7 ms·

Well let me be the first to say that I think that is an absolutely fucking crazy valuation and that MongoDB are either nuts or disingenuous for signing up for i

by venus 13y ago

Well let me be the first to say that I think that is an absolutely fucking crazy valuation and that MongoDB are either nuts or disingenuous for signing up for it. I would be astounded - astounded - if MongoDB generate even a tenth of that, just in revenue, ever. One point two billion dollars. You have got to be kidding me. You have got to be fucking kidding me.

Confusion 13y ago
Fortunately there is no startup bubble.
- venus 13y ago
  Thank goodness for that! If there was, this development would be quite concerning.
pc 13y ago
I hate to be That Guy, but I think this demands a bit more rigor. $1.2B is certainly a big number, but let's unpack what it means. Do you think it's impossible that MongoDB gets to $100M of net income? For a company that sells to the enterprise and whose product has significant adoption, that definitely doesn't sound implausible to me. Given their financials and growth figures, how would you value MongoDB?
- yo-mf 13y ago
  Dear "That Guy", spot on.
- venus 13y ago
  I don't know. I haven't seen these financials. But it's a frigging database, and not a particularly good one. A billion dollars!? Look, I'm not claiming to be omniscient. I'm sure they're smart people. But would you buy stock in MongoDB at a 1.2b valuation? Would you? As for me - Absolutely not.
  - pc 13y ago
    > I don't know. I haven't seen these financials. But it's a frigging database, and not a particularly good one. A billion dollars!? Salesforce is a frigging CRM tool; SAP is a frigging ERP system; Oracle is a frigging database. And not particularly good ones at that, in the estimation of many of their users. Their market caps are $30 billion, $90 billion, and $150 billion, respectively. I'm disappointed that yours is the top-voted comment. We can do better than this.
    - AlisdairO 13y ago
      > Oracle is a frigging database It's really not. Oracle has an enormous middleware portfolio, and plenty of other niches to boot. And, to be honest, much as it may be unfriendly, it's a pretty good database.
      - pc 13y ago
        Yeah, I was being hyperbolic to try to make the point -- you can dismiss anything as merely a frigging X. You're absolutely right with regard to Oracle. (Tangent: for anyone interested in Oracle's history/business, or just enterprise software in general, I highly recommend http://www.amazon.com/dp/0743225058 http://www.amazon.com/dp/0743225058)
        prayag 13y ago
        This book is highly recommended by Aaron Levie from Box too. Fantastic book.
        stingraycharles 13y ago
        I agree with you: at one point in time, Oracle probably was worth $1.2 billion. For all we know, MongoDB could grow into a company that spawns a lot of NoSQL middleware whatevers.
        awavering 13y ago
        Oracle had a net income of over $10B in 2013. That's some serious cashflow. https://www.google.com/finance?q=NASDAQ:ORCL&fstype=ii&ei=lMH6UPjjJcXLlAXw4QE https://www.google.com/finance?q=NASDAQ:ORCL&fstype=ii&ei=lM...
- tlogan 13y ago
  The value of MongoDB is how much Larry Ellison is willing to pay for them. That is that.
  - scorpion032 13y ago
    Cannot be emphasised enough. Less than 1% of Oracle's market cap; and pretty sure they could complete their offering with a NoSQL database.
    - tlogan 13y ago
      Exactly: Oracle will first try to write the code and if that does not work Oracle will write a check.
    - pron 13y ago
      Oracle already has a NoSQL database, and from what I hear, it's pretty good: http://www.oracle.com/technetwork/products/nosqldb/overview/index.html http://www.oracle.com/technetwork/products/nosqldb/overview/...
      - druiid 13y ago
        Yeah. They came in once and tried to sell us on it. Wasn't all that interesting honestly and I believe we'll keep on using Couchbase.
- dbags 13y ago
  More importantly, the number is utterly and completely meaningless without the rest of the term sheet. To be extreme, think of the difference between this investment as all common stock, versus this investment as participating preferred with 3x liquidation preferences. I've seen companies trade liquidation preferences for higher valuations before, because they wanted to pretend a down round wasn't, or because they wanted to feign a greater level of success than had been earned. It wouldn't be unprecedented, particularly from a marketing-savvy company like Mongo that knows a 3 comma valuation would help close deals.
codex 13y ago
I'd agree. Open source businesses have never been able to extract the value that closed source business can. Imagine if Oracle made their database open source; a dozen repackages would pop up, and Oracle's revenue would drop to a fraction of its former level.
- dblock 13y ago
  Redhat? 8.54BB market cap.
  - codex 13y ago
    Redhat is the perfect example. Compare their market cap. to OS vendors which are closed source: VMWare, Microsoft, and Apple. It's a pittance. Profit is only $150M a year depite the dominance of Linux in the server market. Oracle itself is valued at $150 billion. And for every Redhat, there's a Mandriva or a VA Linux. The problem with selling service and support is that you have no incentive to make the product better or easier to use, and every incentive to make it usable only by experts, with a support contract. It's a bad business all around. And if the product is open source, it's easy enough to not pay for even if a need for support is baked into the product. Open source can be a business. It's a viable strategy if you need a differentiator to compete with more established competitors, and the total addressable market you're looking to disrupt is ginormous. However, it's not a particularly good one in relative terms. The revenue generated per dollar of R&D is so small that it's difficult to fund innovation.
    - qwerta 13y ago
      If Linux would be closed source, RedHat would have much more expenses. No more free beta testing from Fedora users. Also Microsoft and Apple are probably on different market. For most deployments Windows or MacOSx based servers are not even considered.
      - sandstrom 13y ago
        I think the second paragraph highlights the reason: yes, open source companies make much less money than closed source alternatives, but in some markets closed source cannot compete with the OS equivalent -- e.g. most servers run on open source operating systems.
brugidou 13y ago
As an engineer directly involved in a company working on one of the biggest mongodb deployments, i also believe that this is crazy because the technology truly sucks outside of a very narrow use case (prototyping, no shard). However they market it so much and they accept very flexible deals with enterprises, in combination with the easy-to-bootstrap for the VP/Manager/CTO, they can probably sell a lot of it.
- nasalgoat 13y ago
  They offer a deeply discounted option for startups and once you have lock-in (ie. running sharded, basically) and become dependent on the support, they increase the cost by 10x.
  - threeseed 13y ago
    Well here's a thought. Don't become dependant on support. EVERY company who sells to enterprises makes their revenue from support. It's been this way for decades. So if you are unhappy paying the money then invest in dedicated people.
    - nasalgoat 13y ago
      Unlike something like Oracle that has been around for decades, at this point the admins I have are probably some of the most experienced MongoDB admins there are. I, myself, have given several talks at MongoDB groups and without exception have been the most expert user in attendance. The only people who know more about MongoDB at this point work for 10gen.
- jfb 13y ago
  Enterprise software deals are never closed on technical merit.
brudgers 13y ago
The investors are putting up capital based on what they think Mongo will be worth at some future date after they have used the new capital to fuel growth. It's a bet, not an accounting exercise, and the bet is based on what might happen five or more years down the road. The valuation is really irrelevant because it is a side effect of the negotiations between a syndicate with $150 million to invest and a company looking to raise money. If the investors had negotiated less successfully, the valuation would be higher. If the company had been less successful, the valuation would have been lower. But in either of those scenarios there would be little difference in their returns if Mongo goes bust, and little difference if they become Oracle sized in the next ten years.

