Cloudera?s Dilemma: What to Do with $900 Million

No, it wasn?t an April Fool?s joke: Hadoop vendor Cloudera just closed a $900 million financing round, showing the world that PowerBall isn?t the only way to crazy riches. And while on the surface it seems to be a good problem to have (like we should all have such problems!), $900 million in the bank may actually be more trouble than it?s worth. What?s Cloudera going to do with all that green?

Clearly, at those stratospheric investment heights, the only possible exit is to go public. So, what should Cloudera spend money on to build a market cap even higher than its current $3.37 billion valuation? Yes, that?s billion with a B, or $3,370,000,000 for all you zero-counters out there.

Clearly, they need to improve their product. While the Big Data opportunity is unarguably large, Hadoop as a platform has its challenges. The problem with sinking cash into the tech is that they?ll quickly run into the ?mythical man month? paradox: simply throwing people (in other words, money) at a piece of technology can only improve that technology so fast. All those zeroes won?t buy you a baby in a month, you know.

Perhaps they?ll invest in other products, either by assembling a gargantuan team of developers or by acquiring other companies, or both. Such a move is likely ? but they?ll end up with a mishmash of different technologies, or they?ll run into the man-month problem again. Or both.

They?re also likely to grow their team. More sales people selling Hadoop to all 500 of the Fortune 100. More Hadoop experts ? going after all 1000 of the 500 top gurus out there. More recruiters perhaps, looking to squeeze more blood out of the Silicon Valley techie turnip. True, such fuzzy math works to your benefit if you?re one of said gurus, but fuzzy math it is. You can only do so much hiring before you?re hitting the bottom of every barrel.

Whatever happens, there?s plenty of money to go around ? unless, of course, you?re already a holder of Cloudera stock or options. If so, you may have just been diluted to the point you could call yourself a homeopathy treatment. But regardless of where you stand with respect to the Cloudera nest egg, it?s nigh impossible to divine a path that works out well for any of the parties involved ? Cloudera employees, investors, or customers. But in the meantime, I?m sure they?ll throw some kick-ass parties. Pass the shrimp, please!

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