If you’ve been following the market for the last week, I’m sure you’ve noticed it’s been a pretty rough week for tech stocks. Two stocks, in particular, were hit unexpectedly hard this past Thursday: LinkedIn Corporation (NASDAQ: LNKD) and Tableau (NASDAQ: DATA) lost close to half their value over the span of 48 hours.
I’m not a financial analyst. I can’t advise you on stocks. But I can tell you that whatever financial analysts are saying is happening with tech stocks is a little off.
For starters, financial analysts tend to bundle anything that’s remotely connected to Cloud, Big Data, and So-Lo-Mo under the label of “Tech Stocks.” LinkedIn is a social platform. Tableau is an enterprise data software player. What’s happening to LinkedIn (and may be happening to Twitter if today’s fall in shares is indicative of a bigger drop to come) is different from what’s happening with Tableau. If you’re a buyer of technology, an entrepreneur or an investor, that’s important.
Analytics growth is far from over
Last week’s timing was particularly unfortunate for Tableau. The day the company took its most significant plunge, Gartner, a leading industry consultancy and analyst firm, released its iconic Magic Quadrant. (If you’re unfamiliar with the report, it is THE document of reference for buyers of Business Intelligence (BI) technology).
Tableau, which had reached exceptional levels in this report last year, was pulled down, closer to arch rivals Qliktech and Microsoft. One can only imagine how the story was spun in competitive circles, looking to point to Tableau’s weaknesses.
But take a closer look at the Gartner Magic Quadrant. Every vendor has moved down, including titans like SAP and IBM. Oracle is not even in the report this year. Microsoft has moved to the right, which, in Gartner’s vernacular, means they’re getting their strategy in order.
Why such a reset? The Business Intelligence and Data Analytics market is becoming intensely competitive, and Gartner is seeing a shift to bi-modal buying motions where both IT and business users are buying analytics solutions. What happens to a market when twice as many people participate? It grows! It has room to the upside, and Gartner had to clean up the top of the Quadrant.
It doesn’t take more than just reviewing Tableau’s earnings to see that the market has tremendous growth potential. The company, which beat its forecast estimates this past quarter, grew by close to 58% year-over-year. That’s more than 10 times the growth rate of the entire IT industry.
Business Intelligence might be one of the healthiest, fastest growing segments of the IT market. There is room for a massive upside. A potential upside could be using analytics tools in front of Hadoop. According to Forrester, 100% of enterprises will be onboarding Hadoop in the next 24 months. This market will be up for grabs soon. Don’t turn away from it too fast.
The Next Tableau?!
If you’re an entrepreneur, this should scream “business opportunity.” Enterprises have not been able to capitalize on the data stored in their databases. Business Intelligence helps solve that problem. According to Forrester, between 60% and 73% of data that enterprises have access to goes unused for business intelligence and analytics.
Every day we run into companies that claim to build a better Tableau or a “Tableau 2.0” (our company makes BI work on Hadoop).
There is a catch though. It takes a lot to build “another Tableau.” The company’s success didn’t happen overnight, and it certainly didn’t happen by raising hundreds of millions of dollars. It took Tableau 10 years to go public. The company raised $15 million in venture capital and is rumored to have spent very little of that money on its way to IPO.
When asked why, Tableau CEO Christian Chabot said that he had seen firsthand what happens to young companies that raise too much money too fast.
So, if you’re an entrepreneur and think that this downturn is your opportunity to build a “better Tableau,” just think hard about what you might be signing up for. It might be safer to simply buy some of their stock.
Dave Mariani is CEO and founder of AtScale.