Here’s why $3.9 billion data warehousing startup Snowflake is so hot, as told by its partners and experts (AMZN, MSFT, ORCL, GOOG)

Snowflake

Snowflake is a hot cloud data warehousing startup whose platform has attracted other enterprise cloud startups and the giants of cloud computing.
This week, the startup notched another win by announcing that it will support Google Cloud, in addition to Amazon Web Services and Microsoft.
Snowflake has raised more than $900 million from the likes of Sequoia Capital and ICONiQ capital, most recently at a valuation of $3.9 billion.
We attended Snowflake’s customer summit, and spoke to partners and analysts, about what makes the company so special.
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"Snowflake" isn’t always a nice thing to call somebody, but it connotes something much more flattering in tech where it refers to the red-hot startup that’s attracted the spotlight with a string of high-profile partnerships and customers.

Snowflake has created a stir in the startup world with a cloud data warehousing technology that’s drawing the attention of cloud startups, data-focused enterprises and the cloud giants themselves: At its annual customer summit this week, Snowflake announced a new partnership with Google Cloud, joining its existing tie-ups with Microsoft Azure and Amazon Web Services.

"Snowflake is going to completely transform data warehousing because of the scale and the economics," CEO Frank Slootman said in San Francisco on stage at the summit — his first public appearance since taking over for former chief exec Bob Muglia in May.

The company’s momentum highlights a fast-growing cloud database market that’s projected to be worth $100 billion by 2025, according to Constellation Research. Snowflake is poised to be a dominant player in that arena with a technology that addresses a major enterprise tech problem, storing, managing and find ways to make use of huge amounts of data in the cloud.

Indeed, Snowflake has raised more than $900 million from the likes of Sequoia Capital and ICONiQ capital, most recently at a valuation of $3.9 billion. That growth has also attracted a nascent, but growing, ecosystem of startups who are eager to stake their bets on building with Snowflake’s platform.

We talked to some of the startups in Snowflake’s orbit, and to industry experts, about what’s driving all the interest in this hot startup.

"It is new, it has a trendy name, it is in a trendy segment," analyst Rob Enderle of the Enderle Group told Business Insider. "It is a cloud based data warehouse solution, enterprise grade, and well-priced. What’s not to love?"

Trendy name, trendy segment

"Like a lot of small companies it is having some growing pains and leadership issues always adversely impact growth," Enderle said. "But they have a decent number of branded companies using them and they haven’t made any terminal mistakes, that I know of."

He was referring to the sudden exit last month of former CEO Bob Muglia who was replced by Slootman. On Tuesday, Slootman flatly denied speculation that he was hired mainly to take the company public.

In his keynote, Slootman said Snowflake has about 2,000 customers globally and adding about 300 to 400 a quarter. The company also has been "on a 3x ramp" on its financials, he said.

"I’m going to try to keep that going for as long as we can," he said, after also admitting that one of the first things he asked when he took the job was: "Why did you call [the company] Snowflake?"

The reason, it turns out: Snowflake’s founders — Benoit Dageville, Thierry Cruanes and Marcin Zukowski — were at a skiing trip at Lake Tahoe when they came up with the name for the company, according to company spokesperson Danica Stanczak. They were "discussing their ideas and brainstorming names for the company and it hit them, ‘Snowflake’ because snow comes from the cloud, just like Snowflake the product," she told Business Insider.

The product quickly became a hit: Its technology provides the software layer necessary to store and analyze tremendous amounts of business data.

"They are key to cloud database growth and have one of the easiest products to use," analyst Ray Wang of Constellation Research told Business Insider.

Opportunities for other startups

Snowflake’s technology has also evolved in a way that opened up opportunities for other enterprise cloud startups looking to address other needs related to storing and managing data in the cloud.

One of them is Sigma Computing, based in San Francisco, which develops tools to make it easier for different teams in a business — programmers, sales, marketing — to process and draw useful business insights from data stored in the cloud. CEO Rob Woollen was an entrepreneur-in-residence at Sutter Hill Ventures where he got to know Mike Speiser, a founding investor in Snowflake. Woolen said he quickly saw Snowflake as a perfect partner for the cloud-based business intelligence startup.

Sigma’s technology enables "programmers and anyone in the business, in sales, marketing and finance" to "work directly on the same environment with the same data," he told Business Insider. "Anyone who knows how to use a spreadsheet can open Sigma and, instead of wall of code, they can do any analysis on top of Snowflake."

Another Snowflake-focused startup, Fivetran, offers technology to help businesses move their data into cloud storage faster and more efficiently. Founder and CEO George Fraser said he was at the 2015 Amazon Web Services Reinvent gathering when he got to chat with Dageville, one of Snowflake’s founders. They ended up talking about forming a partnership.

"At the time, Snowflake wasn’t yet the unicorn it is today and had just over a hundred employees. At the time, other tools in the space were also hesitant, and unwilling to build Snowflake as a destination. But Fivetran saw early on that Snowflake was doing something right," says Fraser.

A Gartner report said Snowflake’s customers were upbeat about key aspects of the technology, including its capabilities, pricing and the ease by which they’re able to use the platform. But Snowflake is growing fast expanding its customer base to more than 1,000 organizations since it became available in 2015.

This "period of hypergrowth," Gartner said, "may be challenging for the organization to continue to provide the same level of customer engagement that its customers have come to expect."

Building a network

However, Eric Anderson, a principal at Scale Venture Partners, said Snowflake’s ability to form a network of cloud partners has been one of its key strengths. Scale Venture Partners has invested in Matillion, a startup with a partnership with Snowflake.

"If you want advanced machine learning or you need to move data into snowflake they are going to pull in partners to the deal," he told Business Insider. "In this way, customers of Snowflake come for the best product and also get the convenience of a suite-like partner network."

Slootman said Snowflake is also prepared to move quickly to meet a client’s needs. In fact, that was the reason for supporting Google Cloud. That had always been part of Snowflake’s strategic plan, he said, but they decided to move faster on the request of a major client, the pharmaceutical and health care giant, McKesson.

But "when you have a large institution like that, you’re not going to just drag your feet," he told Business Insider. "You’re going to go quickly."

Got a tip about Snowflake or another tech company or startup? Contact this reporter via email at bpimentel@businessinsider.com, message him on Twitter @benpimentel, or send him a secure message through Signal at 510.731.8429. You can also contact Business Insider securely via SecureDrop.

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