Jan
26
2021
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Vectorized announces $15.5M investment to build simpler streaming data tool

Streaming data is not new. Kafka has existed as an open source tool for a decade. Vectorized was founded on the premise that the existing tools were too complex and not designed for today’s streaming requirements. Today the company released its first product, Redpanda, an open source tool designed to make it easier for developers to build streaming data applications.

While it was at it, the startup announced a $15.5 million funding round, which is actually a combination of a previously unannounced $3 million seed round led by Lightspeed Venture Partners and a $12.5 million Series A, which was also from Lightspeed with help from Google Ventures.

Redpanda is an open source tool that is delivered as an “intelligent API” to help “turn data streams into products,” company founder and CEO Alexander Gallego explained. It’s built to be a Kafka replacement, while remaining Kafka-compatible to help deal with backwards compatibility.

At the same time, it takes a more modern approach. Gallego points out that teams building data streaming applications have been getting lost in the complexity and he recognized an opportunity to build a company to simplify that.

“People are drowning in complexity today managing Kafka, ZooKeeper (an open source configuration management tool) and the data lake,” he said, adding “We enable new things that couldn’t be done before for several reasons: one is performance, one is simplicity and the other one is this store procedures.”

He says that the key to developer adoption is making the product free through open source, and having Kafka compatibility so that developers don’t feel like they have to just dump existing projects and start from scratch. While the company is launching with an open source tool, it plans to use the funding to build a hosted version of Redpanda to put it within reach of more organizations. “This funding round in particular is to power our cloud,” he said.

Arif Janmohamed, a partner at Lightspeed Ventures who is leading the investment in Vectorized sees a company looking to improve upon an existing technology with a better approach. “With a simple, elegant solution that doesn’t require any changes to an existing application’s code, Vectorized delivers 10x better performance, a much simpler management paradigm, and new functionality that will unleash the next set of real-time applications for the next decade,” Janmohamed said.

The company has 22 employees today with plans to add another 8 in the first half of this year, mostly engineers to help build the hosted version. As a Latino founder, Gallego is acutely aware of the need for a diverse and inclusive workforce. “What I have found is that being a [Latino] CEO, it attracts more people that look like me, and so that’s been a big thing, and it’s made a difference [in attracting diverse candidates],” he said.

One concrete thing he has done is start a scholarship to encourage under represented groups to become developers. “I started a scholarship where we just give money and mentorship to communities of Latino, Black and female developers, or people that want to transition to software engineering,” he said. While he says he does it without strings attached, he does hope that some of these folks could become part of the tech industry eventually, and perhaps even work at his company.

Sep
30
2019
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Confluent adds free tier to Kafka real-time streaming data cloud service

When Confluent launched a cloud service in 2017, it was trying to reduce some of the complexity related to running a Kafka streaming data application. Today, it introduced a free tier to that cloud service. The company hopes to expand its market beyond large technology company customers, and the free tier should make it easier for smaller companies to get started.

The new tier provides up to $50 of service a month for up to three months. Company CEO Jay Kreps says that while $50 might not sound like much, it’s actually hundreds of gigabytes of throughput and makes it easy to get started with the tool.

“We felt like we can make this technology really accessible. We can make it as easy as we can. We want to make it something where you can just get going in seconds, and not have to pay anything to start building an application that uses real-time streams of data,” Kreps said.

Kafka has been available as an open-source product since 2011, so it’s been free to download, install and build applications, but still required a ton of compute and engineering resources to pull off. The cloud service was designed to simplify that, and the free tier lets developers get comfortable building a small application without making a large financial investment.

Once they get used to working with Kafka on the free version, users can then buy in whatever increments make sense for them, and only pay for what they use. It can be pennies’ worth of Kafka or hundreds of dollars, depending on a customer’s individual requirements. “After free, you can buy 11 cents’ worth of Kafka or you can buy it $10 worth, all the way up to these massive users like Lyft that use Confluent Cloud at huge scale as part of their ridesharing service,” he said.

While a free SaaS trial might feel like a common kind of marketing approach, Kreps says for a service like Kafka, it’s actually much more difficult to pull off. “With something like a distributed system where you get a whole chunk of infrastructure, it’s actually technically an extraordinarily difficult thing to provide zero to elastic scale up capabilities. And a huge amount of engineering goes into making that possible,” Kreps explained.

Kafka processes massive streams of data in real time. It was originally developed inside LinkedIn and open-sourced in 2011. Confluent launched as a commercial entity on top of the open-source project in 2014. In January the company raised $125 million on a $2.5 billion valuation. It has raised than $205 million, according to Crunchbase data.

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