Nikita Shamgunov is a native of Russia, coming to the US for grad school in 2005. Eventually he worked at Microsoft on the SQL Server product. A fun fact - Nikita quit business school on the first day, and decided to join Facebook and find his future co-founder. All of this worked out, and he and his co-founder built SingleStore, which is one of the highest valued companies at YC. Outside of tech, he was a semi-professional athlete in Ping Pong, achieving the status of Top 10 in Washington State back when he was at Microsoft.Nikita completed his "tour of duty" at SingleStore, and post that, he joined a venture fund. He pitched incubating an idea of his at the fund, which was rolling up all Postgres instances in the world. He started to engineer an approach, the team, and the architecture - and did so in some very unique, and deliberate ways.This is the creation story of Neon.SponsorsRapyd CloudSpeakeasyQA WolfSnapTradeLinkshttps://neon.tech/https://www.linkedin.com/in/nikitashamgunov/Our Sponsors:* Check out Kinsta: https://kinsta.com* Check out Vanta: https://vanta.com/CODESTORYSupport this podcast at — https://redcircle.com/code-story/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy
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The original idea was to build an open source alternative to AWS Aurora. The key idea of Aurora, which we took to the next level, was separation of storage and compute. In a year, we were ready and we started to onboard some internal users. As we started to work on the launch, it leaked, right? Because we didn't hide the website behind a password. So suddenly posted in Hacker News.
and we had a lot of traffic coming to the website. Right before that, we started to see our GitHub repo, and we were building in the public. The stars started to go vertical. We started to get validation that we're onto something. My name is Nikita Shamgunov, and I'm a CEO and co-founder of Neon.
This is Code Story. A podcast bringing you interviews with tech visionaries, who share what it takes to change an industry, who build the teams that have their back, keeping scalability top of mind. All that infrastructure was a pain. Yes, we've been fighting it as we grow. Total waste of time. The stories you don't read in the headlines. It's not an easy thing to achieve, my dear.
Took off the shelf and dusted it off and tried to begin. To ride the ups and downs of the startup life.
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It's not just about technology. All this and more on Code Story. I'm your host, Noah Labpart. And today, how Nikita Shamganov is enabling you to ship faster with Postgres. on a serverless platform where you can move fast. This message is sponsored by QA Wolf.
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Eventually he worked at Microsoft on the SQL Server product. A fun fact, Nikita quit business school on the first day and decided to join Facebook and find his future co-founder. All of this worked out and he and his co-founder built Singlestore, which is one of the highest valued companies at YC.
But outside of tech, he was a semi-professional athlete in ping pong, achieving the status of top 10 in Washington state back when he was at Microsoft. Nikita completed his tour of duty at Single Store and post that he joined a venture fund. He pitched incubating an idea of his at the fund which was rolling up all Postgres instances in the world.
He started to engineer and approach the team and the architecture and did so in some very unique and deliberate ways. This is the creation story of Neon.
While the first company that I built was mostly driven by my understanding of database technology and the desire to build a startup, Neon was engineered not just as a product, but as a company as well. So after my tour of duty at Single Store, where I was CTO first and then CEO, I joined Coastla Ventures, which is a tier one venture firm here in the Silicon Valley as a partner.
As I walked in to work with a famous venture capitalist, Vinod Khosla, I told Vinod, hey, I have this other idea. Maybe we can incubate it here at Khosla Ventures. And the idea was to roll up all Postgres usage in the world. While building Tingle Store, I noticed that there is so much Postgres out there.
And the other property of Postgres is that a small startup would be using Postgres and a very large enterprise would be using Postgres. And then as a technology, nobody really owns Postgres. There isn't a dominant software company that owns Postgres code. There isn't a software company that owns Postgres trademark. So it's like open source in the best definition of being open source.
Since then, I started thinking, what are the key properties of a successful Postgres company? One thing I learned from the node is the team you build is the company you build. And so the second question is like, what is the right founding team to build a dominant Postgres company? And then I started engineering that founding DNA of the company.
I started calling all the Postgres committers and contributors. And then I started to think about the architecture as well. The architecture is the architecture of separation of storage and compute and therefore you need people who understand storage very well and you need to bring them into the company.
The company also depends on the knowledge of Postgres internals as well as the ability to plug it into the Postgres ecosystem and be accepted by the Postgres community. The two co-founders, Stas and Heike, are from the Postgres world. Both contributed to the Postgres engine. Heike is like a legend in the Postgres community and a committer for 20-some years.
And then Stas worked at the Postgres company, but also worked at the tech prime as well, at the largest company in a tech company in Russia at the time. And then the thing is, you need to, what Bezos says, you need to be stubborn on your vision, but flexible on the details. There's a bunch of things that we discovered on the way.
