After Funding Falls Through, MapR Seeks a Buyer to Avoid Shut Down
MapR Technologies, once one of the major distributors of Hadoop software, failed to secure additional outside funding after an extremely poor first quarter and now must take quick action – including possibly selling the company – within two weeks to keep its headquarters from being permanently shut down.
The once high-flying software company warned state officials two weeks ago that it may be forced to lay off all 122 employees at its Santa Clara, California headquarters by June 14 as part of a “permanent closure.” Companies are typically required to give the state 60 days of notice of large-scale layoffs under the WARN Act.
MapR only gave 30 days’ notice because company officials thought that giving the notice when it was officially due would hurt its chances of securing outside money to continue operations, according to a May 13 letter by MapR CEO and chairman John Schroeder.
“The company is actively continuing to pursue financing and other strategic transactions that might allow it to avoid closing its Santa Clara site,” Schroeder wrote in a letter to employees. “In fact the company has received, and the Board of Directors is currently considering two letters of intent submitted by two different entities.”
MapR is still pursuing those transactions, the company told Datanami today.
“While MapR is optimistic about the possibility of a strategic transaction taking place, such things are inherently uncertain,” the company stated. “For that reason, MapR concluded that the most prudent course of action was to provide Santa Clara employees with the notice required under applicable law (WARN) while it continues to pursue a transaction that if successful may permit it to keep the Santa Clara site open and retain many of the employees that might have otherwise been affected.”
MapR has raised $280 million in venture funding since it was founded by Schroeder and M.C. Srivas in 2009. The company’s most recent funding was September 2017, when it raised $56 million in a round led by Lightspeed Venture Partners. Other entities investing in MapR over the years include Redpoint, Mayfield Fund, CapitalG, Silicon Valley Bank, and Future Fund.
The company, which was reportedly valued at over $1 billion at one time and was considering an IPO, has struggled financially in 2019. In his letter to employees, Schroeder explained how the poor financial results impacted his company’s ability to raise enough funding to keep the business going.
“The Company’s objective of securing sufficient financing to continue its operations without significant disruption or employee terminations was significantly hindered by the Company’s extremely poor results in the first quarter of fiscal 2020 (ending April 30, 2019),” the CEO wrote. “Our Q1 results were not only disappointing, but also unexpected. While the reasons for the results are not entirely understood, they were at least in part due to the sudden, last minute, and unexpected postponement of several customers’ timelines to make a purchasing decision.”
The poor first quarter results directly led to the collapse of a deal for outside funding, Schroeder wrote.
“Because of the sudden, and unforeseen, loss of financing presented by the party’s decision, the Company immediately redoubled its efforts to pursue other potential financing options, as well as explore possible merger or acquisitions transactions that it believed could avoid the necessity of ceasing operations and terminating your employment.”
While the rest of the big data world zigged with an open source ethos, MapR zagged with a largely proprietary stack.
The MapR Data Platform was based in part on Apache Hadoop and supported HDFS, but it also brought in other capabilities. For example, in addition to supporting HDFS, its MapR File System (MapR-FS) support for NFS and POSIX applications, and was compatible with Amazon’s S3. The platform also included a built-in NoSQL database (MapR-DB) and included an Apache Kafka-compatible for streaming applications (MapR-Streams).
MapR’s adaptations helped address some of the technical shortcoming of Hadoop and HDFS, which allowed it to position the MapR Data Platform as a premium offering, especially compared to Hortonworks, which was 100% open source. Cloudera, which completed its acquisition of Hortonworks earlier this year, offered a mix of proprietary and open source components.
Cloudera’s stock, which trades on the New York Stock Exchange under the ticker symbol CLDR, today was down about 1.5% and trading around $9.27 per share, which is close to its all-time low.