Cloudera CEO: With more than half a billion in cash, we can do IPO right

A lot has been written about Hadoop vendor Cloudera’s recent $900 million financing round from Intel and a number of institutional investors, but there has also been a lot of confusion over just where all that money is going. Cloudera CEO Tom Reilly came on the Structure Show podcast this week to explain why Intel is so interested in the company, why it raised so much money and just how much it’s getting.

Here are the highlights of the interview, but anyone who hasn’t read our previous coverage of the partnership, or who’s interested in hearing all about how Cloudera plans to expand internationally en route to an initial public offering, will probably want to hear the whole thing. Especially from an investment standpoint, there’s no such thing as too much information when assessing a market where Cloudera and Hortonworks are raising hundreds of millions in capital and talking about billion-dollar revenues, and where larger vendors such as Pivotal and IBM making strong plays, too.

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First things first: How much cash does Cloudera have?

“Suffice it to say, when all’s said and done, of the $900 million, we expect roughly 60 percent of that’s going directly to Cloudera, which will be in our bank account for us to invest, grow the business and do all the things I told you earlier,” Reilly said. “We’re adding more than half a billion dollars in cash to our books.”

The details of the secondary financing — Intel did spend a significant amount of money purchasing stocks from existing investors to reach is 18 percent ownership stake and board seat — should be finalized in early May, he added.

Big data needs big capital

“We raised a significant amount of money because we’re going after one of the largest enterprise software markets that is growing at one of the fastest rates,” Reilly said. “We are both transforming an industry and disrupting an industry, so there is a lot of work to do.”

Among those things are investing in engineering, community growth and scaling Cloudera’s business internationally, including being able to service existing Intel customers in India and China.

All the additional capital will also help Cloudera get its business in order and not rush toward an IPO, Reilly explained:

“We are going to [go public], we will be there, hopefully as soon as possible. But what’s nice is this funding gives us flexibility to make sure that we enter the public markets when we are ready — when we have our systems and processes down, when we have our governance to be a well-governed company, when we have the right predictability and visibility, when our whole ecosystem of partners is kicking in.”

Tom Reilly (left) at Structure Data 2014. (c) Jakub Moser /
Tom Reilly (left) at Structure Data 2014. (c) Jakub Moser /

Why Intel is betting so big on Hadoop

“[Intel has] been investing in a lot of performance-enhancement capabilities riding Hadoop on top of their servers and chips. The reason is because Intel predicts that Hadoop is going to be the No. 1 application that is running on Intel servers,” Reilly said. “Today, Intel has 94 percent share in the data center, so I think they have good insight.”

But investing approximately $740 million in secondary shares and direct funding to Cloudera, upping its valuation to more than $4 billion? It’s because Intel wanted to make a statement to its shareholders, its partners and the entire IT industry that it’s going to be a factor in the Hadoop space.

“Intel’s desire in this relationship was for this to be a strategic relationship. They didn’t just want to put in, I would call it pocket change or small money and just say we had a normal partnership,” Reilly explained. “That level of importance drove them wanting to have a good ownership stake and a board seat, so that’s how we came about to their ownership level and that drove the amount of dollars.”