Snowflake CEO Frank Slootman talks vision, AWS tension and IPO plans

Snowflake CEO Frank Slootman talks vision, AWS tension and IPO plans

The new CEO of the cloud data warehouse vendor talks frankly about what he wants to bring to the company and some of the key challenges on his agenda

Frank Slootman (Snowflake)

Frank Slootman (Snowflake)

Credit: Snowflake

Frank Slootman, the new CEO of the cloud data warehouse vendor Snowflake says he was hired to scale Snowflake aggressively into the enterprise market, replacing legacy and 'first generation cloud' data warehouse solutions and bringing new analytical possibilities to those clients.

The Dutchman joined Snowflake as CEO in April, after leaving ServiceNow in March 2017 following six years as CEO, where he helped scale the software-as-a-service (SaaS) firm towards becoming the $46 billion market cap business it is today.

Snowflake came out of stealth in 2014 with what it claims is the first relational data warehouse built exclusively for the cloud. It promises almost limitless scale and concurrency by effectively spinning up new cloud instances (S3 on AWS, for example) for each workload to effectively run as a standalone data warehouse but all under the same roof, so data-science queries never tread on the toes of BI, for example.

Speaking to the press during an open Q&A session this week in London, the CEO frankly discussed his vision for the vendor, its complicated relationship with cloud partners Amazon Web Services (AWS) and a possible IPO roadmap. His responses below have been edited for brevity and clarity.

On why he joined Snowflake

Frank Slootman, CEO of Snowflake: "What I find so intoxicating about Snowflake is that it is the first product I've seen, that just fully exploits cloud scale.

"I was at ServiceNow for a long time and we were just cloud hosted, it was really an on premise product. So there's nothing really cloud about it, we had the rhetoric, but we didn't really have the product.

"In fairness, we didn't really need it either, because it was much more of a transactional, deterministic database, so you don't have the extreme workload requirements that you have in our style of business.

"[Here] we see customers really completely rethinking what data is going to do for them, the velocity of data and almost zero latency, to allow data to drive the business and make determinations. That's the stuff that is so exciting for us. It's not taking a Terradata workload and moving it to the cloud. Yeah, we're going to do a tonne of that, is that exciting? Yeah, it's exciting for us because that's our business, but the transformation comes after that.

"As far as what I do, I always divide up the stages of companies: you have a time when you're building your product, they did that between 2012-2015. Then you go to the formative stage, where you try to take the product to market, and figure out if you even have a product and get across the chasm and deal with all the frictions and objections and they did that very successfully under Bob Muglia.

"Then the company got to velocity and needed to move to scale. That's the change that I represent as a CEO to help the company achieve scale.

"Scale is not just throwing unlimited resources at the problem and 'poof' everything is great. It takes extraordinary discipline and effort to scale. You cannot just build organisations on loose sand. I have lived this life a few times before and hopefully that's going to be my value added to the Snowflake journey."

In terms of the customers Snowflake is resonating with, Slootman was clear that the vendor has had most of its success to date with so-called 'first generation cloud' customers, so those born in the internet and cloud age with little on premise IT legacy to contend with and unpick.

Now, Slootman admits, the company will have to start breaching those legacy organisations if it is to grow alongside his ambitions for the company.

"Historically, we've been much more involved in the first generation cloud refreshment, because those were people who are already in the cloud, so you don't have to have that cloud conversation," he said. "It's better for Snowflake to not have to have that cloud conversation. When you're running a first generation cloud situation then they have already passed that issue.

"When you get to on premise the cloud conversation looms very, very large. All the big banks struggle with cloud, right? So you have got to get over that hurdle first. So going forward, we're going to be in tonnes and tonnes of on premise conversations where we are lifting massive data estates to the cloud and it's a huge undertaking, and it's very, very transformational.

"They all know they have to do it, time is not their friend, they can't stay where they are. All the interesting new compelling software is going to be in the public cloud, it's not going to be on promise."

On how Snowflake works with cloud partners like AWS – by running on its public cloud infrastructure – while also competing with its various database solutions

Slootman: "So let me give you a different perspective on that. We run on AWS, Azure and soon also [Google Cloud Platform]. This means 100 percent of the time we have to contest the first-party product, because it's already there.

"When we get into an AWS situation, Redshift is there, whether we like it or not. So we contest it either from a standpoint that the customer is evaluating it, using it, expanding it, so it is unavoidable for us to contest first-party, first generation cloud products.

"Does that create tension? Yes, it does. But we are very large customers, number one, of these large cloud vendors. We pay them huge amounts of money. Secondly we are big partners, because we're bringing on premise workloads to the cloud. So we are net benefiting them.

"We also compete, and that creates a very complex dynamic, and depending on what day of the week it is, it can get a little testy. For the most part, and I've been getting really involved in these situations over the last couple of months, we're all adults, we all understand that we have to live together and sometimes it's very uncomfortable.

"We hold quarterly business reviews with these cloud vendors, where we create common campaigns, and also work on friction that has developed in accounts between people, so that we can intervene on situations that are unhealthy, uncomfortable, unpleasant, so that we normalise the relationship.

"This is the world we now live in, these are the new platforms, this is a new reality. Is it completely balanced and, harmonious? No, but this is what it is and by the way, the cloud vendors are committed to running very vibrant ecosystems, they want to, they have to. It's not good to go to AWS and you get one choice.

"So they want to have people like Snowflake, because they think we are a very, very strong solution for their platform. Basically think about it this way: Amazon loves having Snowflake, the Redshift people? They don't love us quite as much."

On IPO plans

Slootman: "Here's the important thing: we don't need to go public to raise capital. We may not raise capital at all, there's now an alternative method of going public called the direct listing - I'm not here to tell you that's the vehicle we would use – but it's certainly an option these days. So raising money is not the objective.

"Secondly, the issue for the IPO is liquidity. In other words when you are private, employees and investors can't sell shares, they have to sit on them until the company goes public. Our investors are not pushing for the company to go public at all, it's very important for you to know that.

"A lot of times people think investors are forcing the company to go public prematurely, that's absolutely not the case. They would be happy to sit here for years and let us built the company.

"Typically where the pressure comes from is employees. We have been around for seven years, and people have been here a long time and there's always an implied social contract between the company and the employees that, at some point, their equity will be monetisable. That pressure does build up over time and we're mindful of that. So there will come a time where the company will go public, but job one is to prepare ourselves.

"You can't just pull the trigger and go public. There's a whole process. We do have the scale and the velocity in the business to go public. But there's a lot of other requirements and we have to mature ourselves to be a public company.

"The absolute earliest that this could possibly happen is early summer next year. I'm not saying that it will, but that would be the absolute earliest that it could happen. The second thing is, we have elections in the US next year, which creates a huge amount of uncertainty.

"So we don't know what the world will look like [then]. The reason I'm telling you this is just we don't have specific schedules, timelines, or dates other than that we are in the middle of preparing ourselves to be able to do it when we are good and ready to do it."

On the downfall of Hadoop

Slootman: "I've never seen something crater as fast as Hadoop in all my years in the business.

"We see whole companies like Cloudera, MapR just falling off a damn cliff. We haven't seen that in technology, it's usually a gradual decline. This is rapid decline."

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