingest it making sure to handle schema and DQ issues etc. All to support one use case who only needs a handful of fields.

No. Which is why data lakes exist. Because it's cost effective. You simply dump the data and ask the Engineer or Data Scientist building the use case to do the heavy lifting rather than a centralised data team.

kfk• 5 years ago

Sort of. The issue is coupling data with sql databases doesn’t play well with even basic inferential statisics so you end up replicating data based on analytics use cases. Having parquet files in a cheap storage system that can be queried with sql, python, R, etc. is very convenient. What I don’t get is why so little investments are going in making data lakes safer and easier to govern with proper access controls

manigandham3• 5 years ago

You can run those queries straight from relational databases too, since everything ends up in the same dataframe structure for processing in the end. There are tons of data source adaptors now and all the modern OLAP databases support various deeper integrations to run stats/ML directly.

threeseed5• 5 years ago

This is simply nonsense. Big data has never been just about MapReduce.

It has always revolved around the concept of a data lake, with data stored as objects, a series of data engineering pipelines moving data around and a query engine on top. And in almost every enterprise company this is the high level architecture you see today.

And this model only continues to grow in popularity as the use of siloed SaaS products drives data sprawl and the need for tools like Spark, Fivetran etc to move it all back to a centralised data lake for analysis.

manigandham3• 5 years ago

Big data just means big data.

A data lake is one way to deal with it. It's convenient but not always the best.

icedchai• 5 years ago

The real problem is that even when it doesn't fit in ram, you still don't need mapreduce.

dgudkov• 5 years ago

After all, we invented the whole idea of Big Data.

Really?

iblaine• 5 years ago

I was a Cloudera client in 2015. I've since moved to company where we did on prem (thousands of nodes) then another AWS shop. Each case was an example of a superior solution to Cloudera. Cloudera's market seems to be shrinking & they need to change.

On Datacoral, it seems like a very good product, simplifying the overhead of data pipeline development but still staying modern. Datacoral has many cool features, such as treating ETLs as code with an option to develop via GUI. The industry is moving that way, has been for some time.

Good for Datacoral to get acquired and get exposure to so many new customers. But Cloudera has their work cut out for them to stay relevant in a market that is extremely competitive.

lmeyerov• 5 years ago

Been quite a ride to watch, feels like a surprise every couple of years!

Looking ahead, on the one side, we're seeing a privately hosted (on-prem + cloud) revival due to multicloud / lockin distrust + extreme cloud markup for AI/ML (GPUs etc) on the other, and for cloud, insane 30-50% YoY growth rates even at $B scales. On the other, I'm not sure how that lines up w/ Cloudera's current products and the investment team's R&D/M&A appetite

It also makes me wonder what is the value of being in n-th place. We're reviewing which new connectors to prioritize for our own viz tool dev, and cloud-native offerings like snowflake/databricks/redshift are generally ahead of on-prem ones, and we're not the only ones. So what's the value of current growth, and of paying premiums to leap frog (ML, GPUs, etc.), esp. when you have the kind of footprint cloudera earned?

alphachloride• 5 years ago

One annoying thing I have noticed about many company/project blogs that they have no link on the header to go to the actual project website (project.com). Instead the main logo takes back to the blog (blog.project.com). You have to manually type the URL for the actual website.

For e.g. even this site: https://blog.ycombinator.com/

nwsm• 5 years ago

The HN Algoila page also doesn't link back to HN: https://hn.algolia.com/

peter303• 5 years ago

KJR! Expect half your staff to be gone next year after massive cost cutting and leveraging.

dikei4• 5 years ago

Cloudera and Hortonwork promise an easy way to deploy on-premise Hadoop clusters. Yet, HDP & CDH are still too hard to maintain for the majority of companies:

* Tuning for HDFS and HBase is hard. Too many files and GC pause will kill you. Hive Metastore is also a bottleneck.

* It's a nightmare to figure out how to configure some third-party software that's outside the bundle.

* It's even harder, if you want to use a more up-to-date version of a software included in the bundle. We still haven't figured out how to use Spark 3 with our old HDP clusters.

* Sometime the included software is a buggy mess. For example, HDP 3 provides HBase 2.0, which is absolutely unusable. Luckily, we were able to migrate to HBase 2.2 before putting too much data into it.

All in all, it still takes a lot of ops work to own a Cloudera's Hadoop clusters. I can't wait until the time when we can move to a better solution.

pm90• 5 years ago

This might be a silly question but: Why is it so hard to use? What made cloudera not see how difficult their product was to use and invest in fixing that? It appears to have costed them the market, yes?

nl• 5 years ago

Why is it so hard to use? What made cloudera not see how difficult their product was to use and invest in fixing that?

It is packaged open source software, from multiple projects (some of which are financed by Cloudera) all of which release at different paces.

And distributed systems are really hard to get right. There are lots of knobs to tune, all of which are needed in some circumstances, but.. there are lots of things to go wrong.

It appears to have costed them the market, yes?

Cloudera is probably the market leader for on-prem Hadoop clusters.

This is a big market (even now - lots of defence clients who have issues with cloud).

But generally this market is getting eaten by Cloud SAAS products.

dikei4• 5 years ago

TL DR: Distributed system is hard, and Hadoop cluster are not really designed for a dynamic environment.

There are as probably as many services running inside a Hadoop clusters as a Micro Service meshes, except:

* The services can be huge: HDFS Namenode can takes hundreds GB of RAM, hours to start up in a multi PB cluster. Updating configuration requires restarting, so it is a huge pain if you care about zero downtime.

* The services are often bound to host and can not be easily migrated to other hosts.

* The communication interfaces between services are not well-defined: Hive Metastore, for example, didn't have a formal protocol documentation for a long time, yet everything depends on it to store metadata (I'm not even sure if they have the protocol now). As a result, services are often tightly coupled: you need everything to be compiled with the same libraries version, or stuffs might not work correctly. Furthermore, due to dynamic code loading, issues might not surface until days later - in the middle of the night, making life miserable for everyone.

colin_mccabe• 5 years ago

I worked at Cloudera in the early 2010s, before they went IPO. It's a bit sad to see the way things played out. All I can say is, it was a fun ride while it lasted.

Cloudera actually started in the cloud, but quickly moved to selling mostly on-premise software. Back then, cloud was a lot less cost competitive (it still is not really cost competitive) https://a16z.com/2021/05/27/cost-of-cloud-paradox-market-cap... The on-premise business had much higher margins, which kind of "took the oxygen out of the room" for the cloud side of the business. In retrospect, neglecting the cloud market was a big mistake, of course.

Cloudera management knew even back then that Hadoop was eventually going to be superseded by a newer technology. We tried to build that technology, in the form of Impala, an optimized SQL query engine. Unfortunately, it never really took off in the marketplace, for several reasons. For one, its dialect of SQL was not compatible with Hive, the traditional SQL frontend for Hadoop. For another, early versions of Impala were somewhat unstable, and didn't have the fault-tolerance of traditional Hadoop tools.

From my perspective, the main issue that cloud solves is that managing the server side stuff is really hard, and requires experts. Cloud also aligns expectations: it's really clear to both customer and vendor that a cloud contract is not a stepping stone towards self-managing. Unfortunately, Cloudera just didn't see the shift towards cloud coming, and they're now paying the price.

Cloudera taken private for $5.3B, acquires Datacoral and Cazena

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