Countercyclical COSS Analysis -- the "Red Zone"
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Legend: The RED ZONE shows companies whose initial development took place during one of the downturns identified below.
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Major bear markets: (see methodology note -- capture period is bear market plus 12 months after)
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Sept 2007- 2010Financial Crisis
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2000-2003Internet Crash and 9/11
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1990-1992Global political crises
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CompanyOSS project (if different from company name)Initial release of OSSStatusBusiness model
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AcquiaDrupalMay 2000SaaS and Support
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AlfrescoJuly 20052018 PE exitOpen core
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AutomatticWordpressMay 2003SaaS and Support
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CanonicalLinux1991Open core
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ChefJanuary 2009Open core, recently pure support
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CloudbeesJenkins2004Open core
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ClouderaHadoopDecember 20112017 IPO
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ConfluentKafkaJanuary 2011Open core
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DatastaxCassandraJuly 2008Open core
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DatabricksSparkMay 2014Open core
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DockerMarch 2013Open core
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ElasticElasticSearchFebruary 20102018 IPOOpen core
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EnterpriseDBPostgreSQLJuly 1996Open core
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FastlyVarnish2006SaaS
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ForgeRockOpenSSONovember 2008Open core
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GitHubGitApril 20052018 sale to MicrosoftOpen core / SaaS
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GitLabGit2011Open core
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HeptioKuberenetes20142018 sale to VMwareServices
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HashicorpVagrantMarch 2010Open core
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HortonworksHadoopDecember 2011
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InnoDBMySQL20012005 sale to OracleDual licensing
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JetBrainsIntelliJ2001Open core
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JFrogArtifactorySeptember 2008Open core
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Liferay2001-2004Open core
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MagentoMarch 20082011 sale to eBay, second sale to Adobe 2018Open core
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MirantisOpenStack, Kubernetes2012Support
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MongoDBFebruary 20092017 IPO Dual licensing, AGPL
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Mozilla CorpFirefoxSeptember 2002Search revenue
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MulesoftMuleESB20032018 sale to SalesforceOpen core / SaaS
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MySQLMay 19952008 sale to Sun MicrosystemsDual licensing
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Pentaho20042015 sale to HitachiOpen core
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NGINXOctober 20042019 sale to F5Open core
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NPMJanuary 2010Open core
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Puppet2005Open core
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Red HatLinux19912018 sale to IBMSupport subscriptions
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RedisMay 2009Open core
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SleepycatBerkeley DB19942006 sale to OracleDual licenisng
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SourcefireSnort19982013 sale to CiscoDual licenisng
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Sugar CRM2004Open core
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SUSELinux1991Support subscriptions
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Talend20062016 IPOOpen core
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WP EngineWordPressMay 2003SaaS
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ZimbraJuly 20052007 sale to Yahoo 2007, resold 2010Open core
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Sources for release dates, other than Wikipedia:
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https://www.mulesoft.com/mule-reaches-500000-downloads-milestone
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http://www.orafaq.com/wiki/InnoDB
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https://www.ithistory.org/db/companies/pentaho
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https://www.jfrog.com/confluence/display/RTF3X/1.3.0-beta-3
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Here are some companies I excluded and why:
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SunJava2007Sale 2010 to OracleAlthough much of the value of Sun's acqusition was attributable to Java, and therefore it is arguable that Sun was an open source business model, Java was originally a proprietary product whose open source release took place long after its initial development, so the timing of investment in development resoruces does not fit with this model.
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PivotalCloud Foundry2012IPO 2018Product and corporate history too complex to map to this analysis.
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MapRHadoop and Others2005Product history too complex to map to this analysis.
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Methodology: I selected the approximately 50 notable COSS companies. These included notable historical exits and companies with a current notable business. I did not include companies like Facebook or Google which contribute greatly to open source but whose primary business is not open source development. From the initial selection, I excluded cryptocurrencies because their products are not primarily based on providing software, companies that sold only proprietary versions of open source software written by others, and a few others, noted below, whose business was too complex to map to the analysis. I populated the date of first release for the software project (which is not necessarily the start of the company), mostly with information on Wikipedia, but other sources are noted below. I then identified the major down markets of the last 30 years. My working assumption is that development would have started in the 12 months prior to first release. I included in the RED ZONE companies who released in, or within 1 year after, a down market. The objective of the exercise is to determine whether development resources applied to early stage open source projects in a down market could result in significant returns. I think the results speak for themselves -- most of the biggest open source companies were built on software developed during a downturn -- even if you eliminate the Linux distros. To be objective, developers who are RIFed or leave companies often start open source projects to prepare for the next stage in their careers, and that may explain why so many projects started during downturns are successful. But that does not negate the premise -- that open source is a good way to leverage resources during a downturn, when resources and capital are more scarce. The exceptions are also notable -- the wave of acquisitions by Oracle in the 1990s and 2000s, Kubernetes, Docker, and several Apache projects.
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Author: Heather Meeker
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All rights reserved - Copyright © 2019 - OSS Capital, L.P.
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