Amr Awadallah, CTO and co-founder of Cloudera, discusses how timing and execution beat copycat competitors. He raised $5M in Series A during the 2008 downturn, eventually bringing in $1B total, including Intel's $740M investment that became the largest shareholder stake.
Chapters
You talked a little bit about seeing several other companies with the same idea for virtual machines, and so you steered away from that.
Yeah.
We're seeing a lot of copycats now, particularly in spaces such as on-demand food delivery. I swear every day I get a pitch for another on-demand medical marijuana delivery application. There's so many out there. Online fashion marketplaces for used clothes. There's a lot of these spaces where there are many companies with minute dissimilarities, so they're very close. Do you think it's true that in various sectors only 1 or 2 companies will ultimately succeed? Perhaps that's what we're seeing with Uber stealing the thunder from Lyft and Sidecar?
Yeah, no, that will always be the case. Like in most sectors, there will be 1 or 2 companies that do very well, and there will be another— many of these copycats will either be acquired by them, by these companies, or they will they will shut down. So I'm not saying don't do a copycat company. Sometimes doing a copycat company can be a good thing if you're very good at execution or if you have a unique twist, meaning you are doing it in South America, for example, where nobody is paying attention or in Europe where nobody is paying attention. So that might work. That said, be very cognizant when you're doing a copycat company, your chances of success will be lower, right? So this VC game, this startup game, It's all about chances of success and maximizing your probability of success. It's more likely, and I don't want to dissuade you from doing a startup, but it's more likely you will fail than you will succeed. That's just statistics about startups say that, and that's what makes all of you special is willing to take that risk. I'm willing to take the risk that I'll fail. That's what makes an entrepreneur actually more than anything else in my opinion. That said, you also want to apply some intelligence to how you pick that risk so it's not like playing, it's not like gambling. It's not like going to Vegas, which is another way to make money, I guess. So you want to be very careful about picking an idea where you think you have a time advantage, because time advantage— like Uber definitely had a time advantage, and that's why they are as powerful as they are right now. They had a very strong time advantage in terms of doing it first, and the execution was very well done, and that's what gave them the big edge that they have right now. So time advantage is very important, and that's why you want to— So look out for that and avoid the copycat kind of trend as much as you can.
Okay. I want to go back to your first funding round for Cloudera. You said it was 2008.
Yeah.
So country was in shambles financially. I think it would be really interesting for everybody to hear about your approach and your strategy beyond simply being that EIR. What else did you do and in subsequent funding rounds? Because you raised a few others shortly thereafter.
Yeah.
to get the funding that Cloudera needed because I think as we all know, it's not going to be this frothy as it is today forever, and I think it'd be good for people to be equipped with the strategies to raise money when things are maybe a little bit tougher out there.
Yeah. So yeah, when we raised our round A, things were tough. So when we raised our round A, things were really tough. The markets were very, very hard at that time. So I frequently say we were very lucky that we still were able to raise what we raised back then, which was $5 million, despite the markets being in the state they were in. And it's part luck, but part also the founding team was a very strong founding team. So the founding team was myself, I had my experience at Yahoo and being an entrepreneur before. My co-founders, one of them was Jeff Hammerbacker, who was one of the very early guys at Facebook. Mike Olson, who had a history of selling another company before as well. And then Christoph Bichilia from Google. So we had a very, very strong founding team, and that helped a lot. Now from there on, the markets just kept getting better and better. So show of hands— or actually, I'll ask if anybody can shout out the answer. Any of you know how much money Cloudera raised since inception, total? Take a guess if you don't know.
$500 million?
$500 million is one number. Anybody else? $150 million, a billion, that's how much. We raised $1 billion in funding since inception. Cloudera is valued at $4 billion as of last year, so this year should be a bit more than that. So why is that? How did we come to raise so much money? Our growth rate was very strong. So at the end of the day, if investors see your growth rate, meaning revenues growing very quickly or user base growing very quickly, they will help you scale. Like as soon as they see there is scale and all it is about right now is about, in our case, hiring more salespeople in more geographies or in the consumer internet space it's about expanding in more countries, they will help you do that and they will give you the money to do that. So every time in our journey, round A, round B, round C, round D, all of these follow-up rounds, we were very fortunate that the investors actually would come to us. We would not go to the investors, the investors would come to us and say, hey, we've been tracking you, we have been seeing the success that you have, please take from us some money. And this is my second piece of advice is when an investor tells you please take from us some money, that's when you take from them the money because that's when you can dictate on them the terms that you like in terms of that money coming into your company. So never say no to money coming to you. Say yes, but then what you want to do is pick up the right terms, the valuation, the kind of the terms that come with that money as you take it in. So we were very lucky in every round that followed that initial round, the money would come to us and we had the luxury of picking our terms. That said, it's not just luck. I mean, it was part luck but part us delivering in terms of our promises of growing the user base, growing the revenues, and growing the possible market potential. I will talk briefly about why so big, why so much money. A big part of it actually came from Intel. So show of hands, how many of you know about Intel? Almost the entire room. So Intel, as you know, is one of the largest, if not the largest CPU company out there. Intel really cares about the big data space because more big data means more CPUs to crunch all of that data. And they wanted to strategically align with Cloudera to make sure that our platform, when it's running inside of these data centers and inside of these servers, is optimized to run best on the Intel CPUs. So that's when they came to us last year and they said we want to be a majority owner of Cloudera. We want to own the most shares in the company. And that was $740 million. So of the $1 billion, the biggest chunk came from Intel, which was $740 million. $740 million, and they are now our largest shareholder. They own 18% of Cloudera.