by venus 13y ago

Confusion 13y ago

Fortunately there is no startup bubble.

venus 13y ago
Thank goodness for that! If there was, this development would be quite concerning.

pc 13y ago

I hate to be That Guy, but I think this demands a bit more rigor. $1.2B is certainly a big number, but let's unpack what it means. Do you think it's impossible that MongoDB gets to $100M of net income? For a company that sells to the enterprise and whose product has significant adoption, that definitely doesn't sound implausible to me. Given their financials and growth figures, how would you value MongoDB?

yo-mf 13y ago
Dear "That Guy", spot on.
venus 13y ago
I don't know. I haven't seen these financials. But it's a frigging database, and not a particularly good one. A billion dollars!? Look, I'm not claiming to be omniscient. I'm sure they're smart people. But would you buy stock in MongoDB at a 1.2b valuation? Would you? As for me - Absolutely not.
- pc 13y ago
  > I don't know. I haven't seen these financials. But it's a frigging database, and not a particularly good one. A billion dollars!? Salesforce is a frigging CRM tool; SAP is a frigging ERP system; Oracle is a frigging database. And not particularly good ones at that, in the estimation of many of their users. Their market caps are $30 billion, $90 billion, and $150 billion, respectively. I'm disappointed that yours is the top-voted comment. We can do better than this.
  - AlisdairO 13y ago
    > Oracle is a frigging database It's really not. Oracle has an enormous middleware portfolio, and plenty of other niches to boot. And, to be honest, much as it may be unfriendly, it's a pretty good database.
    - pc 13y ago
      Yeah, I was being hyperbolic to try to make the point -- you can dismiss anything as merely a frigging X. You're absolutely right with regard to Oracle. (Tangent: for anyone interested in Oracle's history/business, or just enterprise software in general, I highly recommend http://www.amazon.com/dp/0743225058 http://www.amazon.com/dp/0743225058)
      - prayag 13y ago
        This book is highly recommended by Aaron Levie from Box too. Fantastic book.
      - stingraycharles 13y ago
        I agree with you: at one point in time, Oracle probably was worth $1.2 billion. For all we know, MongoDB could grow into a company that spawns a lot of NoSQL middleware whatevers.
        awavering 13y ago
        Oracle had a net income of over $10B in 2013. That's some serious cashflow. https://www.google.com/finance?q=NASDAQ:ORCL&fstype=ii&ei=lMH6UPjjJcXLlAXw4QE https://www.google.com/finance?q=NASDAQ:ORCL&fstype=ii&ei=lM...
tlogan 13y ago
The value of MongoDB is how much Larry Ellison is willing to pay for them. That is that.
- scorpion032 13y ago
  Cannot be emphasised enough. Less than 1% of Oracle's market cap; and pretty sure they could complete their offering with a NoSQL database.
  - tlogan 13y ago
    Exactly: Oracle will first try to write the code and if that does not work Oracle will write a check.
  - pron 13y ago
    Oracle already has a NoSQL database, and from what I hear, it's pretty good: http://www.oracle.com/technetwork/products/nosqldb/overview/index.html http://www.oracle.com/technetwork/products/nosqldb/overview/...
    - druiid 13y ago
      Yeah. They came in once and tried to sell us on it. Wasn't all that interesting honestly and I believe we'll keep on using Couchbase.
dbags 13y ago
More importantly, the number is utterly and completely meaningless without the rest of the term sheet. To be extreme, think of the difference between this investment as all common stock, versus this investment as participating preferred with 3x liquidation preferences. I've seen companies trade liquidation preferences for higher valuations before, because they wanted to pretend a down round wasn't, or because they wanted to feign a greater level of success than had been earned. It wouldn't be unprecedented, particularly from a marketing-savvy company like Mongo that knows a 3 comma valuation would help close deals.