The first thing that we discovered, it came mostly with one of our angels. Guillermo Rauch, who is the CEO of Vercel. And through his eyes, it became obvious how important developer experience and how important serverless is in building of this company.
So if you're building a developer-first product, there's all those things across the production quality, the ability to deliver your technology in a serverless way, integrating into developer lifecycle. All of those things, they're obvious in hindsight.
But it takes actually a good amount of effort to build and deliver both on the technology, on the experiences, on the production quality, and on the team as well. But then as we went along, we realized that developer experience, integration with JavaScript frameworks and the JavaScript ecosystem are a big deal, and that had a big impact in the company DNA as we went along.
And of course, that statement, the team you build is the company you build, can be applied at every stage of the company. And so this year, the team you build is the company you build was applied to the management team. So we have now a fantastic staff team, VP of engineering coming from Mongo, VP of product coming from GitHub.
So we apply this team you build, the company you build, to each iteration. And the year 25 is going to be about GenAI, and then we're bringing some of the AI talents to the team as well.
Let's dive into the MVP, so that first version of Neon you built. How long did it take to build and what sort of tools were you using to bring it to life? I think that'll be super interesting given also what you said about Postgres.
The original idea was to build an open source alternative to a very popular product called AWS Aurora. The key idea of Aurora, which we took to the next level, was separation of storage and compute. What you do is you build kind of one storage for everyone. And what I mean by that is it's one global multi-tenant storage system.
Compute is still good old compute of a virtual machine in which Postgres lives and then attaches to your storage. So the first version of that was built in about 12 months. And then in a year, we were ready and we started to onboard some internal users. And then we started working on the launch process. As we started to work on the launch, it leaked, right?
Because we didn't hide the website behind a password. So suddenly posted it in Hacker News and we had a big discussion on Hacker News as well as a lot of traffic coming to the website. And then we also, right before that, we started to see our GitHub repo and we were building in the public, the stars started to go vertical. And we're like, wow, what's going on?
We started to get validation that we're onto something. And the GitHub repo was, again, public. And the description in the repo was, this is an open source alternative to AWS Aurora. And there was high velocity on the repo, right? So we were shipping a lot of code.
The tools that we used also helped both from the standpoint of how fast we can build hardcore foundational technology and from the marketing standpoint as well to believe it or not. So our storage is written in Rust and GitHub has this viral loops that's called GitHub trending that are on a per language basis.
And so because there's so much interest in Rust in the world, we were making GitHub trending for Rust many times throughout the history of NEON. And that just gives us a boost and it's a self-reinforcing kind of loop. So now that repo shows up on the trending, some people follow Rust trending and whatnot. So that got us a good number of GitHub stars.
I think we executed this part perfectly because early on in the zero to one of company building, especially for a long term systems project, the market fit is a big question mark. If you build in public, if you build open source, if you make it stupid simple to go and try your technology, your market fit signal is a lot more clear than otherwise.
So giving technology, putting technology into the hands of people is just a very good idea.
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Get started for free today by visiting snaptrade.com slash codestory. So then from that point, how have you progressed and matured Neon? And I'm curious about how you built your roadmap, how you build it today, and how do you go about deciding what's the next most important thing to build or to address with the product?
Very early on, I wrote in the original pitch deck, I wrote a 1-2-3 strategy. The first one was to build separation of storage and compute. That's what we did in about a year. Of course, at that time, it wasn't super mature. It has all sorts of bugs and limitations. But it allowed us to launch, and it allowed us to start to attract users.
And once you start attracting users, they all give you feedback. And so now you have that flywheel going. And because we had a free tier and it's so easy to start, that flywheel, it gives you a statistical way because some things just don't work or people are constantly pushing the ceiling of what's possible.
That's the advantage of having a popular service on the internet that people use and depend on. The second part was win hearts and minds of developers and establish and sign up channel. And I said, it doesn't matter how long this part is going to take, but we're doing a good job if we cross the 5 million in revenue run rate through this.
In the first two parts, I made a point that we are not going to have a Salesforce. I thought, because there's so much Postgres out there, I thought we should be getting to 5 million in ARR without the Salesforce, purely in self-serve. But we will have a partnerships team that will allow us to establish strategic partnerships with, at the time, I thought, Cloudflare, VMware, Microsoft. and Google.
Then Google built a competitive product less than a year after we started a company that's called AlloyDB. So Google was turned off. Cloudflare never happened, but then Vercel happened. And so we partnered with Vercel and we launched a product called Vercel Postgres. And then the third part of company building was basically spinning up an enterprise sales force.
We're past 5 million in ARR, but we are not starting an enterprise sales force. So that's a deviation of our original plan. And of course, the reason that there is a deviation from the original plan is the change in the market and all the activity around GenAI.
