We Just Raised Serious Money From Microsoft’s M12 To Jolt Enterprise AI. Here’s The Plan.
February 10, 2022
Our closing of a $25 million Series A funding round led by Microsoft’s venture fund, M12, is a transformative event for us at Wallaroo. I want to reflect on our journey until now, and what we have planned for our next chapter.
Machine Learning’s “last mile problem”
Data is everywhere, and enterprises across every sector are turning to machine learning to use that data to become more competitive, agile, and profitable. These enterprises, however, are confronting a fundamental roadblock: how to put their ML models into production so that those models have an impact on the bottom line. If businesses can’t do this easily or at scale, their AI initiatives will fail—which is exactly what happens 85 percent of the time. And those failures carry significant costs in terms of budget, manpower, and disillusionment.
I know from personal experience the challenges that arise in turning computational models into business value. I spent nine years at Merrill Lynch, where I was part of a group that harnessed ML to drive massive revenue growth in Merrill’s high-frequency trading business. I faced those challenges again after I left Merrill to start a company that built analytics applications for large banks.
Operationalizing data applications at scale is hard. Existing approaches—whether containerization, cobbling together various existing technologies, or customizing an analytics workhorse like Apache Spark—are cumbersome, limited in scope, expensive at scale, and prone to failure. I knew there had to be a better way—and that large banks weren’t the only ones with such challenges.
Wallaroo is born
I started Wallaroo in 2017 with the mission to build from the ground up a new way to deploy computational algorithms with breakthrough performance, ease, and scalability. I wanted to build for the future—far beyond what existing tools are capable of: to handle any number of models, the complexity of models, and amount of data, and to support computing in any cloud, on-premises, or at the edge—and without having to rip out customer’s existing tools in the process or drown in costs.
In 2018 we closed a $5 million seed round and today Wallaroo is helping enterprises across many verticals, from real estate to manufacturing to the U.S. military, with our powerful self-service toolkit, blazingly fast distributed computing engine, advanced observability, and actionable insights to help drive results. They are now able to use machine learning to turn their data into value—and doing so more easily, faster, and at lower cost than ever before. (You can read more about Wallaroo here.)
We got here with just me working my network for customer engagements and no marketing. And what’s more, we found that data scientists and ML engineers truly love the experience of using Wallaroo, while CIOs/CFOs love the productivity and low-cost operation it brings. That sends a big signal that not only is there a large market for our product but that once ML teams are able to actually try it they really get our core value.
Friends in the right places
Now that Wallaroo’s been proven to add real value in the field, our new funding gives us the resources to significantly scale the company in several important ways. First, being backed by M12 means more than money—it means greater credibility and access to the right customers. This level of backing is invaluable for accelerating growth at an early-stage company like ours. And I know from firsthand experience the importance of having the right investment partners. Over the past three years, the close collaboration we have had with our earliest backers—Boldstart Ventures, Contour Venture Partners, Eniac Ventures, and Greycroft—has been essential to getting us to where we are today. And because they’ve all re-upped in the Series A, we’ll continue to benefit from their counsel and experience, along with that of new investors Ridgeline Partners, NSS Advisors, and FiftySix.
But our new funding doesn’t just come at the right time in Wallaroo’s trajectory—it comes at an inflection point in the commercial application of ML. Market intelligence firm IDC projects that by 2025, global AI-related spending will jump from $330 billion to $500 billion, with AI software platforms growing at 40 percent CAGR. Yet, according to Gartner, less than half of AI prototypes make it to production, and in the end, only about 10% generate substantial ROI. So the challenge is not only in getting ML into production, but also delivering ROI from the models that do make it into production.
As more companies look to operationalize machine learning for the first time, and others grow their current ML investments to become a fully mature function within the organization, conquering ML’s last-mile will quickly become their top AI priority. And because we designed Wallaroo to solve those specific last-mile challenges across all types of data ecosystems (deploy easily, run with low cost, and understand model performance to continuously improve results), we’ll be able to help these customers deliver on the promise of AI much better than any alternative.
Ramping up to seize the opportunity
Armed with our new funding, we’re going to build out our company in several areas to meet the needs of this rapidly expanding market. First, we’re going to release a free community edition to put Wallaroo in the hands of many more people on machine learning’s front lines. We want data scientists to be absolutely delighted with using Wallaroo for their boldest ideas. Our existing community of data scientists heavily informs our product, from the SDK to the UI and insights. A community edition will provide us with massive real-time user feedback so that we can develop an unsurpassed feature set with incredible simplicity. And because of that, many of the data scientists and ML engineers using our community edition will become our champions within their organizations. We’ll be supporting this effort with a team of product managers, community evangelists, and others.
Second, because machine learning’s last-mile problem exists across every data ecosystem, we’re expanding our integrations accordingly. Our funding allows us to hire the engineers needed to make Wallaroo easy to use regardless of a customer’s workflow or model development environment and to provide many more out-of-the-box connectors to other data and analytics products and services.
Finally, we’re building first-class customer success and sales organizations. This upgrade will enable us to talk to, help, and learn from so many more ML teams than we can with our current configuration of founder-led sales, no marketing, and a bare-bones customer success team. On the marketing front, we’re strengthening Wallaroo’s content generation and thought leadership capabilities so that we can provide users and decision-makers with the knowledge and insight they need for their machine learning initiatives to fulfill their promise.
Let’s talk
It’s an exciting time at Wallaroo, and we welcome you to be a part of it—whether as a member of our team, a business partner, or a customer. As Wallaroo’s founder, I obviously believe that Wallaroo can be a bold, innovative company that is an integral part of the maturing market in machine learning. Our Series A round shows that Wallaroo’s employees, investors, and customers believe it, too. So, I’d love to hear from you. Drop me a note: vid.jain@wallaroo.ai
