Breaking Analysis: Five Questions About Snowflake’s Pending IPO

Breaking Analysis: Five Questions About Snowflake’s Pending IPO

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From the cube studios, in palo alto in boston, bringing you data driven insights, from the cube and etr. This is breaking analysis, with dave vellante. In june of this year, snowflake. Filed a confidential. Document, suggesting, that it would do an ipo. Now of course, everybody knows about it found out about it and it had a 20 billion dollar valuation, so so many, in the community. In the investment community. And, so forth are excited. About, this ipo, it could be the hottest one of the year, and we're getting a number of questions, from, investors. And practitioners. And, and the entire. Uh, wikibon. Etr. And, cube community, so. Welcome everybody this is dave vellante, this is, cube insights, powered by etr, and in this breaking analysis we're going to, unpack, five critical questions, around, snowflakes. Ipo, or pending ipo, and with me to discuss that is eric bradley he's the chief engagement. Strategist, at etr and he's also the managing. Director, of venn. Eric thanks for coming on great to see you as always. Great to see you too always enjoy being on the show thank you. Now for those who don't know eric. Van, is a round table that he hosts and he brings in, cios, i.t, practitioners. Cisos. Data experts, and they have a, an open and frank, conversation. But it's private. To etr, clients but they know who the individual, is what their role is, what their title is etcetera, and. It's a kind of an ask me anything and i participated, in one of them uh this past week, outstanding, and we're going to share with you, uh some of that but let's bring up the agenda. Slide if we can here. And these are really some of the questions that we're getting from investors, and others in the community there's really five areas that we want to address the first is, what's happening, in this, enterprise, data warehouse. Marketplace. And the second thing it's kind of a 1a, is what about the legacy, edw, players like oracle, and teradata, and the teaser. The third question we get a lot is can snowflake, compete, with the big cloud players, amazon. Google. Microsoft, i mean they're right there in the heart in the thick of things there. And then what about that multi-cloud. Strategy, is that is that viable how much of a differentiator. Is that and then. We get a lot of questions, on the tam. And. How meaning the total available market how big is that market, does it justify. The. Valuation. For snowflake. Now eric you've been. Doing this now you've, run a couple of events, you've been following this, you've done some other work uh that you've done with eagle alpha. Uh what's your just your initial, sort of takeaway, from all this work that you've been doing. Yeah sure so my first take on snowflake, was about two and a half years ago i actually hosted them for one of my event interviews, and my initial thought was, impressed. So impressed. They were talking at the time about their ability, to kind of, make, ease of use of a multi-cloud, strategy. At the time although i was impressed i did not expect, the growth in the hyper group that we have seen now, but, you know looking at the company in its current iteration. I understand, where the hype is coming from i mean a 12 and a half billion, private valuation, in the last round. The, least. Confidential. Ipo. Anyone's, ever seen, with a with a 15, to 20, billion, dollar you know valuation, coming out which is, more than teradata, mongo, and cloudera, combined. Um you know it's a great question so obviously, the success at this point is warranted. Uh but we need to see what they're going to be able to do next so i think the agenda you laid out is is a great one i'm looking forward to getting into some of those details. So let's let's start with what's happening in the marketplace. And and let's pull up a slide that i i very much, love to use it's the the classic, x y on the vertical axis here we show net score now remember folks net score is a is an indicator, of spending momentum, etr, every quarter.

