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Title: Open Source: Profile of Industry Leaders  
 Date: 10 - 11 - 2005
Quote: A flurry of open-source startups is coming on line. Here are profiles of some of the field's brightest sparks.

In 2003, venture capitalist Ray Lane was sitting in his office at Kleiner, Perkins, Caufield & Byers, talking to entrepreneur-in-residence Murugan Pal about enterprise software. Although Lane had spent much of his career in software and services -- including a stint as No. 2 to Oracle CEO Larry Ellison -- the truth was that he was bored by most of the potential business-software deals he was seeing.

But not open source. It was the one area he believed had limitless potential. Now that infrastructure providers like MySQL and JBoss were starting to emerge, applications outfits wouldn't be far behind, Lane mused. Instead of funding a company to develop applications, he decided what was needed was someone to put it all together for companies interested in using open-source programs.

Out of that discussion emerged SpikeSource. Lane and Pal tapped software veteran Kim Polese to run the company. Polese, in turn, has hired managers with strong open-source credentials, including Don Marti, former editor and chief of Linux Journal magazine. For SpikeSoure, which has raised $12 million in venture capital, these are critical appointments. How the open-source community perceives SpikeSource will be important, and people like Marti have the credibility to make sure the startup is seen as a partner, not a newcomer profiting from the innovation of others.


Businessweek Online
Nearly 50 open-source startups have been funded in the last 18 months, and many are aiming to push the revolution deeper into corporate IT departments via business applications and services. Whether it's their sheer volume of downloads, like Portland-based Compiere, or investor and CEO star power like SpikeSource, the following eight companies are starting to stand out from the crowd.

Still, it's early in the game and challenges remain. No outfit has yet proved it can build a big business beyond supporting Linux. MySQL has come closest with its open-source database and $40 million in annual revenues, doubling year-over-year. These companies also have to walk a fine line between pleasing their investors and the open-source community. That means they have to give away enough valuable software code -- which a community of developers will help them test, debug, and evangelize -- while still holding back something important enough that some companies will want to pay for. And like the early days of the Web, eyeballs are everything. On average only 2% of companies that download open source programs end up paying for support or an enhanced version of the product.

These are potential landmines, no doubt about itbut the spoils are huge: Turning the $16 billion business software industry (excluding maintenance revenue) on its ear. Nothing has excited software venture capitalists this much in a long time. - Sarah Lacy

 

 


 

 

 

 
 
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