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A Summary of

Snowflake and the Data Blizzard

by
Mario Gabriele
The Generalist
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Background on Snowflake

  • Snowflake is a leader in cloud data warehousing.
  • It has three external CEOs instead of the founder-led culture that dominates most of the tech industry.
  • Frank Slootman, Mike Spieser, and Bob Muglia came from vastly different situations to serve as Snowflake’s external CEOs.
  • Slootman came out of retirement because he thought Snowflake was such a great idea.
  • The founders of Snowflake are Benoit Dageville, Thierry Cruanes, and Marcin Zukowski, who all hold other executive positions within the company.

Market

  • Snowflake’s value is around $81 billion, but its global data storage generated $88 billion with a capacity of 700 exabytes.
  • Snowflake also is the third-largest company in the data storage space, with a 10.08% market share.
  • The company Gartner commends Snowflake for its “completeness of vision” and “ability to execute.”

What is a database?

  • Of the two types of databases, transactional and analytical, Snowflake excels as an analytical database.
  • Transactional databases: Data is generated through the little transactions that happen every time a user takes an action, which allows developers to store user emails, accounts, preferences, etc.
  • Analytical databases: These are more resource-intensive, multifaceted spaces where data is examined in order answer questions critical to business, such as: How often did users log in? Where are they based? What was the most popular pricing plan?
  • Data warehouses can copy information from transactional databases into new analytical databases.
  • Snowflake is a managed data warehouse, which means that users can just enter their data into Snowflake, and the company analyzes the data quickly.

Product information

  • Snowflake’s prowess with infrastructure pieces like storage and compute makes its efficiency much better.
  • Snowflake also has a level of flexibility in terms of its cloud provider because it can run on AWS, Azure, or GCP.
  • Although Snowflake provides convenient data management, its fully managed services are expensive.
  • The UI and SQL (Structured Query language) are also very clean and easy to use.
  • Snowflake also has some data-sharing capabilities that are still relatively immature.

Business Model

  • Instead of charging per seat or on a monthly basis, Snowflake bills based on customer usage.
  • They bill on-demand or upfront based on storage, compute, and cloud services.
  • This model is catered towards large enterprise contracts which Snowflake focuses on. Examples are Office Depot, McKesson, Nielsen, DoorDash, Capital One, and Instacart.

Management Team

  • Executive compensation is mostly a cash salary that has an equity and non-equity component.
  • Equity makeup:
  • Slootman – 5.9%
  • Dageville – 3.9%
  • Muglia – 3.3%
  • SHV (External Investor) – 20.3%

Investors

  • SHV is a large VC firm, and Snowflake runs its sales and go-to-market teams through SHV.
  • Other outside investors:
  • Altimeter Partners – 14.8%
  • ICONIQ Partners – 13.8%
  • Redpoint Ventures – 9.0%
  • Sequoia Capital – 8.4%

Financial Highlights

  • Snowflake’s revenue has expanded 173% over the last two fiscal years.
  • Customers are using Snowflake more often, as their net revenue retention is around 223% compared to 2019.
  • However, Snowflake’s margins are relatively modest, around 60%, due to its reliance on cloud providers.
  • Snowflake’s IPO valuation is around $25 billion.
  • Snowflake’s biggest competitors are Amazon, Google, and Microsoft.
  • It will be interesting to see how the Coronavirus affects Snowflake’s value in the future.
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