Integrate 2015:Big Data: Big Investment OpportunitiesSeptember 2015

Glenn SolomonManaging Partner, GGV Capital

Table of Contents

Why Has Big Data Become a Big Target for VC

How We Look at the Big Data Marketplace

Where are VCs Investing

How is Big Data Being Used in Companies

Where Do We See the Opportunities

Big Data Risks and Opportunities

Why Has Big Data Become a Big Target for VC

Why Has Big Data Become a Big Target for VC

Source: Domo, “Data Never Sleeps 3.0”

We are surrounded by a wealth of data we create from our everyday activities

Why Has Big Data Become a Big Target for VC

Source: BI Intelligence

Explosion of IoT

Mobile Devices

By 2016, IoT > Mobile + PC combined

IoT devices are generating billions of gigabytes of data everyday

Big Data is Driving Value for Organizations across Different Areas

Source: Gartner 2014

Increasing Number of Organizations are Investing in Big Data

Across Different Areas, >50% of Respondents See the Value of Big Data

How We Look at the Big Data Marketplace

How We Look at the Big Data MarketplaceStoring Data

Making Decisions with Data

Analyzing Data

Vertical Market Uses of Data

Sales & Marketing

Security

Finance

Advertising

Healthcare

Retail & Supply Chain

Where are VCs Investing

Most Established Companies and Cumulative Funding

Source: Crunchbase, Company websites

Palantir Cloudera MongoDB Hortonworks New Relic AppDynamics DataStax MapR$0

$300

$600

$900

$1,200

$1,500

$1,800

$1.6Bn

$1Bn

$311M $248M $215M $207M $190M $174M

Source: Crunchbase, Company websites

Domo

Mulesoft

InsideSales.c

om

Dataminer

MarkLogic

Sumo Logic

Guavus

Birst

RadiusBanjo

AlienVault

Ayasd

i

GoodData$0

$100

$200

$300

$400

$500 $484M

$259M

$201M$180M $176M

$155M$129M $129M $129M $121M $118M $106M $101M

“Up and Comers” and Cumulative Funding

How is Big Data Being Used in Companies

How is Big Data Being Used in Companies

With huge user base and long hours of streaming, Netflix can collect data from everyone on viewing patterns:• Time spent on shows / movies, and location• Types of entertainment (documentary, comedy,

drama, horror, etc.)• Favorite starring cast• When users stop watching a show, etc.

Using Big Data to Create a Show People Will Like

62.3 million total Netflix users

people watch Netflix for ~ 90 minutes per day

Big Data

Started in 1997 as a pay-per-rental via mail company

Now has evolved into an on-demand streaming service with thousands of movies and TV shows

• Engage users better on current shows• Recommend shows they may like• And create a show people will like!

Directed by David Fincher Featuring Kevin Spacey

With Big Data, 70% of Netflix original shows are renewed for second season, compared to 30% from traditional TV series

Source: Company website

How is Big Data Being Used in Companies (cont’d)

Source: Company website; “Data Jujitsu: The Art of Turning Data into Product”

“People you may know”Asking a set of questions such as: • “what do you do” • “where do you live” • “where did you go to school” • using friend’s friend connections More friendly faces up front to keep users engaged with the product

Collecting Data from Users

“Who’s viewed your profile”• By giving data back to users,

LinkedIn creates a more engaging experience for users

• Brings more revenue and make it more profitable for both users and company

Feeding Data Back to Users

How is Big Data Being Used in Companies (cont’d)

Disney created a big data platform to store, process, analyze and visualize all data that is generated through the MyMagic+ system

Disney MagicBands and MyMagic+ System

Disney collects tons of valuable data through MagicBands and MyMagic+ system - a gigantic database that captures every move of the visitors of the park• Real-time location data • Purchase history• Information about the visitors • Entertainment ride patterns, etc.

Insights from big data enables Disney to make smarter decisions:• Audience analysis & segmentation• Recommendation engine based on in-park traffic flow• Better and targeted marketing messages and offerings• And many more…The MagicBands (part of MyMagic+ System) are linked to credit

card and function as a park entry pass as well as a room key

Source: Company website

How is Big Data Being Used in Companies (cont’d)Solution:The Black Book model, which analyzes up to 1 quintillion decision variables and combines various data sets such as: • satellite imagery• weather data• expected crop yields• acidity or sweetness rates• regional consumer preferences• 600 different flavors profiles of an orange

Results:• Precise & dynamic formula on how to blend

orange juice for consistent taste, down to pulp content, for the $2Bn orange juice business

• After hurricane or freeze, this algorithm can re-plan the business in 5-10 minutes

Problem:Inconsistencies in orange juice due to variations in orange crop, sourcing, and seasonality, etc.

