What do gaming, banking, retail and content providers have in common – data. They create it, they want access to it and they use it to understand, attract, inform, retain and monetise their customers.
According to the Economist, data is now the most valuable resource in the world, with 97percent of businesses using data in some way to inform their business opportunities and over 75 percent of businesses using data as an integral part of their business strategy.
The value of data is the insight it provides into existing and potential customers – think about how Google targets ads, content and links based on your interests and buying habits. This ability to target services and products to customers is why the demand for tracking and supporting data has seen exponential growth in the past decade and there are no signs of these demands easing.
Launched by Ben Bromhead, Adam Zegelin, Peter Lilley and Doug Stuart in 2013, Canberra based Instaclustr is an ‘open source as a service’ platform, delivering fully hosted and managed big data technology solutions. The platform provides technologies including Apache Cassandra, Apache Kafka, Apache Spark, Elasticsearch and Redis. New databases and related technologies continue to be added to the suite of offerings.
The idea behind Instaclustr came about because of a need Ben and Adam themselves faced when needing a powerful and scalable database for a project, deciding on Apache Cassandra database. They knew others users had similar problems needing highly scalable and highly performant access to data for their applications and wanted to help those users who were new to the database technology.
Apache Cassandra is described as a scalable, reliable and easily accessed data, that performs with equal consistency on standard hardware of cloud infrastructure. The data is supported through replication across multiple datacenters providing security against site-specific outages.
Instaclustr has been growing rapidly since 2013 and is proud that its office is still located in Canberra. The company has closed several successful investment rounds in both Australia and overseas. The turnover has grown by over 300 percent to approximately $30m and its customer base continues to grow and diversify along with its technology offerings.
The founders say that they are parochial about Canberra, but believe that the city has a lot to offer, including the great internet and infrastructure that is here to support the machinery of government. The company offers a unique opportunity for people to work on some really leading edge technology and as a result is attracting employees from around the country. The opportunities they provide are world leading and transforming the way enterprises store and use data.
Instaclustr started its journey with support from an ACT Government ICON grant and received its first major tranche of investment from ANU Connect Ventures. The company was awarded the ACT Chief Minister’s Export Award – Emerging Exporter. And without doubt there are many more awards to come.
From the beginning.
Peter Lilley, CEO of Instaclustr says that the business was formed when four founders from two different types of technical backgrounds got together. “We had a really interesting idea for a data marketplace solution”.
“Doug and myself were just off the back of a successful exit of Stratsec, a cyber security company that expanded across Australia and Southeast Asia. We successfully exited that business to BA Systems in 2010. We had a few years working with BAE before we moved on and founded Instaclustr, which was called Relational IO back then”.
Peter says that the business was built around the concept of a data marketplace, which was about connecting data subscribers and data holders and letting those who hold the data monetise it. For that solution they needed a highly reliable and scalable database technology and decided on a technology called Apache Cassandra.
“Everyone knows that data is a valuable asset and it’s becoming ever more valuable now. In fact, Instaclustr is built off the value of data and massively scalable applications,” says Peter.
The solution they needed then was a hugely scalable, reliable, cost effective data store.
“We looked out in the market, and said we don’t want to have to operate the database layer ourselves. We want to build the data marketplace, so let’s go and find an Apache Cassandra database-as-a-service to help us do that and there wasn’t one.”
Peter says that, while they were searching for a data layer solution, there were so many conversations going on in tech forums about how great it would be if someone could actually make a database-as-a-service solution for Apache Cassandra.
In the meantime, Instaclustr had been doing some work getting Apache Cassandra going for its own use. “Because it’s a hugely scalable open source database”, says Peter. “ And with other people asking about a solution, we put some tooling around it, added a billing engine popped it up and we started getting customers signing up from day one. And they weren’t just Australian customers.”
“The customers were from all over the world, and mostly startups”, says Peter. “They were tech companies like us trying to get going with their applications and didn’t want to devote resources to deploying this database technology. They wanted to focus on building their application. And that’s how we got our traction”.
