Redis Labs Raises a $60M Series E Round
techcrunch.com
techcrunch.com
I'm always amazed how startups like this where R&D practically cost nothing are not profitable yet after years in the market and thousands of customers. C'mon guys 99% of the work is already done by antirez and the open source community.
Yes, but maybe he's not a business man or is not in his interest to pursue the road of something like redis labs.
Btw the Redis Labs development team at this point is quite large, because Redis open source is the core, but the company produces a number of things in order to provide a good managed Redis experience, all the additional features and modules, and so forth. But even so, I think it is accurate to say that most money in most companies of this kind will go to orchestrate the company at a different level, not just R&D.
I am really interested to hear how you would square this against, say, Bssecamp's modus operandi.
How would you define 'enough'?
And it's not about greed really - you actually have an obligation to shareholders to maximise profit.
That's just formalized greed.
A convenient myth common in the UK and US. There are no laws that require shareholders to be put first.
How many directors have been prosecuted for not maximising profit?
If people are serious about testing this premise, why not be upfront with the investors and actually tell them that "maximizing profit is not one of our (primary) goals"?
Why not be upfront with investors and tell them keeping the company viable, developing new products, finding better processes, treating staff acceptably, or maintaining the environment are not primary goals?
So why fixate on profit or shareholder value? Once you act as though it is a prime directive, you necessarily relegate the others. There are going to be a lot of times in the life of a company where growth, longevity, research or a dozen other things should take priority for a time.
By not doing so, and continuing to push the continually increasing dividend, you weaken the company. Weaker and ripe for takeover, or lacking the next generation of products that might give 20 more years of profit. Maybe by showing so much greed in your pricing that your customers give up and go elsewhere.
A long lived, vibrant, profitable company is more than just a growing dividend and share price, it's a constant balancing act of all of the above. Profit is indirectly maximised as a result of that balance.
I found a long, but very interesting discussion of the topic: https://skeptics.stackexchange.com/questions/8146/are-u-s-co...
One part is especially worth quoting, from John Kay (a British economist and commentator):
"...and the more shareholder value became a guide to action, the worse the outcome. On the board of the Halifax Building Society, I voted in 1995 for its conversion to a “plc”. We would allow the company to pursue the goal of maximising its value untrammelled by outmoded concepts of mutuality: in barely a decade, almost every last penny of that value was destroyed."
Longevity would have been a better priority in that moment, no?
Not an obligation, but an incentive, as preached by Michael C. Jensen and William H. Meckling in their widely-cited 1976 paper: Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, and in a follow-up HBR article.
In some cases value can be very different than profit, depending on your investors :
- They may want your project to have a positive impact on the local community
- They might only want to have business that are sustainable
- Maybe they care a lot about men/women equality
- Maybe they want to generate recurring revenues
- Or they are looking for short term sale
The question is: are those objectives aligned with what you want to do, or not. Most issues arise when there is a delta there.
Reality is more nuanced. You don't, for example, really know how much profit you'll make from taking more or less investment. It comes down to strategic foresight and belief.. IE not the most reliable guess. IE, a lot depends on the personality and goals of the CEO.
In practical terms, the macro amount of money investors are trying to put in can play a much bigger role than comparing unknown futures. If investors are having trouble investing all the money they want to, the proposition gets more pleasant for the recipient. Less equity, and (more importantly irl, if not formally financial logic) better terms, less loss of control, more choice of investors.
The "fiduciary duty" that obligates companies to make money is also over somewhat academic. IRL, this doesn't really cover strategic decisions. It covers stealing, nepotism, bed-feathering and other blatant shareholder abuse. You could never prosecute a CEO for passing on investment irl.
TLDR: academics formalize these decisions in a clean, whiteboard model of the world. In the whiteboard rule, where the complexity of reality doesn't exist, choices don't really exist either. The CEO just evaluates the npv of taking investment, providing free lunch or launching a new product and the decision is made.
