 Welcome back to New York City, everybody. This is theCUBE's coverage of MongoDB World 2022. Dave Ithachiri is here. He's the president and CEO of MongoDB. Thanks for spending some time with us. It's great to be here, Dave. Thanks for having me. You're very welcome. So your keynotes this morning, you know, I was harkening back to Steve Ballmer running around the stage screaming, developers, developers, developers, you weren't jumping around like a madman, but the message was the same. And you've not deviated from that message. I remember when it was 10 gen. So you've been consistent. Why is MongoDB so alluring to developers? Yeah, because I would say the reason we're so popular, Dave, is that our whole business was founded on the ethos, so making developers incredibly productive, right? Just getting the infrastructure out of the way so that the developer is really focused on what's important, that's building great applications that transform their business. And the way you do that is you look at where they spend most of their time, and they spend most of the time working with data. How do you present data, the right data, the right time, the right place, in the right way? And when you remove the friction of working with data, you unleash so much more productivity, which people just say, oh my goodness, I can move so much faster. Product leaders can get products out the door faster than the competitors. Senior level executives can seize new opportunities or respond to new threats. And that was so profound during COVID when everyone had to think about pivoting their business. When you came to MongoDB, why did you choose this company? Was it that excited you about it? I get that question a lot. I would say conventional wisdom would suggest that MongoDB is not a great choice. There weren't that many companies who were very successful in open source. Red Hat was the only one. No one had really built a deep technology company in New York City. They say you got to do it in the Valley. And database companies need a lot of capital. Now, it turns out that raising capital this past decade was a lot easier, but it still takes a lot of time, a lot of capital. You have to have a lot of patience. When I did my diligence, I was actually a VC before I joined MongoDB. The whole next generation database segment was really taking off. And actually I looked at some competing investments to MongoDB. And when I did my diligence, it was clear even then, and this is circa 2012, that MongoDB is way ahead in terms of customer attraction, commercials, and even kind of developer mindshare. And so I ended up passing those investments. And then lo and behold, I got a call from a very senior executive recruiter who said, Dave, you got to take a meeting with MongoDB. There's something really interesting going on. And they had raised a lot of capital and they had just not been able to kind of really execute in terms of the opportunity. And they realized they need to make a change. And so one thing led to another. One of the things that really actually convinced me is when I did my diligence, I realized the customers they had loved MongoDB, it just, they just really weren't executing on all cylinders. And I always believe you never bet against a company whose customers love the product. And so there's something here. The second thing I would say is open source, yes, it's true that open source was not very successful, but that's open source one.o. Open source two.o. was the technology is much better than the commercial options. And so that convinced me. And then New York, I mean, I lived in New York, big part of my life. I think New York's the fabulous place to build a business. There's so much talent. Your customers, you walk out the door, there's customers all over the place. And getting to Europe is very easy, almost like flying to the West Coast. So it's a very central place to build a business. And it's easier to fix execution, wouldn't you say? And maybe even go to market than it is to fix a product that customers really don't love. Correct, correct. It's much easier to fix leadership issues, culture issues, execution issues, nailing product market fit is very, very hard. And there were signs, there's still some issues, there's still some rough spots, but there are a lot of signs that this company was very, very close. And that's why I took the bet. And this is before there was that huge influx of capital into the, you know, separating compute from storage and the whole cloud thing, which is interesting because you take a company like Cloudera, they got caught up in that and they kind of washed over. And I guess you could argue Hortonworks did too. And they kind of dead ended both. And then that just didn't work. But it's interesting to see Mongo, the market kind of came to you and that really does speak to the product. It wasn't a barrier for you. I mean, you guys have obviously a lot of work to get into the cloud with Atlas. But it seemed like a natural fit with the product. It wasn't like a complete fork. Well, I think the challenge that we had was we had a lot of adoption, but we had tough time commercializing the business, right? And at some point, I had to tell the old employees, it's great that we have all these people who are using MongoDB, but if you don't start generating revenue, our investors are going to get tired of subsidizing this company. So I had to try to change the culture. And as you can imagine, the engineers didn't