Snowflake, a data warehouse cloud service company, will not only hit the US stock market with a high market capitalization in the second half of 2020, but also cross the oceans and impress Chinese industry counterparts.
According to Chinasoft.com , Snowflake has a market value of more than 70 billion U.S. dollars . A major reason that has attracted widespread attention is that this company, established in 2012 and listed on the NYSE on September 16, 2020, has become the largest SaaS company in history . At present, there are very few SaaS companies in China that can be compared with related American companies.
Another reason may be related to Snowflake's favor from Buffett and SaaS giant Salesforce. Buffett is a myth in the investment world, and Salesforce is a myth in the SaaS field. With the blessing of the two myths, it has become natural for Chinese companies to pay attention to Snowflake.
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Innovative data warehouse as a service
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Snowflake is a cloud-based data warehouse company. Based on the data on December 31, 2020, its market value is approximately US$79.664 billion, or approximately US$300 per share. The company's valuation is more than 300 times its revenue, much higher than many other high-growth SaaS companies.
Let us step out of the capital myth created by Snowflake and pay attention to the fundamental development of Snowflake-business.
In 2014, Bob Muglia, who has worked at Microsoft for 23 years and has extensive database experience, became Snowflake CEO. At Microsoft, Muglia was responsible for its $16 billion worth of Windows Server, SQL Server, System Center and Azure businesses.
That year, Snowflake led by Muglia proposed the concept of Cloud Native Data Warehouse (CDW). According to the introduction, CDW uses cloud-native data warehouse technology and adopts a separate architecture for computing and storage to provide customers with a flexible and pay-as-you-go application model.
From the customer's point of view, in order to develop more usable and cheaper products, Snowflake has embarked on the road of cloud-native data warehouse and proposed the concept of DaaS (Data warehouse-as-a-Service).
Snowflake's software services enable organizations to manage and analyze large amounts of data and various types of data across public clouds (such as Amazon's AWS, Google Cloud, and Microsoft Azure, etc.) on an easy-to-use platform.
Snowflake has two operating divisions: One is the product, which includes Snowflake's core data warehouse solution, and customers pay for the computing and storage resources used.
The second is professional services, providing users with consultation, on-site technical solution services, and platform-related training.
Snowflake’s product revenue increased from US$96 million in fiscal year 2019 to approximately US$252 million in fiscal year 2020. At the same time, the company’s customers increased by 152% from 948 in fiscal year 2019 to 2,392 users.
Based on historical growth rates and growth in the second quarter (as of July 2020, the company has 3,117 customers), experts predict that Snowflake's customer base will grow to about 4,600 in fiscal 2021, and total product revenue will be about 530 million. Dollar.
Snowflake's total revenue (including its revenue from professional services) increased from US$97 million in fiscal year 2019 to approximately US$265 million in fiscal year 2020, and is expected to grow by 110% to approximately US$557 million in fiscal year 2021.
Now, Snowflake not only has a rapid increase in new customers, but also can make better use of its existing users for profit.
I have to mention the concept of data warehouse here. A data warehouse is an analytical database, which is mainly used to store and process data in order to analyze the data. The data warehouse has two main functions of storing analysis data and processing analysis data.
Therefore, the data warehouse has three main functions: one is to store, receive and store data from multiple data sources; the other is to process and handle most (or all) intensive workloads; the third is to access, generate reports, and then transfer them Visualize and deliver to the end user.
The data warehouse has a 30-year history of development, at least a few generations of technology. If the data warehouse application is built in the traditional way, its cost and agility will be limited. Cloud provides new development opportunities for data warehouses using on-demand computing and elastic storage. As long as structural innovation is carried out at the technical level, a data warehouse built on the cloud will usher in new opportunities.
The development of Snowflake shows that cloud services provide scalable resources for data warehouse development, improve agility and reduce costs.
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The core advantage customers value most
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Capital One is a diversified international enterprise group based on investment financing and fund management, integrating international trade, project development, and investment banking. It has established more than 30 branches, hundreds of joint ventures and Sole proprietorship.
In 2013, the CEO of Capital One decided to migrate its entire IT operations to the cloud. At that time, Amazon and Microsoft provided data warehouse services, but Capital One chose Snowflake.
According to related reports, "Competitors did not take full advantage of Capital One’s most valued cloud. Capital One concluded that by choosing Snowflake, it can run 250 concurrent data at a lower price (25% to 30% of Teradata’s charges). Analyze queries, while Teradata can only perform 60 concurrent queries."
Capital One currently accounts for 11% of Snowflake's revenue.
Snowflake wins customers and stands out from the competition from three aspects:
First of all, Snowflake adopts a technical architecture that separates storage and computing and embarks on the road of cloud-native data warehouse.
In the past, distributed data warehouses adopted an integrated architecture of computing and storage, and did not support separate expansion. With the rapid growth of enterprise data services, customers' expansion requirements in computing and storage performance are often not synchronized. Computing performance usually only needs to be expanded during load peaks, while storage performance generally needs long-term, linear expansion.
