Forget about overturning the likes of IBM, Oracle and SAP for a place in the market. In the venture capital world, the big bets are on big data technologies that handle unstructured data rather than on variations of the blue-chip technologies the tech giants have already mastered.
"If you're running Bank of America and your transactional database is working, it's going to be a while before you take some of the new stuff and try to switch out the heart-and-lung machine that's critical to your entire business," Kent Bennett, partner at Menlo Park, Calif.-based Bessemer Venture Partners, said at the 16th annual MIT Venture Capital Conference.
In his view, the old guard will "get to hold its place for a while." And, according to Graham Brooks from Boston-based .406 Ventures, they will enjoy a loyal following for those tough-to-do, you-want-a-name-brand-for-that applications such as analytical processing. But to address challenges such as meshing structured and unstructured data together, lesser-known brands are likely to have the upper hand and could potentially carve out a valuable place in the market.
"Big data is about marrying data that sits outside the four walls of your organization with the data that sits inside," agreed Chris Lynch, partner at the Cambridge, Mass.-based Atlas Venture. "Disparate data sources lend themselves to data types that don't have to be in traditional, structured systems."
Big data technologies, another tech bubble bursting?
When Snapchat Inc., the company behind the photo-messaging app, turned down a $3 billion acquisition offer from Facebook Inc. last month (despite the fact it makes no money), market surveyors wondered if it's a sign of another tech bubble that will eventually burst. According to Peter Levine, partner at the venture capital firm Andreessen Horowitz, it's not. He gave audience members at the MIT VC Conference three reasons he's not worried the industry is in the midst of another dot-com bubble:
- The tech market has remained fairly stable. "Post-2002 to now, the steady state of investment capital and mergers and acquisition transactions [is] almost a flat line."
- Companies have figured out how to monetize the Internet. That wasn't the case in the late 1990s, Levine said. The Googles, Facebooks and Amazons of the world are in a different league from their '90s ancestors. Even newcomers, he added, "may not have monetized yet, but they know how to do it."
- Stock prices for companies' post-initial public offering (IPO) haven't gone wonky. "In the late 1990s, there were companies that doubled their IPO price on the first day. That hasn't happened."
Something else driving bubble talk? Virtual currency. That's also a phenomenon Levine's firm is betting on. Just last week, Andreessen Horowitz announced a $25 million Series B investment in Coinbase, billed as the "Bitcoin wallet."
"Coinbase is designed to facilitate the fluidity by which normal consumers can start to use Bitcoin," he pitched.
Startups, come on down! One of the highlights of the MIT VC Conference every year is the Startup Showdown. Ten startups are given a booth at the show and a minute of stage time to convince attendees (and a panel of judges) they have money-making ideas. The top three move on to the next round and are given a chance to demo their products. Here are three that might be of interest to CIOs:
- Move ov-ah Amazon Cloud Services: Jisto Inc. ("Big data, Big computing, Little cost") uses underutilized computing resources you already own, such as employee PCs, to run "distributed apps in a virtual private cloud." And, it claims, it won't impact employee productivity.
- Say goodbye to The Energizer Bunny: Polyceed Inc. is developing a class of "smart materials" that won't require an electrical voltage. Smart materials, which change properties when there's a change in the environment (temperature, moisture), are a "true green energy solution," Maha Achour, the startup's CEO, said.
- Better watch out, Cisco: Vensy wants to make conference rooms go wireless. Cables will no longer be needed to connect your mobile device to the conference room screen. Instead, all you'll need is Vensy's portable wireless device that hooks directly onto the projector.
Unfortunately, none of these made it past the first round.
Data's 'dirty little secret'
Big data technologies are evolving faster than you can say "Apache Hadoop," but tools that help ensure data quality aren't enjoying the same kind of advancement. "We all know that's the dirty little secret of this whole field, which is that we haven't made the progress [on data quality] that we need to," Tom Davenport, president's chair and distinguished professor of information technology and management at Babson College and co-founder of International Institute for Analytics, said at a Meetup Group event in Cambridge, Mass. "We don't have enough people to clean up the data involved in big data."
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That's where a company like Data-Tamer, which has ties to the MIT Computer Science and Artificial Intelligence Laboratory, is focusing its efforts. Co-founded by Mike Stonebraker and Andy Palmer, the startup provides "data curation at scale" and uses machine learning to help businesses discover, clean and transform appropriate data sources.
The data company-that-can-do also claims to be adept at data integration, another big data analytics challenge.
The task: Describe a tech nightmare in five words, tack on the hashtag #FiveWordTechHorrors, push the Tweet button and share with the Twitterverse. The reaction: a viral hashtag that went global. The trend peaked Dec. 10 at 14,000 tweets per hour, according to the social analytics company Simply Measured. Search the hashtag on Twitter and read all of them or enjoy a few of these highlights suited to an IT audience:
"IT has to know? Why?" -- Michelle Tackabery, marketing copywriter, @mktackabery
"All my passwords are 12345." -- SunDog Studios, @thesundogstudio
"It works on my machine." -- Sidney de Koning, iOS/Android developer,@sidneydekoning
"Let's rewrite it in Java." -- Francesco Cesarini, founder Erlang Solutions, @FrancescoC
"Let's re-rewrite it in Java." -- Gordon Guthrie, CEO of Vixo, @gordonguthrie
"Business can edit it themselves!" -- Jonathan Buchanan, programmer, @jbscript
"We're building an iOS app." -- Douglas Back, Web developer, @douglas
"Should we buy or build?" -- Leon Messerschmidt, software engineer, @l_messerschmidt
"Hadoop alone will be enough." -- Merv Adrian, Gartner analyst, @merv
"The IT department is dead. Long live the IT department." -- Wired, @wired
This was first published in December 2013