really like the salespeople. The salespeople thought the engineers didn't really want to make any money. And what I said, like, let's all galvanize around customers and let's make them really excited and try and create a lot of value. And so we just put a lot more discipline in terms of how we prosecute the deals. We put a lot more discipline in terms of what are the problems we're trying to solve? And one thing led to another, we started building the business brick by brick. And one of the things that became clear for me was that the old open source model of trying to find that happy medium between what you give away and what you charge for is always a tough game, like because finding that where the paywall is, if you give away too many new features, you don't make any money. If you don't give away enough, you don't have any adoption. So you're caught in this catch 22. The best way to monetize open source is open source as a service. And we saw Amazon do that, frankly. We learned a lot from how Amazon did that. And one of the advantages that MongoDB had that I didn't fully appreciate when I joined the company, but I was very grateful for it, is that they had a much more restrictive license, which you end up actually changing and made it even more restrictive, which allowed us to perfect ourselves from being cannibalized by the cloud providers so that we could build our own business using our own IP that we had invested in and create a cloud service. That was a huge milestone. And of course, you have great relationships with all the cloud providers, but it got contentious there for a while. But I mean, you give the cloud providers an inch, they're going to take a mile. That's just the way, you know, they're aggressive like that. But thank you for going through the history with me a little bit, because when you go back to the IPO, the IPO was 2017, right? Correct. I always tell young investors, my kids especially, don't buy a stock at IPO. You're going to have a better chance, but the window for Mongo was very narrow. So you didn't really get a much better chance, a little bit, and then it's been a rocket ship since then. Sure, there's been some volatility, but you look at some of the big IPOs, like a Facebook or a Snap or even a Snowflake. I mean, you know, there was better opportunities, but you guys have executed really, really well. I mean, that's part of your ethos and your management team. And it came across on the earnings call recently. You set, it was very optimistic, yet at the same time you set cautious tones and you got, I think, high marks for some of that caution, but that execution. So talk about where you feel the business is today, given the economic uncertainty. Well, what I'd say is we feel really good about the long term. We feel like the secular trends are really in our favor. I mean, software is fundamentally transforming every industry and people want to use modern software to either automate inefficient processes, enable new capabilities, drive better customer experiences, and the level of performance and scale you need for today's modern applications is profoundly different than applications yesterday. So we think we're well positioned for that. What we said on the earnings call was that we started seeing a moderation of growth, slight moderation of growth in our low end of the business in Europe. It was in our self-serve business and in the SMB space for then Q1, towards the end of Q1. And we saw a little bit of that show up in the self-serve business in May in Q2. And that's why while we raised guidance, we basically quantified the impact, which is roughly about 30 to 35 million through the year based on what we saw. And in that assumption, we assumed like, we just kind of assumed it was going to only be at the low end of the market. There would probably be some effect at the enterprise market. Maybe not as much, but there'll be some effect. So we need to factor that in. And we wanted to help kind of investors have some sort of framework to think about what the impact is. We don't want to be one of those companies that said absolutely nothing. And we don't want to be the sum of companies that waves their hand, but then it wasn't really that useful for an investor. Yeah, I thought it was substantive. And you talking about those market trends, you cited three things that developers recognize that there are limits to legacy RDBMS. You talked about what I call point solutions creep. And then the document model is the best for developers. And so, and when the conversation turned to consumption, everybody's concerned about consumption, obviously, you said, my take, you're somewhat insulated from that because you're running mission critical apps. It's not discretionary. My question to you is should we rethink the definition of mission critical? You think of Oracle Mission Critical running a bank. Mission critical today in this digital world seems to be different, is that fair? Yeah, I mean, I think, I mean, gosh, I mean, when's the last time you ever saw a website down? Like, I mean, if you're running like any kind of digital channel, we're engaging the customers or your partners or your suppliers, you need to be up all the time, right? And so neither very resilient, highly available data platform. It needs to be highly performance. So as you had more users, you need to be scale. And we saw a lot of that when COVID hit, like companies had to completely repivot. And, you know, we talked about some