Why MongoDB is worth $1.2 billion

If document database startup MongoDB is looking to thank someone for its hefty valuation, Larry Ellison should be first in line

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The disruptive force of NoSQL

The history of the tech industry is a history of disruption. Microsoft did it to Novell in the '90s, and Apple continues to disrupt Microsoft. You need an entrenched, immovable dinosaur that is well-adapted to its environment, but also unable to adapt its technology or cost structure quickly enough to new market conditions. It's like the Aztecs: very adaptable to their environment but helpless versus Spanish guns and smallpox. The successful insurgent uses the entrenched player's weaknesses against it while living naturally in a new technical environment. The insurgent is an agent of change, rather than a force to keep the technical and business climate in check.

MongoDB is that technology. Not only is MongoDB considerably lower in cost than Oracle, but adding nodes to a MongoDB cluster is an exercise in simplicity. This plays well as the industry moves to virtual network, storage, and cloud technologies. Scaling Oracle requires combining, configuring, and integrating several complicated technologies (RAC, DataGaurd, GoldenGate, and so on) and a larger amount of hardware with a much larger license and professional service outlay. Meanwhile, Oracle's very consolidation of the market makes it a perfect target for MongoDB. Instead of having to chase the features of several differentiated competitors, MongoDB can shoot at one very big target.

Building for the future

We've been using MongoDB at my company for a few years now. We've been impressed with not only its simplicity and adaptability, but how easily we've been able to scale it to many tasks that we didn't think were possible before. We've also been able to implement these systems for pennies on the dollar compared to what we'd have had to spend for Oracle.

Our biggest concern has been whether MongoDB was a fly-by-night startup that would get snapped up by Oracle or Computer Associates -- and in the process become either unusably complex or unfeasibly expensive, killing much of the competitive advantage our clients love.

A billion-dollar valuation and a $231 million war chest virtually eliminates that concern. If MongoDB gets bought, it will be by someone who truly values the company. More likely, MongoDB is aiming for an IPO.

MongoDB now has the staying power to disrupt the industry. It's virtually impossible to imagine Oracle being able to buy MongoDB for the kind of asking price required, unless Oracle thought it could kill the idea of document databases. If it did, the water would simply move out of one bucket and into another. MongoDB's investors would then dump their stock and reinvest it in a MongoDB fork or a close competitor.

This happened with MySQL, but not as fast. MySQL is simpler to use, maintain, and install than Oracle, but it isn't more capable. Popular wisdom is that it takes a 10-fold improvement to disrupt an entrenched competitor. MySQL is a simpler and cheaper relational database, but it has less capability overall. MongoDB is another animal and for many situations it yields an improvement greater than a factor of 10. It isn't always the best choice, but when it is, it's the best choice by a long shot.

The $231 million investment and the overall movement toward virtualization, big data, and cloud technologies give MongoDB both the resources and the position to redefine the database market. Oracle is now forced to react and play defense. We see this same sort of reaction playing out at Microsoft, but it has so far been largely disastrous and its management is in a panic. Perhaps Ballmer won't be the last bombastic CEO to get the boot?

This article, "Why MongoDB is worth $1.2 billion," was originally published at InfoWorld.com. Keep up on the latest developments in application development, and read more of Andrew Oliver's Strategic Developer blog at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.

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