Snowflake's cloud-native data warehouse uses a technical architecture that separates storage and computing. Snowflake CDW supports separate expansion of computing and storage nodes. It does not affect synchronous expansion or shrinkage during query calculations, and does not cause delay or interruption. This fundamentally solves the traditional data warehouse architecture problem and maximizes the cloud native architecture. Features.
Snowflake's innovation in separating computing and storage separates data and computing in the public cloud, providing customers with excellent performance without having to pay high costs, and can have the best of both worlds.
Second, outstanding performance. Snowflake increases the amount of data processed from TB to PB, and provides customers with unlimited computing power. Using the elastic resources of cloud computing and Snowflake solutions, the computing time can be reduced from hours or days to seconds or minutes. It is no longer necessary to invest a lot of money for internal deployment of computing and storage.
Third, the concept of DaaS (Data warehouse-as-a-Service) is proposed.
The unique technical architecture gave birth to novel business models. Snowflake uses a different charging model from SaaS subscription payment. Unlike SaaS subscriptions that “pay before use”, Snowflake adopts a Pay As You Go model, where customers pay based on the amount of data and calculation time, and pay after use, which can solve users' worries.
Snowflake provides customers with flexible and user-friendly data storage and analysis functions, and can scale according to changes in computing and storage requirements. Features include: allowing multiple users to access and run queries on the platform at the same time; paying by usage pricing; ability to use services without purchasing and maintaining servers; seamless data sharing platform with internal and external businesses; available on Snowflake platform Transaction data sets in the cloud market.
Comparison of Snowflake's service capabilities with several major cloud service providers
Although Snowflake has earned a reputation for its ease of use and scalability for storage and analysis, Microsoft, AWS, and Google have started to follow suit and provide similar services.
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Develop and lead the "data cloud" market
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In the data warehouse cloud service market, Snowflake faces two major categories of competitors:
One type is data warehouse solutions and services provided by cloud service providers. Public cloud operators have their own data warehouse solutions. For example, Amazon AWS provides Redshift, Google provides BigQuery, and Microsoft provides Azure Synapse.
The second is locally deployed data warehouse companies, such as Teradata (TDC) mentioned above, Palantir, which has been listed on the NYSE, Oracle (ORCL) data warehouse products, and open source platforms such as Altinity. Palantir mainly provides big data and analysis solutions to governments and intelligence agencies.
Related report data shows that in the cloud data warehouse market, Snowflake's existing customer volume and growth rate are not inferior to those of the three major cloud service providers. The number of Amazon Redshift customers was 13,060, with a year-on-year growth rate of 5%; the number of Google Big Query customers was 8,272, with a year-on-year growth rate of 35%; the number of Azure Synapse customers was 6032, with a year-on-year growth rate of 25%; and the number of Snowflake customers was 3554, The year-on-year growth rate was 84%.
How can Snowflake stand out in an environment where opponents are waiting? This is closely related to Frank Slootman, who succeeded Snowflake CEO in 2019.
Frank Slootman has a very successful track record in developing private companies and making money for investors. He listed Data Domain in 2007 and sold it to EMC for US$2.4 billion in 2009. Subsequently, ServiceNow, the company leading the development of HR SaaS, successfully IPO. Since its IPO in June 2012, the stock has risen more than 20 times.
Slootman's long-term vision is for Snowflake to develop and lead the "data cloud" market. AWS and Azure run the infrastructure cloud, Salesforce CRM is the application cloud, and Snowflake hopes to become the data cloud—a platform for managing and protecting private data and managing rapidly growing workloads.
Snowflake and the three major cloud service providers are both cooperative and competitive. Snowflake's platform is more flexible than its competitors and can work well on all platforms. Snowflake can benefit from applications across multiple clouds.
There is no doubt that large cloud computing companies have a strong motivation to promote their own data warehouse products and can lock their customers in their platforms and services. As multiple companies and multiple businesses go to the cloud, companies are facing increasing resistance in choosing services from a single cloud vendor, and more and more companies need to use the services of multiple cloud service providers at the same time.
Snowflake CDW is compatible with many public cloud vendors, and its services such as multi-cloud migration and disaster recovery and backup will attract more customers. As more and more enterprises migrate to the cloud, in order to simultaneously utilize big data and artificial intelligence, Snowflake can meet the needs of users and benefit from applications across multiple clouds.
According to data from P&S Intelligence, the data warehouse-as-a-service market is expected to grow from USD 1.4 billion in 2019 to USD 23.8 billion in 2030 at a compound annual growth rate of 29.2%. Currently, research shows that only 30% of data analysis is done on the cloud.
Therefore, Snowflake occupies a favorable position in the fast-developing DaaS market, and will gain more markets from the traditional local data warehouse market in the future.