What Confluent’s IPO signals about the rise of real-time analytics

The successful public offering, which followed Snowflake's monster IPO last year, is yet another signal that data is the new foundation for enterprises.

​Confluent CEO Jay Kreps (center) marks the beginning of trading in his company's shares on the Nasdaq exchange.

Confluent CEO Jay Kreps (center) marks the beginning of trading in his company's shares on the Nasdaq exchange.

Photo: Confluent

Confluent's IPO proved that the age of real-time data analytics is upon us. And that shift could have ramifications for an influx industry that is chock-full of legacy vendors and an exploding number of fast-growing startups.

The Apache Kafka-based startup, which raised $828 million, saw its shares pop 25% on the first day of trading Thursday, giving the company a market cap of $11.4 billion. The successful public offering is yet another signal that data is the new foundation for enterprises and the cloud is the primary access point. But it's also an acknowledgement that technology like Confluent's, which enables customers to constantly capture information from a fast-expanding number of sources and act on it immediately, will play a critical role in the architecture of the future.

"There's a ton of excitement around modern cloud data systems, what that unlocks for companies," Confluent CEO Jay Kreps told Protocol. "When you look at most of the other data companies, they're about storage. That gives us unique differentiation … and it's a key aspect of how companies connect all this up."

Snowflake was a signal to the broader industry that a cloud-based warehouse not affiliated with the hyperscalers could thrive. But Confluent's IPO indicates that enterprise data strategies are beginning to mature. Apart from more dedicated use cases, the tools are increasingly being used outside of specialized roles, like data scientists, and more by lines of business users who have different needs and don't come armed with the technical knowledge that was required to operate legacy databases.

"Cloud is changing buying patterns pretty significantly," said Kreps. "We try to make it possible to start as small as possible."

There are already a number of up-and-coming vendors that are seeking to tackle the real-time analytics market, fortified with considerable funding. Amplitude has raised $337 million. Smaller players like Rockset and Imply have raised $62 million and $115 million, respectively. And there are many other competitors, including more established players like MongoDB and DataStax.

The adoption of those types of tools could ultimately impact company spending on other data-focused products. Instead of running everything on Snowflake or Google's BigQuery and risking skyrocketing costs, they can route real-time queries to a separate system designed specifically to handle those workloads. That could help organizations avoid getting massive data warehouse bills, according to providers like Amplitude which offer such services.

"As companies use our product, it typically frees up the data scientist to be able to work on other use cases. It's not that they are trying to reduce their spend on Snowflake, but they are optimizing it more," said Amplitude's Justin Bauer, senior vice president of product. "If you try to do everything [in Snowflake], it's going to get very expensive."

But as in many other parts of the software industry, cooperation and competition go hand in hand. Right now at least, providers like Confluent are eager to strike partnerships and go-to-market agreements with larger suppliers like Google and Snowflake.

"There's a $50 billion market around data in motion that's quite distinct," said Kreps. "It's a different world. Things may change over time, but at the present time we're the beneficiaries of this huge movement to the cloud."

Changing data demands

The rise of real-time analytics providers gets to the heart of how different parts of the organization think about data. A business analyst, for example, may need to pull a report at the end of each day, while a marketing chief may want up-to-the-minute reports on the status of a campaign.

Confluent, along with startups like Rockset and Amplitude, say they can gather and then analyze data coming in from various digital sources — Twitter, mobile apps, website traffic, etc. — in lightning-fast speed compared to services from AWS, Microsoft and Google, as well as Snowflake and other cloud-based data warehouses. The time difference usually amounts to a few minutes or longer, which may not seem that important, but it is for enterprises that are striving to make more data-driven decisions — and make them quickly.

The adoption of real-time analytics, advocates say, gives users the ability to quickly pinpoint tech issues that could undermine sales, personalize marketing, better understand varying customer needs and, ultimately, drive higher sales. Advance Auto Parts, for example, used Confluent to help institute region-specific pricing, like higher costs for weather-related products in areas where thunderstorms were more common. And Postmates used Amplitude to help inform real-time changes to its "Bachelorette" marketing strategy, ultimately leading to a threefold increase in spending efficiency.

Those capabilities could end up dividing providers between those that support the operational analyses that help drive immediate decision-making, versus the analytical queries that rely on more structured data.

Such a shift could reverberate through different parts of the industry. Tableau, Domo, Power BI and other common data visualization tools connect into Snowflake and other data warehouses, giving users the ability to turn the stored information into reports that then drive top-level decision-making. If more of those real-time analyses are run on platforms like Confluent or Amplitude, it could undermine revenue growth for those providers, rivals claim.

"They're going to need to respond in some way. Or they are just going to be part of that reporting layer, which may not be as high-growth for them," said Bauer. "There's a reason why I'm at Amplitude."

Still, the market is nascent. And neither the companies nor the businesses themselves really know what the future is going to hold or how the tech stacks of tomorrow will end up looking. Ultimately, many of these decisions will fall to those in roles like the CIO, who have to evaluate which areas of the business warrant the super-fast speeds but nascent tech that Confluent and others offer, versus the more proven methods that are still the gold standard for many end users.

