Building a Big Data Venture: Hiro Yoshikawa, CEO of Treasure Data (Part 6)

Sramana Mitra: For your core business, you go seek out customers in a direct selling model. The open-source conversion is not your core business?

Hiro Yoshikawa: Correct. This is one of the interesting challenges that we are facing right now. Some investors called us open-source business 2.0. Historically, the open-source commercialization companies have a very typical freemium model. This is not our model. Our idea is to focus on developing the open source technologies, distribute to open-source communities, and then acquire users.

Our service is basically a fully-managed data pipeline and the data analytics platform service on the cloud, which includes data collection and ingestion software, highly scalable data, backend storage, and analytics front-end. We also have the machine learning and workflow engine to automate all the jobs. This is our core business. Our goal is to abstract all the complicated components of the data pipeline into a single service to help our customers focus 100% on analytics.

Sramana Mitra: How many customers do you have for that part of the business?

Hiro Yoshikawa: 250 customers.

Sramana Mitra: How do you describe these customers? What segment are they in?

Hiro Yoshikawa: In the first two to three years, our focus was CTOs. The typical buyer archetype was the CTO of Internet companies, media companies, and gaming companies. As we acquired more customers, we started seeing a lot of demand from enterprise. Even though we are getting a lot of inquiries from technology companies, we also started working with a lot of the Fortune 500 companies. This is a very important move for us.

We are providing very complex advanced data management platform-as-a-service. We call ourselves live data management. The live data is connected, current, and easily accessible data. It’s data that helps your businesses to make key strategic decisions. It powers the so-called data disruptors and transformers like Facebook, Google, and Netflix. Because of the data innovations, they are disrupting established industries.

The flipside is that there have been so many established companies that get disrupted by innovators. Since 2000, half of the companies listed in the Fortune 500 list have ben disrupted into extinction due, in part, to their slow reaction to data innovation and market signals. Unfortunately, the ability to leverage data in such a powerful way that other disruptors demonstrated was totally beyond the scope of a typical Fortune 1000 company.

In short, by bringing the advanced, highly-abstracted data infrastructure, we are enabling those established companies’s data-driven transformation. The same platform ended up being used by a lot of established enterprises these days to fight back against disruptors who are trying to disrupt their existing industries.

Sramana Mitra: Where are you now? You have 250 customers. Did you raise more money after the Sierra round?

Hiro Yoshikawa: We raised Series B and C. For Series B, we raised $21 million led by Scale Venture Partners in December of 2014. Then we had just announced the $25 million Series C by Softbank Investment. We have raised a total of $54 million.

Sramana Mitra: Do you want to give us a range of where you are revenue-wise?

Hiro Yoshikawa: One thing I can comfortably say is that we are growing the product revenue by over 100% every year since 2013.

Sramana Mitra: What about pricing and average deal size? What are you seeing? You said that it was not your goal to maximize revenues for the first 10 customers. Obviously, you have now hit your stride as far as revenue model is concerned.

Hiro Yoshikawa: Yes. The sales price is also very important. The good news is that we have been, in a sense, transforming the customers.

Sramana Mitra: What are your average deal sizes?

Hiro Yoshikawa: It’s big. We have a couple of customers who are spending more than a million dollars a year. We are supporting small businesses too.

Sramana Mitra: So it’s becoming a large enterprise software deal kind of business. I love your story. Thank you for your time.

This segment is part 6 in the series : Building a Big Data Venture: Hiro Yoshikawa, CEO of Treasure Data
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