Business Management

Hortonworks's Cunitz Plots IPO and Slates Cloudera

Hadoop is hot but which way the market will turn remains intriguingly up for grabs. The open source framework is widely seen as the go-to environment for processing and analysing enormous data sets and that promise is being translated into enormous funding for the best-placed companies in the field. The two companies that are widely regarded as the leading Hadoop implementers are Cloudera (chief strategy officer Mike Olson profiled here) and Hortonworks. And with the former having taken its total raised to over $1bn recently thanks to Intel taking a $740m stake in the company, some thought that it was the turn of Hortonworks to play in this high-stakes poker game. I recently met Hortonworks president Herb Cunitz (profiled here) for a catch-up on the Hadoop world and started by asking about that amazing funding collected by its rival.  

“We could have raised [enormous sums] if we had wanted to,” says Cunitz. “Money comes at a price — and unfortunately it’s not free and the price is not worth it. The price is you get to dilute the business, dilute the shareholders. The question is what they do with it. There’s a counter-argument which is too much money makes you sloppy.”

Hortonworks plans to zig where Cloudera zags, preferring to raise money via a planned IPO (“in 2015 if the market is there”) to build on smaller earlier rounds and a recent $100m raised in what Cunitz calls a “bridge round” to span its journey to an eventual float.          

“We have a long-term goal which is to drive innovation around Apache and the open-source software world, and drive Hadoop in an ecosystem. IDC predicts Hadoop will be a $50bn market by 2018 and to [make the most of] that you do have to bulk up and get more capital, and we have decided the way we want to do that is via the public markets.”

Cunitz is also dubious about suggestions that Cloudera is “worth” over $4bn based on the Intel investment, noting that highly prized companies with hundreds of millions of dollars in revenue like FireEye and Splunk have market capitalisation values not much higher.

He also suggests that the massive investment makes Cloudera “tied to Intel” and suggests relationships with a broader range of partners will trump an axis with a star-name partner.

“The platform the infrastructure bets on is what’s important and if you start to move yourself too close to one partners you alter the balance of power. We’d rather stay on neutral ground.”

The rate of growth in the sector is remarkable even if revenue figures are hard to extract. In the last year Hortonworks attracted 250-plus new enterprise customers, across banks, financial services, telecoms and utilities and other segments. For these organisations, VC chatter is a sideshow.

“They aren’t concerned about [our funding],” he says. “They’re concerned about choosing the right platform, making sure they don’t get locked in and making sure the ecosystem supports it. That’s what matters to CIOs. “

The same CIOs are also wary of any sign that Hadoop power players might turn to proprietary tactics, Cunitz says, referring to recent Cloudera pronouncements.

“They want to stay closer to the open-source software platform and Cloudera is starting to veer away from that. The CTO says ‘yes, we’re proprietary and proud of it, but it’s to lock rivals out’. I don’t know how a lock works both ways.”

Instead, Cunitz says Hortonworks will plough its own furrow in a model analogous to that of Red Hat with Linux: recurring revenues based on customer support, crowdsourcing the world’s developers and building an ecosystem of partners. Where necessary, there will be acquisitions, however, and Hortonworks recently dipped into its savings to buy Hadoop security startup XA Secure.

Both Cloudera and Hadoop are growing but their respective strategies reveal two disparate approaches. Cunitz reminds me that I once called the pair the Tweedledum and Tweedledee of Hadoop. The mutual antagonism is still there but nobody could argue they’re identical and the comparison no longer fits.


Martin Veitch is Editorial Director at IDG Connect


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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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