In 2021, SaaStr Annual was the only tech event that came back. We were 100% outdoors and open air, and it was just a great chance to see folks we hadn’t seen since well … March 2020.
Ali Ghodsi, CEO and co-founder of Databricks joined us just as AI was beginning to acclerate. Many of us couldn’t see it before ChatGPT and Generative AI took off, but it was clear it was the future for Databricks.
And today they’re growing a stunning 60% at $2.4 Billion+ in ARR!!
Databricks’ CEO, Ali Ghodsi, shared why AI and Open Source are taking over multiple industries, and why they’re here to stay. And see 100s of incredible speakers like this at 2024 SaaStr Annual, Sep 10-12 in SF Bay.
A look back:
Summary:
In the video, Ali discusses the evolution and impact of AI and open-source technology over the past thirty years, focusing on its adoption in the enterprise sector and how companies like Databricks effectively leverage open source to drive innovation and business growth. They explore the significance of community engagement, successful business models such as SaaS, and the ongoing importance of open source in shaping the technology landscape, highlighting the synergy between data and AI in organizational success.
Key Points
Open Source Evolution
- Nitika Rough introduces herself and Ali Gotsis, initiating a discussion about the growth of open source over three decades, marked by the inception of Linux.
- Gotsis emphasizes how open source has become a pivotal enabler of global innovation, pervading various sectors from supercomputing to embedded devices.
Business Models and Investments
- The video outlines a significant increase in valuations of open source companies, illustrating that they now reach up to 400 billion dollars, indicating a mature market.
- Databricks is highlighted for its innovative approach to integrating open source technology with enterprise-level solutions, successfully navigating the balance between community engagement and commercial growth.
Importance of Community
- Gotsis explains that building a community around open source projects is crucial for success, as developers become early adopters and advocates, driving widespread adoption.
- The conversation touches on how community support not only cultivates trust within organizations but also attracts talent, enabling companies to hire skilled engineers motivated by open source contributions.
SaaS Model Advantages
- Gotsis describes the reasoning behind Databricks choosing a SaaS-based model over traditional on-prem solutions, citing operational efficiency and reliability as key benefits.
- He contrasts the challenges faced by other open source vendors operating on-prem with Databricks’ cloud-native approach, which allows for superior service delivery and customer support.
Future of Open Source
- There is a strong assertion that open source is not only here to stay but has the potential to disrupt traditional proprietary software models, particularly in the cloud environment.
- Gotsis speaks to the increasing demand for multi-cloud solutions, asserting that software needs to be flexible to work across various cloud platforms to meet diverse customer needs.
Challenges in AI and Machine Learning
- Gotsis addresses the adoption issues faced by enterprises in implementing machine learning due to fragmented data and AI software solutions that often lack integration.
- Databricks aims to provide a unified platform that effectively combines data processing and AI capabilities, fostering collaboration across different roles within organizations.
Real-World Applications
- Examples are shared, showing how major companies, including Comcast and pharmaceutical firms, utilize Databricks for various applications, from natural language processing to vaccine development.
- The discussion concludes with the notion that Databricks democratizes AI, making powerful technology accessible to a wider range of enterprises, beyond just tech giants.
Deeper Dive:
Open Source and Linux dominate every industry they’re a part of.
Open Source is one of the most successful enablers of global innovation in history, and Linux has grown into the most important software platform in the world, dominating every market it enters. Linux is the #1 internet client, makes up 100% of the supercomputer market, and is second to Windows when it comes to enterprise software platforms.
In 2010, COSS was valued at $10B, and 90% of that value was attributed to a single company: Red Hat. But today, COSS is valued at closer to $300B, and Red Hat is now one of hundreds of Open Source companies, many of which were founded in the last ten years.
Community is vital to the success of Open Source businesses.
At Databricks, it was really important for us to focus on the community around Open Source projects from the very start. For the first twenty employees, we were working on developer relationships. We’d rent a car, get on the road, and go to all kinds of startups and give talks on Apache Spark to build up a community around it. We weren’t focused on revenue, we were focused on winning developers one-by-one, and that was the key to success for us.
Open Source products, the millions of customers, and the communities around them make the industry almost feel B2C. Once you have a community to support you and help you grow, you’re unbeatable.
“Once you have the community, you’re a little bit unbeatable. If you can figure out how to do it again and again, then you have something unique.”
The developers you engage with often become your first adopters, who then become product evangelists—and they’ll help you scale and solidify trust within enterprises, too.
Open Source is here to stay—and Open Source + SaaS is the future.
We’re currently in the age of the public cloud. Databricks started out in the Cloud; we never provided an on-prem offering, only a SaaS Cloud offering. It was difficult, but it was worth it.
“Slowly, you’re going to find lots of companies like Databricks that offer open source technology as a SaaS service. Those are the companies that are going to be dominant in this new SaaS era.”
For us, the SaaS model Amazon Web Services (AWS) offered was an amazing one to look at. They basically offered multiple Open Source technologies as a service, so instead of simply using free software and managing it on your own in your own data center, you’re effectively renting it and delegating the difficult things—security and reliability, to name two—to the vendor instead of having to deal with that in-house.
The time and headache saved by letting go of those responsibilities are beyond worth it, not just in terms of improving your own product, but reducing employee churn and increasing automation, too. If there’s a data breach, it’s the vendor’s responsibility, not yours. If something goes down or stops working properly, you don’t have to scramble your team to fix it. Innovation happens more easily on Open Source in a SaaS model.
Key takeaways
Open Source is an innovation that’s here to stay. Multiple successful exits and valuations of Open Source companies like Confluent, HashiCorp, and Databricks show strong business models can and do exist, and SaaS-based models help more COSS companies succeed in the Cloud. Focus on your community, your employees, and making your product easier to use, and you’ll create a disruptive product.
You can listen to the full episode with Ali Ghodsi or subscribe to weekly updates from SaaStr.
About the speakers
Ali Ghodsi is the CEO and Co-founder at Databricks, responsible for the growth and expansion of the company. He was one of the creators of the Open Source project Apache Spark and serves on the board at UC Berkeley’s RiseLab.
Nithya Ruff is the Head of the Open Source Program at Comcast and the Chair of the Board of Directors at the Linux Foundation. She’s responsible for growing Open Source culture at Comcast and engagement with external communities.
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