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> Redis Labs CEO Ofer Bengal told me the company’s isn’t cash positive yet. He also noted that the company didn’t need to raise this round but that he decided t

> Redis Labs CEO Ofer Bengal told me the company’s isn’t cash positive yet. He also noted that the company didn’t need to raise this round but that he decided to do so in order to accelerate growth. “In this competitive environment, you have to spend a lot and push hard on product development,” he said. I'm always amazed how startups like this where R&D practically cost nothing are not profitable yet after years in the market and thousands of customers. C'mon guys 99% of the work is already done by antirez and the open source community.

Scarbutt 8y ago
* C'mon guys 99% of the work is already done by antirez* Yes, but maybe he's not a business man or is not in his interest to pursue the road of something like redis labs.
- carlosdp 8y ago
  That wasn't really the original commenter's point though...
antirez 8y ago
Basically what happens is that even if you start to be cash positive, you want to get a bigger company, so you need to scale a lot the sales team and the customer support team, so you spend more money in order to end with more customers, not caring about the short term profitability. This is common to most startups basically. Btw the Redis Labs development team at this point is quite large, because Redis open source is the core, but the company produces a number of things in order to provide a good managed Redis experience, all the additional features and modules, and so forth. But even so, I think it is accurate to say that most money in most companies of this kind will go to orchestrate the company at a different level, not just R&D.
- ljm 8y ago
  > even if you start to be cash positive, you want to get a bigger company I am really interested to hear how you would square this against, say, Bssecamp's modus operandi. How would you define 'enough'?
  - kolinko 8y ago
    If you took VC money, 'enough' is when you cannot expect to profit from more money put into the company. (something to do with 'NPV' or net-present value, if I'm not mistaken) And it's not about greed really - you actually have an obligation to shareholders to maximise profit.
    - risaacs99 8y ago
      If you take someone's money, you only have a duty to fulfill your promises. Plenty of for-profit companies exist partially for some social good, or exist to further some multifaceted goals. If you can convince someone to invest in those types of goals, nothing is stopping you.
    - skrebbel 8y ago
      > And it's not about greed really - you actually have an obligation to shareholders to maximise profit. That's just formalized greed.
    - NeedMoreTea 8y ago
      > you actually have an obligation to shareholders to maximise profit. A convenient myth common in the UK and US. There are no laws that require shareholders to be put first. How many directors have been prosecuted for not maximising profit?
      - adharmad 8y ago
        Yes there are no laws but I always wonder about this. If people are serious about testing this premise, why not be upfront with the investors and actually tell them that "maximizing profit is not one of our (primary) goals"?
        deleted 8y ago
        [deleted]
        NeedMoreTea 8y ago
skywhopper 8y ago
These companies are intentionally walking a careful line of spending a ton of money to create a market-leading product and to capture as much of the market as possible early on. They could easily be cash-flow positive and take on less investment, but it's also very possible that competing products or service providers will overtake them or become dominant in the market they are trying to establish for themselves. So you don't want to miss out on the opportunity to be the big fish in your pond (you may be unable to keep making money in the long term if you aren't the market leader), but you don't want to grow your costs so fast that you can never catch up. That's the balancing act being played. And your early-stage investors who have lots of control will push hard to play it aggressively in later stages, because they want to make huge returns. And when there are people out there willing to give you tens of millions of dollars and by extension several years more guaranteed life of your company without you having to do the hard work to hammer out actual profit anytime soon, it's going to be hard if not impossible to turn down.
- zzzcpan 8y ago
  > but it's also very possible that competing products or service providers will overtake them or become dominant in the market they are trying to establish for themselves. It's not really possible, they are just playing the startup game. Honest non Patreon sounding justifications are pretty hard to come up with at this point.
zachsnow 8y ago
99% of the job building the core tech; the other 99% of the job is sales, support, account management, marketing, etc. It’s never just the product, no matter how much we builder types might like. (No idea whether 60M is the right number for the rest though.)
- 1stcity3rdcoast 8y ago
  That adds up to 198%, but that’s effectively correct when you’re scaling up a company!
- sk5t 8y ago
  Sometimes writing the code is, like, 10% or 20% of the work. Everything else--marketing, hiring, lead gen, legal, accounting, billing, contract negotiation, compliance, on and on--while not creative work, absolutely and disappointingly cannot be ignored.
Waterluvian 8y ago
Companies suffer from Mrs. Armitage's Bike, where they're not happy with what they've got and need more. I wish more companies could just do one thing well and scale to whatever size it is that does that.
mbesto 8y ago
> I'm always amazed how startups like this where R&D practically cost nothing are not profitable yet S&M is a helluva drug. Notice something common about the "Other SG&A" in all of these? https://www.marketwatch.com/investing/stock/mdb/financials https://www.marketwatch.com/investing/stock/mdb/financials https://www.marketwatch.com/investing/stock/cldr/financials https://www.marketwatch.com/investing/stock/cldr/financials https://www.marketwatch.com/investing/stock/rht/financials https://www.marketwatch.com/investing/stock/rht/financials At the end of the day, DCF is really what matters and DCF != profit
nunez 8y ago
> C'mon guys 99% of the work is already done by antirez and the open source community. That's the problem. Enterprising open-source stuff is really hard. Either you're selling support for already-open-source stuff, or you're selling an enterprise variant with extra goodies and throwing a support plan on top of that.
nindalf 8y ago
> 99% of the work is done by antirez and the open source community Redis Labs employs antirez and therefore sponsor the open source work on redis. At least a part of this VC money is going towards making a great open source redis. As a user, that makes me happy. https://redislabs.com/team_post_type/salvatore-sanfilippo-lead-open-source-redis-development/ https://redislabs.com/team_post_type/salvatore-sanfilippo-le...

