I've used Snowflake a fair amount. It's a decent product, probably on par with Redshift / BigQuery. Obviously theres a lot of hype and free money floating around but my take on why they are popular is that they are basically a replacement for large Hadoop installations that have become untenable to manage over the past decade. If a company is already using Redshift or BigQuery I'm not sure why they would switch.

I would be apprehensive in investing in Snowflake long term purely because their product is highly susceptible to being obsoleted in the next 5-10 years.

People are excited about Snowflake because it can completely disrupt the traditional data-warehouse market.

The legacy players like Teradata and Exadata (from Oracle) really don't scale. Teradata has ~2B in revenue, Exadata is probably in the same range. That's all up for grabs but that's only scratching the surface.

Historically, only transactional data was dumped into the warehouse. Snowflake is selling storage at S3 price (plus you get compression so often ends up cheaper) while they are making money of compute/query. If they can provide all the right query abstractions (SQL, full-text search), in theory all data can be thrown in Snowflake. Yes, tech savy bay area companies can setup their own stack using Presto etc but rest of the world is not like that.

Almost all the big companies I worked for had a "database gang" -- a database group which, in the name of centralization, forced you to bow to them to get anything. New DB? bow to them. More nodes? bow to them. Reboot? bow to them. The internal budget "prices" would be off the charts unbelievable.

It makes sense to centralize, but only at a certain cost. Beyond that cost, it is better to just de-centralize because not every project can spend 4-5 months of meetings to spin up a DB.

The cloud changed this because it became an OpEx discussion and something you could spin up on your own. For non-production workloads, it comes especially obvious to do this.

Can someone summarize Snowflake's unique technical value? I'm quite familiar with both Redshift (I would summarize it as Postgres adapted to sharded, columnar OLAP functioning) and BigQuery (there is a famous paper explaining the architecture). Also with more traditional databases such as MySQL, PostgreSQL, SQL Server, and columnar OLAP databases like Vertica. I explored the website a little bit, but couldn't construe a clear statement of the technical architectural value. Some of the comments here are valuable, but I'm missing a clearer "big picture" overview. Thanks!

The thing to keep in mind is that leadership in data management lasts about 5 years, definitely less than 10. An (incomplete but representative) timeline:

- late 90s: Early DWs like Redbrick

- early 2000s: Oracle, Teradata

- late 2000s: Shared-nothing Data Warehouses (Vertica, Aster Data, Greenplum) - bought up by Teradata, EMC, HP

- early 2010s: Hadoop and Hive

- late 2010s: Redshift and cloud DBs

- early 2020s: Snowflake

- late 2020s: probably something else...

All these technologies felt they were here to stay at the time, but they didn't. Will Snowflake be the exception? Maybe, but the odds are not nearly as great as their valuation implies.

I guess this quote from the article sums it up: "There was so much hype, my mom, who doesn't even know what Snowflake is, decided to invest in Snowflake."

This article explains why Snowflake is a great company. And there's no doubt about that.

But it does not explain why it is valued at 60B$. Or if that value makes sense.

To put a price on a company, I need to know in projection for the next 5-10 years what income they will generate to shareholders.

The fact that they are a great company does not guarantee they will generate an income to shareholders that value them at 60B$.

This is how bubble starts. Overvalue a great company, then overvalue fair companies just not to miss out and "in comparison" with the great companies, and in the end, overvalue nothing (if Tesla is great, then Nikola was the nothing).

Because interest rates are super low and there’s a lot of uninvested capital sloshing around.

Because we're in a tech bubble. These valuations are absurd.

This is some ridiculous overvaluation. I've used their product and while it worked all right, I could definitely notice part of their websites and docs being half-assed by not very experienced web developers. Which didn't really conjure an impression of quality to me. More like, "let's do things in hurry to get the money".

I don't know how can you, as an investor, rationalize the price by any other reason than speculative increase in share price. Which is again driven by some fundamentals but mostly by hype. If they fail to gain almost 100% increase in revenue for the next year, that 60B is looking way too high.

Compare this with something like Splunk. They make high quality product and have over 2B in revenue (with a nice growth curve). Market cap 30B. So is Snowflake as of now worth two Splunks? I don't think so. I could see it maybe being half of that, 15B, if I squint real hard.

If I want full ownership of my data, meaning I don't want it managed/hosted by Snowflake, doesn't that mean that snowflake will reference my S3 bucket as an external table? How exactly am I going to be saving money? Snowflake will have to index my S3 bucket, most likely doing a poor job at doing so, all the while charging me for S3 requests just to create an index that I'm already maintaining. My company has strict contractual obligations regarding data de-identification that I have written code to securely index. We use S3 to store de-identified data and the index to query data we have in S3, meaning that we run no risk of our customer data being identified even if attackers acquired access to both the index & S3 bucket. Snowflake may not be trying to handle our use-case, but the corporate account executive spamming my inbox was dead certain that it was our panacea. I'm failing to see where they fit in and I'm glad that my manager listens to me. I also don't see the arguments that Snowflake is beneficial because it is cloud-agnostic. I can count the number of cloud-agnostic employers I've had over my career on 0 hands. If I can't set up Lambda triggers to puts to my S3 bucket, then snowflake is a hard no from me.

Nerds are surprisingly susceptible to hard-sell tactics.

I think part of it is that many know that most companies under perform the market. So I imagine it's not hard to see someone justifying (correctly or incorrectly) that its worth paying more for a company you think is more likely going to be one of those outliers. and being that there is a limited supply of these companies, they can shoot up in value fast.

I never used snowflake, so hard for me to have a solid opinion of this company. I remember when facebook IPO'ed and people were like 'what? worth 100 billion? OVERVALUED'. and they were wrong in every way. so who knows? Though my gut doesn't tell me this company is the next facebook. coming out of the gate with a 70 bil market cap feels like all the growth is already priced in.

