Why Databricks CEO Says 2024 Was ‘Dumb’ for an IPO—And What’s Next
Databricks, the AI and data analytics powerhouse, recently secured a staggering $10 billion in Series J funding—one of the largest private rounds in tech history. Yet, despite investor enthusiasm, CEO Ali Ghodsi is holding off on an IPO until at least 2025. Here’s why.
The Strategic Delay: Stability Over Hype
At the Axios AI Summit in San Francisco, Ghodsi explained the rationale behind the decision:
- Election Year Volatility: “2024 was an election year. We wanted stability—people are worried about interest rates, inflation,” Ghodsi told Axios’ Dan Primack. “IPOing this year would’ve been dumb.”
- Employee Liquidity Timing: Even a 2025 IPO would delay liquidity for employees due to lock-up periods, making 2026 a plausible alternative.
Record Funding as a Cushion
With $10 billion raised, Databricks has no urgent need to go public. Ghodsi revealed the round could’ve been nearly double the final amount:
- Initial Goal: \(3B–\)4B
- Investor Demand: $19B in unsolicited interest, forcing Databricks to raise its share price.
- Key Benefit: Early employees can cash out while the company scales.
The AI Bubble and Long-Term Vision
Ghodsi didn’t shy away from critiquing the current AI frenzy:
“It’s peak AI bubble. Startups with no product, no IP—just recent grads—getting billion-dollar valuations? That’s a bubble.”
Yet, he’s confident in Databricks’ durability, citing its rivalry with Snowflake:
- SnowMelt Initiative: A now-concluded campaign to poach Snowflake customers.
- Tabular Acquisition: A $2B bet to outmaneuver Snowflake in data governance, despite Tabular’s modest revenue.
What’s Next?
Databricks is eyeing enterprise giants like Salesforce and Microsoft, leveraging AI and data’s growing role. While an IPO is inevitable, Ghodsi’s message is clear: When you can raise $10B privately, why rush?
Key Takeaways:
- IPO delayed until 2025⁄2026 due to macroeconomic uncertainty.
- $10B funding round underscores private market strength.
- Ghodsi dismisses “AI bubble” hype but positions Databricks as a long-term winner.
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