MongoDB’s path from unlikely NYC enterprise tech startup to global category leader has been amazing to watch.
I’ve had the pleasure of hosting two of MongoDB’s co-founders over the years, first Dwight Merriman back in 2012 (here) and then CTO Eliot Horowitz in 2016 (here). So it was a real treat this time to get to chat with CEO Dev Ittycheria, who has been leading the company since 2014, and it particular has presided over the company’s remarkable ride in public markets since its 2017 IPO.
In addition to being a truly world-class CEO, Dev has had an outsized impact on the New York tech scene, as he’s been playing a central role both at MongoDB and also at Datadog, where he’s been a long time board member (after leading the company’s Series B back in 2014).
We had a wide-ranging conversation where we covered:
- Dev’s journey as a CEO and investor
- The evolution of enterprise tech in New York
- MongoDB’s database as a service offering, Atlas
- Newest products and product roadmap
- Open source
- GTM strategies, bottoms up vs top down
- Lessons in scaling the team
- Being a student of the game rather than a master of the game
Below is the video and below that, the transcript.
(As always, Data Driven NYC is a team effort – many thanks to my FirstMark colleagues Jack Cohen and Katie Chiou for co-organizing, Diego Guttierez for the video work and to Karissa Domondon for the transcript!)
VIDEO:
TRANSCRIPT (edited for clarity and brevity)
[Matt Turck] As a level set, here’s a quick run through the history of MongoDB:
- The company started in 2007 in New York, and it was named 10Gen at the time
- The product was open sourced in 2008
- Dev became CEO in 2014
- The company went public on Nasdaq in October of 2017. And I read somewhere that it was the first database company to go public in 26 years. Is that right?
[Dev Ittycheria] Correct.
Fast forward to today, the company has about 25,000 customers spanning a wider range of industries in more than a hundred countries around the world. So, global domination. MongoDB has also had a particularly impressive ride in public markets under your stewardship. The company went public at a $1.2 billion evaluation and today it has a $18.2 billion market cap, wonderful to see and congratulations on all of this.
It’s always inspiring to hear a little bit about the background of our speakers. You’ve done some fascinating things as an entrepreneur, as a CEO, also as a VC, although more briefly… if you could give us a couple of minutes on your story, that’d be awesome.
Sure. My academic training is as an engineer, what I realized about myself was that I really wanted to be at the intersection of business and technology. I didn’t want to be stuck behind a computer all day. I felt like I’d be like a caged tiger. And so I really wanted to be at what I felt where the action was, which doesn’t mean that what other people are doing is not interesting. That’s just what I seem to really get excited about. I started my career in some big companies. I started off in a management program at AT&T, I rose pretty quickly, but quickly got frustrated with big company politics and went to some smaller telecom company and that’s in the 90’s when telecom was hot and VCs were investing and building out the broadband internet.
And all of a sudden I saw these companies get funded. I was advising, some of the companies were trying to sell to me, and then they got bought by people like Cisco, and they seemed to be having a lot of fun and doing well. And so I said, why don’t I do that?
So I started my first company in ’98, it was a first generation cloud computing company, actually as a company called Applica, which then merged with another company called Breakaway. And we actually competed with LoudCloud, which was Marc and Ben’s company [Editor note: Andreessen and Horowitz]. That company ended up hitting a wall because 70% of our customers were dot-coms when the bubble burst in 2000 and the venture capital dried up, but we actually had a real business. It’s just that our customer diversity wasn’t as good as it should have been.
That was inspiration to start BladeLogic, just starting 2001, which was essentially, you were building a data center automation platform to help people provision, configure and manage service and data center, because as people move to these kinds of distributed architectures, all the complexity was the backend.
Pretty crazy time to start a company by the way, 2001.
