Hello and welcome to Runtime! Today: how a emerging group of data companies are unlocking new ways to work with data but running into economic roadblocks, CoreWeave signs two big deals, and this week in enterprise moves.
Surfing the pipeline
Now that the business world has fully embraced the strategic importance of data, simply collecting and storing that data isn't enough. The speed, flexibility, and efficiency provided by newer data tools have become much more important than simply dumping "Big Data" into a storage facility and running relatively simple analytical queries.
Companies like Snowflake and Databricks provided the foundation, making it much easier to work with large data sets on the cloud, and their products enjoyed widespread adoption. A new crop of startups hopes to find similar success by building tools around that foundation that let customers work with their data in new ways.
- "Everybody that needs a data warehouse needs three things that come along with it," said Tristan Handy, founder and CEO of dbt Labs, an early entrant to this emerging space.
- "You need data ingestion, a way to get data into that warehouse; data transformation, a way to actually take the tremendous amount of data that you eventually dump into the warehouse and turn it into distilled meaning; and then you need some type of analytical tool to actually visualize or otherwise analyze data."
So what is "the modern data stack?"
- "It’s trying to figure out why growth is slowing before tomorrow’s board meeting; … it’s an angry Slack message from the CEO saying their daily progress report is broken again," wrote Benn Stancil, CTO at Mode, in August 2021, and almost two years later those problems remain.
- The earliest customers for tools like dbt's — which focus on the data transformation leg of the above-mentioned triad — were companies just like it: venture-backed Silicon Valley tech companies that intuitively grasped the need for faster and more flexible data tools five to six years ago, Handy said.
- Data upstarts that have seen their valuations soar with the rush to modern data tools include Fivetran and Airbyte, which focused on data ingestion, or getting data from apps to a database or data warehouse.
- And data analytics companies like Tableau and Looker were acquired by Salesforce and Google, respectively, for big money over the past several years.
Companies like Ascend and Elementl are now betting on automating several steps in the process of getting data from storage to analytics — known as the data pipeline — into a single tool.
- "We have this saying internally, which is, the 'Hello World' for data pipelines is really easy. The productionalization and operationalization of data products is very, very hard," said Sean Knapp, founder and CEO of Ascend.
Data companies are now seeing the end of the "let it rip" mentality when it comes to spending on data products, according to Snowflake CEO Frank Slootman.
- "Over the last few years, the cost of capital was very low and the reward for innovation was very, very high," Knapp said. Cost concerns dominate now that the free-money era is over.
- Slowing growth could lead to a lot of consolidation among these new data companies, which might have to rethink their own cost structures as data efficiency becomes important for the first time in the last several years.
Generative AI and large-language models could also have a profound effect on their business models.
- "Though I don't believe the tools that make up the modern data stack will fail, the modern data stack as a movement seems incompatible with the rise of AI," Stancil wrote in April. "It's a philosophy that was designed for a world in which reasoning through a data problem with a robot was a fantasy."
A lucrative web they weave
We're going to ignore the fact that these types of deals can take weeks or months to put together and just point out that CoreWeave landed two massive votes of confidence from investors and Microsoft this week after it was profiled on Runtime last Thursday.
The GPU cloud upstart raised another $200 million from existing investors this week, bringing the total amount of capital it has raised in a capital-intensive business to $571 million. And according to CNBC, Microsoft has "agreed to spend potentially billions of dollars over multiple years on cloud computing infrastructure" from the company, which mostly counts smaller AI labs and startups among its customer base.
The long arm of Nvidia, one of CoreWeave's existing investors, could be behind the startup's recent momentum. The Information reported Thursday that the AI chip champion is prioritizing startups like CoreWeave over major cloud providers when rolling out its most powerful GPU yet, the H100.
The big cloud providers, who increasingly sell their services to slow-moving enterprise customers that are still trying to figure out an AI strategy, will eventually get their fair share of H100s. But the generative AI boom is already having an interesting effect on the cloud infrastructure market, and the year ain't over yet.
John Burke is now senior vice president of revenue at Digital River, after stints at Deloitte and Oracle.
Shiran Nawi was named chief people and legal officer at monday.com, following five years at the company in several roles such as general counsel.
Major General William Hartman was tapped by President Biden to be second-in-command at U.S. Cyber Command, according to The Record.
The Runtime roundup
No headline this week better summed up how odd a place Wall Street is than "Dell stock jumps after early earnings release shows largest sales decline on record, but still beats expectations," courtesy of Marketwatch. (Emphasis added.)
Forbes had a nice profile of AMD CEO Lisa Su, who has architected one of the better turnaround stories in tech over the last decade.
Thanks for reading — see you Saturday!