How to Beat a Giant at Its Own Game
Note: This post has been updated since it was first published to clarify who founded 10Gen.
When 10Gen went into business a few years ago, you might have wondered if it was a quixotic quest. The company would wind up competing with one of the biggest companies in software in one of the toughest areas of corporate IT: databases.
But the windmills quickly disappeared.
Two DoubleClick veterans, founder and CTO Dwight Merriman and engineer Eliot Horowitz, started 10Gen and spearheaded development of MongoDB, which has become one of the leading open source so-called NoSQL databases because it eschews traditional relational database structures. In the process, 10Gen recently closed on a $42 million funding round, bringing total investment in the company to $73.4 million. In a recent interview with Max Schireson a nine-year veteran of Oracle who became president of 10Gen in February 2011, MongoDB has more than 2.5 million downloads and 500 corporations pay for the product. "They range from Web startups like Foursquare and Craigslist all the way up to global giant telcos like Telefonica; big banks; and the governments of the U.S., the U.K., and India," he says.
How did 10Gen get out from under Oracle's shadow?
Solve the Problems the Giant Overlooks
First, Schireson didn't assume that the way people have solved particular problems for decades is the only approach. "The data model is a more natural fit to a lot of applications" such as product catalogs, document archiving, data analysis, and even gaming, he says. Oracle is a relational database, which means companies have to set out explicit data structures and relationships among them at the start. But when so much data is decentralized, mobile, and flexible in nature, the relational approach can fall short.
Developer and corporate customers needed different answers. However, companies like Oracle that focused on traditional database systems had no financial incentive to pursue different approaches. It's the classic innovator's dilemma described by Clayton Christensen.
Give the Product Away
The second critical decision was to give the product away. Oracle, IBM, and Microsoft have immense resources to promote their products. But achieving growth at a start-up, even with venture backing, is a challenge. So, 10Gen invoked the power of open-source software by giving away copies for individual or exploratory use while charging when companies use the software for production applications. When they made MongoDB available for the first time in February 2009, there were 700 downloads. Word of mouth spread. By 2010, there were tens of thousands of downloads per month. That jumped by a factor of ten last year.
"Listen carefully to clients about what they want the products to do and over-invest in making clients successful," Schireson says. "One of our big investments is in making sure that anybody in the community that asks a question gets a good answer. Not the one-hour response time guarantee [for paid customers], but we want to make sure people using the product have a good experience and get what they need to be successful."
Schireson wouldn't share revenue numbers, but said that "monetization is working extremely well because more and more of the people using it are becoming subscribers." And 10Gen is growing its sales force--one use for all that VC money--to expand its financial effectiveness. Of course, charging a lot less than your big competitors doesn't help, when companies are still concerned about the economy and want to make their spending as efficient as possible.
ERIK SHERMAN | Columnist
Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.