Yes, I raised my first round of financing five days before 9/11. And then obviously capital was super expensive. So when we raised $29 million total and had $7 million in the bank when we filed to go public, we went public in 2007. And so you really build a lot of muscles in terms of using the best, the cheapest form of financing is revenue, right? Getting revenue from your customers. So we really financed the business through customers and we ended up going public in 2007. Then a year later, we just got an offer to get bought out by BMC. At the time it was a pretty high multiple, obviously seems paltry in today’s revenue multiples, but it was a pretty rich multiple for that era. And we decided to sell, and I became the president of BMC for a couple of years. Then I took some time off.
And then I became a VC for a while and spent some time on the West Coast with Greylock and then on the East Coast with OpenView. And actually I led the B round at Datadog. So 2014 turned out to be a pretty interesting year for me. I led the B round and Datadog, and then literally 6 months later, I joined Mongo to be a CEO. I still stayed on the Datadog board and I’m actually on the board today. Obviously it’s been a pleasure to work with Oli and the team there. They’ve done a fantastic job.
I also felt like I could add some value to MongoDB. We’re fortunate, the business then was roughly about 250 people trailing about $30 plus million in revenue. And today we’re approaching 4,000 people and about $700 million in run rate.
Obviously both MongoDB and Datadog are global companies, but given this event is Data Driven *NYC*, it’s worth pausing and realizing that those are basically the two major successes of enterprise tech in New York at least over the last few years. You’re CEO of one and board member of the other. So your impact on the NYC tech ecosystem has just been insane.
Well, thank you, man. By the way, I don’t know if people realize this, but UiPath is pricing tonight and starting to trade tomorrow. So we’ll have a 3rd big, and their valuation I think will be quite large. So there’ll be another big data driven tech company in New York.
So it speaks well to New York. I think New York is turning out to be a pretty interesting place for tech.
BladeLogic was based in Massachusetts, MongoDB was built in New York originally, any thoughts on the ecosystem and building enterprise software out of the East Coast?
I personally love New York city, it’s my favorite city in the world. And I’ve been to almost every major city in the world. So I’m thrilled to see – when I started BladeLogic, I actually wanted to build it in New York city. But at the time it was very hard to recruit people. You were trying to recruit from the big banks and so forth. And people really wanted to maintain their cash comp, but then also have big equity. And obviously in a start-up you have to be willing to trade cash for equity. So there weren’t as many people who had that entrepreneurial mindset.
There was obviously some interesting companies, obviously DoubleClick was doing well, and adtech was a big space and new media was another hot area, but hardcore tech was not a placefor the New York. I think what’s changed is the access to capital obviously, firms like FirstMark and others have done a lot of investing in New York. So it’s actually encouraged entrepreneurs to keep companies in New York.
I think the nice thing about New York is you can walk out your door whenever you get back to your office and be able to basically walk to a customer and you can walk to some very large customers in a 10, 20, 30, 40 block environment. Then flying anywhere from New York is so easy. Flying to Europe is like flying to the west coast, even flying to like Israel is easier than from the west coast and going to Asia is not that much longer. It’s only maybe a couple hours longer. So access to the world from New York is very easy and I like the heterogeneity of the culture. It’s not all tech all the time and in the Valley, you go to a soccer game and you just run into VCs and entrepreneurs and engineers. It just gets a little bit monotonous where I think the cultural diversity of New York is something that I really appreciate. And you see people from all walks of life.
So I would say one of the challenges in New York though, and I think it’s changing now with the success of all these companies is hiring senior level talent. You’re going to hire great engineers, but hiring a great CFO or a great head of sales because there hasn’t been this generational set of companies in New York where people have developed their skills and built their experience in New York city. So in the early days when I joined actually my first CRO, my first CMO, were actually on the west coast because I couldn’t find enough depth and experience in New York city.
I think, as you see the success of these companies, Datadog MongoDB, potentially UiPath, and others, I think you’re going to see more talent in the local area. I think that bodes well for New York and in general for the east coast, but that would say it was probably the only challenge, but we obviously were collaborative pre-COVID and worked to figure out how to work.
In fact, my predecessor at MongoDB was actually based out of California. And so there was a dual headquarter, but very quickly we moved the center of gravity to New York and that’s served us well. But obviously with COVID we’ve learned to collaborate.