Basecamp could have been slack, but slack ate their cake.
They have successfully resisted the pressure to continually expand.
The problem is that, for a lot of companies, the endgame is continued midsize existence; it’s death when you stop getting new customers and old ones phase out.
The low marginal cost of software doesn’t guarantee winner-take-all markets by any stretch, but it does apply pressure in that direction.
So you don't want to miss out on the opportunity to be the big fish in your pond (you may be unable to keep making money in the long term if you aren't the market leader), but you don't want to grow your costs so fast that you can never catch up.
That's the balancing act being played. And your early-stage investors who have lots of control will push hard to play it aggressively in later stages, because they want to make huge returns. And when there are people out there willing to give you tens of millions of dollars and by extension several years more guaranteed life of your company without you having to do the hard work to hammer out actual profit anytime soon, it's going to be hard if not impossible to turn down.
It's not really possible, they are just playing the startup game. Honest non Patreon sounding justifications are pretty hard to come up with at this point.
It’s never just the product, no matter how much we builder types might like.
(No idea whether 60M is the right number for the rest though.)
S&M is a helluva drug. Notice something common about the "Other SG&A" in all of these?
https://www.marketwatch.com/investing/stock/mdb/financials
https://www.marketwatch.com/investing/stock/cldr/financials
https://www.marketwatch.com/investing/stock/rht/financials
At the end of the day, DCF is really what matters and DCF != profit
That's the problem. Enterprising open-source stuff is really hard. Either you're selling support for already-open-source stuff, or you're selling an enterprise variant with extra goodies and throwing a support plan on top of that.
Redis Labs employs antirez and therefore sponsor the open source work on redis. At least a part of this VC money is going towards making a great open source redis. As a user, that makes me happy.
https://redislabs.com/team_post_type/salvatore-sanfilippo-le...
“When we came out with this new license, there were many different views,” he acknowledged. “Some people condemned that. But after the initial noise calmed down — and especially after some other companies came out with a similar concept — the community now understands that the original concept of open source has to be fixed because it isn’t suitable anymore to the modern era where cloud companies use their monopoly power to adopt any successful open source project without contributing anything to it.”
Okay, so here's the thing, at FOSDEM this year there were multiple events around this issue, and I haven't seen a single person defend the stance of Redis and others. Also the original concept of open source is doing fine, thanks. The problem is a couple of overvalued, VC-backed companies that found out they don't have a business model that is compatible with the promises they made to their investor.
Of course that is baseless speculation, but so is assuming that Redis could be continued to be maintained "by just hiring antirez".
1. Redis Labs anyway pays me full time and Fabio Nicotra (prat time) to just do BSD code. So they are not taking away anything from the OSS part.
2. Internal devs at Redis Labs submit pull requests to the Redis core BSD code base.
So this whole discussion is centered around modules, that is, their POV is that in the cloud era you have to do also things under different licenses. Now it's perfectly licit to disagree with that, however it's important to realize that Redis Labs is not taking away anything from the OSS effort around Redis, it's actually paying for such BSD code. Yet Redis Labs for some reason is getting a lot of criticisms despite other systems went completely non-open-source, core + accessory things. Something does not add up IMHO.
No, the problem is exactly what the source mentioned. When FOSS became a thing, cloud computing wasn't even an infant thought and the licenses that spawned during the era addressed only known factors.
> I haven't seen a single person defend the stance of Redis and others
How many of them are in this situation? Not really interested in the opinions of people that don't have skin in the game, and I'd wager these people don't have product's being exploited by cloud provider.
We have large businesses exploiting open source software (thanks to dated licenses) to make profit off the back of open source communities, while contributing little-to-nothing in return.
Fuck that. I didn't adopt Redis Postgres, or MySQL so that Amazon and Google could build off decades of good will to make money from them. They've all made significant improvements to these services, but refuse to add that value back into the community despite the fact that the opportunity only existed because other's worked for free.
