STARTUP TO WATCH
Whipping MuleSource Into Shape

Having secured funding from Hummer Winblad Venture Partners, Lightspeed Venture Partners and Morgenthaler Ventures, MuleSource cofounder Ross Mason turned what was the Mule Project into an open source player on the fast track. Re-invigorated with new CEO Greg Schott when another cofounder, Dave Rosenberg, left the company, MuleSource has been ramping up its business in the wake of a recession that has gutted some proprietary legacy players.

The Mule Project was an open source enterprise service bus (ESB) and integration platform that gained notoriety early on. MuleSource has adapted its product offerings in both the community and enterprise editions in the Service Oriented Architecture (SOA) and integration space. Its core business is selling subscriptions for its open source infrastructure software, Mule.

That core business has been successful -- MuleSource's revenues are rising with three successive quarters of record bookings.

However, the company is once again getting ready to take a gamble and release the next major release of their open source ESB.

"We set some very aggressive goals," MuleSource CEO Greg Schott told LinuxInsider.

Project Propelled

In a sense, MuleSource's experience is an example of how the open source business model should work. Mason worked in a small startup company after years as an engineer. He had worked for a few banks in London and saw that open source was emerging.

That led him to start the Mule Project and eventually roll it into a business venture to offer software that solved a variety of problems integrating communication among companies.

"Our main obstacle was figuring out, how does a successful open source project become a thriving company? We answered that question through innovation and monetizing. We did a lot of trial and error," Ross Mason, CTO and cofounder of MuleSource, told LinuxInsider.

For the most part, that plan is working. Martin made several mid-course corrections in driving MuleSource forward. A big change in direction took place last February when he hired Schott as the CEO.

"I looked at Greg as one who could drive strategy," said Mason.

Adjusting Course

Much of what he has done in guiding MuleSource is about growing a larger user base, according to Schott. The company continued to change its product line and developed an enterprise edition.

"We've done well as the product's reputation is spreading. Our challenge is how to grow that," Schott explained.

MuleSource is in the process of moving from being a developer's darling to establishing itself as a key enterprise integration player, according to Mike Meehan, senior analyst for application infrastructure at Current Analysis. The company is still making moves.

"It's moving well beyond the Web services-based integration it debuted with, recently adding mainframe and SAP (NYSE: SAP) transports. It also struck a key partnership with GigaSpaces to provide high availability services, which is a performance enhancement focused squarely on big-dollar customers," Meehan told LinuxInsider.

Growing Pains

In the past, open source companies have typically pick low-risk software categories. However, people are now more used to open source, so it has become applied to more mission-critical types of applications. The same thing is happening at MuleSource, Schott noted.

When he felt the number of product downloads was approaching critical mass, he decided to expand the offering.

Despite the several course adjustments, MuleSource walked a bit of a tightrope then as it is now. MuleSource faces stiff competition despite its progress.

"In order to land those big integration projects, it needs to add the functionality you'd find in ESBs from IBM, Oracle, Software AG, Progress (Sonic) and TIBCO. Yet it needs to keep its barriers to entry low, both in terms of price of and usability, because WSO2, Progress (FUSE) and Sun GlassFish are out there as capable open source competitors," said Meehan.

Hitting the Horizon

As Schott sees the landscape ahead, it involves challenging customers' understanding of data.

"The bottom tier of open source has become databases. People are now thinking of data in different ways. So we have to expand our offerings again. That put us in the sweet spot in the past," he said.

To that end, MuleSource is becoming an integration/ESB provider. The company is combining the data tier and presentation tasks into layers.

"That's our opportunity as a company to grow," Schott said.

Avoiding Detours

The biggest challenge MuleSource faces as a small, high-growth company is how to keep its cultural footprint intact. That involves both product simplicity and user base, according to Schott.

Related to that is how does the company keep expanding its product footprint? For that answer, Schott only has to look Microsoft (Nasdaq: MSFT) for inspiration.

"We have to focus on avoiding bloat -- think Microsoft Windows. So that challenge is to stay lean and mean," he said.

Cultural Obstacle

Code bloat is not the only roadblock MuleSource must avoid. Incorrect pre-existing notions about open source among some consumers is another factor.

"One challenge we have been confronting is the notion that open source is not free software. We got quite lucky at being able to distinguish between community and enterprise versions," said Mason.

On the other hand, factors that have put strain on most businesses are actually turning into opportunities for MuleSource, according to Mason.

"The shifting economy has really helped us. No one ever gets fired for using open source. It brings savings of from 30 to 70 percent," said Mason.

The Goal of Integration

MuleSource's place among the integration players could be its safety net. There is no shortage of integration work to be done, according to Meehan.

In many ways, much of modern IT revolves around integration projects. This involves getting different applications, divisions or companies to work together, he offered.

"It's a fertile landscape off of which a company like MuleSource can live. It's proven out its technology and business model, which is why it keeps growing even in a shrinking global economy," said Meehan.

Strategy Questions

Continuing to move MuleSource forward will keep Schott pondering answers to key questions. His ability to drive strategy , as Mason noted, will be put to some critical tests.

"There's no question MuleSource can survive or even thrive. The real question is how big can it be, along with whether it will remain an independent entity. Will MuleSource start acquiring technology to build around its ESB business, or will it be acquired to add a strong integration backbone to something like the new VMware-SpringSource hybrid?" prodded Meehan.

Either way, he sees MuleSource as a fascinating company to keep watching. Its technology will be part of the enterprise IT landscape for a long time to come, predicted Meehan.