examples where like a health and beauty retailer who was all kind of, you know, basically retail had to suddenly pivot to a e-commerce strategy. We've had streaming and gaming companies suddenly saw this massive influx of data that has scaled their operations very, very quickly. So, I would say anytime you're engaging with customers, customers, you know, they're so used to the kind of the consumer facing applications. I almost joke like slow is the old, you know, the old down. If you're not performing, it doesn't matter. They're going to abandon you and go somewhere else. So if you're an e-commerce site and you're not performing well and not serving up, you know, the right skews depending on what they're looking for, they're going to go somewhere else. It's a, it's a click away. You talk about a $100 billion TAM, maybe that's even under counted as you start to bring new capabilities in there. But there's no lack of market for you. How do you think about the market opportunity? Well, we believe like again, softwares transforming so many industries. IDC says that 750 million applications were built over the next two to three years by 2025. To put that number of perspective, that's more apps that will be built in the next three to four years than were built in the last 40. The rate and pace of innovation is exploding. And people are building custom applications, right? I'm not, yes, you know, Workday, Salesforce, you know, other companies, commercial companies are great companies, but my competitors can use Workday or Salesforce, you know, some of those commercial companies. That doesn't give me a competitive advantage. What gives me a competitive advantage is building custom software that better engages my customers, that transforms my business of adding new capabilities or drives more efficiency. And the applications are only getting smarter. And so you're seeing that innovation explode and that plays to our strength. People need platforms like MongoDB to build the next generation of applications. So Atlas is now roughly 60% of your business thing is growing at 85%. So it's the, at least the midterm future. But my question to you is, is it the future? Cause when we start to think about the edge, it's not necessarily the cloud. It's, you know, you're not going to be able to go that round trip and the latency. And we had Verizon on earlier talking about what they're doing with 5G and the mobile edge. Is Mongo positioning for that edge? And is the, our definition of cloud changing where it's not just on-prem and across clouds, but it's also out to the edge, this continuous experience. Right. So I'll make two points. One, I mean, definitely believe that we believe the applications of the future will be mobile first or purely mobile because one with the advent of 5G, the distinction between mobile and web is going to blur with a hundred times faster networking speeds. But the second point I make is that how that shows up on our revenue, on our income statement, will look like Atlas because we don't charge nothing for the end, you know, point we, it's basically driving consumption of the backend. And so we've introduced a bunch of very, very sophisticated capabilities to synchronize data from the edge to the back end and vice versa with things like flexible sync. So we see so many customers now using that capability, whether you're field service technicians, whether you're a mobile first company, et cetera. So that will drive Atlas revenue. So on an income statement, it'll look like Atlas, but we're obviously addressing those broader set of mobile needs. You talk a lot about product market fit, you know, a form of VC, of course. Mark Andreessen says you, product market fit, you kind of know when you see it, your hair is on fire, you can't buy a service. How do you know when you have product market fit? Well, one, we have the luxury of lots of customers. So they tell us pretty clearly when they're happy and we can see that by usage behavior. Now the other benefit of a cloud service is we can see the level of activity. We can see the level of engagement. We can see how much data they're consuming. We can see, you know, all the actions they're taking. So you get the fidelity of feedback you get from Atlas versus someone doing something behind their own firewall and you kind of call them and check in on them is very, very different. So that level of insight gives us visibility in terms of what products and features have been used. Gives us a sense of how things are going well or is there something awry? Maybe they have misconfigured something or they don't know how to use some capabilities. So the level of engagement that we can have with a customer using a service is so much different. And so we've really invested in our customer success organization. So the byproduct of that is that our retention rates are also very, very strong because you have such better information about what's happening in terms of your customers. You see retention in real time. You've been somewhat, I mean it's hard to say this because you're growing at 50% a year, but you're somewhat conservative about the pace of hiring for go-to-market. And I'm curious as to how you think about scaling, especially when you introduce new products. I mean, Atlas is several years ago, but as you extend your capabilities and add new products, how do you decide when to scale? So it's a constant process. We've been quite aggressive in scaling our organization for a