Does A you know like clockwork, survey where they're asking people essentially, are you spending. More or less they subtract the less from the more it comes up with a net score it's more complicated, than that but but like nps, it's a very. Simple, and reliable, methodology, that's the vertical, axis and the horizontal. Axis, is what's called market share, market share is the pervasiveness. Within the data set so it's calculated, by, the number of mentions of the vendor. Divided, by the number of mentions within that sector and what we're showing here is the edw. Sector. And we've we've pulled out a few. Uh, companies, that i want to talk about so the big three obviously are microsoft, aws. And google and you can see microsoft, has a huge. Presence, far to the right. Aws. Very very strong a lot of redshift, in there. Uh and then you're pretty high on the on the vertical, axis. And then google, not as much share. But but but very solid in that you know close to 60, net score, and then you can see above, all of them. From a vertical standpoint. Is, snowflake. Uh with with a 77.5. Next net score you can see him in the upper right there in the green. One of the highest, eric in the entire, data set so, so let's start, with with some you know sort of initial, comments, on. The big guys, and snowflakes, your your thoughts. Sure uh just first of all to comment on the data. What we're, showing, there is just the the data warehousing, sector but snowflake's. Actual, net score is that high, amongst the entire. Universe, that we follow, uh, their data strength, is unprecedented. And it really you know we have forward-looking. Spending intentions, so this bodes very well for them, now um, what you did say very, you know accurately. Is, there's a difference between. Their spending intentions. On a, net revenue, level, compared, to aws. Microsoft. Uh you know there no one's saying. That this is an apples to apples comparison, when it comes to actual revenue. So uh we have to be very cognizant, of that, there is domination. Quite frankly, from, aws. And from azure. And, you know snowflake, is is a necessary, component, for them not only to, help facilitate, a multi-cloud. But look what's happening right now in the u.s congress right we have these uh tech leaders, being grilled, on their actual dominance, and one of the main concerns they have is the amount of data that they're collecting, so, i think the environment, is right to have another player like this, um i think snowflake, really has a lot of longevity.

And Our data is supporting, that, and the commentary, that we hear from our end users the people that take the survey, are supporting that as well. Okay and let's let's stay on this uh this xy, slide for a moment and i want to just pull out a couple of other, comments, here, because one of the questions we're asking is wither the legacy, edw, players so we've got in here ibm. Oracle. Uh you can see teradata. And then hortonworks. And and map r we're going to talk a little bit hortonworks of course is now cloudera. We're going to talk a little bit about you know hadoop, and some of the data lakes. So you can see there. They don't have nearly. The net score momentum, oracle, obviously, has a huge install, base, and, is, is investing, you know quite frankly in r d and doing exadata, and has its own cloud. So you know it's got a lock on, it, it's customers, and if it keeps investing, and adding value. You know it's not going away. Uh you know ibm with with netezza. There's really, been, been some questions around their commitment to that base and i know that, a lot of the folks in the venns that we've talked to eric have said well we're, we're replacing, the tisa, or you know. Frank slootman's, been very. Vocal about going after teradata. And then we're going to talk a little bit about the, hadoop space but, can you summarize, for us your thoughts. In your research, and the commentary, from, your, your, your community. What's going on with the legacy guys are these guys cooked. Can they, can they hang on what's your take. Sure. We focus on this quite a bit actually so i'm going to talk about it from the data perspective, first, and then we'll go into some of the commentary, uh and the panel you, even joined one yesterday you know that was touched upon but, first on the data side what we're noticing, and capturing, is, a widening, bifurcation. Between, these cloud native, and the legacy, on-prem. Uh it is undeniable. There is nothing that you can you know really refute, the data is concrete. And it is getting worse that gap is getting wider, and wider and wider. Now the one thing i will say is. You know nobody's, going to rip out, their, legacy. Applications. Tomorrow, it takes, years, and years, so when you look at atera data right their market caps only 2 billion 2.3, billion. How much revenue growth do they need to stay where they are not much right no one's expecting them to grow 20, which is what you're seeing on the left side of that screen. So, when you look at the legacy, versus, the the the cloud native, there is, very clear direction of what's happening. The one thing i would note from the data perspective, is if you switched from net score or adoptions, and you went to flat spending. You suddenly, see oracle. And teradata, move over to that left a little bit because, again what i'm trying to say is. I don't think they're gonna catch up no but i also don't think they're going away tomorrow, the you know these have large install bases, they have relationships. Um, now to kind of get into what you were saying about each particular, one, ibm. They shut down, the tessa, they shut it down and then they brought it back to life. How does that make you feel if you're the head of data architecture, or you're devops, and you're trying to build an application. For our large company, i'm not going back to that there's absolutely no way. Teradata, on the other hand, is known to be incredibly, stable. They are known to just not fail if you need to kind of you know re-architect. Or do a migration. They work, uh teradata, also has a lot of compliance, built in so if you're a financials, if you have a regulated. Business or industry, there's still some data sets that you're not going to move up to the cloud whether it's a pii, compliance, or, financial, reasons. Some of that stuff is still going to live on-prem, so teradata. Still has, a very good niche. And from what we're hearing, from our panels. Uh, this is a direct quote if you don't mind me looking off screen for one second but this is a great one. Basically, said teradata. Is the only one for the legacy, camp who's putting up a fight and not giving up, basically, from a cio, perspective, the rest of them aren't an option anymore, but teradata.

