MongoDB disrupts database software market

 MongoDB today announced upgrades which expand the uses of its database software as well as enhance security and privacy features.

The software is used by developers to build querying, indexing and other applications for databases. It offers “developers access to technologies that align to the way they think and code to enable high productivity,” Dev Ittycheria, chief executive, said in a statement.

Headquartered in New York, with 4,000 employees, MongoDB has 27,000 customers in over 100 countries. Clients include Google, Adobe, e-bay and the UK government. More than 1.5 million have registered for MongoDB University, which offers free training on using the software.

Customers shift to MongoDB because they find that, on their older database software, applications do not perform well, it is hard to add new features and they have service problems, Ittycheria, 53-years-old, said during an interview with Matt Turck of venture capital firm First Mark.

MongoDB software on mobile devices enable employees at 7-Eleven’s 8,500 stores to manage inventory, employee hours and other operations. The data is synced and backed up in the cloud, linking automatically to all other reporting systems at 7-Eleven.

The software is “massively popular with developers due to its flexibility, ease of use, and agile capability,” Carl Olofson, Vice President at research firm IDC, said in a statement.

MongoDB was founded in 2007 by Dwight Merriman, Eliot Horowitz and Kevin Ryan, who had earlier founded DoubleClick, an Internet advertising company.

DoubleClick served 400,000 ads per second, but often struggled with scalability and agility. The start-up developed and used many custom data stores to work around the shortcomings of existing databases, which led to the founding of MongoDB.

In 2007, DoubleClick was bought by Google for $3.1 billion.

In 2014, Dev Ittycheria was appointed chief executive of MongoDB. That year it had $30 million in revenues and about 250 employees.

He took the company public in 2017, at a market value of $1.2 billion, the first public offering of a database company in over 26 years. In fiscal year ended January 2017, MongoDB had $101 million in revenues and $86 million in pre-tax losses.

“Most applications today run on a database technology that was introduced in the 1970s,” Ittycheria told CNBC in 2017. “In the ’70s, I was using a rotary phone to have a phone conversation…people are looking for a modern, scalable and flexible (database) platform.”

 In fiscal 2021, MongoDB revenues were $590 million, 40% higher than in the previous year, almost all of it from subscriptions. It had a pre-tax loss of $263 million.

Ittycheria is spending heavily to boost sales and improve the software. He says a sales team, focused on reaching out to potential clients, is key to revenue growth for a start-up which competes against long-entrenched vendors, who have close ties with customers.

MongoDB competes against legacy database vendors Microsoft, Oracle, SAP and IBM as well as Amazon’s cloud-based software. In fiscal 2021, MongoDB spent $325 million, or 55% of revenues, on sales and marketing.

MongoDB also spent $205 million, or 35% of revenues, on research and development to enhance the ease of use and productivity of its software and add new capabilities. .

Earlier, Ittycheria was a managing director at OpenView Venture Partners in Boston and a venture partner at Greylock Partners in Menlo Park, California.

He started his career as a management trainee at AT&T in the early 1990’s. But though he rose through the ranks, he was frustrated with big company politics.  

In 1995, he went to work for a smaller, entrepreneurial company in the telecommunications field. Seeing the growth of the internet, and companies getting funded and bought at high valuations, he decided to launch his own business.   

“I really wanted to be at the intersection of business and technology. I didn’t want to be stuck behind a computer all day,” he told Turck.

In 1998, Ittycheria co-founded Applica, an early cloud-based software company, and served as its CEO. About a year later, it was purchased by Breakaway Solutions, an e-commerce solutions provider. He then served as Breakaway’s Senior Vice President.

The company, which was public, had a market valuation of $2 billion in 2000. That year it had $412 million in operating losses on $103 million in revenues. In 2001, after the internet bubble burst, Breakaway shut down operations, since 70% of its customers were internet companies which ran out of funding.  

In 2001, learning from the failure of Applica and while an entrepreneur in residence at Bessemer Venture Partners, Ittycheria founded BladeLogic. It was a software platform to configure and manage the rapid growth of data centers, as a result of the expansion of internet usage.

In 2008, BladeLogic, whose clients included GE and Sprint, was bought by BMC Software for $900 million. Following the acquisition, Ittycheria served as President of BMC. He has worked on five public offerings and the acquisitions of two major companies.

“I hated hospitals, so I decided to become an engineer,” Ittycheria told John Fortt of CNBC. He graduated from Rutgers University, the major state school in New Jersey, with a B.S. in Electrical Engineering.

Ittycheria serves on the board of Datadog, a public software company. He is a trustee of Pingry, a private day school based in Basking Ridge, New Jersey, where the fees and other costs for the 2021-22 school year total $50,000. He and his wife, Dr. Anju Thomas have one child who finished high school from Pingry and another who is at the school.    

Ittycheria is from a family with roots in Kerala, South India. He was born in north India, where his maternal grandfather served as an Indian government official. From age 7, Ittycheria moved with his family to the UK, Europe, Canada and Nigeria, where his dad worked for an oil company.

The family migrated to the U.S. when he was 12. His father got a Master’s degree from Cornell University, New York, which enabled him to move to a new career. He worked in the satellite operations of RCA and then GE, both in New Jersey.

In fiscal 2021, Ittycheria received $8.5 million in salary and stock options at MongoDB. His stock ownership in the company is worth $552 million.

Since going public in 2017, under Ittycheria’s leadership, MongoDB’s market value has risen nearly 20-fold to $23 billion. At 25 times estimated fiscal 2022 sales, the current valuation is expensive, especially for a loss-making company.  

Evidently investors are bullish on the company’s long-term prospects for revenue growth and profitability since database software is one area of technology that has hardly been disrupted in three decades. MongoDB has only 1% of the estimated $70 billion database software market.

Ittycheria sees his role as CEO as “a glorified head of HR (human resources) because 80% of the issues I’m dealing with are around people,” he told Turck of First Mark. “Who’s moving up? Who’s moving sideways? And sometimes who’s moving backwards…A leader has to essentially recruit well.” 

His philosophy in life, he added, has always been to be “the student of the game, not the master of the game…you constantly have to work at your trade craft.”

Ittycheria told CNBC’s John Fortt, “I am who I am because of my mother…I get my strength and confidence from her. Like her, I just refuse to give up,” in the face of setbacks and challenges.

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