At this stage, Instaclustr, decided to leave the data marketplace on the shelf and take Cassandra, its first database service offering, to market as its minimum viable product. The company started getting traction immediately.
Growing into something new
“We had this opportunity that was opening up around open source and database services, which would be transformational for business and we were getting investor interest. We had a minimum viable product, but knew that there was a lot to be done and we needed to source some funding to accelerate,” says Peter.
Instaclustr pitched for funding in Australia and the US and secured the backing of ANU Connect Ventures, which Peter believes was a good first step for the company. “We were a startup in Canberra and had the ANU backing us. This gave us the right kind of investor feel – an academic institution backing an emerging tech business exploring a new business area. Then we just started growing really fast”.
The first round of funding allowed Instaclustr to take what they had and accelerate their minimum viable product to a much more mature offering. At this point the company started to attract mid market, or growth Stage Companies and then mature growth companies.
Today Instaclustr is pursuing that open source vision by offering a managed platform solution for selected open source technologies and is now servicing major enterprises around the world.
Product versus service
Peter describes Instaclustr as a solutions company.
“We build a managed platform for our technical operations team to service the needs of our customers. This is the managed solution part of our business. So, if a customer wants to deploy the open source Cassandra, or any of our other technologies they can have it managed by Instaclustr via our platform.
“Everyone uses the platform solution as it is. We have a couple of variations for consumption, because we support customers in the public cloud environment and in a private data center environment, but essentially everyone on our platform is consuming our managed solution product.”
Instaclustr has effectively developed a smart platform that allows it to service people in different ways.
“We have huge economies of scale, and that’s what makes us look quite different from the typical managed services company. Our business model is very different. Normally operators dial into a customer’s infrastructure and manage things for them and the number of people that a company can apply to the problem limits the size of the operation. Our platform is engineered to take the expertise of operating these open source technologies and provisioning, managing, securing the information with expert support around it, but we operate like a SaaS company. So it’s our platform that scales and not the people”.
It’s all about the data
When discussing the types of data that Instaclustr allows its customers to store, utilise and on sell, it became apparent just how far the company has come from its early days. Peter says that from a data perspective, customers use the platform in a way that is driven by their use cases – it’s about “what do I need to get from the data and what open source technologies are best suited for that?”
Peter explained that when people talk about Cassandra as a technology, they talk about time series information.
“It’s that, ‘this certain action happened (the data) and when it happened (the time) and how it’s changed’, type of link. This fits a classic set of business problems that customers have”, says Peter.
“In security and fraud detection for example, an event occurs at a point in time, and then you analyse that data to look at the relationships between all the time series information and what/how it has changed to correlate security events or detect fraud”.
“Another example,” says Peter “is what is called a playlist – your classic kind of preferences playlist. Say you are using Netflix, you watch certain shows, you fit into a particular demographic, your location is Canberra. A link is created that of all the people living Canberra, of that specific demographic, all like this movie – here are seven related shows that you might enjoy. It creates a recommendation or builds playlist options for you around your Netflix viewing patterns.”
The appeal of the technologies on the Instaclustr platform is that it they are highly reliable, super fast and can enable things to happen during the transaction or in the session of interaction of a customer’s application.
“So if you are using a mobile banking platform, and the bank knows its customers, it can in near real time, analyse, the behaviours and actions taken, and can market products (recommendations) back in stream to the customer. This drives sales for the bank,” says Peter.
The Instaclustr platform offers these fantastic and powerful open source technologies, to support client’s applications in real time.
“We are big in advertising technology, financial services and online computer gaming, if you’re an online computer gamer one of the most important things to you is the leader board and where you rank.