Is Still fighting, and that's great to hear uh they have their own data as a service offering. And, you know listen they're a small, small market cap compared to these other companies we're talking about but, you know to summarize. Uh the data is very clear, um, there is a widening, bifurcation, between the two camps. Uh i do not think legacy will catch up i think all net new workloads. Are moving to data as a service, moving to cloud native, move it to hosted. But there are still going to be some existing. Legacy, on-prem, applications, that will be supported. With these older databases. And, of those you know oracle. And and teradata, are still viable, options. I totally agree with you and uh, our. My colleague david floyer is actually quite high on teradata, vantage. Uh because he really does believe that a key component we're going to talk about the tam in a minute but a key component of the tim. He believes must include the on-premises. Uh workloads, and frank slootman's been very clear we're not doing on-prem we're not doing this halfway, house and so that's an opportunity, for companies, like. Teradata. Certainly oracle, i would put in that camp is. Is is putting up a fight. Verdict is another one they're very small, but but, another one that's sort of you know battling it out from the old mpp. World. Uh, but that's great let's let's go into. Some of the specifics. Uh let's bring up here. Some of the specific. Uh. Commentary. And uh that we've curated, here from the the round tables. I'm gonna go through these and then ask you to to comment, um, the first one is just i mean people are obviously very excited about snowflake, it's easy to use, you know the whole thing zero to snowflake, in 90 minutes but snowflake, is synonymous, with cloud native data warehousing, there are no equals, we heard that a lot from your your venn panelists. We certainly, did the, there was um. Even more, euphoria. Around snowflake, than i expected when we started hosting the series of data warehousing, panels and, this particular, gentleman, that said that happens to be the global head, of data architecture. For a fortune 100, financials, company, and um you mentioned earlier that we did a report. Alongside, eagle alpha. And uh, we noticed that among fortune 100 companies, that are also using the big three public cloud companies. Snowflake, is growing market share faster than anyone else. They are positioned, in a way where even if you're aligned with azure, even if you're aligned with aws. If you're a large company, they are gaining share right now so, that particular, gentleman's comment, uh was very interesting, he also, made a comment that said. Uh snowflake. Is the person who championed the idea, that data warehousing. Is not dead yet, use that old monty python, line you know not dead yet, and you know, back in the day where the hadoop, came along and the data lakes turned into a data swamp and everyone said we don't need warehousing, anymore. Well that turned out to be a head fake right uh hadoop, you know it was an interesting, technology, but it's a complex, technology, and it ended up not really, working the way people wanted. I think snowflake, came in at that point at an opportune, time, and said no data warehousing, isn't dead we just have to separate. The compute. From the storage, layer and look at what i can do that increases, flexibility. Security. It gives you that ability, to run across multi-cloud. So i honestly, the. The commentary, has been nothing but positive. We can get into some of the commentary, about people thinking that there's competition, catching up to what they do, but there is no doubt that right now snowflake. Is the name when it comes to data as a service. The other thing we heard a lot was etl, is going to get completely, disrupted, you sort of embedded, etl. You heard, one panelist say well it's interesting to see that, that, guys like informatica, are talking about how fast they can run inside a snowflake, but, but snowflake, is making that easy that that that data prep, is sort of part of the package, and so that does not bode well for etl, vendors.

