For those who follow the business intelligence (BI) media, the phrases commercial open source and super-crunching now need little introduction. The successes of Red Hat, JBoss, MySQL and other products have helped educate the technology marketplace on commercial open source. And the current growth trajectories of nascent companies Pentaho and JasperSoft suggest that open source business models translate quite well to BI.
At the same time, 2007 bestseller BI books Super Crunchers and Competing on Analytics clearly point to the evolution of a next level of sophistication in BI, a sophistication that includes randomized business experiments, advanced statistical models, machine learning algorithms and other visualization and optimization techniques that top analytics competitors will use to differentiate in the competitive market.1,2
Both super-crunching and open source can find a champion in The R Project for Statistical Computing. Certainly among the leaders of open source projects, R is now the standard for academic statistical computing, the preferred platform of statistics, graphics and computation for a worldwide community of enthusiastic contributing statisticians including myself.
Several months ago, I read a press release announcing REvolution Computings plans for commercial support and enhancement of R, subsidized in part by venture funding through global investment company Intel Capital. At that time, I thought it might be interesting to get the insight of a venture capital firm on both open source and advanced analytics. After all, we hear quite a bit on the opinions of pundits and software vendors, but what about the perspective of a company thats providing financial backing for a new business model? I then contacted Patrick Walsh, investment manager for Intel Capital responsible for the REvolution account, who was most cooperative and graciously agreed to be interviewed for DMReview. What follows are the thoughts of Walsh on open source and super-crunching. I hope DMReview readers find them as informative as I did.
Steve Miller: Intel Capital defines its mission as a global commitment aimed at investing and supporting profitable enterprises that will drive internet growth, enable new usage models, and advance industry standards. Can you elaborate on this?
Patrick Walsh: Intel Capital has actively invested in technology startups since the early 1990s, and has now grown to become one of the largest technology venture capital firms in the world. We ended 2007 with about $2.5 billion invested in over 400 companies spanning numerous technology segments. In our investments, we strive for both strategic alignment with Intels core businesses, as well as financial return to the portfolio.
SM: Intel Capital has a unique focus on open source software. Can you give us a history of your involvement with open source and explain the business models through which commercial open source companies will make money?
PW: As an investment manager in the software and solutions sector at Intel Capital, one of my focus areas is early stage open source seed or Series A investments for businesses using open source software to deliver new value or capabilities to customers.
Intel has invested in a number of open source companies in the past, including successful firms such as Red Hat, JBoss, MySQL and Zend. In 2006, Intel Capital created the Open Source Incubator Program to engage at the earliest stages with entrepreneurs forming companies that take advantage of new business models enabled by open source. Many early open source companies focused on providing support, consulting services and prebuilt binaries for commercial users. As these businesses matured, they also began offering enterprise features in their software under commercial licenses to drive increased revenue, improve new subscription (conversion) rates and ensure ongoing renewals by enterprise users. We now see many companies offering subscriptions to new, hosted solutions, as well as access to high-value data services. We believe all software companies must transition to a subscription-based model, and truly successful software companies will make use of, and contribute to, open source projects in the normal course of business.
SM: BI solutions are moving from traditional reporting and online analytical processing (OLAP) into analytics, advanced visualization, optimization, predictive modeling and data mining. What is Intel Capitals commitment to BI and position on this increasing use of super-crunching for business intelligence?