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Ex-Yahoo! Hadoopers hoover up $50m into trunks

Open source purist Hortonworks sharpens tusks for Hadoop 2.0 battle

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Hadoop Summit Wars take money, and the battle between the several distributors that package up Hadoop stacks just got a whole lot more interesting now that Hortonworks, one of two teams that have been built by ex-employees that came out of former search engine giant Yahoo!, has just landed $50m in its second round of funding.

Rob Bearden, CEO at the Hadoop distie, didn't want to make a big deal about the cash and put it out on a blog post, no doubt not wanting to overshadow a preview of the Hadoop 2.0 stack that Hortonworks will be previewing at the Hadoop Summit in San Jose today.

That is just silly. A $50m second funding round is a big deal, with two new investors, Tenaya Capital and Dragoneer Investment Group, kicking in most of the funds. Existing investors Benchmark Capital, Index Ventures, and Yahoo! all put some dough in this round as well.

Hortonworks has raised $70m in two rounds, the first coming two years ago when Yahoo! spun out its internal Hadoop engineering team to create Hortonworks. (Well, what was left of it after a whole bunch of people left to start Cloudera or, like Doug Cutting, Hadoop's creator, ending up there a year or so later.)

Hortonworks was late to the commercial distie game, and did not get its Data Platform 1.0 release out the door until last June.

Being first mover has its advantages, but the first mover does not always live longest, or live best, in this crazy IT racket. Hortonworks has Yahoo! behind it, which certainly sounds better than it did two years ago when Hortonworks looked like a better company to invest in than Yahoo! itself.

And if Intel didn't suddenly desperately need a software business as much as Hewlett-Packard and Dell do, Hortonworks would arguably be the natural partner for Chipzilla. (Instead, Intel has decided it needs to do its own Hadoop distribution as well as a variant of the Lustre cluster file system because it can hear the boom being lowered by ARM processors on profits in the chip racket.)

Hortonworks also has strong alliances with Microsoft, which is using its HDP distro as the basis for its HDInsight Hadoop-as-a-service on the Windows Azure cloud, and Teradata, which is weaving Hadoop into a hodge-podge of Teradata parallel data warehouses and Aster Data NoSQL/columnar data stores as a Swiss Army knife for data capture and analytics. Teradata is hedging its bets a little and also partners with Cloudera for Hadoop connectors and to get its SQL-H database query for Aster and Teradata databases linked to its version of Hadoop.

Speaking of Cloudera, the other Yahoo! inspired Hadooper and arguably the largest and most successful distie, that company was founded in 2008, giving it a three-year lead on Hortonworks by some measures (and no lead at all based on the fact that Yahoo! continued work on Hadoop after people left to found Cloudera). And Cloudera has raised an astonishing $141m in five rounds of funding, its most recent being a $65m round in December last year.

By the fifth round, you are usually getting ready to go public and venture and equity investors are looking to cash out with a tidy – or downright decadent – profit. Cloudera just made CEO Mike Olson chairman and chief strategy officer and brought in outsider Tom Reilly to be CEO, presumably to either prep Cloudera for an initial public offering or to be sold to the highest bidder that is not Wall Street.

It is hard to say how far along the path Hortonworks is towards an acquisition or going public, but Bearden said that Hortonworks has more than 100 customers, which is not bad considering how young the company is, how small the commercial Hadoop market remains despite all the hype, and how shiny its Hadoop distribution is.

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