The books Built to Last: Successful Habits of Visionary Companies
, and most recently, Good to Great: Why Some Companies Make the Leap…And Others Don’t
by Jim Collins, have motivated entrepreneurs to build enduring companies. Collins cites companies such as General Electric, American Express and Walmart as examples of great companies, and he provides insights as to why they are great along with strategies and actions that make them great companies. Being “built to last” is an idea that is arguably most relevant in the technology world, where customers invest in products that are strategic to their businesses and where there are relatively high switching costs.
Technology buyers rely on their vendors to take them on a technology ride of continuous innovation based on their present and future needs. Technology buyers are exposed to the risk where vendors fail, or where mergers and acquisitions impact that technology ride. The foundation for any company that wants to be “built to last” is to have a business model that actually supports that objective.
Enduring technology companies including Microsoft, Oracle and Cisco have grown from modest beginnings into public companies that have provided their customers with products for decades. These mammoth vendors all have their warts; they’ve experienced both good times and bad, and sometimes have not exactly been loved by their customers. That being said, companies running their businesses on Windows or on Oracle would have been disrupted if those technologies had ceased to evolve. Companies connected by Cisco would have been negatively impacted if Cisco hadn’t soldiered on, continuing to innovate providing 10gE networks and expanding beyond their core switching business by building fiber channel storage area networks.
, we’re in our fifth year of operations, and still in the early stages of our journey towards joining the list of companies that are built to last. I personally admire what executives Godfrey Sullivan (Splunk) and Frank Slootman (ServiceNow) have recently been able to accomplish. Jerry Kennelly (Riverbed), who made the trek from founder to IPO launcher and vowed never to retire as CEO, is also inspirational. Tableau and Marketo also executed successful IPOs on their journey toward developing companies that are built to last.
The giants of the technology industry and these emerging, enduring companies all have something in common in regards to their business models. They all have set audacious goals to:
- Build extraordinary technologies that have a strong value proposition
- Have highly differentiated products that compete based on merit
- Derive the majority of revenue from licenses or product sales
MapR is succeeding in executing this sustainable business model. While we can assist our customers with education and professional services, we actually derive over 90% of our revenues from software licensing. We deliver a highly differentiated product that’s based on the combination of our participation in the Hadoop open source community and our innovative, patented technology. We’ve developed revolutionary innovations such as our POSIX data platform and NOSQL database, which are both based on industry standards and are without artificial vendor lock-in.
MapR has the largest deployment by a factor of 10 in the financial services industry, and we are the chosen platform for the world’s leading retailer. We have also run the table in the telco segment, and we power Web 2.0 companies as well. MapR has over 500 paying customers who have gone beyond training classes/professional services and have purchased licenses. 99% of MapR customers renew their subscriptions, while 88% purchase additional capacity within the first 12 months of initial purchase. Several dozen customers have converted from our competitors to MapR. Quite a few are documented in the press.
The conversions are from companies that are running Hadoop applications in production and have experienced problems including data loss, outages, bottlenecks ingesting data into Hadoop, and spiraling hardware costs due to other distributions’ poor performance.They move to MapR and we resolve those problems.
Contrast our situation with the companies (including our competitors) who state that they are the Red Hat for “name your open source project.” Do they realize that Red Hat is the only public company, and the only company that may be “built to last” using that model? Some “Red Hat for” companies have had successful exits through acquisition, including MySQL, JBoss and XenSource. Other than Red Hat, none of these companies has ever delivered significant revenue exceeding $100M annually, and revenue is required to be built to last. Revenue is also needed for funding the engineering of those innovations that are required to take customers on a technology ride.
In my view, MapR is more like Splunk and less like Red Hat. Hortonworks continues to language “Red Hat for Hadoop” into the marketplace. Cloudera has recently changed their tune from “Red Hat for Hadoop” to saying they are a products company that combines open source and differentiated product. I agree with the combination, and that’s what MapR has been doing since our founding. My belief is that companies that are being “built to last” message their true position in the market. So we’ll see if Cloudera can build product differentiation that brings value to the market to fulfill their aspirations to become a product company.
My comments regarding the Red Hat model should not be interpreted as a lack of support for open source software. MapR is making large investments in Apache open source projects, including the innovative Apache Drill. Drill made a significant code drop just this quarter, and Drill is the only Hadoop-related SQL initiative that combines the ease of technologies like MongoDB with the familiarity of traditional SQL. MapR not only contributes to numerous Apache open source projects, but also incorporates Hadoop open source innovations that have been developed outside of our company.
Finally, Collins discusses the need for companies to set BHAGs—Big, Hairy, Audacious Goals.
MapR has two primary BHAGs:
- Have the vision to develop the technology our customers need to take the hassles out of building and running Big Data applications
- In a market the size of Big Data, many companies will succeed, but only one will be around in 20 years…
At MapR, we are confident that we will be that company.