And now we have a very distributed team. I have a CTO in Seattle, have a head of sales in Europe. I have a GC in California and our philosophy is let’s hire the best talent, no matter where they are within reason. Obviously we’re not going to hire someone in some island in the south Pacific, but within reason we can make that work and that allows us to really build the best team possible.
I’d love to chat about product and in particular Atlas, which has been an incredible success story. Atlas, which is your database as a service offering, was launched in late 2016. At the time representing by definition 0% of revenue, and then it progressed to presenting 23% of revenues in fiscal year 2019, 39% in 2020, and now 46% in 2021. So it’s gone from zero to being almost half of the company’s revenue. I think it’s absolutely fascinating and super impressive. What does Atlas do, so folks can wrap their minds around it.
Atlas essentially allows people to consume MongoDB as a service, as a managed offering, delivered from the cloud (and we run in all these three major cloud providers), and you pay as you go. So the cheapest paid tier is like 9 bucks a month. So it’s literally like having two cups of coffee a month to we have customers now spending more than seven figures with us on Atlas. So depending on how big your deployment is, how much resources you need – and it really ranges the gamut in terms of a variety of customers.
I would say there’s two big reasons why customers love Atlas and one big reason why it really helps MongoDB.
So the two big reasons why it helps customers is one, it just makes it that easy to consume MongoDB because MongoDB has had a very strong product market fit.
One of the other things customers care a lot about is getting rid of undifferentiated heavy lifting. Managing a distributed database can be quite challenging. So when they basically say why don’t you the experts manage it for us? It just alleviates them, and a customer will always tell us my competitive advantage is not by hiring more DBAs and more support staff – my competitive edge is by building great product, adding new features, shipping features more quickly seizing new opportunities or responding to new threats really fast and investing more and more time and money and resources in maintaining, managing my data persistent architecture. It doesn’t make a lot of sense when I look at it from a strategic point of view. Now, obviously that’s at the senior level, maybe the ops people may feel a little threatened, but they also realize that they can add more value to the organization without having to day-to-day manage MongoDB.
What’s good for us as a company is that prior to Atlas, we had our free version and our paid version, and we had a classic open source problem where you have to figure out where the paywall is, right? So if you constrain the paywall too much, then you have very little adoption. And if you give away too much of your product, it’s very hard to monetize. So you’re always trying to find that fine balance in terms of what the paywall is. Well, with a service, with open source as a service, you can monetize everything because you’re just paying as you go. So it allowed us to really capture value, but still also give compelling value to our customers. And which is why it grew so quickly.
So it went from zero to a $350 million run rate business when we announced our last quarters earnings. So that is growing at about a 66% annualized growth rate.
Remarkable. And then you keep adding more stuff to it, like more features, more product expansion. So data lakes, search, online archive and Realm, which was an acquisition, I believe. Do you want to talk about the product expansion thinking?
It really comes from a lot of customer feedback and our intuition about the market.
For Search, what we found was a lot of customers were dual homing data to both MongoDB and say Elastic. And they said, this is crazy. We don’t want to do that. And they said, we really want to embed all our OTP functionality along with application search in one platform, it’s much easier to maintain. We don’t have to manage two systems, learn two platforms, etc. We’ve now embedded that it just makes life so much easier for customers. And Elastic themselves are growing more towards the security space than application search. Well, it’s more like an application search logic. So every app has some search functionality, so embedding that more tightly into the app is helpful for the application developers, less systems to maintain.
The second thing that we announced was Real. So we had a lot of customers who obviously are building mobile. If you think about mobile, everyone’s going with a mobile first strategy, especially with the advent of 5G, when network speeds will be hundred times faster, at least we hope than what we get with LTE or 4G. And so I think the line or distinction between mobile and web apps will blur when you have that kind of network performance. Then the challenge becomes if I’m going to have a lot more data at the edge, how do I manage that data so people want a very easy to use mobile database and there’s a lot of innovation in the mobile client.
