Slack may be making the headlines with its confidential, $8 billion filing to go public, but there’s another, under the radar open source phenomenon playing in that same enterprise messaging market. Mattermost, which just announced a $20 million, Redpoint-led Series A venture round, started as a gaming platform, like Slack, but unlike Slack Mattermost delivers enterprise messaging flexibility through open source, to the tune of 10,000 downloads per month, each of which supports hundreds of Slack-sized teams.
While this may sound like an underdog story, Mattermost already boasts large customers as varied as Amazon, Uber, and the US Department of Defense. Indeed, Mattermost offers an interesting case study on how to do open source right as a component of a business strategy.
The overnight successful accident
Mattermost co-founders Ian Tien (CEO) and Corey Hulen (CTO) brought together backgrounds in business intelligence and artificial intelligence in 2011 to build a high performance HTML5 game engine called SpinPunch! Buoyed by the promise of HTML5 to change how applications are developed, the two attracted seed funding from Hollywood stars like Will Smith. When HTML5 didn’t print cash, they pivoted to become a games studio company.
And when that didn’t set the world on fire, they started the Mattermost open source project in 2015.
SEE: Open source vs. proprietary software: A look at the pros and cons (Tech Pro Research)
The Mattermost project, and subsequent eponymous company, arose from developers struggling with messaging. Like most startups, they had embraced CI/CD and a collaborative, real-time, teams-based approach to developing software–that’s just how developers prefer to work. But their HipChat platform, according to the founders, “sucked.” Worse, the vendor, Atlassian, wouldn’t transfer their data back when Mattermost wanted off the platform. (Side note: Systems integrators in the space say former HipChat customers are turning to Mattermost asking for migration help since Atlassian killed the project and sold to Slack.)
It’s common sense, but the best tech companies tend to be built by brilliant engineers solving a problem they face themselves. So Mattermost built its own messaging platform. The team knew they wanted to leverage the rapid innovation cycles of open source. The project and the company quickly took off. Today there are more than 1,000 related projects around Mattermost, and the platform supports more than 16 languages.
Why open source matters
That open source angle turns out to be a big advantage, particularly for a large cohort of Global 2000 enterprises in high-trust industries like financial services, healthcare, government, aerospace, online services, and more that want to see the underlying code. They also want to host their core platforms like messaging in their own data center or some version of a private cloud. Often it’s for legal or regulatory requirements, but it’s also the only assured way to run a secure, private system where you control all of your data. And of course, open source is easy to modify to add connecters, extend capabilities, and customize.
Global 2000 enterprises have engineers who need to move as fast as startup engineers. They’re embracing the same DevOps agile programming approaches of the unicorns. Mattermost gives them a platform with the speed and look and feel of a Slack but with the added benefits of being secure and open. Mattermost also plays nicely with the modern Atlassian, GitLab, GitHub, Jenkins, CI/CD developer toolchain.
Engineers are happy and productive. Enterprises retain control.
SEE: Software licensing policy (Tech Pro Research)
It’s not a trivial market opportunity. The enterprise collaboration market is projected to grow from $34.57 billion in 2018 to nearly $60 billion by 2023, at a CAGR of 11.6% from 2018 to 2023, according to the analyst firm Research and Markets. That’s billions of dollars in market opportunity essentially made possible because of open source.
Not that this is what the Mattermost founders set off to pursue–no, they just wanted a messaging platform that “scratched the itch” they had. This is how the best companies and, in turn, the best open source projects begin. It’s a lesson in the right way to turn open source into a business: Start with getting the developer love right, and the money can follow.
