BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Redis Labs Growing 60%, Plans To Disrupt Oracle In $60B Database Market

Following
This article is more than 5 years old.

Oracle keeps on plugging away even though startups keep building databases that work better. The reason is simple enough -- it's expensive for customers to switch.

That's because when you combine the cost of breaking Oracle's expensive long-term contracts with the enormous amount of work required to migrate operations to a new database, customers are locked in.

But one Silicon Valley startup -- Mountain View, Calif.-based Redis Labs, says it's on its way to disrupting Oracle -- a widely-used term which I gather means that Redis will win lots of Oracle customers.

Should Oracle investors be quaking in their boots? No -- but Redis does seem to be growing while winning many big enterprise customers many of whom use Oracle's database.

The key point is that Redis wins in a small segment of the database market -- the one for new applications -- such as checking your bank account balance from your iPhone.

If Redis could ever convince customers to dump Oracle for their core transaction processing systems, such disruption could become a reality.

(I have no financial interest in the securities mentioned in this post.)

The market for databases is expected to reach between $50 billion and $60 billion by 2020. But according to my August 20 interview with Redis CEO, Ofer Bengal, "10% of the market is for new applications and that segment is growing much faster than the overall market. Our revenues are in the tens of millions, we are growing at 60% a year and can maintain that rate for the next several years."

Redis has 8,300 customers of its Redis Cloud service which it introduced in 2013 and 250 customers for the same functionality as downloadable software -- which it launched in 2015. As Bengal said, "Our customers include six of the Fortune 10, 40% of the Fortune 100, three of the top five communications companies, three of the top four credit card companies, and three of the top five health care companies. Specifically, American Express, WalMart, Dreamworks, and United Health are our customers."

Redis -- which was founded in 2011, has raised $86 million in capital, and employs 225 people --  has a technology edge. It's based on an open source database developed by Sicily-native, Salvatore Sanfilippo (Antirez), who now works for Redis.

Redis's so-called NoSQL technology is much faster and cheaper to own and operate than Oracle's SQL database. "Companies were demanding much faster response time to operate their wireless apps on much larger databases. Traditional database response times were too slow. Specifically, customers wanted response times of under one millisecond to process 10 million transactions per second. We are the fastest database in the world -- 100 times faster than Oracle and much cheaper to own and operate," Bengal said.

Gartner has verified 68 customer reviews for a total of 4.7 out of five stars. One manufacturing customer said, "Redislabs has been the most stable, secure, and highest performing vendor we have ever worked with. We have thrown increasingly ridiculous workloads at our cluster and it has never faltered."

Identity verification service, Whitepages, chose Redis because it's faster than the competition. Heather Wade, Whitepages VP of engineering, said, "Our Identity Graph product handles [a huge amount of data which makes] our applications extremely latency-sensitive. Redis Enterprise provided the single-digit latency we required."

Redis rivals include MongoDB, Apache Cassandra, and Couchbase. Whitepages said it tested the performance and reliability of other competitive solutions but none matched Redis's response time.

Redis -- which operates R&D in Tel Aviv -- is adapting its organization to keep up with the growth in demand. "When we first started, everyone did everything. Before you have a product it's hard to attract top talent in Tel Aviv and Silicon Valley so you take what you can get. Today it's easy to attract talent. We have 110 people in sales which is run by Jason Forget, the former chief operating officer of Imperva; Manish Gupta, our CMO, was CMO at many Silicon Valley companies; our cofounder, Yiftach Shoolman, is chief technology officer," explained Bengal.

Redis has several vice presidents within its major functional departments. As he said, "Under our chief operating officer we have VPs of sales for North America, EMEA, and customer success (who runs our database as a service), and solutions architecture (who provides proofs of concept for potential customers). Under marketing we have vice presidents of product marketing, demand generation, and community. And our CTO oversees vice presidents of R&D and the CTO team that develops cutting edge services like Redis Search."

Redis is popular among developers -- who build so-called microservices and containers. Bengal said that 900 million containers uses Redis -- way ahead of the 650 million using MongoDB.

Redis aspires to win more of Oracle's business as companies adopt the product for more of their core operations and expects to go public in two to three years thanks to its low customer churn and its ability to double revenues per customer six quarters from its initial sale.

But Oracle is not in danger of going out of business. Its revenues are up at a 1.4% five year annual rate to about $40 billion with a 10% net margin, and a stock price up 3.6% in 2018 -- yielding a $193 billion market cap, according to Morningstar.

And MongoDB is growing but losing money -- with revenues more than doubling in the last two years to $154 million, a $96 million net loss and shares up 199% in 2018 to a $3.3 billion market cap.

Oracle has raised a price umbrella over the database industry and there are many fast-growing rivals taking advantage. That's not good for Oracle shareholders but Larry Ellison seems to be doing just fine.

Follow me on Twitter or LinkedInCheck out my website or some of my other work here