It Does not right so etl, is a legacy, of on-prem, databases. Or you know and even when hadoop came along it still needed that extra layer, um you know to kind of work with the data but this is really, really disrupting, them now the snowflakes, credit they partner well, um, all the etl, players, are partnered with snowflake, they're trying to play nice with them, but the writing's on the wall as more and more of this application, and on i'm sorry workloads. Move to the cloud. You don't need the etl, layer now obviously that's going to affect, talent and informatica, the most. We had a recent comment that said, that this is a cio. Who basically said. The most telling thing about the etl, players right now is every time you speak to them. All they talk about is how they work in a snowflake, architecture. That's their only metric that they talk about right now and he said that's very telling that he basically, used it as their it's their existential. You know identity. To be part of snowflake, if they're not they don't exist anymore, so it was interesting to have sort of a philosophical. Comment brought up in one of my round tables but. That's how important, uh you know, playing nice and finding, a niche, within this new data as a service is for etl. But to be quite honest, they might be going the same way of. Okay, you know let's figure out our niche on these still the on-prem, workloads that are still there, uh i think over time. We might see them. Maybe, as an m a possibility. Uh whether it's snowflake, or one of these new up-and-comers, kind of bring them in and sort of take some of the technology, that's useful, and layer it in, but as a large, market cap, uh you know solo, existing. Niche i just don't know how long etl, is for this world. Now yeah i mean you're right. Marketing they're not fighting fashion but. But but really there are some challenges there. Now there were some contrarians. Uh in the panel, uh and the potential. They signaled some potential icebergs, ahead and i guarantee, you're going to see this. In, snowflakes, red herring when we actually get it we're going to see all the risks. One of the comments i'll mention the two and then we can talk about it uh, their engineering advantage, will fade, over time essentially we're saying that people are going to copycat, and we've seen that and the other point is, hey we might see some similar things that happen to hadoop.

The Public cloud players you know give giving away, these offerings, at zero cost essentially marginal, cost of adding in other services. Is is near zero. So the cloud players will use, their. Heft. To compete. Um, your thoughts. Yeah you know first of all it's one of the reasons i love doing panels, right because we had three gentlemen, on this panel. That all had nothing but wonderful things to say, but you always get one, and this particular, person is the cto, of a well-known. Online, public, travel agency we'll put it that way, and uh he he said you know i'm gonna be the contrarian, here. I have. Seven different technologies. From private companies that do the same thing that i'm evaluating. So that's the pressure from bod behind, right, the technology. They're gonna catch up right now, uh snowflake, has the best engineering, which interestingly, enough, they took a lot of that engineering, from ibm. And teradata. If you actually go back and look at it which was brought up in our panel as well, he said however, the engineering, will catch up they always do, now from the other side, they're getting squeezed because the big cloud players just say hey we can do this too, i can bundle it, with all the other services, i'm giving you and i can squeeze you pretty much give it away at a cost. So i do think that um. There is a very valid concern. When you come out with a 20 billion dollar ipo evaluation. You need to warrant, that and, when you see competitive, pressures from both sides, from private emerging, technologies. And from the more dominant, public cloud players. You're going to get squeezed there a little bit and if pricing gets squeezed, you know it's going to be very very important for snowflake, to continue, to innovate, that comment you brought up about possibly, being the next cloudera. Was certainly, the the best sound bite that i got and i'm going to use it as click bait you know in future articles because, i, think everyone who starts looking to buy a snowflake, stock and they see that, you know they're going to need to take a look, but i would take that with a grain of salt i don't think that's happening anytime soon but what that, particular.

Cto. Was referring, to was, if you don't innovate. The technology, itself will become commoditized. And he believes, that this technology, will become commoditized. So therefore. Snowflake, has to continue, to innovate they have to find, other ways, layers to bring in whether that's through their massive, war chest of cash they're about to have. An m a whether that's, them buying an analytics, company, whether that's them you know buying an etl, layer, finding a way to provide more value, as they move forward is going to be, very important for them to justify, this valuation, going forward, yeah and i want to comment on that you know the cloudera, hortonworks, map bar piece, uh the hadoop, etc, i mean there are dramatic, differences, obviously i mean that whole space was so hard. Very difficult, to stand up, you needed, you know science, project. Guys and lab coats to do it it was very services, intensive. As well. Companies, like cloudera. Had to fund all these open source projects, and it really squeezed their r d, i think snowflake, is is is much, much more focused. Uh and you mentioned some of the background of their engineers of course oracle, guys as well. However. You you will see. Amazon's, going to trot out a ton of customers. You know, using their ra3, managed storage, and their flash, they think there's the dc2, piece they have. A ton. Of. Of action, in the marketplace, because it's just so easy, it's interesting, one of the comments. You asked this yesterday. Uh was, with regard to separating compute from storage which of course is snowflakes. You know they, basically, invented it it was one of their claims to fame. The comment was what, aws, has done to separate compute from storage from for redshift, is largely, a bolt-on. Which i thought that was an interesting comment i've had some other comments my friend george gilbert said hey, despite, claims to the contrary. Uh aws, still hasn't separated, storage from compute what they have is really primitive. That's. We got to dig into that some more but you're seeing some data points that suggest.