"It's a delicate balance," Linh Lam, CIO for mortgage tech at the Intercontinental Exchange, told Protocol. "Real-time analytics can be extremely powerful, but it can be extremely detrimental if there isn't integrity behind the data that's being presented."

But Confluent's IPO is sure to increase attention on the space. And that usually means more competitors and more promised innovation.

"It raises awareness of the importance and use cases around real time. That raises all ships," Bauer said.


Why foundation models in AI need to be released responsibly

Foundation models like GPT-3 and DALL-E are changing AI forever. We urgently need to develop community norms that guarantee research access and help guide the future of AI responsibly.

Releasing new foundation models doesn’t have to be an all or nothing proposition.

Illustration: sorbetto/DigitalVision Vectors

Percy Liang is director of the Center for Research on Foundation Models, a faculty affiliate at the Stanford Institute for Human-Centered AI and an associate professor of Computer Science at Stanford University.

Humans are not very good at forecasting the future, especially when it comes to technology.

Keep Reading Show less
Percy Liang
Percy Liang is Director of the Center for Research on Foundation Models, a Faculty Affiliate at the Stanford Institute for Human-Centered AI, and an Associate Professor of Computer Science at Stanford University.

Every day, millions of us press the “order” button on our favorite coffee store's mobile application: Our chosen brew will be on the counter when we arrive. It’s a personalized, seamless experience that we have all come to expect. What we don’t know is what’s happening behind the scenes. The mobile application is sourcing data from a database that stores information about each customer and what their favorite coffee drinks are. It is also leveraging event-streaming data in real time to ensure the ingredients for your personal coffee are in supply at your local store.

Applications like this power our daily lives, and if they can’t access massive amounts of data stored in a database as well as stream data “in motion” instantaneously, you — and millions of customers — won’t have these in-the-moment experiences.

Keep Reading Show less
Jennifer Goforth Gregory
Jennifer Goforth Gregory has worked in the B2B technology industry for over 20 years. As a freelance writer she writes for top technology brands, including IBM, HPE, Adobe, AT&T, Verizon, Epson, Oracle, Intel and Square. She specializes in a wide range of technology, such as AI, IoT, cloud, cybersecurity, and CX. Jennifer also wrote a bestselling book The Freelance Content Marketing Writer to help other writers launch a high earning freelance business.

The West’s drought could bring about a data center reckoning

When it comes to water use, data centers are the tech industry’s secret water hogs — and they could soon come under increased scrutiny.

Lake Mead, North America's largest artificial reservoir, has dropped to about 1,052 feet above sea level, the lowest it's been since being filled in 1937.

Photo: Mario Tama/Getty Images

The West is parched, and getting more so by the day. Lake Mead — the country’s largest reservoir — is nearing “dead pool” levels, meaning it may soon be too low to flow downstream. The entirety of the Four Corners plus California is mired in megadrought.

Amid this desiccation, hundreds of the country’s data centers use vast amounts of water to hum along. Dozens cluster around major metro centers, including those with mandatory or voluntary water restrictions in place to curtail residential and agricultural use.

Keep Reading Show less
Lisa Martine Jenkins

Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (ljenkins@protocol.com).


Indeed is hiring 4,000 workers despite industry layoffs

Indeed’s new CPO, Priscilla Koranteng, spoke to Protocol about her first 100 days in the role and the changing nature of HR.

"[Y]ou are serving the people. And everything that's happening around us in the world is … impacting their professional lives."

Image: Protocol

Priscilla Koranteng's plans are ambitious. Koranteng, who was appointed chief people officer of Indeed in June, has already enhanced the company’s abortion travel policies and reinforced its goal to hire 4,000 people in 2022.

She’s joined the HR tech company in a time when many other tech companies are enacting layoffs and cutbacks, but said she sees this precarious time as an opportunity for growth companies to really get ahead. Koranteng, who comes from an HR and diversity VP role at Kellogg, is working on embedding her hybrid set of expertise in her new role at Indeed.

Keep Reading Show less
Amber Burton

Amber Burton (@amberbburton) is a reporter at Protocol. Previously, she covered personal finance and diversity in business at The Wall Street Journal. She earned an M.S. in Strategic Communications from Columbia University and B.A. in English and Journalism from Wake Forest University. She lives in North Carolina.


New Jersey could become an ocean energy hub

A first-in-the-nation bill would support wave and tidal energy as a way to meet the Garden State's climate goals.

Technological challenges mean wave and tidal power remain generally more expensive than their other renewable counterparts. But government support could help spur more innovation that brings down cost.

Photo: Jeremy Bishop via Unsplash

Move over, solar and wind. There’s a new kid on the renewable energy block: waves and tides.

Harnessing the ocean’s power is still in its early stages, but the industry is poised for a big legislative boost, with the potential for real investment down the line.

Keep Reading Show less
Lisa Martine Jenkins

Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (ljenkins@protocol.com).

Latest Stories