Big Data or Big Bubble?

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SurpriseI think most would agree that the Big Data industry is witnessing an accelerated hype cycle that feels all too familiar. Remember 2000? I sure do. That was the year my bubble burst. I had just launched the world’s first Database-as-a-Service, a much too mundane service to attract venture dollars. The VCs of the day were only looking for Internet plays with lots of “eyeballs.” Revenue, or even the potential for revenue, was a distant second in the list of priorities for making an investment. That is, of course, unless you didn’t have lots of eyeballs, in which case you had to justify the investment with the usual good-business attributes, solid management team, innovative technology at a prototype or MVP level, and viable business model (i.e. a way to make money). My company had all these things, but few eyeballs, so I opted to bootstrap the business at just the wrong time. 2000 was no time to start a new Internet business (even though my DaaS continues to operate today)!

Fast forward to present day. Facebook just paid an unbelievable $19 billion for WhatsApp, a company that doesn’t make money and whose CEO plainly said the other day that his product would never embrace ads. Just how does he expect to have revenue? Ah, but he has “eyeballs,” more than 450 million active users and nearly 1 million more each day. That means Facebook is willing pay $42 for each WhatsApp user. Ooops, did I just step into time machine? Is this 2000 again? As Mark Twain said, “History doesn’t repeat itself, but it does rhyme.”

My big concern is that the computer industry is slowly slipping into a “pre-bubble mentality” that I thought had disappeared once and for all after the bubble burst well over a decade ago. Could it be true that the human memory span, especially when it comes to business (OK, politics too), is all too short? Can the hubris that made up the pre-bubble tech industry be rearing its ugly head again? Before you answer that, just take a look at SnapChat’s rejection of a $3 billion offer from Facebook last year. That’s three B’s for a “pre-revenue” company, with only (you guessed it) eyeballs?

But I’m getting way ahead of myself. I started off talking about the Big Data over-hyped atmosphere. I am not suggesting that big data will experience an implosion of the kind we witnessed in 2000. The technologies underlying our industry are sound, proven, and have naturally evolved out of technologies that have been around for decades – the facilitators of big data, data science and machine learning, have been around under different names for a very long time. And the current incarnations of these technologies support a fledgling new industry that allows companies of all sizes to take advantage of valuable data assets using the familiar 3 Vs of big data: velocity, volume, variety. I’m not worried about the big data hype catching up with reality because we are real.

What I am worried about is the tech industry, specifically areas likes social media and mobile, flaming out in a spectacular fireball with its effect on the industry and economy as a whole causing deleterious effects on Big Data. Could it happen? Stranger things have happened in our illustrious industry. Could a public push back occur in reaction to all the extreme breach-of-privacy stories we hear in the mainstream press nearly once a week and could that push back initiate a bubble event?

We’re at a delicate period right now.  2014 is seeing recognizable names in corporate America adopting big data initiatives. We’re seeing real use case examples of our technology base. The vendor ecosystem is healthy and growing. Our industry is gaining global respect. But all it might take is a big slip up by our technology brethren to cause a “disturbance in the force” and trip us up in a big way. Big Data grew out of The Great Recession, a trying time for all. It would be a shame if old habits like eyeballs and stratospheric valuations based on non-existent business models came along and knocked us off our comfortable perch.

Daniel — Managing Editor, insideBIGDATA


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