There's Copycatting. Going on, may not be as functional, but at the same time eric. Like like i was saying. Good enough is maybe good enough in this space. Yeah and you know especially. With the enterprise, right you see what microsoft. Has done their technology, is not as good as all the niche players, but it's good enough and i already have a microsoft, license so. You know why am i going to move off of it but i want to get back to that comment you mentioned too about. That uh particular, gentleman who made that comment about you know redshift, their their separation, is really more of a bolt-on than a true offering. It's interesting, because i know who these people are behind the scenes and he has. A very strong relationship. With aws. So, it was interesting to me that in the panel yesterday, he said, he switched. From, redshift. To snowflake. Because, of that and some other functionality, issues so, there is no doubt from the end users that are buying this and he's again a fortune, 100s. Financial. Organization, not the same one we mentioned earlier a different one but again a fortune 100, uh well-known, financials, organization. He switched from aws, to snowflake so there is no doubt. That right now they have the technological, lead, and when you look at our etr data platform you know we have that adoption, uh reasoning. Um you know slide that you that you show, when you look at it the number one reason that people are adopting snowflake, is their feature set and technological. Lead, they have that lead now they have to maintain, it, now. Another thing to bring up on this to think about is um, when you have large data sets like this and as we're moving forward, you need to have machine learning capabilities. Layered into it right. So they need to make sure that they're playing nicely with that and now you can go open source with the apache, suite, but google. Is doing so well with bigquery. And so well with their machine learning aspects, and although they don't speak enterprise, well they don't sell to the enterprise, well, that's changing. I think they're somebody to really keep an eye on because their machine learning capabilities, that are layered into a big query. Are impressive. Now of course you know, you know, microsoft, azure has data bricks, they're layering that in but this is an area where i think you're going to see maybe what's next um, you have to have, machine, learning capabilities.

Out Of the box if you're going to do data as a service. Right now snowflake, doesn't really have that. Some of the other ones do so i had one of my guest panelists. Basically, say to me because, of that, they ended up going with google bigquery. Because he was able to run a machine. Learning algorithm, within, hours. Of getting set up within hours, and he said that you know that kind of capability, out of the box is what people are going to have to use, going forward so that's another thing we should dive into a little bit more, well let's get into that right now let's bring up the next slide which shows net score remember this is spending momentum. Across the major cloud players. In, in plus snowflake. So you got snowflake, on the left google aws, and microsoft, and it's showing, three. Survey, time frames, uh last october. April. Uh 20 which is right in the middle of the pandemic. And then the most recent survey which has just taken place this this month in july. And you can see snowflake. Very, very high scores actually improving. From. The last october, survey. You know google. Lower net scores, but but still very strong want to come back to that and pick up on your comments. Aws. Dipping a little bit i think what's happening here we saw this yesterday with aws, is results. 30 percent growth. Awesome. Slightly, miss, slight miss on the revenue, side for, aws. But look, i mean. Massive, and they're so exposed, to so many industries, so some of their industries have been pretty hard hit, microsoft, pretty interesting. A little little softness, there but one of the things i wanted to pick up on eric when you talk about, google, and. And big query. And. It's you know ml out of the box was what we heard from a lot of the event participants. There's no question about it that google, technically. I would say is one of snowflake's, biggest competitors, because it's cloud native, remember. Aws, had did a license one time license deal with par excel and had to sort of refactor, the thing to be cloud native. And of course we know what's happening with microsoft, they basically, were on-prem, and then they put stuff in the cloud. Then all the updates happened in the cloud and then they push to on-prem, but there's you know they have that, what frank slootman calls that halfway house, but but, big query no question, technically. Is very very solid, but again you see snowflake. Right now anyway outpacing. These guys in terms of momentum. Snowflake, is outpacing, everyone, across, our entire survey, universe. It really is impressive, to see, um, and one of the things that they have going for them is. They can connect, all three it's that multi-cloud. Ability, right that portability. That they bring to you is, such an important, piece. For today's modern cios, or data architects. They don't want vendor lock-in, they are afraid, of vendor lock-in. And this ability, to to make their data, portable. Um and to do that with ease, and the flexibility. That they offer is a huge advantage, right now. However, i think you're 100. Right google. Has been so focused, on the engineering, side and never really focusing, on the enterprise, sales side that is why they're playing catch-up. I think they can catch up they are bringing in some really important, enterprise, sales people with experience. They're starting to learn how to talk to enterprise, how to sell, how to support. And nobody, can really doubt their engineering. How many open sources have they given us right, they invented kubernetes. In the entire container, space. No one's really going to compete with them on that side, if, they learn how to sell it and support it, um yeah right now they're behind they're a distant third don't get me wrong you know, from a pure, hosted, ability, uh aws. Is number one. Microsoft, is yours sometimes, looks like it's number one but you have to recognize, that a lot of that is because of simply their host of 365.. It's it's a sas app you know it's not a true. Cloud. Type of infrastructure, as a service, but. Google is a distant third, but their technology. Is really, really great and their ability to catch up is, is there, and like you said, in the panels we were hearing a lot, about, their, machine learning capabilities, right out of the box, and that's where this is going what's the point of having this huge data, if you're not going to be supporting, you know new application, architecture. And all of those applications, require, machine learning. Awesome so we're, and i totally agree with what you're saying about google they just don't haven't figured out how to sell to the enterprise. Yet and 100 percent, aws, has the best cloud i mean hands down, um. But the very very competitive, market as we heard yesterday in front of congress now. Um. We're uh we're on the point about you know can snowflake, compete with the big cloud players i want to show one more data point so let's bring up this is a.

