During Roman Stanek’s 20-year career in tech, he has shown a knack for creating breakout companies. He sold NetBeans to Sun Microsystems, which is now owned by Oracle (NASDAQ:ORCL), and Systinet to Mercury Interactive, which is now owned by Hewlett-Packard (NYSE:HPQ).
Back in 2007, Roman also saw an emerging opportunity, called Big Data, and created a company called GoodData to capitalize on the megatrend. Since then, he has snagged $53.5 million from marquee investors like Andreessen Horowitz, General Catalyst Partners, Fidelity Growth Partners, Next World Capital, Tenaya Capital and Windcrest Partners.
I recently had a chance to chat with Roman more about the Big Data trend. Here’s what he had to say.
Q. There are lots of definitions of Big Data. How do you define it?
A: Simply put, Big Data is the collection and storage of massive amounts of data. IDC defines Big Data as projects collecting 100 terabytes of data, comprising two or more data formats.
Now comes the most-important and hardest part: Finding meaning out of that geyser of data that companies can act on and — this is key — converting into revenue.
Here’s what I mean: By analyzing all the information, sales managers can quickly understand sales reps’ results, view new contracts lost or signed and react to how actual performance compares to plans set months earlier. Help-desk staff can see how individual customers affect sales and profit, showing them which customers to focus on and which cost too much to support.
And I would bet Big Data came into play a few weeks ago, as insurance companies modeled damage costs from Hurricane Sandy.
Q. What’s GoodData’s role in the space?
A: GoodData provides a platform and cloud-based apps that analyze Big Data in a way that enables anyone, in any size company, to glean insight into what will be. That way, they can find new ways to boost profit or increase revenue. In effect, GoodData helps companies react to today’s information so they can influence tomorrow’s business performance. This is in contrast with traditional business intelligence (BI) tools, which only allow expert users to look at historical trends.
For example, our customer Zendesk is a leading provider of web-based customer support software with more than 5,000 businesses. And not surprisingly, many of those businesses had unique demands in how they wanted to explore trends in ticket volume, backlog and support performance. Instead of trying to create multiple, varied stovepipe reports on a customer-by-customer basis, Zendesk offers the “GoodData for Zendesk” tool to more than 1,000 customers. With the tool, each Zendesk customer can measure, dissect and understand the data that he or she cares about most. From concept to launch, the cloud-based solution took less than 90 days.
Q: How large is the opportunity for Big Data? What is required for tech companies to be successful? Are there traditional companies that may be threatened, like Oracle?
A: Earlier this year, IDC predicted the market for Big Data technology and services will reach $16.9 billion by 2015, up from $3.2 billion in 2010. That’s an astounding 40% annual growth rate. The interesting thing is that IDC expects most of this spending to focus on infrastructure — the plumbing that enables companies to download, collect and store vast amounts of data.
I believe that server-makers like IBM (NYSE:IBM) and Oracle will continue to milk this aspect of the Big Data market for several years — at least until a new innovation comes along that undercuts the cost of storage media and data warehouses. But the tech behemoths have also made big investments in the sorts of traditional BI tools GoodData is designed to replace. As you may recall, in 2007 IBM paid $4.9 billion to buy Cognos and Oracle bought Hyperion Solutions $3.3 billion.
These and other traditional BI tools are expensive, require enormous setup efforts from customers’ IT departments and are difficult, if not impossible, for the average businessperson to use. In contrast, cloud-based apps and platforms are easy to scale, quick to implement and enable anyone — no PhD required — to find meaning they can act on.
I view the next generation of Big Data BI as a huge threat to IBM, Oracle and other traditional tech companies. Their investments, their cultures and their approach to customers all prevent a timely switch to next-generation BI. I have every intention of capitalizing on their inertia.
Q. What are your views on Big Data and the IPO market for 2013?
A: My prediction is that Big Data will get even bigger in 2013. The surprise of 2012 was that enterprise IPOs won the day over consumer-facing IPOs that many expected to explode under the limelight of the public markets. Facebook (NASDAQ:FB), Groupon (NASDAQ:GRPN) and Zynga (NASDAQ:ZNGA) — while much hyped — have yet to deliver for investors. The limelight was instead stolen by companies like Splunk (NASDAQ:SPLK), which enjoyed a blockbuster IPO thanks to its focus on Big Data.
I expect companies to continue hopping on the Big Data bandwagon, especially as VCs and private equity firms continue to pour money into this space. I also anticipate at least one big IPO or acquisition. Cloudera just announced it raised $65 million based on an estimated $700 million valuation, for example. And while these figures may seem big, with an estimated $100B Big Data market opportunity waiting to be tapped, this is only the beginning.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.