Original URL: https://www.theregister.com/2013/11/21/rob_bearden_hortonworks_playbook/

Rob 'Flipper' Bearden plans to FLOAT his Hadoop heffalump

Hortonworks hears an IPO-OOOO

By Gavin Clarke

Posted in On-Prem, 21st November 2013 16:02 GMT

To some, Rob Bearden is a hero. In just a few years, the venture capitalist flipped two open-source startups, turning diamonds in the rough into gems in the corporate M&A crown.

In 2006, he sold app server disrupter JBoss to Red Hat within a few years of joining for an estimated $350m, and just a year after joining SpringSource, he’d sold it to VMware for a whopping $420m.

Bearden is a former Oracle-sales high-flyer turned venture-capital inside man. He's also colourful, renowned for driving to the office in his farm truck with tyres stacked in the back.

This character's actions gave hope to open-sourcers eager to confirm that what they did could actually make money and – to the relief of his VC bosses who’d put money in both outfits – he got them their highly prized “exit.”

Jboss and SpringSource were in the right place at the right time. Selling professional services to open-source, low-cost middleware, they picked the proprietary pockets of IBM and Oracle and forced BEA Systems to sell up.

Big data is Bearden’s new calling, and for two years he’s been pushing Hadoop – the implementation of Google’s MapReduce data-cruncher – at Hortonworks.

Based on Bearden’s track record, we’re due a flipping – only there’s been no sale. In fact he laughs off the suggestion and the rumour he’s been hawking Hortonworks. “It’s comical, because you don’t raise $50m [venture funding in June] if you are selling the company,” Bearden told The Reg during a recent interview.

This time an IPO is in the air, sometime after 2014.

“We built this company from day one around the discipline and structure of taking it public – how we build and release technology, finance, how we hire people,” he says.

And in another first, Bearden has become chief executive - getting hands on with the day-to-day business rather than just creating the framework as COO.

Yahoo!’s Hadoop software dev vice president Eric Baldeschwieler was the first CEO but got shunted aside after six months so COO Bearden could take over.

Why has Bearden updated his MO?

The Hadoop market is supposed to he huge: it's said Hadoop as a service will be worth $13.85bn by 2017 while the market for Hadoop/NoSQL software and services will hit $3.5bn in five years, up from $540m today.

IBM’s software supremo, senior vice president Steve Mills, said: “Hadoop is there for the taking.”

This sounds exactly like the push-over of early JBoss, when you had to turn customers away. The company's former strategy chief, Bob Bickel, summed up that spirit in a recent blog that also explains how Bearden “professionalised” a fast-growing startup that needed to get its act together if it wasn’t to be overwhelmed by the insatiable demand for its services.

"I didn't realise how transformational it [Hadoop] could be for the overall data architecture - I didn’t anticipate that... it's required some tweaks in how you engage with customers and ensure you help knowledge transfer." – Rob Bearden

“JBoss was growing fast and significant companies wanted to do business with us. We needed to put in place a way to keep up with the demand and take advantage of the opportunity in front of us,” Bickel wrote.

The size of the big-data market is the reason Bearden’s VC paymasters at Benchmark Capital took on Hadoop – Bearden is a Benchmark Capital entrepreneur in residence.

The VC appeared to have smelled big data opportunity and sprung Yahoo!’s core Hadoop engineering team free from the search company in a $23m spin out in 2011.

Benchmark has a lucrative history in open source. It invested in MySQL, XenSource and Zimbra (besides JBoss and SpringSource) that it sold respectively to Sun Microsystems, Citrix and VMware for $1bn, $500m and an undisclosed sum.

Bearden told The Reg the Hortonworks deal took a year to get right. But so determined was Benchmark it spent 12 months honing a deal that would still give Yahoo! the access to a support team and the service level agreements needed to run their own Hadoop infrastructure. Yahoo! uses Hadoop on its web properties to crunch data.

“It took a year to fund the right balance of a deal structure,” Bearden said, “that allowed the team to come out and be independent of Yahoo and yet have a relationship with Yahoo that made us deep engineering partners.”

An "entrepreneur in residence", by the way, is the person VCs send to startups to provide structure and, as they say in VC circles, help the business to "scale".

The means making the right hires, knocking heads together ‘till they spark, putting in place processes for sales and marketing that mean sales and marketing operate consistently and reliably, not on an ad hoc and reactive basis.

JBoss and SpringSource got a foot in the door because developers had already downloaded them, making it easier to sell support contracts.

This time, despite the hype, big data is a harder sell than application servers and tools. Your devs can’t simply download a big data framework – you need a data strategy and to know what hardware you’ll use.

Bearden has had to re-calibrate – hiring field sales and service engineers to sell and support Hortonworks’ Enterprise Data Platform over longer sales cycles.

"What we know going into building the company was Hadoop could be very transformational for the business value and the ecosystem it can get for the enterprise, but I didn't realise how transformational it it could be for the overall data architecture - I didn’t anticipate that," he said.

"It has required some tweaks in how you engage with customers and ensure you help knowledge transfer... it’s more of an enterprise skills set in engaging with customer, so we had to hire people in the field and sales side to cater for the longer sales and support cycle.

