Nikita Shamgunov and Andrew Smyth on M12-Neon Investment

This is Textron tv. Hey everyone, it's a Chul. Welcome back here to Textron tv.

I am really happy to have two folks all with me for this interview. Uh, let me first introduce you to Andrew Smyth. And Andrews a pronounced Smith.

It's Smith Smith. Smith Smith. Andrew, just quickly, if you don't mind sharing with our audience.

Yeah. A Little bit about you. Thanks, Alan.

Uh, I'm Andrew Smyth. I'm a managing partner at the M 12 Microsoft's Venture Capital Fund, where I lead all of our cloud infrastructure investing. Um, I'm Irish originally, as you can probably tell from my accent, but I've been in the Bay Area for, for, uh, close to a decade now.

Um, I've been on, on the investment side for the entire of my career. Um, uh, originally as a research analyst and as a, as a GP in a, in a VC fund, uh, based here in the Valley and recently joined Microsoft, um, um, investment group. Thank you, Andrew.

I appreciate it. And then joining Andrew and I is Nikita. I hope I pronounced that right.

Nikita, welcome. And let's hear a little bit about you. Uh, my name's Nikita.

I'm excited to be here. Uh, I'm the CEO of Ian. I have been building databases my whole life.

Um, you know, starting in 2005, I had worked, um, at Microsoft working on the SQL Server Project, and that's after, um, getting my, working on databases and compilers in my grad school back home in Russia. So since then, um, I started a company called Single Store, um, that reached, um, you know, like a, a, a magic milestone of a hundred million in run rate. And that's also a database technology company focused mostly on big data and analytics now.

Um, just, you know, building databases, passion of mine, um, and even running single store. I saw this opportunity, um, with the rise of SREs that, that open source technology that nobody really owns, right? It's, it's owned by the community and, and in a way, kind of like Linux, um, that's becoming, uh, a standard in the operational, um, database space.

So every developer today, they need to choose a database unless they have some, some sort of exotic requirements, they would likely, um, with more than 50% probability, go ahead and choose Postgres. So, um, with, with, with all the transition to the cloud, I thought, um, there is a way, uh, to create the, the bar none, uh, absolutely the best, uh, cloud service for Postgres, and that's what Neon is. Um, it started with a, with a particular architecture of separating and storage and compute.

And so started very, very technology centric. You know, what, what can the, can be this 10 x, uh, improvement in the quality of service, um, um, and that required, um, building, you know, next generation storage, uh, as the foundational technology for it. And, and then once you have that, everything else, uh, builds audit, like, like a set of Lego bricks.

So that's what we started on working, um, three and years and change ago. And now more than a million databases have been created on the Neon platform, uh, starting December 22, right? Uh, that's when we, uh, officially opened up the gates and invited, um, all the developers in the world onto the platform.

Since then, that's been very, very steady growth of the, of the Neon platform. So is it Neon DB is the database and Neon the company? We Just, it neon.

Uh, I, I think No more DB DB's old. I learned my lesson from the previous company. Uh, the previous company originally was called, uh, sql, which stood up for SQL that can run in mem, uh, be run in memory.

Sure. Over time it stopped being in memory and expanded their, their offering beyond sql. Um, in addition to that, um, salespeople could not pronounce sql.

So, so we knew we had to rename it, and so eventually we call it single store. Um, there's a variety of reasons for that here. I just want to call it something that can carry, um, you know, company eventually becoming multi-product, uh, company eventually expanding, uh, its scope and I think it's happening, um, at that small scale already, um, as we bring additional functionality into the platform.

So that's why we're not gonna call it db, we just call it Neon. Got it. So, you know, it's, it's kind of funny in this age where we seen such special specialization in databases, right?

There's so many, you know, we went from SQL to no sql, but now we have time series, you have graph database, so many different kinds of databases, but at the same time, our choices for just a good SQL open source database kind of dwindled as they got bought by various companies, right? And, and people want to use the open source variance of these. Um, Andrew, you guys invested it in, in Neon here and, uh, talked to us what, you know, first of all, it is open sourcing.

For a long time people said, oh, what's the business model? Then we thought we understood the business model of open source, and now we're starting to see maybe some open source company business models changing a little bit as they change licenses, right? Even Red Hat themselves.

Yeah. Change license a bit from a investor point of view. Let, let's talk open source databases.

Sure. I mean, you know, as Microsoft's Venture capital fund, we invest in companies with strategic relevance to Microsoft, right? So we, we wanna invest in companies, um, we believe can benefit and ultimately win and through partnership with, with Microsoft.

Microsoft is ultimately, um, a developer or oriented organization. Developers want, want open source, they want reliability, they want extensibility. And I think Postgres offers, uh, offers a lot of, uh, a lot of that, right?

