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MongoDB ft. Dev Ittycheria - How an Early Pivot Catalyzed an Open Source Movement

sequoia-capital-podcast economics-business-work Sep 12, 2024 source →
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MongoDB ft. Dev Ittycheria - How an Early Pivot Catalyzed an

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MongoDB made an early decision to drastically reduce its scope and pivot from a platform to a single product.

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Dwight Merriman realized the scope of building a full Platform as a Service (PaaS) was too huge for a startup, requiring more runway than a startup could get.

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The company began considering a wholesale move to a fully managed cloud-based solution called Atlas.

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Atlas represents 70% of MongoDB's revenue today.

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The proposed SSPL (Server-Side Public License) would require any organization offering a service using MongoDB's code to either obtain a commercial license or make their own source code publicly available.

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MongoDB powers thousands of companies worldwide.

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In its early days, MongoDB faced questions about translating early traction with developers into a sustainable business.

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The company migrated its business model from open-source on-prem software to fully managed cloud services.

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MongoDB gambled on a change to its licensing model that risked community and user revolt.

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Dwight Merriman was co-founder of DoubleClick in 1995.

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Merriman, Kevin Ryan, and Elliot Horwitz were interested in doing a startup as their next venture after DoubleClick.

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The founders observed recurring scaling and fragility issues on the tech side in the design and development of systems.

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Traditional tools, including programming languages and databases, were not designed for horizontal scaling in cloud computing.

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The original idea for the company, then called TenGen, was to create an open-source Platform as a Service (PaaS) system with a new stack of modern technologies.

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TenGen had new ideas and tools at the application layer and its own data layer, which was called MongoDB.

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For decades, dating back to the 1970s, applications were powered by relational databases commercialized by companies like Oracle and Sybase, using SQL.

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Relational databases are structured as rows and columns, which can be thought of as a spreadsheet.

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Relational database systems powered many applications built in the 1980s and 1990s.

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With the advent of the internet, the scale of applications grew beyond what relational technologies were originally built for.

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PayPal experienced outages because its Oracle database could not cope with the scale needed.

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DBAs used sharding to break databases into many smaller databases to serve the scale needs of internet companies, but the database was fundamentally not built for that scale.

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Dwight Merriman and his co-founders designed their data layer, MongoDB, to address these shortcomings, notably not using SQL.

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MongoDB was at the forefront of the NoSQL movement.

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MongoDB uses a document as the central unit, encapsulating all details like an invoice.

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MongoDB's document model makes it flexible and easy for developers to add new fields, unlike legacy relational systems.

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TenGen released its Platform as a Service beta within 12 months, receiving good feedback and sign-ups.

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Google released App Engine as a beta around the same time as TenGen's beta launch, which was conceptually very similar.

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Merriman concluded that only large companies like Microsoft or Google could afford the runway and long-term thinking for a full PaaS.

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Users of the TenGen PaaS beta provided positive feedback specifically on the data layer (MongoDB).

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The decision to pivot to database-only was difficult because the original PaaS was in beta and people liked it.

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Elliot Horwitz, co-founder and CTO, agreed with the pivot to database-only after an hour of consideration.

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Kevin Ryan, the third founder, pragmatically supported the pivot once Merriman and Horwitz agreed.

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The pivot involved laying off employees not working on the database layer and discarding application layer code.

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Founders building truly successful companies are able to make difficult 'crucible decisions' like letting go of wrong ideas.

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The speed with which founders are willing to make difficult decisions is one of the best predictors of ultimate success.

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After the pivot, MongoDB's first step was to write drivers for every programming language to allow interaction with the existing database.

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In 2009, MongoDB launched for public use as an open-source product.

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MongoDB used an open-source go-to-market plan, leveraging meetups and conferences for free marketing across many cities and languages.

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Sequoia Capital intersected with MongoDB in 2010 and saw it as the likely winner in the NoSQL category.

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MongoDB had developer love, positive references, and rapidly growing download numbers in 2010.

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At the time of Sequoia's investment in late 2010, MongoDB had 12 employees.

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In 2013, the company officially changed its name from TenGen to MongoDB.

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In mid-2014, MongoDB's revenue run rate was approximately $40 million.

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The board felt an opportunity to hire a CEO who could scale MongoDB from $40 million to multi-hundred million dollar revenue.

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Dave Ittycheria joined MongoDB as President and CEO.

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Ittycheria had previously passed on investing in MongoDB's competitors due to MongoDB's significantly better developer traction.

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Ittycheria found MongoDB was generating momentum but also struggling with a dysfunctional leadership team and ineffective go-to-market efforts.

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Ittycheria believed MongoDB could achieve much more with an 'A team' in place, despite its current struggles.

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When Dave Ittycheria joined MongoDB as CEO, the company offered open-source on-prem software.

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MongoDB saw increasing users accessing software as a service directly through the cloud.

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Customers were building applications with MongoDB on cloud infrastructure but without an ongoing relationship with MongoDB.

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MongoDB was missing out on building a business around the cloud delivery of its solution.

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Offering a cloud service would let customers outsource undifferentiated labor and focus on core business.

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There was skepticism about Atlas because MongoDB was the first independent company to offer an infrastructure service on the cloud.

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Building Atlas required MongoDB to transform from a product-shipping company to one with operational skills for running databases.

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Dave Ittycheria believed not pursuing Atlas would be a 'giant mistake, kind of borderline disaster'.

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Tom Killalea, a key executive at AWS, was recruited to MongoDB's board to guide its cloud strategy.

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Killalea initially had concerns about Atlas's product positioning, fearing a 'jack-of-all-trades' approach compared to AWS's specialized services.

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Killalea became convinced of Atlas's advantages, seeing value in a data platform for many use cases that would obviate data extraction and shifting.

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In December 2015, MongoDB's board debated whether to launch Atlas 'now or later', with urgency prevailing.

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