Once upon a time CIOs bought into open source solely to achieve dramatic cost savings. Today, Red Hat gave them another reason: superior performance.
Today Red Hat announced that it has broken server performance records with its Red Hat Enterprise Linux 5.2 on an IBM System x 3950 M2 running Intel X7460 Xeon processors. Apparently you can have your cake and eat it, too, at least in the open-source world:
In its latest 1M tpmC benchmark, Red Hat Enterprise Linux 5.2 outperformed all other operating systems on price performance in the 1M+ range. The Red Hat-based benchmark system delivered 1,200,632 transactions per minute and improved the price performance to $1.99, delivering a 20 percent savings in comparison to competitors. The single system proves its capability to handle substantial transactional workloads with its ability to process over 20,000 transactions per second.
Again, it would be impressive enough to have delivered such market-beating performance, but to provide superior performance at a 20 percent discount...? That's truly noteworthy.
It's also not fair. All those proprietary Unix and Windows vendors have spent good money "creating" and hoarding their IP, only to have some open-source upstart beat them in performance and cost. At some point customers are going to wake up and wonder why they're dumping unnecessary cash into proprietary products that cost too much and deliver too little.
Proprietary software may well be the ultimate, anti-Faustian bargain: sell one's soul (IT independence) and get rubbish in return. With open source and Red Hat, CIOs spend less but get more, and they don't have to sign a deal with Mephistopheles to get it. In troubled financial times, CIOs should have to justify installing anything other than Linux.
(Credit:
The 451 Group)
Venture funding for open-source companies rose to $115 million in the second quarter, a 14 percent increase over the same period a year ago, according to The 451 Group. And funding for the first half of the year is up 62 percent over the first half of 2007.
That's all the good news.
The bad news is that seed and series A funding remains anemic and may continue to remain so while venture-backed companies struggle generally to find a public exit, i.e. an initial public offering. In the second quarter, there were exactly zero IPOs for venture-backed companies--whether they were open source or otherwise.
While the open-source freeze may perhaps not be a cause for as deep concern as The 451 Group suggests--VCs need to see returns from their existing open-source investments before they start to pile on more--it does mean that there have been better times to try to get an open-source venture funded.
With that said, investors who have seen strong returns from open source (e.g., Peter Fenton at Benchmark and David Skok at Matrix) are actively investing and vetting new open-source projects. For those with the right credentials or track record, these are the investors to approach. But given their experience in investing in open source, they're also the least likely to be swayed by mere downloads.
Dave already covered SpringSource's impressive Series B investment from Benchmark and new investor Accel, but the interesting factoid behind the investment is that the two firms co-invested at all, given the commonality between the two: Peter Fenton.
Two years ago, Fenton bolted from Accel to Benchmark, a move that jarred the cozy VC world. Partners rarely lateral to another move, and not without considerable consternation because it shakes up board seat arrangements and creates complications as to whose Aston Martin gets which parking spot.
It's therefore good to see that there's no enduring bad blood between Fenton and Accel. The VC world is too small to permit prolonged handwringing over parking spaces. (Peter, you can park your Aston Martin at my house anytime. Just leave the keys under the doormat.)
Congratulations to Rod and the SpringSource team for the investment. Two great firms and what I hear was a sweet valuation.
For those proprietary database vendors who have been hoping and praying that their myths about MySQL would persist ("For low-end applications, "Not high performance," etc.) , Kickfire just announced a MySQL-based database appliance that should wipe the smirks off Oracle and IBM.
If you get nothing else from this post, remember this: Big performance. Little price.
Kickfire, Inc. today announced the first MySQL database appliance that brings the high-performance capabilities of large commercial database systems to the MySQL market. The company...has built its appliance by developing an ultra-modern database kernel and a revolutionary SQL chip that packs the power of 10s of high-end CPUs. The result is a small form-factor MySQL appliance that delivers the high performance of large systems but with dramatically lower hardware, power, and cooling costs. Separately today, Kickfire and Sun Microsystems announced record-breaking TPC-H price/performance benchmark results that demonstrate the performance efficiency and price/performance leadership of Kickfire's design.
How high of performance?
... Read moreIf there was an open question as to which venture capital firm is the king of open source, Benchmark just settled that question with its most recent investment in Pentaho, a leading open-source Business Intelligence company. Not surprisingly, Peter Fenton is behind the deal.
Pentaho competes with other open-source BI companies like JasperSoft and Actuate (and I suppose Greenplum, too, in a way), but the more interesting competition is the big proprietary vendors (Business Objects, Cognos, etc.) and the net new opportunities bringing BI to the masses.
It will be intriguing to see how this investment pans out for Benchmark. The firm has so many eggs in the open-source basket that it will either (continue to) win big (Red Hat, Zimbra, MySQL, etc.), or lose big. My bet is on the former outcome.
If you're looking for a seasoned, open-source savvy executive team, you might look to MySQL or another leading open-source company. But if you want that team to come with investment dollars attached, you'd do far better to look to Benchmark Capital. In addition to Kevin Harvey (MySQL, Red Hat, etc.) and Peter Fenton (JBoss, Hyperic, SpringSource, etc.), Benchmark just added four new EIRs (Entrepreneurs in Residence), two of which will focus on open-source investment opportunities.
Benchmarks's Bob Kagle notes the importance of EIRs:
By bringing seasoned executives into the firm to found new businesses or work with our portfolio companies, everyone benefits. They understand the challenges of running a start-up, and demonstrate by example what it takes to build, manage and lead fast-growth technology companies.
This is particularly true in open source, given the relative dearth of understanding of how to build a successful open-source business. Anyone who needs a hand in doing so will almost certainly want to tap into one of Benchmark's new EIRs: Rob Bearden.
... Read moreThere are a range of venture capitalists that I like and would work with in a venture. At Alfresco I've been fortunate to work with Robin Vasan (Mayfield) and Kevin Comolli (Accel). I'd happily work with either again. They are entrepreneurial and empathetic. They're also helpful in cracking into a wide range of companies.
One firm with whom I've never formally worked but would engage in a heartbeat is Benchmark Capital. Matt Aslett of The 451 Group gets it exactly right in calling out Benchmark as the secret sauce behind a majority of the industry's successful open-source ventures...and exits:
... Read moreLast week, Benchmark announced a $3.5 million investment in Engine Yard, which provides commercial support for Ruby on Rails applications. Engine Yard is doing $3 million in business and growing. It's also profitable. It didn't need the investment.
The investment, however, is very telling. When one of the top venture capital firms on the planet puts hard dollars behind a support model, it's significant. It becomes doubly so when the firm (or its investors) in question previously invested in JBoss, MySQL, SpringSource (Interface21), and other support-based open-source companies.
It may mean that Benchmark knows something that the rest of the industry seems determined to ignore: services-based businesses may well be the future of the software industry.
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