So Realm had gotten a lot of traction, but they also needed to synchronize data from the edge to the core. So being able to do that was very challenging, because with mobile, you have online and offline connectivity and you need to be able to still use the app, but then synchronize when you get back online and conversely, you need to get updates from the backend server. And that’s a pretty difficult challenge for developers. And so we’ve automated that for developers and made it really easy. We think that will make MongoDB an even more compelling platform to use.
And data lakes is part of this as well?
Correct. We’re enabling people to use the power of our query language to create data not just from MongoDB, but from other sources. And we’re not trying to be a data warehouse. We’re not trying to compete with Snowflake. It’s more to help developers because we believe that applications of the future and even today are more and more instrumenting the business, applications are now embedding analytics, especially real-time analytics into apps. Think about it like a leaderboard for a gaming application. Think about a financial app. Think about supply chain apps where you have to have real-time information. So being able to embed analytics is going to be even more important. And our focus is really helping developers use data to build amazing applications.
Is there stuff on their product roadmap that you can talk about?
Yeah. I would just think of us as we really want to be an application data platform. A lot of people sometimes confuse us, are you competing with Snowflake? Are you going after Databricks? You know, or Dremio or other companies like that? Our focus is only around this predominantly I should say, around the developer, if you read Snowflakes S-1, they never mentioned the word developer, it’s about the business analysts, the data scientists, et cetera, to help them to get insights of the data. We’re really focused on helping developers build amazing applications and leveraging software and data to do so. So you’ll see us expand into other capabilities that developers need to build applications.
MongoDB’s open source project has continued to explode in popularity. What are the key drivers behind that? Why do you think it’s continued to be so incredibly popular and in fact accelerating?
Well, I think the first thing is you’ve got to have strong product market fit. And what essentially Mongo DB did was address two fundamental problems with the relational database. One, the relational database, where you’re trying to basically disaggregate data into rows and columns is a very counterintuitive way to model data. It’s frankly, it’s not aligned to how developers work and as the data model grows, it becomes more and more brittle and it’s harder to change. Talk to anyone who wants to do a schema change and they’ll roll their eyes because they know how painful that is. Well, we essentially solve that problem by coming out with our document architecture, which is much more conducive to the way developers think and the way developers code. So it just makes it so much easier to use MongoDB, to build applications, to do it quickly and to do it more powerfully.
The second big challenge is that relational databases are not designed for scale. I mean, Oracle was founded in 1977. We’re talking about a company that’s now 44 years old and they still haven’t solved the scalability problem. You know, they’ve had Oracle RAC, sidecar and other ways to try and replicate. They’re super expensive because the relational database was designed to be a single node system. So as data volumes grow, their architecture has limitations. Now Amazon’s trying to make some extensions with Aurora to kind of make relational databases suck less, but they fundamentally have scalability problems. MongoDB is designed from the ground up to be highly scalable. We have replication sharding built into our architecture. So you can scale very, very easily using MongoDB. So that’s why we’ve gotten so much popularity and that’s why we’ve taken off.
So one is linking to product market fit. The second thing I would say is that we didn’t view open source as a crowdsourced R&D strategy. We use open source as a freemium strategy to kind of let people use MongoDB quickly, play with it, tell their friends and leverage the virality of the open source community. To build a community of people who wanted to just try and use MongoDB. So today MongoDB to your point is everywhere. Literally there is not one country, once city in the world, I don’t think someone’s not using MongoDB. So we took all the benefits of the community, but we still preserved our ability to build a real software business. And that was important to us. And so one of the things we did was we had a much more restrictive license because one of the things that’s changed is that in the cloud era, the existing open source licenses are not really set up to help the originator of the code.
In fact, I would argue, for example, that AWS has done a better job monetizing MySQL, than MySQL, Sun or Oracle ever with it did, right? And so what the cloud providers are doing is taking these free versions of open source, plugging into the platform and monetizing it. And then as you know there’s been a lot of friction between AWS and Elastic and other open source companies. We didn’t want to go down that path. We said, we invest a lot in the product. In fact, we’ve invested over $700 million in R&D since we started the company and more than 50% of that goes to the free product. We think it would be very unfair for someone to just pick a free version, make money off it and not give anything back. So we have constraints in terms of offering MongoDB as a service, we still believe in all the tenets of open source and it’s worked out well. So it’s allowed us to build a real business, allowed us to invest back into the product. So our community benefits from the continued innovations in the product. And obviously our investors also see a return of the investment.
