According to Gartner, 75% of all databases will be deployed or migrated to the cloud by 2022. Cloud database management accounts for 68% of the growth in the worldwide database management market. As businesses develop robust applications in a data-driven world to address both customer and internal needs, they’re embracing modern, scalable, and resilient cloud solutions as opposed to legacy relational options like MySQL and Oracle to handle their transactional, application, and analytical data requirements. Cockroach Labs has developed CockroachDB, the cloud-native, distributed, SQL-compliant database. By using data architecture designed specifically for the cloud, applications can be scaled faster on-demand with minimal cost, outages are reduced, and the exponential amount of data being created and accessed can be handled more efficiently. To reduce friction, the company’s solutions are open-source and Cockroach Labs offers both self-serve and hosted options for its 200+ customers that include Bose, AllSaints, eBay, and Comcast that have contributed to a 3x increase in annual recurring revenue in the last year through Q3.
AlleyWatch caught up with Cockroach Labs CMO Peter Guagenti to learn more how the company is powering the fundamental shift of database architecture to the cloud, strategic plans, latest round of funding, which brings the total funding raised to $633M, and much, much more.
Who were your investors and how much did you raise?
We announced a $278 million Series F, which has now brought the company’s valuation to $5 billion. The investment round was led by Greenoaks with participation from Altimeter, BOND, Benchmark, Coatue, FirstMark, GV, Index Ventures, J.P. Morgan, Lone Pine Capital, Redpoint Ventures, and Tiger Global.
Tell us about the product or service that Cockroach Labs offers.
Cockroach Labs is the creator of CockroachDB, a cloud-native distributed SQL database. Helping companies of all sizes — and the apps they develop — to scale fast, survive failures, and thrive everywhere. CockroachDB is the ideal choice to serve the evolving needs of today’s most innovative development teams, from the smallest startup to the largest category leader and every stage in between. We have partnerships with two of the major cloud providers, AWS and Google, and are now Google Cloud Run’s first database partner. Additionally, CockroachDB was just named to the 2021 Gartner Magic Quadrant for Cloud Database Management Systems, validating both the emerging distributed DBMS category and Cockroach Labs’ market momentum as an innovator within it.
What inspired the start of Cockroach Labs?
Cockroach Labs and CockroachDB was born from the frustration three former Google engineers (Spencer Kimball, Peter Mattis, and Ben Darnell) felt with the lack of sophisticated database technology available in the open-source ecosystem. In 2015, they set out to provide a next-generation cloud-native database capable of picking up the baton from venerable, but aging, monolithic databases like Oracle, Postgres, and MySQL. They understood the world-changing applications of tomorrow require data architectures capable of exploiting the true benefits of the global public cloud. These companies are being built today, and we believe these are the innovations that will assume their place in the future ranks of the Fortune 500. To do that they need operational databases that are resilient to cloud outages while accommodating massive growth in data intensivity from globally-dispersed customers.
Our founders’ combined experience working at some of the world’s biggest technology-focused companies made it clear that those tools would need to be built from the ground up. Almost seven years later, CockroachDB is running at scale in more than 200 customers, many of which are the fastest-growing leaders in their respective verticals. The mission to make data easy for every developer and the impact it has had on our customers is what drives us.
How is Cockroach Labs different?
The traditional databases many still use today weren’t built for modern applications. Unfit to realize the possibilities of the cloud and unable to keep up with how fast companies need to go, they have become a festering ground of complexity holding up future innovation.
Cockroach Labs re-wrote the database from scratch for the demands of today’s data-driven world. CockroachDB is architected to scale elastically, so it’s prepared to handle the demands of tomorrow. Cloud-native, open-source, and indestructible—CockroachDB makes it easier to build and scale apps. It gives companies the freedom to serve customers anywhere. And it’s backed by world-class documentation and dedicated support.
Today, Cockroach Labs helps organizations of all sizes—from single-person startups to multinational enterprises—manage their data seamlessly.
What market does Cockroach Labs target and how big is it?