So let's switch to teams. How do you go about building your team? What do you look for in those people to indicate that they're the winning horses to join you?
This is my second company. And in the first company, we focused on competitive programming. And so we hired a bunch of people from kind of world champions in International Olympiad in Informatics. And there's another programming contest. It's called ICPC, which is a student contest. And I think that strategy works. And the reason it works is you have an asymmetric advantage for talent.
And it doesn't have to be competitive programming, but it has to be something that you have advantage over the rest of the world. Keith Rabois said that startups are built on undiscovered talent. And undiscovered talent is either young, is it somebody who hasn't been discovered by the world? And so in the Silicon Valley,
Traditionally, undiscovered talent is new grads or people very early in their careers. It also could be people with non-traditional background. So for example, the leader of the very popular Gen-AI product is not coming from like a top school. And so sometimes you get those kind of craftsmen that grew up in a different environment, but they're extremely talented.
But the world hasn't learned their name just yet. At Nian, our advantage is the fact that we are fully distributed. And it went out of vogue in the venture community. And there's a lot of like back to the office type energy that is happening. But because we're a Postgres centric company, we need Postgres committers and contributors. It's fairly natural for us to be remote first.
And we built a critical mass of systems engineers in Europe. So that allowed us to be a really cool brand for people in, I don't know, in the UK, in Germany, in the Netherlands. And that got us asymmetric access to talent. Stas is Russian. The first four people on the team were the ones that Stas hired.
Obviously, Russia started war on Ukraine, and it became, for a US company, we could not afford to have anybody in Russia. Everybody on that team moved out of Russia, every single person, in the next few weeks after the war had started. So that kind of removed that dependency. But because Stas was a star and he was able to attract some really high quality talent early on also helped us.
As we go along, there are a couple of things that you can also do. And you can only do it if your company is doing very well. So you either take an approach of hiring slow and firing slow, or you can take an approach of hire fast and fire fast, but you don't have much tolerance for that. And I was reading that book that's called Amped Up by Slootman.
And he was saying that contrasting data domain and ServiceNow, and in ServiceNow, he was a lot more aggressive in terms of both hiring fast and firing fast. I have some kind of similar approaches. At SingleStore, we hired extremely slow. We had very involved interviews. And it means we're hiring much faster when we used to hire than a single store.
But we also have much less tolerance for underperformance. And I think the net result is roughly similar in the quality of talent. The DNA is different because there was a lot more systems talent at single store because it was building software and on-prem software. And here we're running a service. So there's a lot more kind of like product engineers and SRE DevOps type DNA.
Because it's remote, the talent for the most part, more senior, because if you build in the Silicon Valley, you're forced to hire more junior people and have them grow really fast. And they mostly grow by osmosis. And the reason to that is like, it's hard to pull the top tier talent out of good places because good places make sure that top tier talent is very happy.
We hire and fire faster at Nian versus single store. And again, I'm very happy at the quality of the talent that we have at Nian. I'm not a huge fan of remote first. I'd rather prefer everybody in the office. But we're also driving a bunch of benefits by being remote.
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For a limited time, get $1,000 off Vanta at vanta.com slash codestory. That's V-A-N-T-A dot com slash codestory. I'm curious about scalability. Where has scalability come into play here and as you're building Neon? And have there been any interesting areas where you've had to fight it as you've grown?
Naturally, in a startup, you will have a handful of people that are responsible. Like these are the people you call to if there is a fire. And as the company scales and the user base scales, and now we have 5,000 databases spun up every day on the platform, you're going to get fires. That's just what's going to happen. And then you keep reaching out to the same people.
My co-founder Stas was one of them. Eventually, you start burning those same people out. And there are ways to address this. And typically, you address it by starting to distribute the workload or... You address it by having stronger team leads and whatnot. From the CEO standpoint, you can think about it as you have a bunch of balls in the air.
If the company is growing exponentially, the number of balls in the air starts growing exponentially as well, and then they will just start falling. In our case, the symptom of that was the stability of the service about a year ago. So 12 months ago, all hell broke loose as the number, the usage on the Neon platform was growing exponentially. And then we started to have outages one after another.
And our competitors started to make fun of us on Twitter by, like, referring to us without naming our name. And it was just, like, it was embarrassing. By that time, we were already for self-postgres. Guillermo was sending angry messages to me every time we were having instabilities. The classic from the CEO standpoint is once this is happening, you start building your staff team.
That's when I started. I opened up a number of searches and we brought head of engineering, head of product, head of marketing. And then we were like, do we need a head of finance? Do we not need to get insight? I was like, fuck it. We're just going to bring a head of finance as well.
The learning there is once you start building a staff team, if you have some folks on the staff team who are professional executives and some who are not, the ones that are not better step up really quickly. Or you will have weird staff meetings going on where the bar for communication and getting things done is different and uneven.