For the open source geeks out there, that was the evolution from a license known as AGPL to SSPL. Right? And that’s something that you guys created right?
Yes. We came up with SSPL, it was fairly controversial. It was a lot of worries. Like, oh my God, the adoption that people would say, you’re not open source anymore. No one’s going to use your product. But what people forget is that the first thing people don’t say is open source or not, they say, does this technology solve my problem? And we knew that we solved a very important problem.
Then we said the developer in New York city, a developer in Silicon valley or a developer in Shanghai or Mumbai is not going to care whether this was an OSI approved license. They say, is it free? Can I modify the source code? Can I use this free to distribute? And all those tenets still apply. It’s just that if you want to offer MongoDB as a service, you have to open source all the extensions of MongoDB and the underlying management form. So it was a very fair trade. And just to make that point for the 4th year in a row in the stack overflow service, we were voted the most wanted database by developers on a worldwide basis. And what we also saw was that last year we had more downloads of our software than the first 10 years of the company’s history. So we have never been more popular than we are today.
How do you work with cloud vendors? Like what can they do, how do you incorporate or partner with them?
Obviously, with Atlas, it has to be deployed and delivered to the cloud. So we have to work with the cloud provider. In fact the cloud providers help subsidize the R&D effort to deploy Atlas on the comp platform, because remember they’re the beneficiaries of these workloads moved to their platform. Not only do they get revenue from the underlying consumption of storage and compute and network services, but they also see customers for every dollar they spend on Atlas, they probably spend another 5 to $10 and other ancillary services. So they’re motivated to drive those workloads to the cloud. Now, Amazon and Azure in particular have competitive offerings, but we feel we’re very well positioned when it comes to going head to head against those. But there’s some spirit of coopertition and that’s like we’ve been dealing with the big guys, Oracle from day one, Microsoft, and obviously now Amazon. We recognize the market’s large enough and we feel like we’re well positioned. And they’ve actually helped subsidize and drive a lot of marketing, right? They give us marketing dollars to drive customer demand. We partner with them on events. We partner with them on deals. They align the sales compensation to incentivize working that have their sales people work with us. So there’s a lot of healthy partnership there.
You have a multi-cloud offering now, right? What does that look like?
Well, one, we run on all three clouds. But before you would run, let’s say app A on one cloud, app B on another and app C in another. Today with our new announcement, you can run app A across multiple cloud providers. Now, why is that important? Well, if you’re a customer in Australia or you’re a customer in Canada, Amazon, or say Azure may only have one region. And if you want diversity, and you only care about that market because you’re a local Australian or Canadian company, the only way you get geo diversity is by going to another cloud provider. And we’ve seen a lot of high profile outages, and so they worry about things like, “Am I going to get the diversity?”
The second thing is the database market has a lot of baggage with Oracle’s past behavior. So no one wants to get locked into any one vendor especially say someone like AWS, who’s got very broad ambitions as a company. And so, one day you might find AWS competing with you and your core business. And so given that, companies do like the fact that they can leverage MongoDB to run on any cloud provider and leverage the best of breed services, because the cloud providers are competing against each other. So Google may have some capabilities that are better than Amazon, and Amazon has some capabilities better than Azure and vice versa. So they can pick and choose which services to use from which phone providers.
It was this whole complexity of open source in cloud vendors – and for anyone that’s listening to this, for whom this discussion is not completely clear, the concern all along has been that cloud vendors can just take the open source code and run a competitive version of the product without cooperation from the original vendor. That’s the heart of the whole discussion. And for additional context, that’s a current controversy around Elastic and some stuff like gotten themself tripped up into this whole conversation. So with this whole complexity of open source and cloud and the relationship, what do you think of, I guess, open source in 2021 for a young company? If you’re a young startup, is that the way to go or is there an evolution there?
