87: Michael Katz: The Evolution of packaged CDPs, democratizing ML and the myths of composable and zero data copy

What’s folks, today I’m pumped to be joined by Michael Katz, CEO and co-founder at mParticle, the leading independent customer data platform.

Summary: In the contentious debate over Packaged and Composable CDPs, Michael delivers a clear-eyed perspective that cuts through the hype. Rejecting the idea that Pacakged CDPs are becoming obsolete, he emphasizes the continued importance of data quality, integrity, and privacy, and he warns against becoming entangled in marketing illusions. He also highlights the need for adaptability, dismissing some of the more pervasive myths in the martech landscape, such as the magic of zero copy data. With strategic acquisitions, mParticle is focusing on intelligence and automation, aiming to be more than just “simple pipes” in data management. Michael’s insights provide a grounded roadmap, focusing on genuine value creation and thoughtful navigation of the complex industry that is Customer Data Platforms.

About Michael

• Michael got his start as an analyst at Accenture and later focused on customer acquisition and marketing strategy for a mobile content company
• He entered the entrepreneurial world founding interclick in 2005, a data-valuation platform for advertisers
• He ran the company as President and took the company public in 2009 and sold to Yahoo in 2011 for $270M 
• He’s been on the Board of Directors for several companies including Adaptly and BrightLine
• He’s a volunteer at Southampton Animal Shelter
• He’s also a Mentor at Techstars
• After a year as VP of Optimization and Analytics at Yahoo after his company’s acquisition, Michael took on his second venture, co-founding mParticle in 2013
• mParticle is a global, remote-first company that provides a real-time AI customer data platform.  They help get the highest quality customer data to any system that marketers or product managers use – ultimately improving customer experiences.  They work with big players and small, fueling the customer success of brands like Paypal, Seatgeek, Venmo, Headspace, Lyft, McDonalds, and Airbnb.

Unpacking the 8 Components of Customer Data Platforms

When asked about Arpit Choudhury’s enumeration of the eight essential components of Customer Data Platforms (CDPs), Michael’s response was swift and assertive. With an appreciative shoutout to Arpit for articulating the complex aspects of CDPs, he aligned himself with the eight facets laid out in the question.

These eight components, according to Michael, indeed compose an end-to-end solution for the first generation of CDPs.  They include:

1. CDI, customer data infra, collect 1st party event data from customers from website and apps
2. ETL, data ingestion, extract data from other tools and load it into DWH
3. Data Storage/warehousing, store a copy of data collected
4. Identity resolution, a solution for tying together a customer’s various interactions with you across multiple platforms and devices
5. Audience segmentation, drag and drop UI
6. Reverse ETL, extract/activate from DWH to other tools
7. Data quality, validity, accuracy, consistency, freshness, completeness… 
8. Data governance and privacy compliance, user consent, HIPAA compliance

Emphasizing the integrated nature of these components, Michael asserts that the value of the whole system is greater than the sum of the individual parts. He proudly reflects on mParticle’s reputation as a complete CDP and emphasizes that many existing CDPs lack strong stories around data quality and governance.

The conversation with Michael reveals his confidence in the synergy that arises when these parts function together. He cautions against skipping any of these steps, underscoring that a weak foundation will undermine the entire system. Speed in data processing should not compromise quality and privacy protection, and mParticle’s holistic approach ensures this balance is maintained.

Takeaway: Michael’s insights into the eight essential components of CDPs not only align with industry experts but also highlight the importance of a unified approach. By valuing integration, quality, and consumer privacy, mParticle positions itself as a leading player in the CDP landscape. The wisdom shared by Michael emphasizes that genuine value is derived not merely from the individual elements but from the careful orchestration of all parts into a coherent and resilient system.

Debunking the Myths Around Reverse ETL and Composable CDPs

Reverse ETL and composable CDP proponents assert that the traditional CDP is becoming obsolete and that the future lies in Composable CDPs that leverage modern data warehouses and processes like Reverse ETL. Claiming that existing CDP vendors will have to adapt to this shift or risk becoming irrelevant.

Michael’s written extensively about this debate over the years. He argued that product marketing around the composable CDP is just modern day sleight of hand tricks…designed to dupe the buyer.

To be fair, mParticle has adapted to the rise of the modern data stack by offering services like data warehouse sync and value-based pricing. 

Michael highlighted the rise of the Cloud Data Warehouse as an essential system within organizations, but he was quick to emphasize that the real challenges lie in maintaining data quality, integrity, and privacy. As he elaborated, legacy CDP vendors like mParticle deliver value not in the storage of data, but in the movement and activation of it. Michael stressed the importance of going beyond mere data collection to understanding the context and the “why” behind customer behavior.

According to Michael, the true value in the CDP space has shifted towards enhancing context, improving understanding, and introducing an insights layer. For mParticle, this has translated into a focus on finding truth and meaning in their data, creating an infinitely optimizing loop. He vehemently argued against reverse ETL, characterizing it as “garbage in, garbage out,” and took aim at what he described as “sleight of hand” tricks in product marketing designed to distract from the real issues.

Michael challenged several narratives in the debate, dismissing the importance of zero data copy, the vulnerability of CDPs to security threats, and the notion of faster deployment times leading to sustained value. He warned against getting enticed by aggressive product marketing, stressing that what might appear easy to implement could be hard to maintain.

Takeaway: The transformation of CDPs isn’t just about new technologies or marketing tactics but lies in understanding the true needs of customers. With a focus on integrity, context, and sustained value, Michael exposes the fallacies in current debates, emphasizing that real success comes from creating genuine value, not just noise.

The Realities of Replacing Traditional CDPs with Reverse ETL Tools

When asked about the growing trend where some reverse ETL customers have found ways to replace their traditional Customer Data Platforms (CDP) with reverse ETL tools, Michael acknowledged that this represents only a very narrow subsegment of the market. He expressed a concern that the fragmented “Do It Yourself” approach isn’t alw...