So it's ok for cloud providers to profit from FOSS projects, but not ok for the original authors? Shameful, this attitude is absolutely disgraceful.
Please stop using open source if you don't also advocate for FOSS authors to reserve the right to try and profit from their work in a way that's compatible with the greater FOSS community.
> Is Commons Clause open source?
> According to the Open Source Initiative (OSI), open source licensing cannot limit the scope of a license – it only applies conditions to exercising it. With this model, no one can stop you from doing whatever you want with the software, whether commercial or non-commercial, or (famously) good or evil. Therefore, the no-sale restriction imposed by Commons Clause means that any software under this new license is non-open source by definition. However, in practice, Commons Clause only adds a limitation concerning fair use, and we believe that both licensing approaches share the same core value of making software available for use by anyone.
That's a long way of saying the new license is not OSI-compliant. The new license is BSD with a common clause which according to the president of OSI, this clause instantly renders it non-approved.
https://www.zdnet.com/article/open-source-licensing-war-comm...
P.S. I'll also address threading and persistence.
Redis is exactly the kind of software that gives me joy. Aesthetically and intellectually. Its pieces are orthogonal -- a word you used in your blog post. The code is small, tight, and well designed. It invites you to think more creatively. The lolwut command was also a very good innovation!
> Let me show you an example. You have a Redis instance and you plan to use the instance to do a new thing: delayed jobs processing. You get a library from the internet, and it looks to work well. Now why on the earth such library, that you don’t know line by line, should be able to call “FLUSHALL” and flush away your database instantly? Maybe the library test will have such command inside and you realize it when it’s too late. Or maybe you just hired a junior developer that is keeping calling “KEYS *” on the Redis instance, while your company Redis policy is “No KEYS command”.
Without ACLs we need to rely on command renaming or completely isolating databases to guard against errors. ACLs sound complicated but they're actually a solid user experience improvement.
Is there a break down somewhere of what each series should signify?
Tesla raised Series F in 2009, and it's still alive.
They're presently worth $42 billion with $2.1b in sales, 172% sales growth over three years, and are likely set to be another enterprise software juggernaut.
It clearly doesn't inherently mean anything. What matters is whether the business is growing properly versus the capital being consumed. If more capital will reasonably accelerate growth further, feed the business more capital (depending on what the owners want to pursue of course).
Why is it so hard to just supply an honest service in exchange for money and take a nice profit?
If I'd start my own startup and don't take VC money and the company makes $300k-$500k profit per year, I'd be ecstatic and happy to stay at that level forever. Maybe I'd focus more on reducing my own time spent at some point, rather than growing more. For a VC that's the same as failing. They invest in a wide range of companies and they need to get some major cash out from the successful companies. There also needs to be an exit. That means IPO or sell the thing. The exit is needed because the fund has a set lifetime. After that the shares go to the fund investors. For years you had A16Z representing, now you got a bunch folks you never heard of. Neither you nor those people want to deal with any of that.
If you have an IPO the treadmill continues, because our economy is about exponential growth and not sustainable, steady income. That pattern is even reinforced by our tax code. Capital gains < income tax. I can defer capital gains by not selling. Don't give my dividends! Those get taxed immediately!
Elastic's own cloud ElasticSearch is better than AWS's notoriously bad implementation, but what if it wasn't? Elastic's cloud offering runs on AWS and other third party offerings, so all it would take would be AWS reaching relative parity in quality, and they would then surely have the upper-hand by being the cloud infrastructure their own offering is run off of. I feel like the same is true with AWS Elasticache vs Redis Labs. What if AWS reaches parity, but can additionally offer the ease of not managing 2 accounts, as well as the ease of co-locating the cache with the app server and putting it all in a VPC. What is the endgame for these DBaaS when they have AWS copying their work?
This is the funniest thing I've read all day lol. Almost reads like something straight out of HBO's Silicon Valley.