This 'ain't JBoss or SpringSource, people

“The interesting thing is in the JBoss and SpringSource models, the technology was able to be consumed in a way that enabled a high velocity of adoption."

He brought in Herb Cunitz as president in October 2012 - more than a year after the Hortonworks' spin out. Cunitz is Bearden’s former colleague from SpringSource, where he was vice president of worldwide sales became vice president of global field operations in VMware’s cloud application development platform division after VMware bought SpringSource in 2009.

Hortonworks had just 50 employees before Cunitz, all in engineering. Today it’s on 250 with Cunitz expanding marketing and consulting in the US and Europe.

“He [Cunitz] did really understand how to 'operationalize' their [SpringSource and VMware cloud] business to go to extreme scale with reliability and predictability and those are the skill sets we are bringing in for every line of business at Hortonworks,” Bearden said.

Increasingly, the upper echelons of Hortonworks have been filled out by Team Bearden. Hortonworks' vice president of strategy is Shaun Connolly, who dates from JBoss and worked for SpringSource and then VMware.

It’s a policy that has landed Hortonworks in hot water.

Verty giant VMware has hit Hortonworks, Cunitz and several other Hortonworkers previously in its employ with a legal action alleging "unfair practices".

The ex-VMers Hortonworks has added fit precisely into the profile deemed necessary to help sell and support Hortonworks’ EDP - its Apache-compatible version of the Hadoop stack. They are: enterprise accounts manager Taylor Ivey; vice president of global technical services Jamie Engesser; and Melissa Warner, whose Hortonworks’ job title is not clear.

Cunitz completes the picture: an exec experienced in taking small teams and scaling them into functioning sales operations as he did at SpringSource.

Bearden would not comment on details of the VMware litigation when we spoke, but said simply: “The temperature level on the thing is way down.”

There's room for everyone in big data

Bearden claims Hortonworks is growing: with more than 120 customers and claims to be adding between 30 and 40 per quarter. He said Hortonworks is “well financed”, with just over $70m from two rounds of funding by Benchmark, Index Ventures, Tenaya Capital and Dragoner Investment Group. Cunitz said Hortonworks is cash-flow positive, will make money in 2014 and predicts profit in five to seven quarters – so between a year and 18 months.

Far from flipping Hortonworks, Bearden reckons he’s sticking around because of that opportunity Mills and the analysts are crowing about.

The opportunity is, in one word, “data” – data that’s not managed. Data not managed is data that’s not monetised, according to Bearden.

“This is bigger than both of those things put together [JBoss and SpringSource]," he said of his past loves.

“The reason is because it’s data, because it’s new data, data that’s never been managed before and data that was not economically viable to mange in existing platforms… now you can get Hadoop on commodity servers and storage and you can go from $100,000 per terabyte to $1,000 a terabyte.”

Hortonworks isn’t trying to undermine or take anybody out - either intentional or unintentionally.

Like a card-carrying open-source CEO, Bearden says this is a market big enough to accommodate everybody – even the relational data boys and Hadoop rivals.

"People think Hadoop is going to be big, [that] it’s a zero sum game. If Hadoop wins, who loses? In our view, it’s not a zero sum game. We want to extend the data set that those enterprise data warehouse platforms manage have – for Teradata, for example." – Rob Bearden.

Hortonworks has a strategic partnership with Microsoft, making SQL Server Hadoop-friendly, and has worked with Informatica on an open-source tool to query Hadoop. Its rival, Cloudera, meanwhile, has partnered with Oracle and IBM.

“People think Hadoop is going to be big, [that] it’s a zero sum game. If Hadoop wins, who loses? In our view, it’s not a zero sum game,” Bearden claimed.

“We want to extend the data set that those enterprise data warehouse platforms manage have, for Teradata, for example. We want to let that platform do what it does exceptionally well but let it manage a much bigger data set, a 10 to 20 times bigger data set and have Hadoop as an extension of its architecture.”

He added: “We are not trying to go in and fight about a data set that sits on IBM, Oracle, Sybase, Ingres or Teradata."

Bearden's target is to build an "extraordinary company that really changes the landscape for ever."

“That is the kind of company you can take public,” he said.

Bearden has a long way to go, and grow, before Hortonworks becomes extraordinary or changes the landscape. He'll also have a way to go to satisfy Benchmark. Hortonworks had just three per cent of the Hadoop/NoSQL market in 2012, according to Wikibon. IBM and Cloudera - the latter home to Hadoop's creator Doug Cutting - were number numbers one and two when it came to Hadoop. Cloudera does have a head start on Hadoop - founded three years before in 2008.

Going public is another new page in the Bearden playbook. Whether it’s planning or necessity that has put this option on the table is unclear.

Hortonworks got off to a shaky start, while, it seems, companies of the stature of Microsoft, Oracle and IBM - top tier tech names with a history of M&A - look like they prefer extracting what they can from the Hadoop boys through partnership rather than taking ownership.

Either way, Bearden reckons there’s no date for IPO: “We have an operating plan we have been constantly meeting or exceeding. We had a great year this year, and have a comfortable plan for this year and next,” he said.

“It’s reasonable to assume it will be sooner rather than later, but not next year.”

Seems Bearden will be sticking around for longer than he once would have. ®