Well, I think you first have to ask yourself, why are you trying to be an open source? What’s the strategy behind it? You shouldn’t just be open source for the sake of being open source. It’s just to say, there’s a clear strategy there. For example, Snowflake is not an open source company. Datadog is not an open source company, right? So you can thrive as an infrastructure company without being open source. You have to ask yourself, why is open source an important element of the strategy? And be very, very clear on that. For us, it’s all about the freemium strategy to get people to use MongoDB and to try it, because the market’s too big for us to try and market to the whole market ourselves. We wanted to leverage the virality of open source to get broad adoption.
So I think that’s one. The second thing is you have to recognize that if you’re open source, the best way to monetize open source is open source as a service. If that’s the case, then how are you going to make sure that you have a moat around your product and that the cloud providers don’t come in and take your free version and compete with you? So you have to think through your licensing around how you plan to license your product and make it simple for customers so that it’s not confusing to them or to the market about what your intentions are. And third, it’s not trivial to be both building software and running software. So you need to make sure you invest in both, right?
There’s a lot of companies who try and do that and they struggle. So you have to really build real competence around your tooling, management infrastructure, your telemetry or your multi tenant architecture. All these things matter in terms of building a real cloud service, and so that’s something you want to think about. But again, it all depends on what the strategy is. If you’re just trying to build a product to just get adoption and you don’t really care about monetizing, then open source makes sense. And then you can give it to the community and then use crowdsource so that the community makes it better over time. There’s many reasons to do open source. Monetization is not the only one.
Switching to the discussion to Go to Market strategies, you use open source as a freemium kind of strategy. Is that for a company of the global scale of Mongo, is that still the core motion? Is that sort of bottoms up or is there also top down of AEs going directly to CIOs?
So our business starts and stops with developers. If developers don’t use our product, we don’t have a business. So we have to make sure we drive a lot of developer enthusiasm by using MongoDB. That being said, developers don’t necessarily have the right to say yes, they have the right to say no. They can kill a deal by saying, “I’ll never use MongoDB” and you’re done. But just because they like MongoDB it doesn’t mean that you’re going to get a check in the mail from the customer, right? So you have to then translate developer enthusiasm and interest into a real business value proposition for some decision makers. It’s not always a CIO, it could be the VP of Infrastructure. It could be the line of business. And in our business, it’s a land expand. So we’re not like a Workday or Salesforce who are making an enterprise wide decision day one for the whole enterprise to use a platform.
We coexist with Oracle, we coexist with Microsoft, we coexist with other players, right? And we want to get that first workload. And we find the relationship kind of tends to be in three stages. First, you kind of land a workload or a few workloads. Then you find adjacencies to expand into. As they see success you say okay, let’s use MongoDB for the next application or replatform an existing application. And then maybe over time, maybe even years, then all of a sudden say, “You know what? We need to make MongoDB a standard. It’s all over. Let’s make it a standard. And that essentially means that you now have the full organization’s endorsement to be the platform of choice.
And typically we see a lot of consolidation happening now in large companies. They don’t want to use a new database for every new use case. They want to standardize and say a modern standard like MongoDB, maybe a relational standard like Postgres. And then maybe there’s some corner cases where they use something esoteric. And our goal is to be the standard where we can go after 80% of the use cases. And that’s when you see the relationship with the customer grow fast.
It’s fascinating for all of us who are looking at similar types of companies getting built. There’s this tension between bottoms-up and top-down. But at your scale, there’s still no sort of temptation to just say, “Hey, everybody knows Mongo now.” So yes, I mean, it’s great that developers love us. But why don’t we go directly to the CIO because everyone knows Mongo, right?