“One of our biggest customers in India is Dream11, who support the Indian Premier League. They have millions and millions of subscribers interacting, and they have a leader board that runs for each competition. The Instaclustr platform is central to this architecture”, says Peter
Being born global
Instaclustr was clearly born global. Peter says that the team didn’t think that this was where the company would go when it started. The growth has all been customer driven and the opportunities have enabled the company to deploy and manage customers around the world quickly thanks to global cloud services.
Peters says that public cloud services gave Instaclustr global reach immediately and this wasn’t available when Stratsec was growing 15 years ago constraining market reach. “Cloud services are providing a solution for those tech companies looking to break out of the Australian market. This is a superhighway that you can use to reach customers anywhere at any time”.
Peter agrees that if COVID had happened 10 years ago, many companies and some industries, would not have survived. There have been some major changes in a relatively small period of time thanks to the growth of cloud-based capabilities and capacity.
Instaclustr runs what Peter describes as a hub and spoke kind of arrangement. Canberra is the Engineering Center of Excellence and most product development is done here. The software engineers that build the platform solution, the central cores of the customer support team, and the majority of the technical operations team, or DevOps specialists all sit in Canberra.
The company has set up spokes in the US and in Europe and will in the future deploy into other markets and locations.
“We have a team in the Bay Area. It’s mostly what we would call sales and marketing and our consulting team – who assist customers transforming to open source data layer technologies. We have the same in Europe. And this last year, we’ve started to evolve our technical operations team, and deployed a small satellite of our tech ops team in Boston. Part of the reason for that as an evolving and growing business we wanted to reduce the burden of 24/7 shift operations in Canberra to something that was much healthier for our technical people. We wanted a team that could service customers globally in the corresponding time zone,” says Peter.
The challenges and the opportunities:
Peter says that like many other businesses, Instaclustr does work in sectors that have been heavily impacted by COVID. As a cloud based type SaaS offering, customers pay for what they consume. Instaclustr has seen a contraction in use from customers in the travel and retail sectors for example.
“But we saw a real opportunity in online computer gaming when everybody was sent home to work, and went into lockdown. They were looking for something to do and computer gaming was where a lot of them went. This sector has exploded in terms of growth. Another sector was food home delivery and also transport and logistics businesses as the world changed how it shopped.”
Peter says that it was important to be sympathetic to those customers in exposed sectors and help them through the process where possible.
“Sales actually became really hard around March and April, particularly for our traditional sales model of having a US sales team spending a fair bit of time on the road going and meeting customers. When that couldn’t happen, sales had to rethink how they were going to engage with customers.
“We had to rethink how we would get our brand and our expertise out there in the market. We used to have a program of physical workshops and meet ups where people come together. Well, people aren’t coming together. So we changed our marketing approach. We went to virtual workshops, meet ups, lots of seminars and webinars.
“The new thing to pop up was virtual conferences. It really changed the way we do things, but this is also true for customers. They have a whole procurement team that is now offsite and their legacy systems are no longer appropriate and they have had to undergo some pretty major transformations so that they could actually continue to do business. This slowed some of the buying cycle between March and May, but once it settled down we actually end up having our strongest sales quarter ever in the history of the company in quarter two this year”.
Peter agrees that COVID has leveled the playing field for many companies. “Sales are a personal relationship and when you limit that personal relationship, it makes things a lot more equal”.
Peter says that looking forward to 2021 he thinks that the big enterprise customers will be looking for opportunities to save costs. So moving away from legacy licensed software arrangements to a “pay for what you consume model” is very attractive and companies are leveraging the power these open source solutions offer into digital transformations in order to reduce costs, while still addressing operational risk through use of the Instaclustr platform.
“Instaclustr improves resilience. The company’s mantra is reliably at scale, every minute of the day. We can take customers on that open source journey and reduce time to market through agility and achieving transformation quickly. We are reducing operational risk through the reliability of our platform and generating cost savings from the beginning by eliminating software licensing costs. This is a very powerful driver for enterprises”.
Peter believes that flexibility and agility to change will become a requirement for successful companies in the future.