 followed his career from Zensource, he's been an entrepreneur, big company in Citrix, now he's a VC, I guess he'll probably jump back in the ring soon enough when he gets bored with the VC business, but it's not boring right now, you just kept it a secret from me when we met about the funding. I did, it was difficult to do so, but I did my best. I really get blindsided, I usually sniff out something, but it was such a great conversation. Welcome to theCUBE, Dave Vellante, my co-host. We're here inside theCUBE, so congratulations, you got the big funding news, tell us, okay since you couldn't tell me in person, you kept the embargo, what happened? I mean, obviously Ignition's doing later stage deals, right? Yeah, yeah, so Ignition typically is, we favor early, but in this particular case, this is a company that I've been involved with for a long time. Thanks guys, yeah it's always a short guy, they got to move it a bit closer. No, no, move it this way more, so that. Robert just moved the whole table. Okay, well that's Robert. That way you can talk down towards this. Okay. We'll do a reset, okay, go ahead. Back to Ignition Partners, what's going on with the funding? Yeah, so we favor early, but this is again, this is a series D for us, and so it is atypical for us to do a deal in this range, but I've been involved with the company for a while now. I was an advisor early to the company while I was on the Venture Development Team at Accel Partners before actually joining Zen Source. And so the project even back then was very attractive to me, and so I spoke with Mike over the years, and so when I turned professional, again after leaving Citrix, when it became time to do this investment, the existing investors and Mike came to me and said, what do you think? Said, Frank, you guys are doing typically early stage, but we've got momentum here, and that's what really drew me to the investment was the momentum, and of course the team, and also the thinking of the team around being a platform. So even before my time at Zen Source, I worked at Microsoft for 10 years, I worked on Windows NT for releases of that, Randy SDK team, my other partners built platforms like Internet Explorer, DOS, Windows 95, and so we have an understanding for what it takes to get a platform out there, and we think this team has the stuff to get that done. So we talked to Kirk Dunn, COO, as you know. He said to ask you the question, why Cloudera, and then he also mentioned that you looked at a lot of guys in the big data space or Hadoop space. Why Cloudera and why them over the other guys? Right, so again, so we did have the opportunity to look at lots of things happening in big data. We did make, we made an investment in couch base. Again, we chose a leader that we liked there as well in the schemaless area. But again, in the case of, in particular, of companies commercializing Hadoop or doing things in a proprietary fashion on MapReduce, there were a number of things that really drew us to the investment. Again, the first thing, even though this is a series D company, which from a venture perspective tends to be late, there's a lot to be said for the team. Again, our familiarity with the team and the skill of the team and the kind of things that they've done is really super important, and that's paramount. The second thing is real momentum. More than proof of concepts, customers actually deploying the product in production and paying money for it is a big deal. Anyone can talk about number of downloads or number of people visiting websites, but Cloudera has real customers. And finally, it's the point I made a bit earlier around being a platform. The team has a thinking around being a platform and the patience and persistence to take the long-term view to get that done. And the strength of a platform is based upon the things which stand upon it and what we've seen just by virtue of even all the independent software vendors here that are building to Hadoop and working with Cloudera to ensure the best possible performance and deployment environment for those applications gives Cloudera the best shot at becoming something very broadly deployed. And that is the real strength of a platform and that's where valuation comes from. As investors, that's what we look for. And the market leaders. So you've been around the block, you mentioned Microsoft and you go way back in the days of IBM, I believe we had a chat about. So even if you mentioned that, they're doing well, but you've seen the wars, you've seen the computer industry. And obviously most recently with Zen where you actually were in the open source battles, you've seen all those movies before. This open source community, talk about what's different and some of the dynamics. We had Kirk on and we had Ameron. Talk about the Linux versus what's going on here, the differences, the similarities. Just share with us your view because you work close with Amazon. You saw with Zen that open source communities and how that all formed. What's going on today? Right, so the interesting thing when I went to work on Zen, it was my first thing that I did in open source. And so when the first people I went to speak to was Brian Stevens over at Red Hat. And he encouraged me to try to unlearn everything that I had learned on proprietary software. And one of the first things I learned that in general for any given project, it actually is a pretty small team of people or a group of people that are doing the really hard work. So a small group of companies and a small group of people. And so it was funny I thought