Building an Open Source Software Company Around Cassandra, Seed-Funded by RackSpace: Jonathan Ellis and Matt Pfeil, Founders of DataStax (Part 5)

Sramana Mitra: Can you talk about the business model from that time? What were you charging? What were the deal sizes and so forth?

Jonathan Ellis: When we were first starting the company, we had a potential $80,000 deal. I told Matt, “You know if we can get a few deals like this, we might not have to raise funding.” That was kind of naïve for someone who has not done it before.

Sramana Mitra: Were you able to get the deal?
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Building an Open Source Software Company Around Cassandra, Seed-Funded by RackSpace: Jonathan Ellis and Matt Pfeil, Founders of DataStax (Part 4)

Sramana Mitra: Let’s come back to the pitch to Lightspeed based on which you raised your Series A. How did you evolve from there? How did you build the business?

Matt Pfeil: We built out an engineering team for both the core open source project as well as continued to evolve OpsCenter. For practical purposes, it felt like that was one of the goals of the money. The OpsCenter was our first company-owned product as opposed to completely open source.

It was the management software for Cassandra and we built out a team for it. We continued standard support offerings and then started to hire full-time support engineers as opposed to engineers who were doubling duty. It was really good, based on customers signing up for those offerings. We had more revenue than anticipated and ended up hiring more people than we originally planned to. Our original plan was to hire 6 people in 6 months but within a year, we had about 20 people working for the company. We also hired two sales people.

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Building an Open Source Software Company Around Cassandra, Seed-Funded by RackSpace: Jonathan Ellis and Matt Pfeil, Founders of DataStax (Part 3)

Sramana Mitra: Had you already moved to Silicon Valley before raising the money? This is another key question that a lot of entrepreneurs are wrestling with and making decisions on.

Jonathan Ellis: Yes. It actually wasn’t an explicit condition of the funding and we actually took another 3 months or so before moving the headquarters. They suggested it and we recognized the value of having our sales and marketing presence particularly in the Bay Area. When we were starting out, probably 80% of our customers for that first 6 months were Bay Area companies. That area is more used to taking a little bit of a risk on a new technology in the hopes of getting a big pay-off in terms of solving the scalability and performance problem. So Matt moved out as CEO and I stayed in Texas and continued building an engineering team out here which had a number of cost benefits.

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Building an Open Source Software Company Around Cassandra, Seed-Funded by RackSpace: Jonathan Ellis and Matt Pfeil, Founders of DataStax (Part 2)

Sramana Mitra: I am going to probe you on a couple of different points. Did you start DataStax while you were still inside of Rackspace?

Jonathan Ellis: No. We were working on Cassandra at Rackspace but we started DataStax, originally called Riptano, after leaving Rackspace.

Sramana Mitra: So, by the time you left Rackspace and started this company did you know precisely what DataStax was going to do?

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Building an Open Source Software Company Around Cassandra, Seed-Funded by RackSpace: Jonathan Ellis and Matt Pfeil, Founders of DataStax (Part 1)

If you haven’t already, please study our Bootstrapping Course and Investor Introductions page. 

This is an interesting story of how an open source software company built around Cassandra was incubated by RackSpace and has grown to $5 million in revenue. Founded by engineers Jonathan Ellis and Matt Pfeil, the interview traces not only the successes of their journey but also the mistakes they made in structuring their funding rounds.

Sramana Mitra: Jonathan and Matt, let’s start with both of your backgrounds. Where you were born? Where did you grow up? How did you get together?

Jonathan Ellis: I grew up in New Jersey. I met Matt after I moved to Texas to work for Rackspace. Rackspace hired me to build a scalable database for their internal infrastructure as they started to compete more with companies like Amazon, Google, and the Cloud. In late 2008, I started working on Cassandra. I met Matt Pfeil shortly afterwards as he led the group that was going to be deploying Cassandra internally at Rackspace.

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Harvard Business Review: How To Fund Indian Start-Ups

Harvard Business Review has published Sramana Mitra’s piece How To Fund Indian Start-Ups. You can read the entire article here.

New Book – Seed India: How To Navigate The Seed Capital Gap In India

While tremendous interest in entrepreneurship in India continues to surge, there is a troubling and corresponding shortage of seed capital to help get these entrepreneurs’ ventures off the ground.

Sramana Mitra, one of the most highly regarded writers on the Indian startup scene, analyzes the current state of the startup eco-system in India in the latest addition to her acclaimed Entrepreneur Journeys book series, Seed India: How To Navigate The Seed Capital Gap In India (December 2013; Amazon Kindle). Mitra proposes ways of navigating the rest of the decade, such that a robust pipeline of entrepreneurs can survive the current malaise, and thrive, while the eco-system develops and matures in parallel.
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Seed Capital: Inventus Capital Partners

1M/1M ambassador Irina Patterson talks with Parag Dhol of Inventus Capital Partners.

Irina Patterson: Please tell us briefly about your personal background and about your fund.

Parag Dhol: Inventus Capital Partners is a U.S.–India venture firm managed by successful entrepreneurs and industry operating veterans who have backed over 100 entrepreneurs with operations in India and/or Silicon Valley. Inventus backs entrepreneurs first and foremost. The companies financed by Inventus include redBus (acquired by MIH/Naspers and our biggest success), Vizury, Credit Sesame, Savaari, PoshMark, Power2sme, Policybazaar and eDreams, among others. Inventus started investing out of Fund-II earlier this year. >>>