MySQL was bought in cash by Sun for $1 billion. Of course, Sun collapsed after that, so perhaps you are right about the madness.

The only explanation that ever made sense to me for that transaction was that it was to make them more attractive to their potential purchasers - MySQL was a very strange acquisition choice for Sun but for Oracle and IBM not so much.

... And then Monty and his team all quit, so what Sun actually got for a billion of their shareholder's dollars was the domain name mysql.com. One of the stupidest business decisions of all time.

Imagine what SUN could have built, if they had $1 billion in cash to spent on a Database. Stupid managers wouldn't let them, but they spent $1 billion on a hyped DB with questionable quality.

I always thought of the MySQL purchase as a last desperate attempt to get their geek mojo back. Not something that they could have done with an in house solution (quickly).

It still didn't work, but I don't think they were just trying to buy a database.

You can't buy user base.

Sure, but investors in this round would _lose_ almost 20% if MongoDB got bought for $1B. Now, if it was EMC, CRM, Red Hat, and Intel making small investments in order to have some influence of the strategic direction of the company, that would make sense. But Sequoia? They must have a case for this making better than market returns over a multi-year window. I am skeptical, but I guess I'll have to revaluate...

They weren't buying tech, they were buying customers.

It wasn't for 1B cash, it was 800M cash, 200M Sun stock.

If a trifle of a service like Instagram can get sold at 1 billion a legitimate piece of technology infrastructure valued at $1.2 seems reasonable to me.

Edit: corrected Instagram sale price from 2 to 1 billion, thanks Elliott

valuation of a social network = <# of users> * <$ value/user>

valuation of infrastructure = <# of deployments> * <margin/deployment>

The problem is that we cannot get an accurate estimate for the total value of a social network. We can usually get an accurate count of the number of users, and can even decently predict the number of potential users. However, when it comes to the value per user we have no idea what that number is because the avenues of monitization are so murky. Can instagram get just as much money per user as facebook? How about compared to Flickr users? How about SnapChat? Can we get a reasonable predict which social networks are fads and which are here to stay? To me, the value of a social network is much too foggy to reasonably predict.

The valuation of an infrastructure company is much easier to predict - it's a matter of price setting. If you are charging $100k for a product, and every fortune 500 company needs your product at that price, you can expect to be worth about $500M.

I don't really disagree with anything you say. But I think keeping longevity in perspective is important as well. Instagram is (mostly) at the mercy of fickle tweens and 20 somethings. If Mongo has a good management team they could be in the game long after Instagram becomes a shadow of it's former self, if you're selling to Fortune 500s odds are you aren't selling to them only once.

Instagram was bought for $1 billion, not 2 and had a $500 million valuation at the time.

Instagram had 30 million users. Thats $34 a user. Facebook IPO was close to 100 billion, they had 1 billion users which is $100 a user.

That's not real money, much of that was overvalued Facebook stock.

I dunno. It's a real business with real revenues, and tons of lock in. ORCL is worth $150B. It seems to me anyone who can steal marketshare from them could be worth at least 1% of that amount.

"This market is $XX billion, we only need to take 1% and we'll be rich" is a common startup fallacy. Stealing customers from Oracle is no easy endeavor.

That's very true, but Mongo has both a different product and dramatically different price point which should at least give them a fighting chance. You can't take on Oracle with a similar product that sells for 10% cheaper. With that statement, I'm really just parroting some of the tenets of the Blue Ocean strategy, but for the most part that book just makes sense and has validated what I've seen in competitive situations in the various industries I've worked in.

But the Oracle database engine is arguably a pretty small part of that value.

yes, but the DBMS was the keystone to that value.

Oracle sold a product that was absolutely essential to pretty much every major business: there isn't really a good alternative to a transactional relational database running on middle-to-high-end hardware for a lot of companies. Selling something business-critical to customers with deep pockets is a pretty good business strategy. And they only had a couple of direct competitors in that space.

Well they've not got $1.2bn, they've got $150 million. There is nothing to say that they will be able to float or get bought at a similar valuation. I can't see any of the investing arguments for MongoDB that even Facebook had. The whole space is full of competition for starters.

That's what I meant - I was congratulating them on getting the $1.2bn valuation. Agreed that there is a lot of competition and little certainty out there, though.