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Thought Leaders in Cloud Computing: Ari Zilka, CTO of Terracotta (Part 5)

Posted on Friday, Jan 6th 2012

Sramana Mitra: I have to say, though, that what you’re describing, even at a big data level, not yet available. Forget big data and real time. Correct?

Ari Zilka: That’s where Terracotta comes in. We’re a data management company, and the product’s name is Big Memory.

SM: I know, but what I am saying is you can add the real-time component to it, but the truth is the big data analytics portion of it is not available yet.

AZ: Right.

SM: The use case you just described [for] this car, there’s a ton of business logic needed.

AZ: That has to get written?

SM: That has to get written for that to happen, and even that is not there yet. And there are a ton of pieces that need to come together. I mean, how many seats are available at a restaurant is not a piece of data that is easily available.

AZ: Right, but every restaurant in the U.S. is not wired – as you and I both know – to OpenTable or its competitors.

SM: No, that’s not true at all. I knew you were going to go to OpenTable, but OpenTable has very low penetration.

AZ: Fair enough. But I think the concept is reasonably proven where OpenTable integrates to your point-of-sale devices that are best of breed for restaurants. I’m out of my element at this point, going into the restaurant business.

SM: I think we both get the point that conceptually, this is where it’s going. But in reality, we have a ways to go even on the logic side before the acceleration can even come in.

AZ: Yes. Let me try to come up with an example that’s more current day. You brought up Amazon.com, but Amazon is already doing much of this already. So, we could make up examples only to discover that Amazon does it right now.

SM: Yes, that’s very possible. They are one of the most technologically advanced companies around.

AZ: Yes. So, let’s look at Facebook four years ago. What did they realize that no one else realized? It’s that Google had built, in 2000, an advertising platform that was hidden in the construct of a search engine. It was value-add for the consumer and a value-add for the retailer at the same time, for the owner of products. They made the first search engine that was actually a revenue-making machine. Yahoo had this other technology that wasn’t giving anyone any money for clicks and referrals and all that. Google tied money to data.

Now, Facebook is the second generation of that. Facebook says, “Let’s tie people together socially, and then let’s bring merchants into the mix. Facebook gets paid because Facebook looks at your behavior patterns, your friends, where you live, where you hang out, and then targets you with ads that are relevant in a way finer-grain scale than Google ever could. Google’s looking at what you search for. Facebook is looking at what you do outside the computer. You have an incentive on Facebook to tell it when you logged off the computer and you walked out your front door, what did you go do? You take pictures. You check in on Foursquare. Facebook gets all that visibility to all that data. That’s a huge amount of data. Then they need to build retailing and merchandising models and marketing segmentation models that say, women between this and that age in this city will want to know about this cheese shop or that dress shop or the other lululemon store has a sale or whatever. And men in this segment and that segment will want to know about this vendor and that vendor, and so on. So, Facebook has done what I’m talking about. It has taken big data, massive amounts of data and applied batch processing to it to create segmentation, consumer segmentation and models, and then applied real time to put the icing on the cake and draw massive amounts of revenue. It’s one of the few social networking sites that is hugely profitable. The reason it’s profitable is that it put all three together – big data plus batch analytics on it plus real-time view, which is when you and I log in and the ads are down the left and the right of our Facebook experience. Those are real-time analytics.

Oh, Ari just logged in. I know his age because he had input his birth date on my system, unlike Google. I know he’s traveling today because he’s doing check-ins. I know he likes to play video games, so I’m going to offer him new mobile phone Android apps. I know he uses an Android because he gets onto Facebook from his cell phone. I even know his mobile platform and what to offer him, which means that I, as Facebook, can charge Apple, for example, far more for ad space than Google can. So, Facebook has to sell far fewer ads to make more money. That’s the power of real time; that’s the power of big data brought together. It’s the ability to do pattern recognition from the masses of data you’ve got, and the ability to react to it in real time. It gives you an optimization of your revenue path.

That even goes back to my credit card network example where we gave them, at their fingertips, the entire transaction history of you as a credit card customer to make intelligent fraud detection decisions. That saves them money because they cut off more cards faster and save the consumer money, make the cost of credit go down and make their profit go up all at the same time. That’s the confluence of big data and real time.

This segment is part 5 in the series : Thought Leaders in Cloud Computing: Ari Zilka, CTO of Terracotta
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