that everyone, at least in the Linux community, seemed to be on a first name basis. Linux and Zen community. So if you said Ian, you knew that was Ian Pratt. If it was Simon, it was Simon Crosby. If it was Brian, it was Brian Stevens and I thought that was pretty funny. And then, and so the parallels here on the, again with the Hadoop project, it's pretty similar that you have a small number of very aggressive contributors and committers and then a large number of reviewers, or rather reviewers and then even a wider circle of actually users and people downloading or incorporating the project. And that's very similar to what we had at Zen. The difference with this project in particular relative to what we had at Zen is the ability for the project to attract a very vibrant community of independent software vendors that are bringing solutions to end users. So at Zen, by definition, our key ISV partners were operating system vendors and that we had key partners that were some management software vendors, but we really didn't expose ourselves in any meaningful way to application developers. And so to the extent that the customer got a solution, it was just incidental it was running on our, in a contained OS running on our hypervisor. And again, so this has far greater ability to get real customer impact earlier on than most other open source projects. Frank, can you talk a little bit about the similarities and differences with Red Hat? You mentioned Red Hat. I mean, everybody kind of left Red Hat alone for a decade and they went off and built the $10 billion valuation. Fantastic. Cloudera's out in the early lead, looking good and all of a sudden all this other competition comes in and the big guys, there's one of the big guys is nah, we're not going to let them run away with it. What's your take? What are the similarities and what are the differences? Well, I think one of the similarities with the folks at Cloudera doing, again, similarity to the guys at Red Hat have done for a long time, is really look through the open source projects, look through the community and ensure that the things that have the highest use value actually become part of the project, harden that, make sure everything's tested together and can provide that as a well tested, well supported stack with additional management tools on top of that. And so that's one of the things that really made Red Hat as a commercial entity gain customer adoption. And yes, many of the, much of the, a lot of their revenue comes from support. Red Hat is purely an open source business. But it's that ability to maintain the relationship with customers who are using the product, find out what are the various bits and pieces of new packages and new projects or enhancements to existing things and then going and bringing on and making sure as many of the project maintenance and contribution that's feasible as part of the company. And so I see that as something that the team at Cloudera has definitely learned from. What do you think about the Excel's $100 million fund? Obviously, iPhone fund with Kleiner. They had a couple wins out of that. They had a couple gaming companies that paid back the fund. You and I traded some messages and talked about sometimes these funds are gimmicky. Well, that's what I said. But there seems to be demand for these apps. Is it the lifestyle business that they're trying to enable? Is it just throw the seeds out into the patch and see what grows? Or is it really a venture opportunity? Is it, should it be part of a side fund? What's your opinion on that and how you think it's going to play out? So, historically, the specialized funds have been hit and miss. Some have been very good. Some have been less than successful. There were some that were done early on around processor technology that didn't work out that well. And later funds, again, like you said, the iPhone fund had some hits, had some misses. So I think it remains to be seen. My friends at Excel have the ability to have a fund of great size. And so the ability to slice off a piece of the fund or raise a side fund to do that is a testament to their ability as a partnership. To focus on big data right now just seems totally obvious. I think perhaps even more important than the creation of the fund itself is Excel's ability to pull together the team of advisors that they have around those investments. So whether it's going to be 50 million, 100 million or all of Excel 11 that's investing in big data, the focus there is something I think that is notable. Now, why do you think it took so long? I mean, it's obvious. Given it, it's so obvious. It's just still in the early days, but you guys are usually way ahead of the game. Yeah, I mean, I think it's okay. I'm very new to venture. And so I can just make some judgments even just on the last couple of years. I think that in general, the limited partners, the folks that actually put money into the funds, you'll prefer things to not be so hard and fast so that a fund can actually have some agility. And so which is why you rarely see a particularly focused fund in that way. But I guess it's my impression that at the time right now with the potential of things happening in big data across the spectrum, that saying you're going to invest a specific amount of money in big data related things, that it could make sense. If you recall back to the slide that my friend Ping showed, it's not the $100 million fund is not specifically focused at MapReducer, Hadoop. He'll actually invest up-stack and down-stack. So he'll invest in applications