couple of reasons. One, we have very low market share so the market's vastly under-penetrated. We still don't have reps in every NFL sitting in the United States, it's kind of crazy. There's other parts of the world that we are just still vastly under-penetrated in. But we also look at how those organizations are doing. So if we see a team really killing it, we're going to deploy more resources because one, it tells us there's more opportunity there and there's a strong team there. If we see a team that maybe is struggling a little bit, we'll try and uncover, rather than just plowing more resources in, we'll try and uncover what are the issues and make sure we stabilize the organization and then devote resources. It's all in the measure of being very disciplined about where we deploy our resources to get those kind of returns. And on the product side, we obviously go through a very iterative process and kind of do rank order of all the projects and what we think the expected returns are. Obviously, we look at the customer feedback, we look at what our strategic priorities are and that informs what projects we fund and what projects kind of are below the line. And we do that over and over again every quarter. So every quarter we revisit the business. We have a very QBR-centric culture so we're constantly checking in and seeing how the business is operating and then we make those investment decisions. In general, we've been investing very aggressively in terms of expanding our reach around the world. It seems like, well, with Mongo, your product portfolios, from an outside observer standpoint, seems like you've always had pretty good product market fit. But I was curious, in your VC days, would you ever encourage companies to scale, go to market prior to having confidence in product market fit or did you always see those as sequential? Well, I think the challenge is if you wait, I mean, this part is analysis, part is judgment, right? So you don't necessarily have to have perfect product market fit to start investing, but you also don't want to plow a bunch of resources and realize the product doesn't work and then now you're burning through a lot of cash. So there's a little bit of art to the process. When I joined MongoDB, I could tell that we had a strong engineering team, they knew how to build high quality products, but we just struggled with commercialization. The culture wasn't great across the company and we had some leadership challenges. So that's what I, when I joined, I kind of focused on those things and tried to bring the organization together and slowly we started chipping away and making people feel like they were winners. And once you start winning, that becomes contagious, right? And then the nice thing is when you start winning, you get a lot more customer feedback, you get more, you know, that feedback helps you refine your products even more, which then adds, you know, it's like the flywheel effect that starts taking off. Yeah, so it seems the culture is working now. Do you have a favorite product from the announcements today? Well, I really like our foray into analytics and essentially, you know, what we're seeing is really two big trends. One, you're seeing applications get smarter. What application is doing is really automating a lot of processes and rather than someone having to press a button, you know, based on analytics, you can automate a lot of decision-making. So that's one theme that we're seeing as applications get smarter. The second theme is that people want more and more insights in terms of what's happening. And the source of those insights is your, you know, operational database, right? Because that's where you're, you know, having transactions, that's where you know what products are selling, that's where you know what customers are buying. So people want more and more real-time data versus waiting to, you know, take that data, put it somewhere else and then run reports and then get some update, you know, at the end of the night or maybe at the end of the week. So that's driving, you know, a lot of really interesting use cases that, especially when you marry in things like time series use cases where you're collecting a lot of data. People want to see trend analysis, what's happening. We see that's a very exciting area. We introduced a very cool feature called queryable encryption, which basically the problem with encrypting data is you can't really query it because by definition it's encrypted. Yeah, you're right. But obviously data security is very important. What we announced is we're using very sophisticated cryptography. People can query the data but they don't have any access to the data. So it really protects you from like data breaches or, you know, malicious users accessing your data but you still can kind of make that data usable. So that was a very interesting announcement that we made today. Sounds like magic without the performance hit. Yes. You can do that. Dave, thanks so much for coming on theCUBE. Congratulations on all the activity. I mean, bumper sticker on day one. Oh, super exciting. The energy was palpable. You know, 3,300 people in the room. Lots of customers, lots of users. We've got lots of investors here as well for investor day. Have a dinner tonight with a bunch of senior execs. So it's been a busy day. Future is bright for MongoDB. Dave, thanks so much for coming on theCUBE and thanks for watching. This is Dave Vellante and we'll see you next time.