Yeah, so I think you have to really understand customer buying behavior because even if the CIO says, “I want to standardize on MongoDB.” They don’t have the time or the resources to replatform every app onto MongoDB. But look at Oracle. Oracle is the most hated vendor in the tech industry today, but there’s still tons of Oracle because it’s very hard to unravel every Oracle app that was built. So you’re still going to see a lot of Oracle out there. So what customers want to focus on is where am I having the most pain? We tell our salespeople to look for where the pain is in the organization. Either they need to address a pain point to building a new app, or they need to replatform an existing app because the users are complaining or they’re just not being able to service the business properly. Find where they have the most pain, typically the more the pain, the more the dollars are available, then the more attention to senior management.
And then we use that as a wedge to get in the door and then use that as a way to… So once we get in the door, our net expansion rates are very high because obviously we can then start winning more and more workloads. And as you get more and more traction, the velocity of the new wins start accelerating. We encourage our salespeople to go slow to go fast. You don’t want to cut too many corners day one. Have some success, build a relationship, get some confidence built around MongoDB, and then go after a new business.
As a CEO, how do you arbitrage between the different needs? Even at your scale there is a finite amount of resources. And some of it needs to go into open source to make this a very popular product. But some of it needs to go into the commercial product. How do you arbitrage and then how has it evolved over time?
Yeah, it’s a good question. So obviously there’s lots of competing interests. As a high growth company, we think a lot about how quickly we can grow. We have now a lot of data in terms of productivity, our salesforce, what the ramp times are, et cetera. So we think about how quickly we can grow our top line relative to our productivity and how fast we can hire. That kind of drives our top line forecast. So then our revenue forecast then drives an expense forecast. We make some decisions about, “Are we going to be profitable? Lose a little money, make a little money.” Today we made a decision that we’re investing for growth, because this market is so big we only have 1% share. And so it’d be foolish to have close to a billion dollars in the bank.
It’d be foolish to try and optimize for profitability. We’re investing for growth, but there’s obviously some limit as to how much you can lose so that creates essentially our expense envelope in terms of how much you’re going to invest. And then we review all the projects and get people to rank all the new investments, as well as all the existing investments are doing. And then we triage which ones do we want to invest in new, which product is going well, which products we’re to shut down? So there’s a little bit of sausage making in the process. Sometimes there’s a little bit of blood on the walls. There’s a lot of fierce battles about what to do and what not to do. But ultimately we all kind of use that process to galvanize our priorities and what we’re trying to do. And obviously we also want to plant seeds, especially on the product side, for things that we think will bear fruit two, three years from now, because a lot of the investments we’re making now won’t show up as products until later.
I’d like to talk about lessons in scaling. So you’ve done it time and again, and both before IPO and after. So after IPO, maybe talk to teams and hiring and what do you want to do before IPO versus IPO? Do you have to recruit a completely different set of folks as you scale? And then what are the right type of folks that you want as a growth stage startup versus as a public company?
My job is that I need to do three things well. I need to be very clear on what our strategy is, at least the next couple of years. I need to make sure I have the right people in the organization, especially at the executive team to go execute on that strategy. And I need to remove any barriers, whether the cultural barriers, financial barriers, organizational barriers, to make sure people are set up for success. So obviously with our strategy, we’re not changing that every day. So once you’re clear on the strategy, then a lot of the focus is on people. In fact, sometimes I joke with my Chief People Officer that I’m like a glorified head of HR because 80% of the issues I’m dealing with are around people. Who’s moving up? Who’s moving sideways? And sometimes who’s moving backwards. And in a high growth business, not everyone scales at the same rate, right?
And so it’s not a secret, but since we’ve gone public three and a half years ago, we’ve had six C level changes, right? So essentially almost two a year, right? Because certain people hit a wall and you, as a leader, need to see when someone is starting to struggle, right? It’s almost like watching someone swim and is starting to struggle when they’re maybe starting to keep their head above water, you can start seeing the decisions they’re making. And you see a lot of signs with the organization. Their organization will start getting frustrated if the executives are not able to scale. And so, what you as leader have to do, is this a fixable development issue? Is this a fatal flaw? At some point you have to say, “Can this be remedied or do I have to make a change?”
