Couchbase IPO: The Company Looks For Database Riches

During the past few years, the IPO market has seen a variety of database companies hit the markets. And the latest one came this week: Couchbase. The company issued 8.3 million shares at $24 each, which was above the initial price range of $20 to $23. On the first day of trading, the shares jumped by 27%.

The origins of Couchbase go back to the development of an open source project, called CouchDB (its an acronym for cluster of unreliable commodity hardware). The developer of this technology was Damien Katz, who formerly worked at IBM. He started on this project in 2005 and launched the first stable version in 2010.

Startups like CouchOne and Membase saw the potential of this technology and began to build their own enhancements. These companies would also merge in 2011 to form Couchbase, which would combine core database technology with caching systems. The goal was to make the platform highly scalable and reliable for enterprise customers. 

The Technology

The relational database is the most dominant model. While it continues to be robust, the technology has had difficulties with the needs for handling millions of users and managing spikes in workloads. Relational databases are also far from cheap. 

“Relational databases were built for large and monolithic applications,” said Matt Cain, who is the CEO of Couchbase. “But today’s applications involve many datasets and heavy interactions.”

To address the problems, there has emerged a new model called the NoSQL database. It is based on a document model and can work effectively with any type of data, such as structured, unstructured, time series and so on. 

However, the first generation of NoSQL databases was not for mission-critical applications. Part of this was due to the underlying technology. But there was also the problem with the implementation because of the need to retrain database administrators.

As for Couchbase, the company has focused on applying enterprise-grade systems to its platform. Consider that it works in a myriad of configurations, whether for the cloud, hybrid, or on-premise environments. 

“At Couchbase, we are combining the best of both relational databases and the NoSQL model,” said Cain. 

A key factor for Couchbase is that the system has been built for seamless deployment. This means there is minimal downtime. As a result, the company has been successful in migrating mainframe and relational database implementations. For about 80% of its customers, the database is used as a source of truth or system of record for some or all of their business.

Market Opportunity

The database market is enormous. Keep in mind that it’s one of the largest undisrupted markets for enterprise software. 

According to IDC, the spending was about $42.9 billion last year and it is forecasted to hit $62.2 billion by 2024. One of the main catalysts for growth is the need for digital transformation, such as to offer mobile apps, manage edge systems and leverage Artificial Intelligence. Such technologies simply do not work well with relational databases.

“With digital transformation, it’s not just about creating new applications,” said Cain. “There is also a need for re-platforming existing ones.”

In other words, the future does look bright for Couchbase. The company has a robust technology that is used by many large customers and handles enormous workloads. More importantly, there is a real need for companies to transition to other approaches—and this may mean that the database market is finally at a critical point for major change.

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