March 24, 2007
Next big European tech story - MySQL?
Those who complain that Europe doesn’t produce enough big and ambitious technology companies should look for a moment at MySQL, the open source database company, started by two Swedes and a Finn.
This is one investors should be looking at in any case, as the company has started signalling plans for an IPO on the Nasdaq before the end of the year.
MySQL is the unknown giant of the database world. It’s kept a low profile so far in the financial press, but is well known among the internet community. Most internet sites, in fact, are to some extent built on its technology.
Because basic MySQL database code can be used for free, a lot of internet start-ups with small budgets used it to build their databases. Now some of these companies have grown into Google, Yahoo, Facebook, Neopets and the like, giving MySQL an enviable client list.
Marten Mikos, chief executive, told me the company estimates it has 10m customers, putting it at the number three position in the database market behind Oracle and Microsoft. He believes the company recently overtook IBM’s D2 database division.
According to Mr Mikos, the 10m-user estimate is extremely conservative. The company doesn’t know exactly how many users it has, but it does know that 25m copies of its product are requested every year. If customers use the software for say, seven years on average, that would be 175m users.
What is the catch? Only one in a thousand users pay MySQL anything.
The basic database tools are completely free. You only pay if you want some support from the company, or you want to build your own closed-source application on top of the MySQL code.
Revenues were just E40m in 2006. They have grown exponentially from around E1.5m in 2001, but are still far short of Oracle’s $14.38bn in 2006.
Within the next 10 years, the company is aiming to reach revenues of around $1bn, as the number of paying users grow.
This will be against a generally declining database market, as more and more companies go for free, open-source software.
Danny Rimer, the venture capitalist whose firm, Index Ventures is a backer of MySQL, said Mr Mikos’ initial pitch to him was both stark and breathtakingly ambitious.
Sitting in a grubby Stockholm youth hostel, he told Mr Rimer: “The database market is currently worth about $9bn. We will shrink that to one third of its current size and take a third of the rest.”
This is not a European company lacking ambition.
It has some way to go, but Mr Rimer, known for his role as one of the earliest backers of Skype, believes him.