With facebook and on their IPO, I felt just their mobil revenue in 5 years time alone would be worth their valuation. But I had week hands. I think I bought them at 28 and sold at 22. I should have had more conviction because I truly did believe they were worth a lot more.

I don't see it mentioned in the article but isn't one of the main selling points of Snowflake their data exchange? Companies upload their data to Snowflake in the hopes of someday monetizing it? If that's the case then I think it's just a matter of time until regulators become interested too.

The article talks about 'good things' but doesn't put them in context of valuation.

$60B is still too much.

It's odd that Buffet is in, it's a weird signal, because this is a weird era for markets: all other things equal, we are looking at .com-ish situations here and the timing would be ideal for a true crash.

That the world economy is shrinking by 10% and governments, major industries are going insolvent should be scary.

Perhaps investors think they are preparing for the 'covid future' but this may be a weird kind of inflation whereby everything else (including cash) is crap so they are piling into winners.

There is an emotion to a lot of stocks these days that is probably making every analysts job a nightmare - if the CEO or company is popular, it really messes with valuation.

Snowflake seems to be part of a segment of companies that are defying economy reality during covid: $TSLA, $ZM, $SNOW. These companies have huge P/S ratios and a higher volume of options activity relative to their underlying stock. A rational person may look at metrics, but we're not in a rational market. The strange behavior of the market may explain these valuations more than anything else. And maybe 3 digit P/S ratios are the new normal.

[1] https://www.ft.com/content/b330e091-2a59-4527-b958-9213731a5...

For every $1 of revenue Snowflake received from their customers a year ago, that same pool of customers are now paying $1.58. That means Snowflake could acquire no new customers, and they would still be doubling revenue every 18 months.

No. That would require customers to grow their spend 58% every year. Might happen early on, especially as projects like this are usually staged in phases so the initial go-live usage is lower than when you get to full production. But projecting long term revenue growth on the basis of average annual 58% increases in per-customer revenue is simply ridiculous.

Ok, It's a great product, but valuation still does not make sense!

So, at the moment Snowflake beat all the cloud providers at usability, but what stops them from improving their offerings using the tech Snowflake can't match because it doesn't own the hardware? Like, as far as I understand AWS Aurora could only be offered by Amazon because it uses interfaces available only internally. Also, it seems that DWH/analytics landscape changes very rapidly, isn't being "long Snowflake" is actually "short progress"?

People want to own the next Salesforce. Snowflake could expand into ERP/CRM/Visualizations. There is over 50B revenue across the world in those areas.

If you were a foreigner and had to invest your savings somewhere (because banks and govs are forcing negative rates) where would you invest

I did an analysis of Snowflake's Facebook ads if you want to see how they message there and the kind of content they promote : https://www.rightpercent.com/b2b-guides/snowflake-just-went-...

I don't know anything about Snowflake but in general they are fortunate to go public in this time. The tech market is in a bubble and investors are frothy at the mouth for tech stocks. Pessimism started to creep in for some of the already sky high tech stocks. Snowflake IPO'd right at that time and people just flocked to it.

> Net promoter score (NPS) is a way of measuring customer satisfaction.

How easy/hard is it to fake an NPS score? Is this somehow regulated? Can the company only provide its most satisfied customers (which it knows beforehand) and only have them participate to get a good NPS?

In order to grow into this valuation, snowflake will need to become the biggest data warehouse company ever. They have a great product and that will probably happen! But you need to be highly confident of the best case scenario happening to buy at the current price.

Am I wrong if I say that they are so valuable (in monetary terms) just because they are the only (or one of the few) non-free database management systems (or whatever they are)?

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As someone who spends a lot of time in this space, their only "killer app" is automated workload / data distribution management. Which is cool, and hard to get right, but clearly something the cloud vendors and other data players are have taken steps towards / offer more or less the same outcomes.

And in contrast their Silicon Valley roots means a lot of their tooling/UX/data capabilities are ... undercooked. Their Web IDE feels like a throwback to 2003 Hadoop, their ETL capabilities are a joke, they don't support joins in views ...

And they've also squandered some opportunities to actually offer a differentiating "all in one" data processing experience for ad hoc/exploratory, BI/aggregated, and Big Data/AI/ML model crunching. For example, here's their garbage blog post on Spark SQL - https://www.snowflake.com/blog/snowflake-spark-part-2-pushin...

tl;dr when someone writes a Spark job that includes a filter against data in Snowflake, it's more efficient to let Snowflake filter the data before shipping it off to the (much more performant) Spark engine to do the actual analytical pieces of the query plan, instead of just shipping all the data over and letting Spark do the filtering.

Like ... wow, predicate pushdown is your answer?

Contrast with Azure Synapse providing Spark and SQL Server compute in the same environment; Databricks adding Delta Lake capabilities to be more schema-on-write friendly; Dremio building AI into their caching, and Starburst into their workload management ...

Anyway, I don't see any secret sauce, which means it's still just traditional enterprise sales cycles...

How does Snowflake compare to Databricks?

1) What is Snowflake?

2) What is their stack?

buffet effect. it's insane

Snowflake does INLINE hardware provisioning INSIDE the query syntax. Fully managed and mostly automatic. Fire half of your DevOps team. That's why it is so valuable to Wallstreet. Companies that don't use it are wasting lots of money so there will be mass migration. It's more than query optimization, it's also dynamic horizontal query scaling. It's the same reason cloud providers are so much more valuable than rack hosting companies. It's a generational leap ahead in automation.

I take it I'm supposed to know or care what "Snowflake" is...