⚙️ Case Study #9: Snowflake

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Happy Sunday Operators ⚙️

Frank Slootman's decision to retire from Snowflake — the iconic CEO who navigated the company through its IPO — caused the stock to drop 20%.

All the headlines got me curious as to how Snowflake scaled their business.

I poured over 20+ hours into research to ensure I got the story just right.

Then, this weekend, I watched "Dune 2," and it was a game-changer for me.

The intricate storytelling, the deep themes of survival, adaptation, and the human spirit's indomitable will got me thinking.

The story of Dune is so much like the story of Snowflake.

As I dug more into Snowflake’s journey, I found more similarities I care to admit.

Here are a few examples:

• Visionaries in Unfamiliar Terrain: The founders of Snowflake, Benoit Dageville and Thierry Cruanes vision was to create a platform that would change how data was stored, much like Paul's transformative vision for Arrakis and its people.

• The Challenge of Adaptation: Snowflake's platform was designed to be as flexible as the Fremen were resilient. This was a direct response to the rigidity of traditional data warehouses, which struggled to keep pace with data growth, like how the Fremen had to adapt to survive on Arrakis continuously.

• Overcoming Giants: Just as the Atreides family faced the forces of the Empire and its allies, Snowflake entered a market dominated by established tech giants and the growing influence of Hadoop. Their cloud-based data platform challenged the status quo, offering a solution in a field many believed was already settled, much like the Atreides challenged the entrenched powers on Arrakis.

• Resource Mastery: Snowflake's approach to separately managing data storage and power allowed businesses to use resources more efficiently, reflecting the strategic use of spice central to "Dune." This innovation optimized costs and improved performance, mirroring the importance and management of Arrakis' spice

• Navigating Complex Alliances: Snowflake's strategy to form alliances with major cloud providers like AWS, Azure, and Google Cloud Platform while maintaining a level of independence echoes the complex alliances and strategic maneuvering seen in "Dune." This approach enabled Snowflake to offer its customers flexibility and avoid vendor lock-in, akin to how various factions in "Dune" navigate alliances and enmities to secure their place and power within the universe.

Just like in Dune, an upstart came to disrupt the existing status quo.

Under Slootman's leadership, Snowflake revived a dying industry and solidified its role as a key player in the data warehousing and cloud computing sectors.

But what's the story behind their ascent?

What is Snowflake

Snowflake was founded in 2012 by Benoit Dageville and Thierry Cruanes, who, while at Oracle, recognized the opportunity to transform the data warehouse industry as Hadoop gained traction.

They aimed to develop a cloud-native data platform that would overcome the limitations of traditional on-premises data warehouses. The goal was to focus on speed, flexibility, cost-effectiveness, and the ability to scale within the cloud.

Joining forces with Marcin Zukowski, they developed Snowflake. This design avoided the pitfalls of "cloud lock-in" and ensured that Snowflake could work seamlessly across different cloud services such as AWS, Azure, and Google Cloud Platform.

Snowflake would provide users with unmatched flexibility and freedom from reliance on any cloud provider.

Moreover, Snowflake introduced an innovative pricing model that broke away from the standard SaaS subscription, opting for a consumption-based approach.

This model bills customers based on their actual usage, allowing them to adjust their services as their needs change, ensuring a fair and transparent pricing structure.

This approach, championed by Snowflake's CEO, Frank Slootman, garnered widespread acclaim and reflects the company's commitment to aligning cost with customer value.

Today, it’s clear that Dageville and Cruanes read the tea leaves when it came to cloud migration – taking advantage of what was then an untapped opportunity. Now, it’s a mad dash for enterprises to get on board.

Enough of a dash that Frank Slootman came out of retirement to become the CEO of Snowflake.

Here he is talking about the competitive environment for data: 

Within a span of less than ten years, Snowflake achieved a market capitalization of $43.7 billion as of November 29, 2022, and reported revenues of $1.219 billion in fiscal year 2022, supported by approximately 4,000 full-time employees worldwide.

These figures translate to a revenue multiple of 36X, significantly higher than the industry average of 18X.

According to data from macrotrends.com, Snowflake's revenue increased by 173%, 123%, and 106% year-over-year since 2019.

This growth rate makes the 36X revenue multiple more reasonable, indicating that investors are essentially getting a return of $36 for every dollar of Snowflake's sales, reflecting the company's rapid sales growth.

While Snowflake's valuation is justifiable, the question arises: what drives this exceptional growth in sales? It's not solely about having the most efficient workforce.

In the realm of SaaS, a well-run company is expected to generate approximately $250,000 in revenue per employee. Presently, Snowflake's figures are around $300,000 per employee, which is 20% above the industry norm.