Scarbutt 8y ago

* C'mon guys 99% of the work is already done by antirez* Yes, but maybe he's not a business man or is not in his interest to pursue the road of something like redis labs.

carlosdp 8y ago
That wasn't really the original commenter's point though...

antirez 8y ago

Basically what happens is that even if you start to be cash positive, you want to get a bigger company, so you need to scale a lot the sales team and the customer support team, so you spend more money in order to end with more customers, not caring about the short term profitability. This is common to most startups basically. Btw the Redis Labs development team at this point is quite large, because Redis open source is the core, but the company produces a number of things in order to provide a good managed Redis experience, all the additional features and modules, and so forth. But even so, I think it is accurate to say that most money in most companies of this kind will go to orchestrate the company at a different level, not just R&D.

ljm 8y ago
> even if you start to be cash positive, you want to get a bigger company I am really interested to hear how you would square this against, say, Bssecamp's modus operandi. How would you define 'enough'?
- kolinko 8y ago
  If you took VC money, 'enough' is when you cannot expect to profit from more money put into the company. (something to do with 'NPV' or net-present value, if I'm not mistaken) And it's not about greed really - you actually have an obligation to shareholders to maximise profit.
  - risaacs99 8y ago
    If you take someone's money, you only have a duty to fulfill your promises. Plenty of for-profit companies exist partially for some social good, or exist to further some multifaceted goals. If you can convince someone to invest in those types of goals, nothing is stopping you.
  - skrebbel 8y ago
    > And it's not about greed really - you actually have an obligation to shareholders to maximise profit. That's just formalized greed.
  - NeedMoreTea 8y ago
    > you actually have an obligation to shareholders to maximise profit. A convenient myth common in the UK and US. There are no laws that require shareholders to be put first. How many directors have been prosecuted for not maximising profit?
    - adharmad 8y ago
      Yes there are no laws but I always wonder about this. If people are serious about testing this premise, why not be upfront with the investors and actually tell them that "maximizing profit is not one of our (primary) goals"?
      - deleted 8y ago
        [deleted]
      - NeedMoreTea 8y ago

skywhopper 8y ago

These companies are intentionally walking a careful line of spending a ton of money to create a market-leading product and to capture as much of the market as possible early on. They could easily be cash-flow positive and take on less investment, but it's also very possible that competing products or service providers will overtake them or become dominant in the market they are trying to establish for themselves. So you don't want to miss out on the opportunity to be the big fish in your pond (you may be unable to keep making money in the long term if you aren't the market leader), but you don't want to grow your costs so fast that you can never catch up. That's the balancing act being played. And your early-stage investors who have lots of control will push hard to play it aggressively in later stages, because they want to make huge returns. And when there are people out there willing to give you tens of millions of dollars and by extension several years more guaranteed life of your company without you having to do the hard work to hammer out actual profit anytime soon, it's going to be hard if not impossible to turn down.

zzzcpan 8y ago
> but it's also very possible that competing products or service providers will overtake them or become dominant in the market they are trying to establish for themselves. It's not really possible, they are just playing the startup game. Honest non Patreon sounding justifications are pretty hard to come up with at this point.

zachsnow 8y ago

99% of the job building the core tech; the other 99% of the job is sales, support, account management, marketing, etc. It’s never just the product, no matter how much we builder types might like. (No idea whether 60M is the right number for the rest though.)

1stcity3rdcoast 8y ago
That adds up to 198%, but that’s effectively correct when you’re scaling up a company!
sk5t 8y ago
Sometimes writing the code is, like, 10% or 20% of the work. Everything else--marketing, hiring, lead gen, legal, accounting, billing, contract negotiation, compliance, on and on--while not creative work, absolutely and disappointingly cannot be ignored.

Waterluvian 8y ago

Companies suffer from Mrs. Armitage's Bike, where they're not happy with what they've got and need more. I wish more companies could just do one thing well and scale to whatever size it is that does that.

mbesto 8y ago

> I'm always amazed how startups like this where R&D practically cost nothing are not profitable yet S&M is a helluva drug. Notice something common about the "Other SG&A" in all of these? https://www.marketwatch.com/investing/stock/mdb/financials https://www.marketwatch.com/investing/stock/mdb/financials https://www.marketwatch.com/investing/stock/cldr/financials https://www.marketwatch.com/investing/stock/cldr/financials https://www.marketwatch.com/investing/stock/rht/financials https://www.marketwatch.com/investing/stock/rht/financials At the end of the day, DCF is really what matters and DCF != profit

nunez 8y ago

> C'mon guys 99% of the work is already done by antirez and the open source community. That's the problem. Enterprising open-source stuff is really hard. Either you're selling support for already-open-source stuff, or you're selling an enterprise variant with extra goodies and throwing a support plan on top of that.

nindalf 8y ago

> 99% of the work is done by antirez and the open source community Redis Labs employs antirez and therefore sponsor the open source work on redis. At least a part of this VC money is going towards making a great open source redis. As a user, that makes me happy. https://redislabs.com/team_post_type/salvatore-sanfilippo-lead-open-source-redis-development/ https://redislabs.com/team_post_type/salvatore-sanfilippo-le...