I think that part of the round will also serve to put more efforts in the Redis extensions provided as modules. Incidentally I need to extend the modules system a lot more, especially with "hooks" so that modules can capture any command execution, because yesterday I wanted to implement the Gopher protocol as a module and I could not do that easily without spawning a thread to listen to some other socket, and remained hardly disappointed.
There's almost certainly a non-trivial sales team spend here. Redis Enterprise isn't a decision that organizations take lightly, and databases aren't cheap. Mongo is public on a similar model, so there's almost certainly enough room to grow with their current offerings (licenses and hosting).
Based on 238 employees, they're probably at $25m+ in revenue. Many companies start to think about a "second act" at this point, but few of them actually pull it off. So we'll probably continue to see improvement around the core product and a slew of new integrations, but I'd be surprised if they came up with a totally standalone new product that's worth $X0,000,000 / year in short order. There's too much to do with Redis itself and the hosting platform to devote so much effort to a brand new effort.
FWIW, $25m was a pretty conservative estimate. One way to look at it is to take the number of employees and multiply by $200k. That would imply upwards of $50m in revenue. https://www.saastr.com/how-to-figure-out-your-competitors-re...
It may take some time to get there, but they'll almost certainly break $100m. The VCs at this round probably won't sell immediately after the IPO, either -- trying to make 10x in 2 years isn't the plan.
Also, 7+ years to that level isn't the worst, by any means. The more relevant metric is growth in the last couple years. If they're still doing 100%+ year-over-year, that's pretty great. https://redislabs.com/press/redis-labs-announces-10th-consec...
I think their sales team is going to be in for a long, hard slog. Yes, Redis is popular right now, but the middleware space gets harder every year. Cloud providers slurp up the easy, low-hanging fruit ("click this checkbox to add a managed Redis instance to your deployment"), so all that'll be left are the big, slow, complex enterprise sales. Yeah, they pay well, but it's a brutal, competitive sales cycle, and that kind of customer often wants a lot of high-touch post-sales engineering services.
Hopefully this should fix it.
1. Transparent clustering. You talk to that thing like if it was a single instance and it scales to the cluster. Failover and so forth happen automatically. It'a a lot higher level than Redis Cluster (which also they support as a protocol), there are good and bad things in the different designs, but I like how well it works.
2. CRDTs store for multi master, also across far geographical area.
3. Redis on flash, using different persistent memory types. This feature originated from an early experiment I did years ago, called "diskstore", then Redis Labs worked at it many years and reached a quite cool thing.
4. All the above can be installed in your servers if you want very high memory setups that is impossible to pay for on the cloud.
5. The various modules like RedisGraph, RedisSearch and so forth are only available in the Redis Labs cloud (or you can install manually on your server). Some of those modules like RedisGraph is receiving years of development.
6. I know that the support team and everybody at Redis Labs really knows Redis. Which was one of the main reasons eventually I joined the company. So I think they are able to handle core-level issues for every user having troubles. A lot of Redis operational improvements came from Redis Labs core/support team after investigating issues with customers.
AFAIK those are the stuff I like more from the external but honestly they do a number of things I don't know very well for certain big customers.
> probably
Hmm, anything of substance, or is this just pure speculation?
Aurora is a good example that's explicitly marketed that it's a different core storage engine, but they definitely make many modifications to the projects they're building on top of, but what kinds of changes really varies.
AWS does not compete on price or performance and the Redis servers are hosted directly in whatever cloud facility you'd like.
On final note. Since setting it up, I've never had to look at it again.
Regarding the speed difference between Flash and RAM etc, it's a very interesting topic.
Redis is a great product but I fail to see the valuation that comes with a 60M investment (a billion+?). Yes, the cloud offered variety could potentially be interesting but competing products are available and this seems to be a commodity product running on commodity hardware. AWS already offers it so do others, I believe.