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Reverse ETL startup Hightouch said today it raised $40 million in a Series B round of funding to advance the vendor's technology and go-to-market efforts.
Hightouch's core technology is a data approach known as reverse ETL (extract, transform and load). With ETL, data is extracted from a source system and then transformed and loaded into a database or data warehouse.
What Hightouch's technology does is the reverse, extracting data from data warehouses and then helping to load it into operational systems, such as a CRM platform from Salesforce, or a marketing automation platform from Marketo.
Hightouch is one of several reverse ETL vendors now in the market, with other startups including Census and Omnata.
Reverse ETL is at the foundation of Hightouch's platform, which also has a service called Audiences designed to get data from a data warehouse specifically to build a customer data platform model.
In this Q&A, Kashish Gupta, co-founder of Hightouch, outlines the need for reverse ETL and where the vendor is headed.
How did you get the idea for Hightouch and its reverse ETL technology?
Kashish Gupta: Our business has pivoted a few times. I'll tell you the story was basically we had a product, which was a customer data dashboard, and it would show you everything your company had on the customer. It was meant for go-to market teams to really just have one view of all the customer data. Upon building this product and showing it to customers, they were like, "This is great, but we don't need you to centralize our data; we've already done that."
So we made a decision to put Snowflake, BigQuery and Redshift as the only available sources and then give people this dashboard. Then our prospects told us the dashboard is cool, but they couldn't take action on the data in this dashboard. In order to take action they had to be in their SaaS tools like Salesforce or Zendesk, so that the business user can then use that data and build workflows. So that's when we said: "You're right. It doesn't make sense to give you this dashboard, we should actually get it into your SaaS tool, so that you can make workflows out of it." And that's pretty much how Hightouch was born.
What is the real benefit of reverse ETL? Surely organizations can do the same thing with other tools?
Gupta: You could argue that what we're doing can be done in Segment, Marketo or Informatica, and like the list goes on with hundreds of tools that could potentially do what reverse ETL does.
But reverse ETL ultimately benefits from correctness. So even if you could do point-to-point transfers, for example from Salesforce or Marketo directly, you'll still get better benefits from reverse ETL. So with reverse ETL for example, data moves from Salesforce to Snowflake, data can then be centralized in Snowflake, making sure it's correct and then getting the data into Marketo.
Kashish Guptaco-founder, Hightouch
If you're disciplined, you believe that in the long term, you should always centralize everything in the data warehouse and then use reverse ETL to get data to your tools. People are excited about reverse ETL, because they basically maintain Snowflake, and then all of their SaaS tools will then be accurate and reflect the data that is available in Snowflake.
What are some of the market dynamics that are driving demand for reverse ETL?
Gupta: With third parties not being able to collect data on devices from IDFA [identifier for advertisers] on Apple devices, there is a need for organizations to collect more user data that is stored by the first-party organization, rather than having Google or Facebook track the users.
So because of that need to collect first-party data, organizations are going to store that information in a data warehouse. Getting the data out and then into other tools, including Google and Facebook is where Hightouch can help. We're building a purpose-built solution that does reverse ETL and connects that database to the SaaS layer.
Editor's note: This interview has been edited for clarity and conciseness.