Once you flip the switch and start building a staff team, I think you're better off just having a professional staff team. And that's what we did in the beginning of this year. And now the service is super stable. With a capable staff team, you're much better positioned to solve problems in a very robust way.
Okay, so as you step out on the balcony and you look across all that you've built, with Neon in particular, what are you most proud of?
It's mostly the team, the team that puts max effort into the opportunities that the world presents to us. That's how I think. And I read this in a book that's called Wooden Leadership. It's like a very old book about basketball. But that's how I think about the team and the people I work with. Life is too short to work with people who lack passion or not talented in any way.
The greatest joy in life and when you see people grow and do things that thought were not possible for them. That's what I'm proud of the most.
Let's flip the script a little bit. Tell me about a mistake you made and how you and your team responded to it.
There are a few folks that are not here on the team anymore that I wish I had not hired. I wish things went somewhat differently. Everything that we do and it worked, I wish we had started sooner. And I wish we had started the Gen AI effort sooner as well. Generally, I think that's another thing that I learned from that Woodham Leadership book. The team who makes most mistakes usually wins.
Just being more aggressive in general and allowing yourself and the team making mistakes is, I think, is a very good thing.
This will be fun to hear your answer. What does the future look like for Neon as a product and for the company?
I think we're living through a transition today of software. That transition is driven by AI, by large language models. While Nian is an incredibly useful database service, I think the future is a lot more in a platform and in the agentic space. In the future, I strongly believe, A, we're going to have a billion developers.
So right now we have 20 million professional developers and another 80 million or so tech people, product managers, designers, sales engineers, whatnot. And we're going to have a billion developers. The other thing that I strongly believe in is that each of us will have a bunch of agents that are running around the Internet doing tasks for us.
And it's the amount of information that and like various accounts that we have on the Internet is like absurd. Right. And especially those who have kids. I do.
there's all this like flow information coming from the school and things that that you need to get done and just like the amount of digital work is huge so we're gonna have all these agents running around internet doing work for us and all of those agents are going to be built somewhere on on a platform
Definitely all of them are going to need the database, but they're also going to need a bunch of other things. So I think the future of Neon is more of a serverless agentic platform and not just a Postgres database. And that's why I'm really rethinking part three of the original master plan, because in the original master plan, I'd be spinning up an enterprise Salesforce right now.
But that agentic opportunity isn't front of us. We're seeing software being built on top of the Neon platform. And so we want to catch that wave. And I think that's the most important thing right now.
Let's switch to you, Nikita. Who influences the way that you work? Name a person or many persons or something you look up to and why.
It's many people. I learned a lot from Vedat Khosla, working for four years at Khosla Ventures. And it's both a mindset, the Swiss-taking mindset, and thinking about the world in terms of asymmetric opposites.
And so taking risks and and thinking about like investments and return of investments and you putting time and energy into things and you want to put them into things that are higher, potentially higher in risk. But they have like gigantic asymmetric upside if they work. And it's OK that not all of them work. You just need a handful of them to work.
And then how you think not just one, two years out, but try to think about five, ten years out and create a thesis and then be directionally correct. And if you're directionally correct, you'll arrive into a good future. So that was a big influence. And then I read a lot of books. I read books about leadership. I read books about founders. Obviously, I read about Steve Jobs. I read about Elon.
I read their biographies. Elon's absolutely a hero. Bill Gates is a hero. Sergey Brin and Larry Page are heroes. I'm trying to learn as much as possible by reading and learning how they operate and why they've built such incredible businesses.
Last question, Nikita. So you're getting on a plane and you're sitting next to a young entrepreneur who's built the next big thing. They're jazzed about it. They can't wait to show it off to the world and can't wait to show it off to you right there on the plane. What advice do you give that person having gone down this road a bit multiple times?
I think it's going to be tailored to the individual. And depending on the stuff that he or she is showing to me, if something's groundbreaking, it will take care of itself.
Hopefully the person who's showing me understands the potential of this thing and A, not going to squander it, B, not going to be pushed around by whoever else is around it and take full ownership and unlock the full potential of both the product and that individual. I would also try to make sure that this person understands the importance of other people believing in him or her.
When I work with entrepreneurs, that uncompromising belief that they will be able to accomplish whatever they set out to do is actually a great source of energy. And it's like an important ingredient to the overall thing working and this person accomplishing their mission.
Well, that's fantastic. Well, Nikita, thank you for being on the show today. Thank you for telling the creation story of NEON.
Of course. Love to be here.
And this concludes another chapter of Code Story. Code Story is hosted and produced by Noah Laphart. Be sure to subscribe on Apple Podcasts, Spotify, or the podcasting app of your choice. And when you get a chance, leave us a review. Both things help us out tremendously. And thanks again for listening.