The Six Five team discusses the latest news from Cloudera. They are in a deal to be purchased that will take the software company private.
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Daniel Newman: So let’s talk about Cloudera, Pat. I had to take a call this weekend on Memorial Day, because something big was about to break. I’ll let you break it.
Patrick Moorhead: Yeah. So I think you and I both talked to the president Mick at Cloudera and it was a big news that’s essentially that Cloudera is going private being acquired by KKR and CD&E for $5.3 billion. That’s about a 24, 25% adder to what the stock was currently trading at. And I think it’s a great thing. And let me tell you why. So, first off Cloudera invented the whole concept of big data with Hadoop. Now they fully grown up off of Hadoop. They’re not married to it. We’ve got Spark. And the first company that had a full end-to-end data life cycle product. First came out on-prem. And then what we saw in the last 18 months was they brought out a CDP Private, and that’s the private cloud version of this and CDP Public, which essentially means you can manage your data, holistically, whether it’s on AWS, Azure or a Google Cloud.
And the only thing that they hadn’t hit yet. And by the way, even though CDP is relatively new, they weren’t offering a SAS product and there are so many comparisons, right? To a snowflake as an example, that is cloud only, so what this go private move is going to enable is for the ability to pull in the pits for a little bit and build out their SAS property. And they made two acquisitions, one was Data Coral, and the other one was Khazana that are two very young high-flying companies that enable them to get, I wouldn’t say immediately in, into an enterprise SAS play, but gives them some key building blocks to get there. And quite frankly, I don’t think that wall street would have enough patience with them to give them enough time to build this out. Because I think wall street was kind of thinking, “Hey, we gave you guys patience to get into the public cloud”, right?
And then even though they just finished that build out about three months ago, they would likely have run out of patience. And the key to enterprise SAS, and the reason why that’s so important at the Cloudera in particular is does two things. First of all, it enables a much larger Sam or the addressable target market in that you can go to smaller companies who don’t have data scientists, you don’t have DBA’s right, who want the driving to be left to somebody else. And the other thing it does is it takes it to new types of users inside of any type of enterprise, not just a data scientist or a complete data jockey.
How about somebody in their department that has to do something with data, make decisions based on that data, or put together presentations for executives who can make decisions off of that data. So it expands their addressable market in two ways. And I can’t wait to see what they do. It’s not going to be easy. It’s going to be hard, but listen, they’re executing. And there’s a lot to say for execution out there. And what doesn’t get talked about a lot is Cloudera has exabytes of data with the fortune 500 already under management inside of a cloud era.
Daniel Newman: Yeah, absolutely. You covered a lot there, Pat. I spent a little time talking to some different reporters on Tuesday when the news broke and I kind of had the same story as you, I basically said the company needs runway. Wall street is not going to be patient with the transformation that Cloudera needs to make Cloudera needs to move to a more snowflake like model for adoption. Again, the hybrid thing works. It doesn’t have to be pure cloud, but the acquisitions it’s making makes it more SAS like easier to adopt more low code, which is part of this acquisition as well. What can a, as Satya Nadella kind of called a creator do in the data world, to be able to say, “Okay, I’m going to use tools from Cloudera and I’m going to be able to use them because I understand the business, not because I’m a machine learning scientist”, and that was the big thing I really took away.
But Pat, I see a little EMC-esque here in the sense of what Michael Dell did when he went private. I won’t give this the same credence as a company the size of Dell. But what I will say is there was something very strategic about giving it some runway, some time to identify its strengths, get it story together, grow its customer base, improve its margins, grow revenue, come back public again. I would be very surprised if that isn’t in the cards and that we won’t see Cloudera’s ticker once again on an exchange in the next few years. But I would say very reasonably two or three years before anything like that would be likely to happen.
Patrick Moorhead: Yeah. I mean, there was a ghost shop period to here and there are cloud native companies out there, huge ones that need data on prem. Google Cloud is one of them. Google Cloud is cloud native and they’re not managing much data at all on prem. I’m expecting Google Cloud to be kicking the tires.
Daniel Newman: I asked about that. I would say the group at a KKR and there’s a CSNK would have been very confident that this deal will go through before putting a shop deal into it. But at the same time, everybody now knows, the market all knows, but are there really secrets? Is it really a secret? I mean, there’ve been a few times, like I said, I saw the action on the Cloudera ticker happened on Friday after hours. I didn’t know what it was, but it went up a bunch and I saw moving after hours and I’m like, “Hmm, what’s going on here?” I thought they might be acquired. I thought they might be getting acquired. And then when I got the call about meeting, I’m like, “Oh, maybe I’m going to hear about them being acquired.” So big news a big week for Cloudera.
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