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Innovation Economy

Software pioneer is 'Johnny Appleseed' of start-ups

Email|Print| Text size + By Scott Kirsner
Globe Correspondent / December 23, 2007

Lanky and laconic, Michael Stonebraker is sprawled across a conference room chair at the Andover headquarters of Vertica Systems Inc., a company he helped found.

Stonebraker is one of the pioneers of modern database software, and he's musing in his professorial manner - he also supervises database research at MIT - about his next big idea. The musing makes Vertica chief executive Ralph Breslauer a little uncomfortable, since it's still unclear whether Stonebraker's new concept will fit inside Vertica's business or wind up as the germ of a new company.

Stonebraker is the tech world's equivalent of Tom Brady: an idea guy it seems silly to bet against. His first three companies, all started in the 1980s and 1990s while he was teaching computer science at Berkeley, were acquired by high-tech biggies Computer Associates, Informix, and PeopleSoft for as much as $400 million.

But lately, Stonebraker has been a bit of a bumblebee, flitting from one company to another. In 2003, he started a company called StreamBase Systems Inc., now based in Lexington. Two years later, while still serving as StreamBase's chief technologist, he cofounded Vertica. Both database companies attracted funding from the same two local venture capital firms, Bessemer Venture Partners and Highland Capital Partners. With 2007 almost done, the timing could be right for another start-up.

"It is unusual," says Paul Maeder of Highland Capital of Stonebraker's Johnny Appleseed approach to company creation, "but he's just a very prolific guy."

And few techies have Stonebraker's sway with senior information technology executives. When Vertica organized a dinner in Manhattan last month, two dozen of Wall Street's chief information officers trooped over to the Yale Club to hear him speak.

StreamBase helps companies analyze data as it flows in, rather than after they've stashed it into a database. Marketing vice president Bill Hobbib likens it to "counting salmon as they go up the stream." Several hedge funds rely on StreamBase's software to gain insight into stock market twitches as they're happening and trade on them. In-Q-Tel, the venture capital arm of the Central Intelligence Agency, is also among the company's backers, and StreamBase chief executive Chris Risley suggests that the software may be in use by several government agencies trying to foil terrorist plots - though he can't be explicit. The company has raised $31 million so far.

Risley doesn't seem miffed that Stonebraker is now devoting most of his time to Vertica, the younger company. "Engineering is a slower process than the speed of thought for Stonebraker," he says. "It can take months for us to digest just a couple of ideas from him." Risley says one of Stonebraker's legendary remarks about a new feature is, "It's only ten lines of code," meaning a programmer ought to be able to enact it in just an afternoon. "Stonebraker works best a fair distance from the enterprise."

Vertica takes a novel approach to storing data (placing it in columns, instead of rows) that enables it to use just 10 percent of the disk space it would ordinarily require; the unique format also allows data to be read more quickly, which means faster answers when users ask a question - even if a database is enormous. The company has raised $23.5 million so far, some of it from the well-regarded Silicon Valley firm Kleiner Perkins. In February, Vertica named Jerry Held, a former top executive at Oracle Corp., as its chairman; Vertica is hoping to nibble at the edges of Oracle's vast collection of customers.

"Vertica is in an established market," Stonebraker says. "We go to CIOs and ask them, 'Do you have a data warehouse, and are you in pain?' StreamBase is more of a missionary in a new market, competing against the custom code that companies write themselves." Sometimes, the two companies wind up selling to the same customer, using StreamBase's technology to analyze streaming data and then relying on Vertica to store the data. Risley says that the two companies closed a joint sale last week, where Vertica had recommended StreamBase.

Despite Stonebraker's star power, selling database software to large companies won't be a cakewalk. They're inherently skeptical of buying important software packages from start-ups, and established vendors like Oracle and IBM have vast sales forces that will gladly stoke doubts about the reliability of Vertica and StreamBase's products.

"It's an uphill battle, to be sure," says Paul Barth of NewVantage Partners, an Arlington consultancy that works with chief information officers. Barth says his firm's clients tell him they're trying to whittle down the list of tech vendors they buy from - not add to it. "One CIO we work with has a policy: If you're going to bring in a new vendor, show me the one I should kick out."

The challenge for both Stonebraker companies will be to build sales teams that can make progress against those headwinds, and engineering groups that can pay close attention to what customers will want in future editions of the products.

And also prepare for Stonebraker's eventual exit. One investor I spoke with expects him to move on from Vertica after the company raises a third round of funding - likely happen in 2008.

Maeder says Stonebraker's next database idea, which still is under wraps, will probably stay within Vertica - though he doesn't entirely dismiss the possibility it could be a separate company.

"It's a huge investment to create a new company with its own sales force," he says. "But sometimes you just can't keep the boy on the farm."

Scott Kirsner can be reached at kirsner@pobox.com.

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