Cockroach Labs has seen accelerated growth over the last few years and has the massive opportunity to become a leader in the emerging cloud database-as-a-service market. According to IDC, total database management systems software is forecast to see rapid growth over the next 5 years, reaching $104.5 billion in 2025 — one of the largest and fastest-growing categories in the software market. The rapid growth of both the database market and CockroachDB reflects a fundamental shift, as organizations across industries have transitioned to a cloud-first IT philosophy and are increasingly turning to cloud databases for new initiatives or to modernize existing systems.
What’s your business model?
In addition to removing the complexity inherent in cloud deployments, our goal was to build a data architecture capable of scaling globally, with costs that exactly match usage. In pursuit of this vision, in October we launched CockroachDB Serverless, the first truly serverless relational database that requires no capacity planning around numbers or sizes of nodes, elastically scales to any size without worrying about sharding, has global geographic reach, and survives cloud outages as a matter of course.
What makes it truly serverless is that it can also scale down to zero and then launch from a cold start in 100s of milliseconds. This means it can be offered without a minimum cost, allowing the starting point to be a very generous and perpetual free tier. Applications that scale elastically beyond the free tier pay only and exactly for what they use. We want to empower developers everywhere to build the kind of applications that can change the world and to build them quickly and inexpensively.
What are your post-COVID office plans?
Cockroach Labs approaches return to office with employee choice top of mind. Similar to the open enrollment process, we will allow employees to select one of three preferred models (in-office, remote, or hybrid), with the purpose of providing maximum flexibility. For employees planning to return to the office in the new year, we expanded our headquarters in New York City by investing in a new office space and are also opening offices in San Francisco, Toronto, and London. We will continue to offer support for virtual employees, including remote collaboration tools and virtual team events.
Cockroach Labs approaches return to office with employee choice top of mind. Similar to the open enrollment process, we will allow employees to select one of three preferred models (in-office, remote, or hybrid), with the purpose of providing maximum flexibility. For employees planning to return to the office in the new year, we expanded our headquarters in New York City by investing in a new office space and are also opening offices in San Francisco, Toronto, and London. We will continue to offer support for virtual employees, including remote collaboration tools and virtual team events.
What was the funding process like?
Our existing investors and other interested parties have been following our progress in the market and our exceptional growth, and preemptively approached us with funding opportunities. Our newest Series F funding was led by an existing investor, with the overwhelming majority of the funds invested coming from other existing investors.
What are the biggest challenges that you faced while raising capital?
For this round, we were dramatically oversubscribed and unable to accommodate new investors in the way we would have hoped to.
What factors about your business led your investors to write the check?
This funding round reflects our accelerated growth and the massive opportunity to become a leader in the emerging cloud database-as-a-service market. Our investors have seen us grow from the beginning to now having more than 200 customers with tens of thousands of clusters in deployment around the world. We’ve tripled our annual recurring revenue in the last year, seeing a 500% growth in cloud revenue in the last quarter alone as customers shifted spending to the transactional database-as-a-service. Additionally, we’ve built a loyal following among developers with over 22,000 Github stars and our recent CockroachDB Serverless beta launch brought well over 10,000 new users to the platform.
This funding round reflects our accelerated growth and the massive opportunity to become a leader in the emerging cloud database-as-a-service market. Our investors have seen us grow from the beginning to now having more than 200 customers with tens of thousands of clusters in deployment around the world. We’ve tripled our annual recurring revenue in the last year, seeing a 500% growth in cloud revenue in the last quarter alone as customers shifted spending to the transactional database-as-a-service. Additionally, we’ve built a loyal following among developers with over 22,000 Github stars and our recent CockroachDB Serverless beta launch brought well over 10,000 new users to the platform.
What are the milestones you plan to achieve in the next six months?
With this Series F, we are well-financed to continue our investment in the development of our innovative and well-loved cloud database, as well as driving continued customer growth and expansion into new markets. This new funding will allow us to continue to invest heavily in product R&D and to double down on gaining market share.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Starting a tech business in New York provides great opportunity because there is less competition than in other areas of the country. My advice to tech founders in NY would be to invest in great talent. Engineering talent is a hot commodity in today’s market and New York offers a great pool of talent to recruit and foster.
Where do you see the company going now over the near term?
Our mission is to create a data platform that will help developers everywhere — from the smallest start-up to the category leader and every stage in between — to build the kind of applications that can change the world without having to worry about the constraints or cost of the database.