You know, the, the, the real kind of conviction and thesis are around our investment in, in, in, in Neon as an open source database was really, we ultimately believe Neon is becoming a destination for developers, um, building on, on Postgres. And, and that is valuable. Um, I think just as, um, you know, developer tools and workflows evolve with platforms like GitHub and, and Versal, we think databases can, can follow a similar paths.

Um, they're very valuable companies as, as we both know well. Um, and we think, um, you know, neon is really redefining how developers manage databases. Um, and there's a lot of value there.

I don't that add a little bit. Um, you mentioned that we have a lot of specialization, um, and then we, we had a whole bunch of database engines, uh, showing up, you know, one for time series, one for, uh, for logs, one for, and then like name and workload. We are gonna have a specialized database for it.

I, I'm actually recognizing that the trend is reversing a bit. I think data warehouses and operational databases will stay, um, obviously, right? So something like Snowflake or something like Databricks, uh, for big data, data analytics is architecturally quite different.

Um, and, and it needs to be its own thing. Um, but then a lot of of smaller niche, uh, workloads are getting pulled in and they're getting pulled in into either Snowflake or the, like, you know, snowflake, Databricks, data lakes, yada yada, or into Postgres and Postgres, um, does support time series. Um, they're, they're an extension that, um, the whole company is built their own timescale, uh, but it's becoming more and more of a commodity.

And what we see is that that meme that's, uh, people put on a bell curve, right? Um, uh, where, you know, people who don't, are not very smart. They say, just use Postgres.

Then the middle of a bell curve is like all of those systems, and then the end of the bell curve is like IQ one 40 plus, uh, is also just use Postgres. And, and I think it's true, um, and we see a little bit of a reverse trend, uh, where because the moving the data is so annoying and supporting and managing multiple engines is so annoying, um, we see two centers of gravity. One is Postgres and the other ones, uh, is a data warehouse.

And all those workloads started to consolidate, uh, among the two. So, so I think the, the trend is actually reversed now. I, I hope so.

You know, I, I saw a trend where they use both, they use sort of the SQL relational databases that underline, for lack of a better word base, right? And then they were running some medial little more exotic on top, but it's still relied underneath it on, on Postgres or whatever it was. So it's clear that Nik to Postgres that this is, you did, you're doing it a, a better of Postgres guys.

We're almost outta time. You know, we didn't even mention, we, we took it for granted that people out there realize, Andrew, we've got you are, 'cause you guys made an investment yet, but we didn't give a number or anything. Nik to you're the CDO, you get joined out Stack.

What, tell us about your raise. Yeah, Microsoft led at a 25 million investments, um, into Neen. We're, we're super excited about both the investments and the partnership that we have with Microsoft.

Um, uh, Nian launching on Azure is imminent. Uh, so I think it's a month away. Um, it's one of those things that, I don't want to give you a specific time, but I, I can say that a lot of Azure related things, when Nian is gonna launch this fall, um, we, uh, we recognize that Microsoft is an, uh, intense competition with AWS, uh, which has a, uh, an offering called AWS Aurora, um, and is basically an open source alternative to AWS Aurora, it's next generation.

It's better, it's faster, it's more, it's more delightful to developers. Um, and, um, you know, Azure is its own universe, right? There's, there's a tremendous amount of, of, um, share of population that goes and uses, um, technology on Azure.

So, so that's why we're so excited to, to both that, um, the investment and the fact that we, we will be launching in Azure with, um, a very tight partnership with Microsoft. Um, this whole, um, round brings the total amount of, of, of money residents in Yen to 132, uh, million dollars. Uh, most of that money, um, over a hundred million is still in the bank.

Uh, and we're, we're growing, you know, incredibly fast just this year, we'll, we'll, we'll have grown more than five times, uh, in revenue and in usage. So, um, yeah, I, I'm, I'm super excited, uh, about where it's all, uh, heading And, and for good reason that quid, those are great things. You know, Nikita, I'd like to invite you back, oh, when I'm back in studio, I'd like to talk more about, you know, it can't be just a better or a newer public script.

Let's find out why. Let's find out why developers are so excited about it. Let's talk a little bit about the business model.

It's hard to do all those things in 15 minutes. So for now, I'm gonna ask you for people who want to get more information, what's the right website? Uh, go to Neon, do tech, um, and, um, It's Neon, NEON dot TECH.

Yeah, neon, just like the John Mayer song. Uh, Love it. Hey guys.

Andrew Nikita, thanks for stopping on Tech Shark TV today. Hopefully this will just be the first interview in a series and we could dive a little deeper as we peel the onion back a little bit on. Happy to do that.

Thank you. Hey guys, enjoy your day. I appreciate you putting up, we had some off camera issues and I appreciate it.

We're gonna take a break on text on tv. We'll be back in a moment.