In the year 2023, the risk of starting a new database company is to unwillingly agree to compete with modern cloud providers like AWS, GCP and Azure. These platforms not only offer databases as a managed services serving both OLTP and OLAP workloads, but also have a monopoly on both compute and storage infrastructure. This presents a major challenge for database startups competing in the cloud era.
Wasif Aleem has worked as a software engineer in this space for over a decade, with an MS in Computer Sciences specializing in databases and worked on core database systems at amazon web services that power the majority of cloud and retail services. "If we look at the database companies started in the last decade, almost the majority aren't objectively profitable", says Aleem. "Combined with the fact that database startups raised Venture Capital at staggering valuations when VC capital was "cheap", and now have to show continued growth in the current bear market, it's hard to see most database companies making the cut".
Having worked at Evive Health, a healthcare tech company as a software engineer, to a 800+ billion dollar asset management firm designing a next generation data platforms as a director, Wasif Aleem saw firsthand how companies evaluated data products, he identified that almost all the data needs of a company can be solved by leveraging cloud platforms, for AWS this includes RDS, Redshift, Athena etc. This allows enterprises to focus on business problems at hand, rather than spending time, money and resources to research the current market trends and undergo yet another vendor approval process.
Aleem goes on to say, most enterprises already are cloud customers and would prefer to keep all or majority of infrastructure including data storage and compute under the same umbrella. Even if a new database as a service startup is able to innovate and take on the market, they would have to do so while paying the "big cloud" its dues in form of cloud compute rent, essentially shrinking the margins. Examples include Snowflake or Databricks that are one of the largest customers of cloud platforms like AWS.
Aleem's advice to a new database startup is to carve out the market segment and offer competitive alternatives to existing products in form of cost, ease-of-use, scalability and compatibility. Modern hardware has evolved in the last decade, and database products that can leverage the full capabilities of underlying hardware like utilizing vectorized instructions will be the most appealing in terms of not only cost but speed. Compatibility with existing standards is also important since it will lead to less friction in adoption, for example postgres wire compatibility is top choice for modern database products. Lastly, the design should be grounded in the needs of real-words users, as opposed to technological superiority. At the end of the day, businesses care about the result rather than the technical specifics involved in obtaining the result.
Ultimately, data infrastructure is an evolving landscape, and Aleem hopes to challenge the status quo and help usher in a new generation of data tools that solve real world business needs with a clear value proposition to overcome the cloud era challenges and succeed in the competitive market.