Goal: Consistently deliver optimal blend of orange juice, “despite the whims of Mother Nature”

Orange Juice and the “Black Book Model”

Source: Company website

And Not Just Companies…Even Municipalities Benefit

The use of big data has brought the following benefits:• Identify fire hazards based on algorithm• Reduce the number of fires• Fires are less severe as a result• Save on personnel and firefighting resources

New York Fire Department has captured 60 different factors that could contribute to the likeliness of having a fire, such as:• Average neighborhood income• Age of the building• Whether it has electrical issues• Number and location of sprinklers• Presence of elevators

• Each one of the city’s 330,000 buildings is ranked in order of the risk of fire

• New York Fire Department uses the risk score to determine which buildings get inspected first

Present

• Inspections were almost random except for high-priority buildings like schools and libraries

PastBig Data

Source: Company website

Risk Score

Where Do We See the Opportunities

Where Do We See the Opportunities

• Targeting sophisticated data analysts on data-driven teams

• Connects directly to databases• Fast, customizable visualization, easy collaboration,

and superior SQL editing experience

• Business management platform• Focuses on the needs of the decision-makers in a

business, as opposed to existing data management procedures and policies

• Connect, Prepare, Visualize, Engage and Optimize

Tools for Data ScientistsTools for Business Executives

Disclosure: GGV is an investor in Domo

Where Do We See the Opportunities (cont’d)

Readying Massive Data Intelligently

• USM (Unified Security Management) that provides comprehensive, centralized and affordable security visibility

• Combines log management and SIEM with other security features for complete security monitoring

• Single platform, easy to use and deploy, perfect fit for mid-market enterprises

Solving Big Problems – e.g. Security

Disclosure: GGV is an investor in Alienvault

• Curates massive variety of internal and external data• Reduces time and effort required for analytics and other

applications critical for business growth• Leverages machine learning algorithms to identify data

sources, understand the relationships between them, and connects siloed data

Where Do We See the Opportunities (cont’d)

Data Scientist as a ServiceNuanced and Unstructured Data -> Insights

• Provides actionable insights, not more dashboard reports

• Helps companies quickly understand what they need to do based on the data shown, so companies can spend less time analyzing and more time implementing

• Highly trained on-demand team of Data Scientists backed by powerful tools

• Captures and analyzes feedback from social media, blogs, forums, surveys, etc. to attain deep understanding of customer and marketplace feedback

• Big data big insights, helping companies understand how customers feel by deriving meaning from the most unstructured, unpredictable, and nuanced and subtlest context, so they can take action with maximum impact

Big Data Risks and Opportunities

Big Data, Big Risks and Even Bigger Opportunities

• Trade-off between privacy / security and the benefits of wider pool of data

• Behavioral data collected has more direct impact to the end consumers, and can lead to more sophisticated attacks on targeted consumers

• As information becomes more readily accessible across sectors, it can threaten companies that have relied on proprietary data as a competitive asset

• Companies that have benefited from information asymmetries are prone to disruption

Information Asymmetries to be Disrupted

Privacy / Security vs. Benefits of Data

Big Data, Big Risks and Even Bigger Opportunities (cont’d)

• The purpose of collecting data is to better serve customers not the other way around

• Consumers are becoming more aware of the value of their data and less willing to give sensitive data for free

• To turn data annoyance into empowerment, companies should engage users, enlist their help, give them control, and even reward them with data / insights they like to see in return

• Getting the exact result vs. having a good set of options• If data is presented to users directly, such as search engine,

should aim to maximize precision• In the case of ads where the relationship between ads and your

interest is obfuscated, can compromise on precision to achieve broader optionality

Customers Come First, Data Second

Tradeoff between Precision & Optionality

• More is not always better - more data can lead to more data quality issues, confusion and lack of consistency in business decision making, especially with conflicting data

• The challenge of getting the right information to the right person at the right time is expanded due to the sheer size of big data

• Storage is relatively cheap, and the technology to process data is available on demand

• But what about people and skills? Having the right people and right skills to analyze and take action on the data is the new big challenge

Data++ = Confusion++ and Consistency--

People and Skills are the New Challenge

Big Data, Big Risks and Even Bigger Opportunities (cont’d)

Thank you!

Twitter: @GlennSolomonBlog: goinglongblog.com