And too many times people wait too long to make changes. And so at some point we have to say, “Hey, it’s time to bring someone else who can kind of help the organization scale to the next level. And they have the right level.” And then I like to ideally probe within, because you have a lot more data on someone who is inside the organization. But obviously you also have to recruit outside for a certain set of skills that you may not have in the organization. So it’s tricky, but this is part of leadership, right?
And I break it down into kind of three things. A leader has to essentially recruit well. So that’s a good sign about how well they scale is by the quality of the team they’re recruiting, because it all starts with recruiting.
Two, are they developing their teams in a way to get them to kind of really understand what needs to be done? Is everyone in line?
And three, are they executing consistently quarter in, quarter out and do they have an operating rhythm? How do they kind of measure the success of the business? How do they kind of quickly triangulate on issues and resolve them quickly? And so it’s a constant kind of focus around those three things that allow us to make sure that we’re kind of running our business and scaling it well.
Any advice to founders and CEOs about how they can scale themselves? How do you scale yourself? You’re running a tech company with offices around the world. I can only imagine how many emails and pings you got, just now while you were kindly spending time with us. How do you keep it together and not lose your sanity and make sure that you have time to think?
Well, I think happiness for a CEO is a great relationship with your board and having a high functioning, cohesive team under you, right? So that’s the ideal state.
In terms of development, I think you bring up a very important point.
My philosophy in life has always been, always be the student of the game, not the master of the game. What I mean by that is you constantly have to work at your trade craft. Don’t assume that just because you’re successful in the past, you can be successful in the future because your business is changing. Your market’s changing, your customers are changing. Your competition is changing. Your organization is changing. And if you just keep trying to run the same playbook, you’re going to hit a wall. And the exact people who I’ve seen struggle in not being able to scale, are the ones who just can’t adapt and grow.
So I always have the mindset about what do I need to think about, “Okay, where will the business not be today, but where will the business be two, three years from now? And what are the things that I need to be able to do by that time frame? And what I have to work on now to make sure that I get that kind of outcome.” Those are the people I see tend to really grow and evolve as a leader. And no matter how successful you are, right? Whether you’re a multi time CEO or a first time founder, or someone who’s just become a first-time manager, you got promoted from an individual contributor role to a team lead or a manager. Always have the attitude of I have more to learn, and that to me has paid massive dividends. And so I encourage everyone to take the same approach.
Great. All right, to close maybe just a couple of questions from the group. A question from Alan, about was your strategy growing by acquisition and integration versus organically. How do you think about this?
Yeah, we’ve made three acquisitions and two of them were non-revenue acquisitions, they were more technology acquisitions. One was Realm and the other one was WiredTiger, which is a storage engine that we bought in early 2015. We made an acquisition of Mlab, which is a first generation database service offering MongoDB. We bought that just to kind of get some mass customer momentum around atlas. So 99% of our growth has been organic. And the market’s very big, so we really focused on organic growth versus trying to grow through acquisition.
Great. And then one last question from Julia, how does MongoDB manage to not compete with their open source community?
Well, yeah, I mean, we haven’t really seen a competition with the community. The community is really… I would say our sales leaders sometimes get frustrated because they think the free version competes with us, our paid versions. But we think that that’s part of open source. The most successful open source companies go after big markets, because by definition, you can’t monetize all your usage. So you just have to make sure there’s enough out there that you can monetize to build a healthy business. So going after the database market is one of the largest markets in enterprise software. And so, as I said, we only have 1% share and I think we’re doing quite well. So imagine if we had three or 5% share, we’d be a very, very large company. And so we feel good about the opportunity in front of us. And we also think there’ll be a lot of free usage of MongoDB out there.
All right. Very good. Well, that feels like a great place to end. This was fascinating. I really appreciate it. The community really appreciates it as well. Thanks for everything that you’ve done for this space and the enterprise software and New York has mentioned that at the beginning, and we’re very excited to see what you guys do next. We’re all cheering for Mongo, and what a remarkable success story.
Thank you, Matt. Thank you for having me. And I obviously have to acknowledge my team. We have a great team and I’m very fortunate to be able to work with a very talented team and be able to do what we do every day.