san francisco As Ali Ghodsi strolls through the California sun, he philosophizes about the future of the internet. Companies today collect more and more data. But data alone is useless. It should also be possible to draw meaningful conclusions from this, says Ghodsi.
His company Databricks helps to analyze gigantic amounts of data. Companies such as the technology group Siemens, the Swedish fashion retailer H&M or the driving service Uber have used it to optimize their business processes.
“Based on the data, we can make predictions,” says Ghodsi in an interview with the Handelsblatt. The technology is used in industry to make predictions as to when machine components need to be replaced before they fail. Driving services determine the price for a route according to the expected demand. H&M can offer customers precisely the right clothing or make specific predictions for future sales in individual stores or divisions. In short: the right data strengthens the business.
Ghodsi therefore also wants to strengthen the Databricks focus on Europe and Germany. The company is currently building a research center in Berlin. At the same time, he wants to expand the Databricks office in Munich and open new branches in Frankfurt and Cologne. In addition, Databricks took over the company 8080 Labs from Berlin last year. “We have many roots in Europe,” says Ghodsi.
Top jobs of the day
Find the best jobs now and
be notified by email.
Over the past few years, there has been a veritable race among large corporations to move their business processes to the cloud. With Amazon, Microsoft and Google, three US companies dominate the field. Because of their size and market power, they are often called “hyperscalers”. They started a revolution in the cloud business.
In the past year alone, the largest providers have invested around 180 billion dollars in the expansion of their infrastructure, the analysis house Synergy Research Group has calculated. In Europe, the big players from the USA claim around two thirds of the market for themselves. Domestic rivals hardly play a role.
Data analysts are driving a new revolution in the cloud business
Nevertheless, a second revolution in the cloud business is beginning. Tailor-made analyzes of data are what make the conversion of business processes attractive in the first place. Amazon, Microsoft and Google also offer solutions here, but start-ups such as Databricks or Snowflake have established a new business – independent of the large corporations.
Your advantage: You are experts in data analysis and not tied to a platform. Databricks works with Amazon’s systems as well as those of Microsoft and Google. Many customers do not want to be dependent on one of the big three providers and therefore prefer companies like Databricks for data analysis while using the infrastructure of several hyperscalers.
The cloud expert Adam Ronthal from the analysis house Gartner praises the start-up: “Databricks brings in the strength of the technical expertise from the world of scientific data analysis.” The company has built a convincing model with which it brings together data from different sources for customers says Adam.
The British magazine “The Economist” wrote that the San Francisco company could “become the dominant platform on which applications are created and run” for the topic of artificial intelligence.
The computer scientist from Sweden founded the company in 2013 together with fellow students from UC Berkeley.
(Photo: © 2019 Bloomberg Finance LP)
Ali Ghodsi was doing research at UC Berkeley when he started Databricks from a research project in 2013 together with fellow students. The founders provided a service that uses the open source software Spark to process data from various sources and use it to train algorithms.
Databricks added a component called “Lakehouse” to the offering. To do this, Ghodsi and his co-founders brought together two types of databases: structured company data in the “data warehouse” and often unstructured data in the “data lake”. This allowed Databricks to draw on a larger pool of information and make better predictions.
Databricks was not only able to convince more than 7000 customer companies of this concept, but also attract investors. So far, the company has raised around $3.5 billion and is valued at $38 billion. The overwhelming competition also invested: Amazon, Microsoft and Google are among the financiers. Last year, Databricks increased its revenue by 80 percent to $800 million.
IPO could take valuation to more than $100 billion
Databricks could be going public this year. In financial circles, a valuation of more than 100 billion dollars is considered possible. “We will go public,” announces Ghodsi. However, there has been speculation about an IPO for years.
The company has already taken the necessary precautions. “We could go public today if we wanted to. But we’re in no hurry. And right now there isn’t a particularly exciting market to make a stock debut either,” says Ghodsi.
With this, the founder alludes to the situation of Databricks’ main rival: Snowflake. The business model of both companies is very similar. Unlike Databricks, Snowflake has been publicly listed since 2020. Snowflake’s stock debut in September 2020 created superlatives. With proceeds of around 3.4 billion dollars on the capital market, it was the largest IPO of a software company to date.
>> Read about this: These are the most valuable startups in the world
After the company was valued at more than $100 billion in November 2021, it has lost around 45 percent of its market value. When the latest figures were presented, the forecast fell short of analysts’ expectations.
For Databricks there would also be an alternative to the IPO. For months there has been talk in financial circles that Microsoft might be interested in buying Databricks.
CEO Ghodsi is cautious. It makes little sense for one of the hyperscalers to buy Databricks. “When you buy a company and most of its revenue comes from its competitors, what do you do with it?” asks Ghodsi. “I think the world would be better off with more multi-cloud providers.”
However, cloud expert Ronthal points out: “In the end, the big companies created the cloud world. Everyone else just lives in it.” And of course, the hyperscalers gained advantages over new players in their own worlds. Companies like Databricks still have room to develop further.
More: Cloud companies are securing the future market with gigantic investments