The Same chart as we showed before but it's new adoptions. And this is really, telling. You can see snowflake. You know with 34. In the yellow new adoptions. You know. Down yes from from previous, you know surveys, but still. Significantly. Higher, than the other players interesting. To see google. Showing momentum, on new adoptions. Aws. Down on new adoptions, and again, exposed, to a lot of industries, that have been hard hit, and microsoft. Actually quite low on new adoption, so, this is very impressive. For, uh for, for snowflake. And i want to talk about, the multi-cloud. Strategy, now eric this came up a lot. The the venn participants. Who are sort of fans of snowflake said three things it was really the flexibility. The, the security, which was really interesting to me and a lot of that had to do with the flexibility, the ability to easily set up roles. And not have to waste a lot of time wrangling. And then the third was, multi-cloud. And and that was really something that came through, heavily, in the van didn't it. It really did, and again i think it just comes down to i don't think you can ever overstate. How afraid, these guys are of vendor lock-in. They can't have it they don't want it. And it's also just, it's best practice to make sure, your sensitive, information, is being kind of spread out a little bit, uh we all know that people don't trust bezos, so if you're in certain industries, you're not going to use aws. At all right, so yeah this this ability to, have your data portability. Uh through multi-cloud. Is the number one reason i think people start looking, at snowflake. And to go to your point about the adoptions. It's. Very telling and it bodes well for them going forward. Most of the things that we're seeing right now, are net, new workloads, so let's go again back to the legacy, side that we were talking about the teradatas, ibm's, oracles. They still have the monolithic, applications. And the data that needs to support that right like an old erp, type of thing, but anyone who's now building, a new application, bringing something new to market. It's all net new workloads. There is no, net new workload, that is going to go to sap, or ibm, it's not going to happen the net new workloads, are going to the cloud, and that's why when you switch from netscore, to adoption.

