The Accidental Billionaire
Ali Ghodsi was happily researching AI at Berkeley when he helped invent a revolutionary bit of code—and he wanted to give it away for free. But few would take it unless he charged for it. Now his startup is worth $28 billion—and the career academic is a billionaire with a reputation as one of the best CEOs in the Valley.
ALI GHODSI
WAS HAPPILY RESEARCHING AI AT BERKELEY WHEN HE HELPED INVENT A REVOLUTIONARY BIT OF CODE— AND HE WANTED TO GIVE IT AWAY FOR FREE. BUT FEW WOULD TAKE IT UNLESS HE CHARGED FOR IT. NOW HIS STARTUP IS WORTH $28 BILLION, AND THE CAREER ACADEMIC IS A BILLIONAIRE WITH A REPUTATION AS ONE OF THE BEST CEOS IN THE VALLEY.
It was November 2015, and Databricks, a two-year-old software company started by a group of seven Berkeley researchers, was long on buzz but short on revenue.
The directors awkwardly broached subjects that had been rehashed time and again. The startup had been trying to raise funds for five months, but venture capitalists were keeping it at arm’s length, wary of its paltry sales. Seeing no other option, NEA partner Pete Sonsini, an existing investor, raised his hand to save the company with an emergency $30 million injection.
The next order of business: a new boss. Founding CEO Ion Stoica had agreed to step aside and return to his professorship at the University of California, Berkeley. The obvious move was to bring in a seasoned Silicon Valley executive, which is exactly what Databricks’ chief competitor,
Data Doctors
Databrick’s seven cofounders—six of whom have Ph.D.s in computer science—first worked together in UC Berkeley artificial-intelligence research labs. (Standing, from left) Arsalan Tavakoli, 37, who leads field engineering; Ion Stoica, 56, executive chairman and the original CEO; Andy Konwinski, 37, vice president of product management; Reynold Xin, 35, chief software architect; Patrick Wendell, 32, vice president of engineering. (Sitting, from left) Ali Ghodsi, 42, CEO; Matei Zaharia, 36, chief technologist. “We always considered ourselves the Berkeley mafia,” Ghodsi says.
INSIDE A 13THFLOOR BOARDROOM IN DOWNTOWN SAN FRANCISCO, THE ATMOSPHERE WAS TENSE.
HOROWITZ WAS INITIALLY SKEPTICAL OF ENTRUSTING DATABRICKS TO A CAREER ACADEMIC WITH NO EXPERIENCE RUNNING A BUSINESS. BUT BY THE VC’S OWN ADMISSION, GHODSI HAS BECOME THE BEST CEO IN ANDREESSEN HOROWITZ’S PORTFOLIO, WHICH SPANS HUNDREDS OF COMPANIES.
Snowflake, did twice on its way to a software record $33 billion IPO in September 2020. Instead, at the urging of Stoica and the other cofounders, they chose Ali Ghodsi, the cofounder who was then working as vice president of engineering.
“Some of the rest of the board was naturally like, ‘That doesn’t make any sense: Swap out one founder-professor for another?’ ” recalls Ben Horowitz, the company’s first VC backer and himself initially skeptical of entrusting the company to a career academic with no experience running a business. A compromise was reached: Give Ghodsi a one-year trial run.
By Horowitz’s own admission, Ghodsi, 42, bald and clean-shaven, has become the best CEO in Andreessen Horowitz’s portfolio, which spans hundreds of companies. Databricks is already shaping up to be the firm’s best software success thanks to a recent valuation of $28 billion, 110 times larger than when Ghodsi took over. Databricks now boasts more than 5,000 customers, and Forbes estimates that it’s on track to book more than $500 million in revenue in 2021, up from about $275 million last year. It features on Forbes’ latest edition of the AI50, ranked fifth on last year’s Cloud 100 list and could soon be headed for an IPO that ranks among the most lucrative in the history of software. Already, Ghodsi’s magic act has minted at least three billionaire founders—himself, Stoica, 56, and chief technologist Matei Zaharia, 36—all of whom, by Forbes’ estimation, own stakes between 5% and 6%, worth $1.4 billion or more.
It is a staggering achievement made even more remarkable by the fact that many of the original founders, Ghodsi in particular, were so engrossed with their academic work that they were reluctant to start a company— or charge for their technology, a best-of-breed piece of futurepredicting code called Spark, at all. But when the researchers offered it to companies as an opensource tool, they were told it wasn’t “enterprise ready.” In other words, Databricks needed to commercialize.
“We were a bunch of Berkeley hippies, and we just wanted to change the world,” Ghodsi says. “We would tell them, ‘Just take the software for free,’ and they would say ‘No, we have to give you $1 million.’ ”
Databricks’ cutting-edge software uses artificial intelligence to fuse costly data warehouses
(structured data used for analytics) with data lakes (cheap, raw data repositories) to create what it has coined data “lakehouses” (no space between the words, in the finest geekspeak tradition). Users feed in their data and the AI makes predictions about the future. John Deere, for example, installs sensors in its farm equipment to measure things like engine temperature and hours of use. Databricks uses this raw data to predict when a tractor is likely to break down. E-commerce companies use the software to suggest changes to their websites that boost sales. It’s used to detect malicious actors—both on stock exchanges and on social networks.
Ghodsi says Databricks is ready to go public soon. It’s on track to near $1 billion in revenue next year, Sonsini notes. Down the line, $100 billion is not out of the question, Ghodsi says— and even that could be a conservative figure. It’s simple math: Enterprise AI is already a trilliondollar market, and it’s certain to grow much larger. If the category leader grabs just 10% of the market, Ghodsi says, that’s revenues of “many, many hundred billions.”
FOUR
years into the Iran-Iraq War, as the Ayatollah Khomeini cracked down on his political opponents in hopes of stabilizing his reign, the upper-class Ghodsi family became targets of the revolution and were forced to leave their savings behind and escape to Sweden, the first country that would grant them visas. The year was 1984, and for 5-year-old Ali Ghodsi, whose memories of his home country amount to a cacophony of noise from bombings and sirens, it was the start of an itinerant journey that would last decades.
The family hopped around cheap student dormitories at first, always evicted within months after the landlord discovered that instead of students, an entire nuclear family was living in the one-room space. Sometimes, they endured unwelcome remarks—insults such as svartskalle, a derogatory term that refers to darker-skinned immigrants (literally: “black head”).