The Future of AI, Open Source, and Enterprise SaaS: Where It’s All Going with Databricks’ CEO, Ali Ghodsi (Podcast #505 and Video)

2021 is the 30th anniversary of the birth of Linux. During those 30 years as an Open Source platform, multiple developers and professionals adopted and contributed to it to the point where, today, Linux is everywhere—supercomputers, AI, IoT, embedded devices, and so on. We’re now looking at a massive Open Source category, Commercial Open Source (COSS), that’s impossible to ignore.

Databricks’ CEO, Ali Ghodsi, shares why Open Source is becoming a multi-billion investment, why it’s taking over multiple industries, and why it’s here to stay.

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.

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“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 podcast

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.

The Official SaaStr Podcast is the latest and greatest from the world of SaaStr, interviewing the most prominent operators and investors to discover their tips, tactics, and strategies to attain success in the fiercely competitive world of SaaS.

Published on December 13, 2021

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