Company overview: MySQL
MySQL AB was formed in 1987, and by Marten Mickos joined the company in 2001. MySQL employs 220 people worldwide. MySQL had $20M in gross revenue for the last fiscal year and 100% growth for the past 3 years running. The company has grown from 60 to 220 people in the last two years. The company estimates it has 6 million installations worldwide with another 40,000 downloads each day.
In June of 2003 MySQL secured $19.5M in Series B financing from Silicon Valley venture capital firm Benchmark Capital. Benchmark was chosen as a funding partner because of its track record with other companies like eBay and Red Hat. When asked why he decided to take the path of venture capital funding, Mickos replied, "Because we have the potential, because we can grow to venture capital expectations."
When asked if MySQL was on the IPO track Urlocker responded, "That is the preferred track. We would want to see $50 - $100M in annual revenue before considering an IPO." 65% of MySQL's revenues come solely from licensing the database. 35% of revenue comes from training, support, and documentation. These percentages are likely to change as the company moves to a more scalable support model.
In a commodity market, service is a key differentiator. MySQL has done well in support and can offer 30 minute support turn-around. Urlocker cites a recent gold member support incident which resulted in a fresh, tested database patch within 24 hours. "Our developers are key to our support. With larger database companies your primary tech support contact knows less than you do." Even with this edge the company will continue to invest in the area of support.
MySQL's business emphasis is to help companies lower their TCO for their database investment by specifically providing a low cost commodity database. MySQL wants to deliver a database solution an order of magnitude cheaper than closed source databases. Says Zack Urlocker, VP of Marketing, "Databases are well understood so we don't have to spend time explaining the product."
MySQL's biggest challenge
The company's biggest challenge is managing growth. High growth makes scalability a real challenge and creates the possibility of exceeding management's capability. Another challenge is meeting the needs of unsophisticated corporate users. "Our product has to meet the '15 minute rule'," says Urlocker on the company's support challenge. "If the user doesn't have MySQL installed and running in 15 minutes we haven't done our job. Our support must be top notch. A year from now our challenges will be different but the small issues we encounter can present special challenges during high growth."
"MySQL uses a 'dual licensing' business model. Under this model, users may choose to use MySQL products under the free software/open source GNU General Public License (commonly known as the "GPL") or under a commercial license.
"With the GPL license, MySQL is available free of charge. Users may download the software for free and modify, integrate and distribute it. However, GPL users must abide by the rules of the GPL, which stipulate that if a MySQL-based application is redistributed, the complete source code for this application must also be open and available for redistribution.
MySQL AB offers a commercial license for organizations that do not want to release the source code for their application. Commercial license customers get a commercially supported product with a level of assurance from MySQL AB, without the requirement that their MySQL-based software must be 'open sourced'. MySQL's dual licensing increases freedom in two ways: first, it encourages the growth of free software by licensing MySQL under the GPL; second, it makes it possible to use our software in situations where the GPL is not applicable."
The dual licensing model is a powerful vehicle for enhancing revenue. Without the ability to offer a commercial license for the core database product, MySQL would forego fully 66% of its total revenue. In essence, the dual license allows MySQL to triple its revenues.