You See snowflake. Really stand out because this is about, new adoption, for net new workloads, and that's, really where they're driving, everything. So i would just say that, as this continues, as data as a service continues, i think snowflake's, only going to gain more and more share. For all the reasons you stated, now. Get back to your comment about security. I was shocked by that i really was i did not expect these guys to say, oh no snowflake, enterprise, security. It's not not a not a concern, so two panels ago a gentleman, from fortune 100 financials. Said, listen it's very difficult, to get us to sign off on something, for security. Snowflake, has passed it, it is enterprise, ready, and we are going full steam ahead once they got that go ahead there was no turning back we gave it to our devops, guys we gave it to everyone, and said run with it, so uh you know when a company that's big i believe their fortune rank is, 28.. So, when a company that big says yeah you've got the green light that we're, okay with the internal compliance, aspect, we're okay with the security, aspect, this gives us multi-cloud, portability. This gives us flexibility, ease of use. Honestly there's a really, long runway ahead for snowflake. Yeah so the big question i have around the multi-cloud. Piece and i, i totally and i've said i've been on record saying look. If you're looking for an agnostic, multi-cloud. You're probably not going to go with the cloud vendor, you know. So, and so but but i've also said that that i think, multi-cloud. To date anyway has largely been a symptom, as opposed to a strategy but that's changing, to your point about lock-in, and also i think people are maybe looking at doing things across, clouds. But i think that, certainly it expands snowflakes, tam and we're going to talk about that because they support, multiple clouds and they're going to be the best at that that's that's a mandate, for them, the question i have is, how much, of you know complex, joining, are you going to be doing, across, clouds, and is that something that is just going to be too latency, intensive, is that really snowflakes. You know expertise. They're really trying to build that data layer you're probably going to maybe use some kind of postgres. Database, for that i i don't know i need to dig into that but, but that would be a, an opportunity. From a tam standpoint. I just don't know how real that is. Yeah unfortunately, i'm going to just be honest with this one i don't think i have great expertise, there and i wouldn't want to lead anyone uh the wrong direction, but from what i've heard from some of my, you know, van interview subjects. Um. This. This is, happening so the data portability. Needs to be agnostic, to the cloud, uh i do think that when you're saying are there going to be real complex. Kind of workloads, and applications. Yes the answer is yes, and i think a lot of that has to do with. Some of the container, architecture, as well right if i can just pull data from one spot spin it up for as long as i need and then just get rid of that container. That ethereal, layer of compute. It doesn't matter. Where the cloud lies it really doesn't i i do think that multi-cloud. Is is the way of the future, i know that the container workloads, right now in the enterprise, are still very small, i've heard people say like yeah i'm kicking the tires we got five percent. That's going to grow. And if snowflake, can make themselves, an integral, part of that, then yes i think that's one of those things where remember the guy said snowflake, has to continue to innovate, they have to find a way to grow, this tan, this is an area where they can do so i think you're right about that but as far as my expertise, on this one i'm going to, be honest with you and say i don't want to you know. Answer incorrectly, so you and i need to dig in a little bit on this one, yeah as, it relates to, question four what's the viability of snowflakes, multi-cloud, strategy i'll say unquestionably. Supporting, multiple clouds. Very viable. Whether or not, portability. Across clouds, multi-cloud. Joins etc, tbd. So we'll we'll keep digging into that. The last thing, i want to focus on here is the the last question does snowflakes, tam. Uh. Justify, its 20 billion dollar. Valuation. And you think about. Uh, the, the data pipeline. You go from data acquisition. Uh, to data prep, that i mean that really is where snowflake. Shines and then of course there's analysis, you got to bring in mi, and. Or ai and ml tools that's not snowflakes. Strength. And then you're obviously, preparing, that serving that up to the business, visualization.

So There's, there's potential, adjacencies. That they could get into. That they may or may not decide, to but so we put together this next chart which is kind of the, the tam expansion, opportunity. And i just want to briefly, go through it uh we we publish this stuff so you can go and look at all the fine print but but it's kind of starts with the data lake disruption, you know you called it data swamp before the, the hadoop, no schema, on right you know basically. You know the roi. Of of, of hadoop, became, reduction, of investment, as my friend abi meadow would say, but so they're, kind of disrupting, that data lake which really really was a failure. And then really going after that enterprise, data warehouse, which is kind of a, i have it here as a 10 billion. It's actually bigger than that it's probably more like a 20 billion dollar market i'll update this slide. Um and then. Really what data what what, what snowflake, is trying to do is be data as a service, a data, layer. Across. Data stores across clouds. Really make it easy to ingest. And. Uh and prepare, data. And then, serve the business with insights, and then ultimately. This huge tam, around automated, decision making. You know real real-time, analytics. Automated, business, processes. I mean that is potentially, an enormous, market we got a you know a couple of hundred billion i mean just huge. Your thoughts on their tam. Uh i agree i'm not worried about their tim and one of the reasons why is i mentioned before they are coming out with a whole, lot of cash. This is going to be a red-hot ipo. They are going to have a lot of money to spend and look at their management, team you know who who's leading the way, a very. Successful. Wise, intelligent. Uh, acquisitive. Type of ceo. I think there is going to be m a activity, and i believe that m a activity, is going to be, 100. For the mindset of growing natan. The entire world is moving to data as a service so let's take as a backdrop, i'm going to go back to the panel we did yesterday. The first question we asked was. There was an understanding, or a theory that when the virus pandemic, hit, people wouldn't be taking on any sort of net new architecture, they're like okay i have teradata, i have ibm. Let's just make sure the lights are on let's stick with it, every single person i've asked which is now eight, different experts, said to us oh no oh no no, there's the virus pandemic, the shift from work from home everything we're seeing right now has only accelerated.

