Databricks CEO talks Neon deal and future M&A
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Databricks is one of the world's most valuable unicorns, fetching a $62 billion mark late last year. It's also become a top unicorn hunter, acquiring three startups for at least $1 billion.
Driving the news: The latest prize is database provisioning startup Neon, whose CEO Nikita Shamgunov has said that 80% of the databases created on Neon are created by AI agents instead of humans.
Databricks co-founder and CEO Ali Ghodsi hopped on Zoom to discuss the Neon deal and his company's broader M&A strategy. What follows is part of our conversation, edited for length and clarity:
Axios: What's the backstory to this deal?
Ali: "I've known Nikita for 15 years. We were contemporaries starting companies at around the same time. He started MemSQL, which was renamed later to SingleStore, and I remember even back then thinking that they'd really figured out how to do things that scale and have solid engineers. So we stayed in touch.
- "I later met him at some AI event and he said he's just going to go for this new crazy idea, and I thought, 'He's not going to be able to pull this off, that's too complicated.' But here we are and he did it.
- "The thing that was difficult about it was he really wanted to take Postgres, which is this popular open-source project, and wanted to completely rearchitect it under the hood for the agentic AI era."
There's a giant "vibe coding" boom, which drove the pending OpenAI-WindSurf deal. Did you feel pressure to do a related acquisition?
"No. I mean we had invested in Neon, as did other strategics, and so the question was if you could really get ROI, which became a no-brainer when you see what people are doing with it.
- "It's related, that deal, in the sense that people are doing vibe coding which means they aren't really coding. AI is coding. And it turns out that the vast majority of AI's go and create Neon databases."
What the deal competitive?
"I think so, yes."
Antitrust issues have caused a lot of Big Tech companies to cut back on M&A. Has that opened a lane for you?
"I think that the founders of these companies also prefer working at companies like Databricks than at an enormous hyperscaler. If you're entrepreneurial and want to change the world, who don't go to one of the giants."
You're worth $65 billion. Not exactly a lemonade stand.
"We are still a startup. At these big companies, you'll get sucked into the whole corporate ladder climbing."
Was the Neon deal cash, stock or a combination?
"Largely stock, unfortunately. My board is pushing me, don't give up any more equity. You should just do cash deals, which is why we just raised this $15 billion round.
- "On the selling side, the founders and their boards and VCs just want equity."
This is the third straight year you've done a billion-dollar acquisition, following MosaicML in 2023 and Tabular for $1.8 billion in 2024. Does that mean you're done for 2025?
"I don't think we have any limitations like that. If there's an amazing team on the other side that we really gel with, and a product that's an amazing fit with what we're building. ... Of course the price can't be completely unreasonable, but if those three things match, I think we have room for much, much more."
Is there another one being seriously looked at internally?
"Always. There is intense focus on M&A at Databricks."
