Learn how Nikita and his team have grown MemSQL to over $10,000,000 ARR in only 7 years.
Davis Baer: What’s your background, and what are you working on?
My name is Nikita Shamgunov, and I am the co-founder and CEO at MemSQL. Previously, I worked at Facebook and at Microsoft on the SQL Server kernel team.
MemSQL is The No-Limits Database™, powering modern applications and analytical systems. Providing a cloud-native, massively scalable architecture for maximum ingest and query performance at the highest concurrency as well as a full suite of enterprise features. Global enterprises use the MemSQL distributed database to easily ingest, process, analyze, and act on data in order to thrive in today’s insight-driven economy. MemSQL is optimized to run on any public cloud or on-premises with commodity hardware.
We ended our fiscal year on February 2018 with 200 percent growth and 3 times add on revenue.
What motivated you to get started with your company?
I was working at Facebook with my then soon-to-be co-founder, and we were seeing the challenges that companies who were generating a lot of data were going to have with scaling. When we started pitching our original company idea to investors, it was suggested that with my background we should focus on building a modern database.
Prior to Facebook, I worked on the Microsoft SQL Server kernel team. At Microsoft, I got to work on one of the most ambitious releases of SQL Server, it had been worked on for five years. When I moved to Facebook, I got to see the scale challenges that companies were going to face as the data boom hit other companies.
What went into building the initial product?
At the start of MemSQL in 2011, we had 10 engineers. The initial group was a mix of former SQL Server engineers and some additional engineers we hired. The initial product was focused on transactional concurrency. We started there because we knew we wanted to build the next great database and there was a market need for those capabilities. Those were the workloads that Facebook was having issues solving.
All the engineers were full-time employees, and the funding was a combination of money from Y Combinator and a Super Angel.
How have you attracted users and grown your company?
As we’ve grown, how we’ve attracted and retained customers over time has changed. In the beginning, we had a three-man selling team. Then we hired a VP of Sales that put together a process about how we would sell and go after customers. The mission was to build out a team of AEs and have them go sell. In the beginning, there wasn’t a focus on specific customers or verticals.
Now, we have a more comprehensive go-to-market strategy. From digital marketing campaigns to traditional PR activities to a billboard on one of the major highways in San Francisco. Our top goal is to drive awareness of MemSQL, so that requires exciting our existing customers, staying top of mind with customers that have considered us in the past, and getting our news in front of people who have never heard of us.
One of the tactics that has worked well for us is engaging the Hacker News community. We like sharing our blog posts and getting feedback from that community.
The shift from early days to now is so apparent. To get started, I recommend that anyone do a lot of homework. Read a lot, attend lectures, listen to podcasts. If it’s your first company, you won’t be good right away. Learn every day. Then be completely obsessed about your team. You’re only as good as the people working with you. Hire people that align to your short-term goals. As you grow, recognize how things are working and make adjustments as needed. You can’t waste time, that’s hard for early companies because you’re constantly losing money. Hire people who can do several roles at the same time.
What’s your business model, and how have you grown your revenue?
Like other enterprise software companies, we make money through annual licenses and professional support and services. To buy MemSQL, you need to a sign a contract so that we can bill you. Plans for a swipe-and-go version of MemSQL are in the works.
Early on, as with most startups, you need to have a market fit and a few sales people. Once we had the staff in place, it was about going out and finding deals. Having sales people helps drive the value proposition of the company, because they can translate the value of the company to a broad set of customers. Our first customers were small but to continue getting funding, we needed to land a large customer. So through a lot of hard work, we landed a big online game company pretty early on.
Today, we have an annual revenue in the eight figures, and this growth is attributed to the value our customers see in the product and how we’ve approached selling to the market. Last year, we brought in a short-term COO, who helped us implement a “land and expand” selling process. Since then, we’ve seen success making deals with companies starting with a $100,000 annual contracts, but by the next year those companies sign million-plus deals because they see other places within in the company that could benefit from MemSQL.
What are your goals for the future?
When you’re starting a company, you hear that hitting certain milestones are impossible. One million in revenue, 10 million in revenue, 100 million in revenue, etc.
We made it through those first milestones, so the next major hurdle is 100 million in revenue. To get there, we first did another funding round. We raised our Series D in May, and have used that money to grow the staff particularly in marketing and business development.
To hit 100 million in revenue we need to triple our customer count, and we’re planning to do that by focusing on two key areas — channel selling and product awareness. You’re looking to perfect your market fit, so there is channel, international, and go-to-market initiatives that allow you to get creative internally or externally. For instance, driving a strong marketing campaign against a competitor has been beneficial for us.
Recently, we announced a very key hire for MemSQL, the addition of a VP of Business Development and Alliances, Jason Wakeam. Jason is responsible for creating our channel strategy, which will help us tremendously with the reselling of MemSQL.
Additionally, we’re investing in digital marketing to help drive awareness of MemSQL and its use cases to the broader tech community. But everything needs to be based in data to help you make better decisions for the next year and longer.
What are the biggest challenges you’ve faced and obstacles you’ve overcome? If you had to start over, what would you do differently?
When you start a business you constantly face challenges; some of them are early and others really test the strength of the company.
Early on, we scaled our sales team too large too early. We didn’t have strong performers and we should have use those headcounts on other teams. We made some technology decisions that weren’t right and we had to change those, which was costly.
Last year, I transitioned from CTO to CEO, which was a major shift for me personally and for the company. The former CEO focused a lot on the business side of the company, while I was focused on the engineering side. So when I transitioned over, I knew I had to bring in help to support me through the transition. I also spent time talking to mentors, reading relevant books, and meeting with various people across the company to better understand what I needed to change.
Have you found anything particularly helpful or advantageous?
There is a certain amount of luck when starting a business. For instance, we bet on needing to be cloud native from the beginning — which was seven years ago. That bet paid off big as our customers still want cloud choice and on-premises flexibility.
Some books that have helped me along the way:
Crossing the Chasm — Geoffrey Moore
Zero to One — Peter Thiel
The Hard Thing about Hard Things — Ben Horowitz
High Growth Handbook — Elad Gil
Predictable Revenue — Aaron Ross and Marylou Tyler
It’s also really beneficial to talk to people from your network, people you worked with and meet along the way. More times than not, people are willing to help.
What’s your advice for entrepreneurs who are just starting out?
Grow and lean on your network. You’re likely starting a company in a field you know something about, so utilize those people for their knowledge and other contacts. Specifically in the Valley, people want to help. We all started from nothing and needed support along the way.
One of the biggest mistakes I see people make is not paying attention to what’s happening with the market. However, it’s not just about following trends, it’s about understanding what trends your customers are adopting today and the trends they are going to be looking at in the future, and having a solution for their problems.
Where can we go to learn more?
If you’re starting a company and need other tips, leave a comment below.