Many a successful startup owes its creation to a wild gamble that paid off. Think about Andy Bechtolsheim's $100,000 bet on Google, a promising search company that didn’t even have a bank account yet.
In the case of Hyperic , an open source software management vendor, the initial bet was somewhat smaller: $1, but the risks -- and the rewards -- were still huge, according to Javier Soltero, Hyperic's CEO and co-founder. But, three years later, Hyperic is in the vanguard of open source companies that are targeting the enterprise market, with a fast growing company and technology that's positioned to shake up a systems management space dominated by much larger firms.
Hyperic was born under Soltero's guidance at enterprise open source vendor Covalent, where the software was developed and sold as a Web management solution in 2003. After finding some success with the Hyperic technology, however, Covalent found itself with some high profile and demanding customers, but a business plan that was focused on the Apache platform and didn't have room for a charge into systems management.
That's when Soltero, who had been chief architect of the product at Covalent, stepped up with a team of engineers and offered to buy the technology from Covalent. The cost was all of $1 -- not a bad deal, given Soltero's estimates that the commercially available product consumed $15 million of R&D. It wasn't all that simple, however: in exchange for the Hyperic technology, Soltero and his team agreed to assume liabilities for the three enterprise accounts that were using the technology -- all of them marquis accounts that his fledgling company couldn't walk away from.
But Soltero believed in his vision for the Hyperic platform, and he had a plan that went beyond salvaging three enterprise accounts. After spinning off Hyperic on March, 2004, Soltero and his team spent the next two years bootstrapping to turn the Hyperic software into Hyperic HQ, a management tool for use in modern datacenters that could do system monitoring, trending, and analysis in environments where SOA (service oriented architecture), virtualization, and composite applications are the norm.
Open source figures heavily in the Hyperic platform, which is written with Java and runs on JBoss and Tomcat. The software currently supports Oracle and the open source PostgreSQL database. Support for MySQL is due out in beta this summer, with an official release in the fall, Soltero said.
The team decided on a new business model to sell it that was very different from Covalent's traditional enterprise licensing model. Soltero calls it "rapid adoptability," and it hinged on getting as many people as possible to get comfortable using his company's technology.
To make rapid adoptability a reality, the Hyperic team made the bold decision to give the crown jewels away: turning Hyperic into a freely available open source product, and banking on the virtuous cycle of community involvement and demand for high-end tools and plug-ins to make Hyperic a success and keep his company afloat.
"We wanted to go to market and build a community around this product," Soltero says.