Sramana Mitra: And what is happening in the financial sector?
Derek Rodner: That was the third sector I was thinking about. So again, the three are genomics, meteorology, and finance. Dealing with global markets, dealing with statistical analysis, the intern space, which is a part of finance – all of those areas are definitely big players in the big data space. Coming out of my area, where I live, there is a kind of a mash-up between the pharmaceutical companies and the finance companies. There is a lot going on in this space in terms of big data as well. When you think about the players that invented this space, those are the three categories I would think of.
SM: Do you have any other thoughts about the field we are covering in this conversation?
DR: If you are talking about entrepreneurs who are looking to start a company and are looking at big data as one of those places to start a company in, I think we are in the very early stages of this market. From what I have seen and what I have analyzed, this is the next big thing. First it was the dot-com era in the 1990s, then there was the open source space in the mid-2000s, where the acquisition multiples were ridiculous. For instance, MySQL was sold for half a billion dollars on $35 million in revenue, and XenSource was acquired by Citrix for half a billion dollars on $13 million in revenue. I don’t know if this space is going to support those kinds of multiples, but they are definitely significant. I estimate a 10x to 20x range. I think those multiples are interesting for anyone. If you can do $5 million in revenue and sell for $100 million, that is not a bad ROI. This is a good space for somebody who is starting out and has experience in this type of software development. I think it is going to be a good business.
SM: What other exits – other than Splunk, which we already covered – would you call out in this business?
DR: There is none that comes to mind right now. But what we are seeing is bigger companies picking up little guys. Google is always picking up somebody, for example.
SM: Who is the most likely acquirer for you? My guess is either Berry Technology Solutions, SAP, or IBM.
DR: Those are realistic choices. I would agree with you.
SM: Thank you for sharing the story and good luck with the company. Goodbye.
DR: Thank you very much.