On June 18th, Infostrux CEO, Goran Kimovski (Kima) sat down with S. Somasegar (Soma) to discuss Soma’s experience and lessons as a board member and early investor in Snowflake. Kima and Soma discuss the concept and value of the data cloud and why data exchange will be as important as data warehousing. As an active angel investor and seed investor, Soma describes what makes a great investment and what he looks for while investing in both enterprise and consumer segments.
Soma: First of all, there was a certain amount of luck I had with investing in Snowflake, so I don’t want us to forget about that, but putting that aside, there are four things I can think of that gave us a very high level of conviction when we were looking to invest in Snowflake.
1. The Team
First and foremost, I always think about the team. Bob Muglia was the CEO of Snowflake when we invested. I had known Bob while he was at Microsoft. I had the chance to work with him and I felt really good about Bob as a leader. This is an interesting anecdote – back in the early days of Microsoft, the late eighties/early nineties, Bob was the first product manager for SQL Server. His engagement with data goes back over three decades or so. So, having Bob at the helm of Snowflake, that was one reason why we thought there may be something interesting here.
2. The Vision
Today, we are comfortable putting our data in the cloud, but 4 or 5 years ago when they started Snowflake, it wasn’t obvious at all that everybody would be going to put their data into the cloud. In fact, a common sentiment was, ‘others may put their data in the cloud, but my data is special, I need to think about regulations, compliance, data sovereignty, and so on.’ People wanted control over their data and were reluctant to put it in the cloud.
Snowflake comes along and takes a bet that sooner or later, everybody is going to put their data in the cloud. They had the vision to think about all the things that enterprises care about such as privacy, security, scale, data sovereignty, global access to data, etc. They thought about all those things and built a platform that enables users to do that.
I thought that was a bold bet when the rest of the world was still thinking about hybrid solutions and not so much about the cloud.
The other innovation that Snowflake did earlier on was the notion of separating computer and storage. I thought that was a wonderful piece of innovation. Now everybody talks about it, but Snowflake was the one that saw an opportunity to add real value by being able to think about these two things separately and letting customers take advantage of that.
So for me, some of the product innovations the company was doing were great.
3. The Sentiment
Since we are in Seattle, we know a lot of people at Microsoft and Amazon. It was very interesting because we would talk to these large cloud providers, and remember all these guys have competing offerings in the market against Snowflake. We would talk to the product teams in these companies and they were telling us about how amazing Snowflake is. But they have a competing product and the underlying cloud infrastructure platform so they were going to be competing and trying to win the space.
If you speak to the sales teams in these companies, they would tell you how worried they are about Snowflake. They would hear Snowflake mentioned in nearly every customer conversation.
So even though it was still early days, the company was showing promise. When we invested in Snowflake, that was the year that Snowflake was going from a 3-million-dollar revenue run rate, to a 15-million-dollar revenue run rate. So we were in the middle of that so it was still very early days, but just hearing the feedback from these large cloud providers was a positive sign for us.
4. The Emerging Patterns
The fourth thing, when we talked to Bob back then, it was interesting that Bob said he was seeing a pattern emerging. He was hearing from customers that they love what Snowflake is doing, and they wanted to sign up and start using it. They would start with a 10K or 20K commitment to Snowflake, so it was not a big commitment but a commitment nonetheless. Then what started happening was customers would start with that. They would play around with it, putting in more and more data. Then a year and a half later, they would go from 20K to about 150-200K commitment from Snowflake. I saw this pattern repeat again and again and again.
So we looked at all these and said there is something here with Snowflake. I’ll be the first to tell you I didn’t think Snowflake could be a 70-billion-dollar valuation company within a year of their IPO, but I did believe there was something special happening here. There is a potential for a large success, so we decided to invest in Bob and Snowflake.