codex 13y ago

I'd agree. Open source businesses have never been able to extract the value that closed source business can. Imagine if Oracle made their database open source; a dozen repackages would pop up, and Oracle's revenue would drop to a fraction of its former level.

dblock 13y ago
Redhat? 8.54BB market cap.
- codex 13y ago
  Redhat is the perfect example. Compare their market cap. to OS vendors which are closed source: VMWare, Microsoft, and Apple. It's a pittance. Profit is only $150M a year depite the dominance of Linux in the server market. Oracle itself is valued at $150 billion. And for every Redhat, there's a Mandriva or a VA Linux. The problem with selling service and support is that you have no incentive to make the product better or easier to use, and every incentive to make it usable only by experts, with a support contract. It's a bad business all around. And if the product is open source, it's easy enough to not pay for even if a need for support is baked into the product. Open source can be a business. It's a viable strategy if you need a differentiator to compete with more established competitors, and the total addressable market you're looking to disrupt is ginormous. However, it's not a particularly good one in relative terms. The revenue generated per dollar of R&D is so small that it's difficult to fund innovation.
  - qwerta 13y ago
    If Linux would be closed source, RedHat would have much more expenses. No more free beta testing from Fedora users. Also Microsoft and Apple are probably on different market. For most deployments Windows or MacOSx based servers are not even considered.
    - sandstrom 13y ago
      I think the second paragraph highlights the reason: yes, open source companies make much less money than closed source alternatives, but in some markets closed source cannot compete with the OS equivalent -- e.g. most servers run on open source operating systems.

brugidou 13y ago

As an engineer directly involved in a company working on one of the biggest mongodb deployments, i also believe that this is crazy because the technology truly sucks outside of a very narrow use case (prototyping, no shard). However they market it so much and they accept very flexible deals with enterprises, in combination with the easy-to-bootstrap for the VP/Manager/CTO, they can probably sell a lot of it.

nasalgoat 13y ago
They offer a deeply discounted option for startups and once you have lock-in (ie. running sharded, basically) and become dependent on the support, they increase the cost by 10x.
- threeseed 13y ago
  Well here's a thought. Don't become dependant on support. EVERY company who sells to enterprises makes their revenue from support. It's been this way for decades. So if you are unhappy paying the money then invest in dedicated people.
  - nasalgoat 13y ago
    Unlike something like Oracle that has been around for decades, at this point the admins I have are probably some of the most experienced MongoDB admins there are. I, myself, have given several talks at MongoDB groups and without exception have been the most expert user in attendance. The only people who know more about MongoDB at this point work for 10gen.
jfb 13y ago
Enterprise software deals are never closed on technical merit.

brudgers 13y ago

The investors are putting up capital based on what they think Mongo will be worth at some future date after they have used the new capital to fuel growth. It's a bet, not an accounting exercise, and the bet is based on what might happen five or more years down the road. The valuation is really irrelevant because it is a side effect of the negotiations between a syndicate with $150 million to invest and a company looking to raise money. If the investors had negotiated less successfully, the valuation would be higher. If the company had been less successful, the valuation would have been lower. But in either of those scenarios there would be little difference in their returns if Mongo goes bust, and little difference if they become Oracle sized in the next ten years.