Tom Reilly – who’s speaking at Structure Data – opened up Cloudera’s analyst conference with a simple positioning statement “We are a Software company” to distinguish Cloudera from competitors who are using open source business models to support their Hadoop distributions. Eight months in as Cloudera’s CEO, Reilly is on the right path. There are only a few situations where an open source company makes much money for its investors and Cloudera, having raised $140 million of VC funding, needs to have a big outcome. As an open source company Cloudera’s success would have been modest at best. As a software company that includes an open source business its opportunity is huge – it could be Oracle-like in size, importance, and longevity.
Cloudera scored a new $160 million of new funding led by T. Rowe Price, and including Google Ventures and Michael Dell’s investment fund. That brings its total funding to $300 million. Clearly this goes beyond what an open source company would need.
So why does Cloudera need all of this money? Most likely the company is going to go on a shopping spree buying up critical software projects that will add more essential functionality to Hadoop. You see many (10 to 20) boxes with names that range from cute to weird acronyms (Sqoop, Flume, Impala, Hive…) that add valuable functionality to Hadoop.
In the early days of the Big Data market it’s OK to have this sort of “gold rush” grabbing of market opportunities. Cloudera’s management must see this as an opportunity to consolidate many adjacent functions onto a single platform. Providing a feature-rich Big Data platform from a single vendor will go a long way toward making this market enterprise-ready. If Cloudera doesn’t consolidate these opportunities someone else will – the market is unstable otherwise. Most open-source companies won’t take this path.
So is Cloudera an open source company that also has some proprietary software or is it a software company that includes an open source division? Clearly the latter, and likely to be the consolidator in the Big Data business. Well-endowed firms like Pivotal, Splunk, and IBM are bound to counter, as will venture-funded startups like MapR and Hortonworks. Will they all go on a buying spree, upping the ante?
If your Big Data software company consists of two guys and a dog, it might be the right time to hire a couple more dogs, push some new features out the door and see who comes knocking at your door. Doing that will put you in the right play at the right time