A “Perfect Storm” Moment For Multibillion-Dollar Open Source Companies

Mike Volpi | Recode | March 25, 2014

At Index Ventures, we have been investing in open source for 12 years, and we’ve never seen such a “perfect storm” moment for open source companies to make the jump from scrappy-and-free to large-and-profitable. With today’s news that Hortonworks, one of our investments, has raised another $100 million in funding, it’s clear that the industry is finally ready to accept and value open source startups as real businesses poised for long-term growth.

Why — after decades of entrepreneurs trying to use free open source technology to build profit-generating companies — is now the breakout moment for billion-dollar open source companies?

Open source, by its very nature, is communal, free or low-cost, hacker-driven, and even anarchist in its approach. So, at first glance, it may seem counterintuitive that a free movement for the “common good” could form the basis for a highly profitable industry. Up until this year, Red Hat was one of the few open source companies with a market capitalization in the billions, but we are already seeing more open source success stories with Hortonworks, Elasticsearch and many others.