Cockroach Labs Is the Latest Data Unicorn
Cockroach Labs develops a distributed SQL database that’s designed to survive the type of disasters that would kill everything but the lowly cockroach. That work has now garnered it the title of unicorn, as the company today completed a $160 million round of funding at a $2 billion valuation.
The Series E round, coming on the heels of a Series D round last May that brought in $86.6 million, gives the company the resources it needs to compete at the highest level and win contracts as the world’s largest companies adopt next-generation of cloud-native transactional databases in the years to come, says Peter Guagenti, Cockroach Labs chief marketing officer.
“We’re going up against Google and Amazon and Microsoft. These are some of the most powerful and most talented engineering organizations in the world,” Gaugenti says. “As a small company, we have to out-innovate. We have to have a unique valuation proposition. And we have to be able to bult technology that at least meets, and preferably beats, what you can get from other vendors. So we have to keep doubling down on R&D.”
Guagenti says there are no “gaping holes” in CockroachDB, the relational database management system that Cockroach Labs co-founders Spencer Kimball (a 2020 Datanami Person to Watch) Peter Mattis, and Ben Darnell began developing five years ago. As a globally distributed, ACID-compliance relational database, Cockroach Labs had to solve some very difficult engineering problems to maintain consistency when data is stored in nodes that are over 10,000 miles apart. , The Cockroach Labs co-founders took their inspiration from the Google Spanner white paper, and cracked the consistency code by adopting the RAFT consensus algorithm and building a multi-version consensus control (MVCC) system into its database.
As a PostgreSQL-compatible database, CockroachDB already has decent coverage of the ANSI SQL standard. “We like to joke that were 100% of the 80% you actually use,” Guagenti says. “The problem is that long tail really matters, so that’s one of the areas we’ll continually focus on.”
Cockroach Labs doubled its employee count, its revenues, and its customer count in the past 12 months, and the goal is to do that again, says Guagenti, who joined the company in March 2020, just as the COVID-19 lockdown was beginning. There will be the usual investments in sales, marketing, and operations to keep the company growing at that pace. With $355 million in total funding, that shouldn’t be a problem.
Also doubling in the past 12 months is Cockroach Labs valuation. While the company didn’t disclose its precise valuation with the last round of funding in May, it was less than $1 billion, Guagenti says.
Cockroach Labs certainly had something to do with that valuation. But as we saw with the emergence of Dremio and Starburst as data analytic unicorns last week, the market also changed. In this case, the market pivoted hard to cloud, which is right in Cockroach’s sweet spot, Guagenti says.
“We saw in a matter of months the final vestiges of digital tarnation that we thought was going to take another decade,” he says. “And so everyone is now expected to be…a forward looking digital native company, even the hold outs that existed before.”
Companies that were already thinking about application modernization accelerated their timelines and came to Cockroach Labs, Guagenti says.
“We saw existing players and home delivery services we were already serving see their everyday look like what had been their bet day and literally max out the software they were using before,” he says. “This one customer had to move off of Amazon Aurora… had to move something that was more scalable and they wanted the global reach that we offered.”
CockroachDB offers extreme scalability and extreme resilience. You can take down nodes of a CockroachDB cluster, and it will not die, hence the name. That’s the sort of capability that the largest Fortune 500 companies demand for their online transaction processing (OLTP) applications, which have been among the last hold-outs in the great cloud migration.
The company’s large valuation is a recognition that these OLTP applications and that transactional data seems poised to move to the cloud faster now than in January 2020. There are only a handful of companies that can offer a globally resilient cloud database, and Cockroach Labs is the among one of the few that isn’t named Oracle, Google, Microsoft, or Amazon.
The company seems destined to capture a share of the market for large OLTP workloads, if only because of the fact that it can run on-premise as well as cloud, and prevents customers from getting locked in with one of the Big 3 cloud vendors.
But Guagenti is also capturing business from smaller developers who won’t need global scalability right out the gate, but want to keep it as an option going forward. “We run just as well for the application that’s being created by three people in the garage as we do for” the largest corporations in the world, he says. “Either way, developers don’t want cheap tools. They want the best possible tool they can afford. We believe we offer that.”
The Series E round was led by Altimeter Capital, with participation from new investors Greenoaks and Lone Pine, and existing investors Benchmark, BOND, FirstMark, GV, Index Ventures, and Tiger Global.