However, employee efficiency alone doesn't fully account for Snowflake's ability to secure significant capital and expand globally as a leading force in analytics.

Achieving such growth isn't solely about having a top-tier product. It requires a clever marketing and sales approach. For Snowflake, this meant focusing more on account-based marketing (ABM).

ABM ensures that sales and marketing teams are in sync. Instead of broad, generic messaging, the marketing team collaborates with sales to develop customized ads and content for specific accounts, targeting those that meet their "ideal customer profile."

But what made Snowflake's ABM strategy so effective?

Why should you care?

Unity, Customer Focus, and Sales Savvy.

Account-based marketing, or ABM for short, is a way to get marketing and sales on the same page and bump up that ROI.

Did you know a whopping 92% of marketers surveyed think ABM is super important to their marketing game plan?

It's all about zooming in on a handful of key accounts and crafting marketing magic that speaks directly to them.

This is about crafting messages that resonate on a personal level with the folks you're trying to reach. Imagine getting an email that feels like it's just for you, addressing exactly what you need.

That's ABM in action, and it's proven to work – a study by CEB says people are 40% more likely to buy when they feel like the message is tailored to them.

But here's the thing: ABM isn't only about chasing new leads. ABM is equally effective in deepening existing customer relationships. It's a powerhouse for building and deepening relationships with the customers you already have.

Through personalized interactions, businesses can foster trust and position themselves as industry experts, continuously adapting their approach based on deeper insights into customer behavior and needs over time.

The best part of ABM?

Marketing and sales are always on the same page.

(There's a reason you always see memes of sales vs marketing. They’re hilarious.)

Instead of fighting, both pick out and go after accounts together, making sure they're singing from the same song sheet when it comes to messaging.

This tag-team effort is key for speeding up the whole sales process because marketing has already warmed up the leads by the time sales reach out.

And guess what? You can actually see how well your ABM efforts are doing. It gives you the kind of clear, measurable results that show you straight up whether your strategies are paying off.

Plus, when ABM is done right, it can lead to more sales, lower costs for nabbing new customers, and quicker growth – loads of marketers say they're getting better ROI with ABM than any other strategy they've tried.

So, how’d Snowflake set up their system?

How did they do this?

Snowflake's set their sights on big fish—enterprise companies stuck with outdated, on-premises solutions but peeking curiously at the cloud's horizon.

So how did they secure these contracts?

First, Snowflake's ABM strategy focuses on engaging with influencers within accounts via strategic, integrated campaigns.

Snowflake deviates from the conventional lead generation model, opting instead for a reversed funnel that better aligns with ABM:

Effective ABM needs a unified sales and marketing front committed to long-term objectives.

Snowflake ensured this by transitioning its marketing strategy to a fully ABM-centric approach, assigning marketing managers to sales teams and focusing SDRs on a manageable number of high-intent accounts.

After aligning your team, you need to collect data.

And lots of it.

Snowflake harnessed the power of machine learning, using the Everstring platform to sift through their top deals, pinpointing accounts with similar vibes for a tailored marketing charm offensive.

Daniel Day, former Director of ABM, put it perfectly:

Daniel Day's strategy at Snowflake was clear: data leads the way, not assumptions.

The team, comprising 30 sales reps, each managed 100 key accounts, strategically focusing on the top 10 for personalized outreach, demonstrating a data-driven approach to account selection.

Integrating SDRs into the ABM process was a strategic move, with a "1-2 punch" approach engaging SDRs only after ABM activities had warmed up accounts.

This integration led to a significant increase in meeting success rates and the overall efficacy of the ABM program.

The essence of Snowflake's strategy was integration, ensuring that marketing, sales, and customer support were not isolated functions but parts of a cohesive strategy aimed at customer acquisition and retention.

Utilizing Uberflip, Snowflake developed personalized content hubs, creating a bespoke experience for each target account.

These hubs were curated environments designed to resonate with each account's specific interests and mirror an exclusive, tailor-made experience.

The company's multi-channel strategy included RollWorks for ABM campaigns, LinkedIn for targeted outreach, and direct mail as an initial contact strategy.

This approach ensured a seamless journey for prospects, marked by consistent branding, personalized messaging, and strategic calls to action.

To gauge the impact of their ABM efforts, Snowflake developed a comprehensive reporting system, offering insights into engagement metrics, sales interactions, and the progression of accounts through the sales funnel.

This level of detail was crucial for optimizing their ABM strategy.

Operational efficiency was a priority, with Snowflake optimizing their workflows to enhance the effectiveness of their ABM campaigns.

Snowflake's ABM strategy was a testament to the power of a unified, data-driven approach, emphasizing personalized customer engagement and cross-functional collaboration to drive business growth and market penetration.

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