that are using big data and also even cloud infrastructure to make big data a better place. And so I think that's just a logical thing for a fund like Axel to do is invest big money across those areas of technology. What's your advice for the BizDev side of it? Because it's pretty crazy. We were talking last night at dinner and you again lived that wars before. There's a variety of different approaches. I'll say Cloudera, which you've now putting your money behind that horse, they should have a specific go-to-market or continue their bit competitive strategy as we were talking to Kirk about. We said he's the Google of Hadoop. Google has such penetration, their goal was to grow the number of internet users. So as that increases their share, Cloudera has kind of got the same mindset. The more people are using Hadoop, they get a bigger, their pie maintains larger. Maybe some competitors get a position in there. What's the approach of these companies, the startups in particular, or the big guys like Informatica or Dell and these hardware guys, the services company? What should people be thinking about how to approach the go-to-market? Right, so in terms of if you're a bigger company or a startup and you realize you're going to bring a solution to market. And again, Cloudera is far from being a big company, so in a sense we have small companies and big companies trying to work together. I think what's a real driver here is just the nature of the data that's being produced across the board. Whether the data is being produced by people or machines or sensors or analytics on top of analytics, is that the data sets themselves are very large, but also the kinds of things, the kind of problems and the kind of analytics that are being applied against them are very large. So there's no one company that can do it all. And so even like harking back to my time at Microsoft, we made the operating system. We never made the backup software. We never really did a good job at very high-end systems management. And so it was relied on an ecosystem and community to go and do that. But the community does need a company and technology to rally around. And the thing that Cloudera will do is become that rally point for the ecosystem, be able to provide the kind of outreach and provide the kind of thought leadership, both in working with and driving demand at the end user customers, but also being the place that will continue to do enhancement to the product and to the project based on the kind of use value that the ISVs desire. And so it is about people working together in early days and yes, there's going to be overlap and there's going to be competition with certain things here and there. But at the end of the day, this rising tide will float all the ships. We're here live in New York City for Hadoop World 2011 at Frank Artali, the ignition partner. It's just invested $40 million led the round, series D for Cloudera, a more rocket fuel for Cloudera to continue to push ahead and maintain that lead. People trying to nip at their heels. A key word is try. Amarau will be on at 2.30 to talk more about this operating system concept platform. Again, like you said, your platform is judged by the things that it stands on and up and down the stack and we'll see that. My question, just my final last question is for two questions for you to end this segment. One, what are the white spaces out there? Like Microsoft, you mentioned backup, they didn't do those little things and Norton Utilities did a bunch of it, they made a lot of money. And what gets you excited right now? Now that Cloudera is kind of on the books and you're going to help manage that, watch that pony run. What are you looking at next? What's it getting you excited? White space and then what's getting you excited? Okay, so on the white, and these are kind of, it's kind of combined into one answer for me, to be quite honest. So on the white space side, what I, when we made the investment, our investment thesis is that this kind of technology and Cloudera as a team and the kind of mindset, this type of technology should be, should provide solutions and enable solutions to businesses of all sizes. So when we see there at the conference today, by and large, the solutions are still somewhat specialized. You see a lot about shopping on eBay. Okay, there aren't that many eBay's out there or you see fraud with large financial institutions. So, at the end of the day, we believe that this technology is something that can help people in their everyday work or their everyday social lives. And we see it hitting the social lives already from the big social websites. But the things that people do to work with their coworkers or business partners everyday should be optimized by this type of technology. And that is a big opportunity because when you take it, take the product down from the very large enterprises all the way down to businesses of 10 people or more, that's a very big market. What gets us excited in the investment community is going and finding those companies to build the products that can be sold to businesses of all sizes that take advantage of Cloudera. And also look at perhaps some things in the infrastructure space to make the deployments even more efficient and less costly to adopt from a CapEx and OpEx perspective. And so we'll look at both of those areas both at the top of the stack and the bottom of the stack. That's it, Frank Artali from Ignition. Thanks for coming on your new adventure but you sound like an old pro to me. Okay, thank you very much, it's great to see you.