And Advanced, our data as a service strategy, in the cloud, we are building for scale, adopting, cloud for data initiatives. So. Across, the board. They have a great backdrop. So that's going to only continue, right this is very, new we're in the early innings of this, so for their tam, that's great because that's the core of what they do, now on top of it you mentioned the type of things about, yeah right now they don't have great machine learning, that could easily be acquired, and built in, right now they don't have an analytics, layer, i for one would love to see these guys talk to alteryx. Alteryx, is red hot uh you know we're seeing great data, and great feedback, on them, if they could do that business intelligence, and that analytics, layer on top of it, the entire. Suite, as a service. I mean come on. Their their tam, is expanding. In my opinion. Yeah your point about their their leadership, is, right now i interviewed frank slootman, writing the heart of the pandemic. And he said, i'm investing in engineering, you know almost sight unseen, uh you know more circumspect. Around sales. Uh but i, will caution people. That that a lot of people i think see what slootman did with servicenow, and he came into service now i have to tell you it was they didn't have their their, unit economics, right they had their sales model and marketing model he cleaned that up took it from 120. Million to 1.2, billion. And really did an amazing, job. People are looking for a repeat here this is a totally, different situation. Servicenow. Drove a truck through bmc's. Install base. And with it help desk and then then created, this, brilliant, tam expansion, let's land and expand, model, this is much different here and slupin, also told me that he's a situational. Ceo, he doesn't have a playbook. And so that's what is most impressive, and interesting, about this, he's now up against the biggest, competitors, in the world aws, google and. Microsoft. And. Dozens of other smaller, startups, that have raised. You know a lot of money take look at the company like yellow brick they've raised, 180, million dollars they've got a, great team. Google, ibm, etc. So. It's going to be really, really fun to watch i'm super excited, eric but i'll tell you the data right now suggest. They've got a a great tailwind. And uh and and if they can continue, to execute, this is going to be really fun to watch.

Yes Certainly i mean when you come out and you are as impressive as snowflake, is you get a target on your back there's no doubt about it right so we said that you know they basically, created, the data as a service, that's going to invite competition. There's no doubt about it and yellow brick is one that came up in the panel yesterday about, one of our cios, were doing a proof of concept with them we had about seven others mentioned, as well, that are startups, that are in this space. However none of them despite, their great valuation, and their great funding, are going to have the kind of money, and the market, lead, that slootman's, going to have with snowflake, as this comes out and what we're seeing in congress right now with some anti-trust, scrutiny. Around, the the large data that's being collected by aws, azure, google. Um. You know i'm not going to bet against this guy either. Right now i think he's got a lot of opportunity. There's a lot of additional, layers. And because, he can. You know basically, develop this as a sweet service. I think there's, i think there's a lot of a, great opportunity, ahead for this company, yeah and and i guarantee. That his, he's got his, he understands, well is that customer acquisition, cost and the lifetime, value of the customer, the retention, rates those are all. Things that that he and mike scarpelli, as cfo, learned that, at servicenow, not learned perfected. And so, well eric. Really great conversation. Awesome data it's always a pleasure having you on thank you so much my friend i really, appreciate, it, i appreciate talking to you too we'll do it again soon and stay safe everyone out there. All right and thank you for watching everybody this, episode, of cube insights powered by etr, this is dave vellante, and we'll see you next. Time. You.

2020-08-06 12:23

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