According to a recent report, annual revenue from the global big data market was expected be $33.5 billion in 2017. Analysts estimate this number to double in the next four years as organizations continue to spend on hardware and related services. Mobile data traffic is estimated to account for 11 exabytes (11 billion gigabytes) a month of data, and cloud computing traffic is estimated to reach 320 exabytes per month in North America alone. Billion Dollar Unicorn Elastic is a leading player in the open source Big Data search sector that recently filed confidentially to go public.

Elastic’s Offerings

Amsterdam-headquartered Elastic was founded in 2012 by Shay Banon, Simon Willnauer, Steven Schuurman, and Uri Boness. The idea behind Elastic came to Shay in early 2000s while he was in his London apartment looking for a job while his wife attended cooking school at Le Cordon Bleu. During his spare time, Shay started building a search engine for his wife’s growing list of recipes. He first created Compass, followed by Elasticsearch. He then open sourced Elasticsearch, created the #elasticsearch channel, and waited for users to appear. Soon enough, he saw how users took to it easily, and adoption began to rise. Inspired by the adoption, he met up with the other co-founders to establish the open source search company Elastic.

Within the next few years, Elasticsearch became one of the most popular scalable, open source, Lucene-based search engine. It runs the search tool on some big sites including Wikipedia, Yelp, and eBay. It has also diversified beyond straight search into analytics, security, and monitoring to deliver an integrated platform called Elastic Stack. Its portfolio includes Elasticsearch, Logstash, Kibana, and Beats that offer features like security, monitoring and alerting, reporting, graph database and machine learning functionality.

Elastic’s Growth

Elastic has seen rapid adoption in the market. Analysts estimate that the service had 100 million downloads in 2017. As of earlier this year, that number had grown to 225 million downloads. At this rate, it is expected to cross a billion downloads by 2020.

Over the last few years, Elastic has been growing inorganically. Last year, it announced the acquisition of Swiftype, another search tool that uses Elasticsearch for indexing and storing its search content. Prior to the acquisition, Swiftype had raised more than $22 million at an undisclosed valuation. The acquisition will help Elastic offer an improved end-to-end user experience.

Earlier last year, Elastic had also announced the acquisition of Opbeat, a SaaS-application performance management vendor. Opbeat is known for its monitoring applications that are written in Javascript. It maps production application issues directly to the relevant developer source code, making it easier to fix the problem without having to hunt in the code to find the problem area. Terms of both acquisitions were not disclosed.

Elastic operates an open source model, where it provides basic services for free and charges a fee for premium services such as the machine learning functionality. It is privately held and does not disclose financials. But unlike other start-ups, Elastic hasn’t blown through a lot of cash. It has raised funding of $104 million so far from investors including Index Ventures, Benchmark, New Enterprise Associates, SV Angel, and Data Collective. Its last round of funding was held in 2014 when it raised $70 million at a valuation of $700 million. The company recently confidentially filed to go public. It is targeting a valuation of $1.5-$3 billion.

Elastic’s direct competitor is Splunk that went public back in 2012. For fiscal 2017, Splunk had reported revenues of $1.3 billion with a net loss of $259 million. It is currently trading at a market capitalization of $15.6 billion.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns.