Databricks started as a way, correct me if I'm wrong, as a way to write code and run it on a distributed computer. Now it's a unified analytics platform. You got data warehouses, data lakes, data zeppelins, I don't know. You let engineering teams build and deploy their machine learning and artificial intelligence apps and you prep their data for it. Is that a good assessment of what Databricks is?
Yep, we got all the buzzwords in there. We got them all. Yep.
Did I say big data yet? Okay, good. So what do companies need more? What do your customers need more? Do they need the clean data side of that offering or do they need the custom tools?
They need security and governance. That's the number one thing that's holding the big enterprises. If your company is more than 10 years old, the big thing holding you back is that you can't actually do anything because you're so worried about getting hacked, who's going to get access to the data? Is the AI going to suck up the data and memorize it and leak it? There's lawyers now taking over. It's like AI lawyers now in every organization.
When you say AI lawyers, lawyers who specialize in AI or actual artificial intelligence?
No, actually they specialize in artificial intelligence. So they tell you that, hey, here's the regulations. Here's which models we can use. Here's what our policies are. Here's our company's contracts with our customers say, so we're not actually allowed to use this model, but if we do, we have to use it in this way. We have to have guardrails and everything slows down in all the organizations. They enter the rooms and that's how you do governance. And there's regulation popping up around AI all over the planet.
So for you, it's corporate inertia.
Absolutely. It's the biggest blocker. And for those companies, they're like, 'Hey, this disruption with AI is coming, but we're being slowed down. Can you help me speed up? What do I need to speed up?'
Now, a lot of companies are looking at AI agents as a way to do that. You guys have expanded into that area, right? It's Agent Bricks.
And so, what are you seeing in that arena? We've been talking about it quite a bit in the last 36 hours or so. What are your customers trying to do with agents? Where are we now and where are we going?
Well, let me segue into it from what I was just saying. Your agent is just going to go access Workday and have access to HR data where salary information is. How do you lock that down? How do you make sure it's not leaking information or going into wrong systems and accessing stuff? This authentication security, who's allowed to do what, is a huge ordeal inside any organization. So, we do that. That's Unity Catalog. But what are people doing with agents? There are lots of cool use cases. The marketing stack inside the organization is completely being disrupted. Take 7-Eleven, a customer of ours. They use these agents to prepare all the material that before was taking huge amounts of time to prepare to target different groups. What should I show you? What are you interested in? What's your campaign? That's now being largely automated and the content is being autogenerated, the groups are being segmented. That marketing stack is a big disruption coming to marketing itself. A little bit of dogfooding too, we're going to talk about that in one of the lunch roundtables today.
So everything in this category is about fast growth. Your company, the technologies you're dealing with, the companies trying to change rapidly. Are you, for your business, concerned about the rising costs of AI eroding your margins?
No. The way I think about it is that it's just so valuable, these use cases. We can so easily see the ROI for our customers that I think we can actually charge quite a bit for this. I think it depends on which layer of the stack you're in. The foundation model layer seems very competitive and the margins are very low. Or if you're in the business of renting GPUs and reselling them, that's hyper competitive. But the layer on top where you're actually having agents do useful work, I don't think it's going to be a big problem with revenue and monetization. I think the big problem is one, security we already talked about, and the second is quality. Are the agents good enough to do work inside these organizations? Generally speaking, the answer right now is kind of no. Even though I mentioned one disruption with marketing, there are other disruptions I'm happy to talk about, but generally it's not the case that inside our companies we have lots of co-worker agents running around that we work with all day long. You probably have zero co-workers that are agents. Anybody have any co-workers who are agents here? Raise your hand. Oh, we got a couple hands. Not like human agents, we're talking about AI agents here. All right, we got a couple hands. I'm saying the disruption is happening in different verticals.
So let's talk more squarely about your company. You have raised, as Ali said in introducing us, billions of dollars from Amazon, Microsoft, Nvidia. I've heard of these companies. Your valuation right now stands at about a hundred billion dollars. To ground that in reality, ExxonMobil is worth about half that in the public markets right now. That's how big that number is. And they're number eight on the Fortune 500 by the way.
They'll be number one forever.
Right. You've read your Fortune magazines. You're flirting with an IPO. Why do you need an IPO and when?
Why do we need an IPO? It's a good question. I would say access to more capital, though I'm not sure we need that much capital. There's just much more access to capital in public markets. The second thing is that for American companies like in the United States, now we're global, there is a marketing boost to companies that are public. There's free marketing every 90 days with earnings calls. That would be another thing. And then maybe a little easier liquidity for employees and investors. But it's close. It's not like there are huge advantages and pros and cons. That's why we're not super religious about it. We will go public at some point, but to us, it's not a really big deal. I know everybody's super curious and interested about it, but for us, it's close enough that we might do it, might not do it right now.
Maybe. The way I think about it is that if there is a bubble bursting, which there might not be, then it would be great to be private because we can continue investing. One of the biggest advantages Databricks had was that in 2021, most of my peers, CEOs, they were like we got to IPO our company, we're going to go public. I told them maybe we should hold off, this whole situation is kind of out of whack. Those companies went public in 2021 and in 2022, inflation, interest rates...
