Our partner Mike Volpi shares his thoughts on Confluent, one of the fastest growing enterprise software companies we've seen, on the heels of their latest $125M Series D round.
As an investor, nothing is more rewarding than seeing an entrepreneur’s idea and passion turn into reality and blossom. When we led Confluent’s Series B in July 2015, we were aware of the popularity of Apache Kafka, but we couldn’t have imagined the amazing rocketship that this company would become. Today, Confluent is one of the fastest growing enterprise software companies we’ve ever seen, and in no small part that’s down to the progress that the founders Jay Kreps, Neha Narkhede and Jun Rao have made since they started the business straight out of LinkedIn in 2014.
Ten years ago, most businesses didn’t bother collecting their data. Many decisions - strategic or tactical - were made based on “experience and gut.” Today, data has become the lifeblood of companies. Organizations of all shapes and sizes know that every part of their business needs data to inform what they do: giving them insights on everything from consumer behaviour and security threats to financial trends and product issues. That data has to be collected, delivered and tailored for the needs of the specific users inside the company. And while there are plenty of companies that chart business intelligence, analyze data, or provide broader collection or interpretation, only one provides the infrastructure that connects all this together. That’s what makes Confluent so uniquely powerful, and perfectly positioned to take advantage of this explosion in enterprise and consumer data. The analogy we often use to describe Confluent is that of a road system. Sources and destinations of data are like people’s home or offices. We all move homes, and we all move offices. Yet the one thing that persists is the road system. Changing it would cause all sorts of damage to the connective tissue of an organization. Confluent provides roadways for data to companies all over the world.
When Audi wanted to build a system to manage the on-board telematics data in its vehicles, it turned to Kafka. The system gathers and publishes data about engine performance from 850 sensors in each car, from cylinder heads to braking systems, feeding back tens of terabytes of data to Audi every day. But Audi is also using telematics to develop more sophisticated systems on its prototype autonomous vehicles and electric cars, and plans to deliver on-road weather conditions, nearby available parking and nearby electric charging stations - all in real time. As Stefan Bauer, Audi’s Head of Development and Data Analytics put so eloquently, “Data is not only the ‘new oil’. It’s the new DNA of Audi.”
Thousands of organizations have similar systems built using Kafka, and as they deploy the technology across production systems, they make use of Confluent’s enterprise features such as the management of visualization of the data infrastructure, advanced data encryption, authentications for publishing and subscribing to data and deploying policies against the data. Confluent has extended Kafka with an impressively rich set of commercial features.
Confluent is built on Apache Kafka, an open source distributed event streaming platform to publish and subscribe, process and store data. Kafka was created by Jay, Neha and Jun in 2011 while still at LinkedIn, and today they still contribute to both the public open source distribution of Kafka. They provide an enterprise distribution called Confluent Platform and a managed service called Confluent Cloud.
We often emphasize how critical product-market-fit is for the success of companies. Confluent has undoubtedly achieved that. But, their leadership and talent is what has enabled this company to grow so rapidly and efficiently over the past four years. The combination of Jay and Neha is the kind of partnership investors can only hope for in a company with this much potential. Jay is off-the-scales smart and an incredibly gifted software architect. He’s also kind, thoughtful and has developed into a brilliant leader for the company not just from a technological point of view, but also from an organizational one. Neha is a gifted product engineering leader and an inspiring evangelist and advocate for the company - a wonderful example to others pioneering in the deep tech space.
The duo has recruited an extraordinary team that’s second to none in the industry: Cheryl Dalrymple whose steady hand has lead the finance and human resources functions; Todd Barnett who has magically scaled the sales organization; Simon Hayes, my compatriot from the Cisco days, who leads the corporate & business development areas; Ganesh Srinivasan who brings his experiences from growing infrastructure at Uber; our friend, Giancarlo Lionetti from Dropbox who just joined as CMO; and, many many others who make up this amazing team.
Today, we’re excited to double down on Confluent in their latest $125m round, which values the company at $2.5bn. Their financial value is a testament to their incredible progress and their future prospects. For Index, our investment reflects the honor and privilege that it has been to work with this truly iconic company. When we originally invested, we had a good feeling that plumbing for data would actually be pretty sexy… the Mario Brothers are getting jealous.
Published — Jan. 23, 2019