Building an Open Source Software Company Around Cassandra, Seed-Funded by RackSpace: Jonathan Ellis and Matt Pfeil, Founders of DataStax (Part 6)

Sramana Mitra: Tell me more about what happened with that money? What were the Series B milestones? What were you able to accomplish? How did the product come together?

Jonathan Ellis: When we were pitching Series B, we had the blueprint of what we wanted to build for DataStax Enterprise. We knew that we wanted to deliver analytics on top of Cassandra and then search came later on. During the Series A, we didn’t know what we were going to build, but we were selling a vision and not an actual product. The goal of Series B was to actually build that and we were already working on that. DataStax Enterprise 1.0 came out in October of 2011, we added search capabilities for 2.0 and then security for 3.0.
Sramana Mitra: And what was the time frame of that? You raised Series B in 2011, yes?

Jonathan Ellis: Yes. The Series B was in June or July of 2011 and then DataStax Enterprise 1.0 came out in October. During the Series B process, we didn’t have the completed product but were working on it.

Sramana Mitra: And what happened now on the customer side alongside Series B?

Jonathan Ellis: This is also the time frame where we brought in Billy as our new CEO. He closed the Series B with CrossLink. He started taking the sales team and making it a real sales team and getting serious about that side of the business. One of the things that I think is interesting and a little unique about DataStax is that not only did we successfully make the transition to bringing in a new CEO but did it very well. We retained Matt who was contributing materially to the success of the company. When you are raising money from venture capitalists, especially if they are first-time founders, the VCs will always ask, “What happens if the company grows larger than your ability to run the company?”

The correct answer is we will step aside for the good of the company and bring in someone who has the experience and ability to be CEO of a hundred-person company. Everybody says that but when the push comes to shove, you often see these nasty battles for control. And so to his credit, Matt was the one who recognized the need and said, “It’s time to bring in someone else.” We met Billy not long after we started that search. I was really reluctant to make that change, but Matt helped convince me we needed to do that.

Sramana Mitra: And Matt, what were some of the secrets of making that a successful transition from your point-of-view?

Matt Pfeil: We brought Billy in May of 2011 and we have known him since the summer of 2010. He was running the database tools unit at Quest Software as their GM and he was one of our first partners. He actually approached me and said he wanted an introduction to some of the VCs we knew because he wanted to be CEO of a startup. He had never done that in his career. I then talked to both Jonathan and John Vrionis at Lightspeed. They met him and liked him. To his credit, he really hit the ground running.

To make it a smooth transition, we got him up to speed on where we were as a company, what our pain points were, and just whatever he needed. Billy has got a nice level head and you can tell him stuff that probably he doesn’t agree with but he will take it in his stride and have a wonderful conversation with you. So it’s been a really good fit at not only the corporate level but also personally.

Sramana Mitra: That’s interesting because you are making a CEO transition but you were bringing in someone who has never been a CEO before. How did that go down with the investors?

Matt Pfeil: John Vrionis and Bill get along very well and while he was a first-time CEO, he was GM of a $300 million a year business.

Sramana Mitra: Yes. So, he had the business experience. It’s just the startup CEO experience that he didn’t have.

Matt Pfeil: Yes. When Billy joined us, he started building on the management team.

Sramana Mitra: And by this time, you also had the product fleshed out?

Jonathan Ellis: Yes, around October 2011.

Sramana Mitra: What about customer ramp up for the product? No longer the services type of customers but customers who were actually buying the real vision of the company. How did that ramp up go?

Jonathan Ellis: We had an early adopter program that started to ramp the actual sales to customers. It really started to ramp up at the beginning of 2012 because you do have a several-month evaluation cycle in this kind of software.

Sramana Mitra: Let’s say in 2012, how many customers were in the early adopter program?

Matt Pfeil: I think we had between 10 and 20.

Sramana Mitra: How are you pricing the product? What was the business model? What are the details of the product itself?

Matt Pfeil: We offer the combination of DataStax Enterprise which is the server, plus the management software, plus the SLA support in a subscription model. The deal sizes vary based on the size of the organization. Initially, there were smaller 5-figure deals but we have done larger million dollar plus deals at this point.

Sramana Mitra: What is the positioning of the company? Are you focused on the very large deals? Are you focused on mid-sized companies? Where are you trying to build your business?

Jonathan Ellis: I think right now it’s fair to say that we are the dominant player at the high-end of the no SQL databse. And we are trying to appeal more to the lower end as well. The reason is that low-end deals can grow up into high-end deals as the company matures, grows, and succeeds. So, we want to improve our product to address their concerns as well as the concerns of the high-end.

Sramana Mitra: As a company, you have raised a lot more money since then, right? You’ve talked about your Series A and Series B but you have raised two more rounds of financing at this point, correct?

Matt Pfeil: That’s correct.

Sramana Mitra: And what is the total amount that you’ve raised?

Matt Pfeil: I think $83 million or a little over that.

This segment is part 6 in the series : Building an Open Source Software Company Around Cassandra, Seed-Funded by RackSpace: Jonathan Ellis and Matt Pfeil, Founders of DataStax
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