3 ms·

Sounds like Snowflake. If you dig into their income statement you see on 264m revenue, they spend 293m on Sales and marketing. [1] Whether Snowflake is actually

by davedx 6y ago

Sounds like Snowflake. If you dig into their income statement you see on 264m revenue, they spend 293m on Sales and marketing. [1] Whether Snowflake is actually a great data warehouse product or not, the main driver of its success is that they spend more than a quarter of a billion dollars per year selling it. This is the state of play in the SaaS business. [1] https://www.sec.gov/Archives/edgar/data/1640147/000162828020013010/snowflakes-1.htm#ia73499eb79a34ddeaa563501d30356b0_40 https://www.sec.gov/Archives/edgar/data/1640147/000162828020...

PhilipA 6y ago
That is pretty normal on high scaling SaaS solutions. If you earn 100k a year on a solution, and you know they in average stay for 5 years, you might spend 150k to acquire them as it is still a good business.
- davedx 6y ago
  By that logic, as long as you're growing you'll always be losing tons of money and never be profitable? How is that a good business model? I mean we're only talking about revenue vs sales and marketing spend here -- the business has a load of other costs too.
  - snovv_crash 6y ago
    You're effectively gambling on running out of new customers at some point. What a world!
  - throwawayfire 6y ago
    That's a great business model if you have investors. You get a proven long-term return of 25% per annum. If you're doing it out of your own bank account, you'll bankrupt before realising this return: it's not a lifestyle business.
  - alangibson 6y ago
    > as long as you're growing you'll always be losing tons of money and never be profitable? Basically yea. This effect is just assumed in the world of physical products. As long as you're growing you're nearly out of business because you need to use N revenues to buy your next N+1 of stock.
  - ckdarby 6y ago
    You hit a tipping point with enough market grab that customers start to approach you without advertising. There is volume discount as you grow. There is upsell potential on the customers you've signed. As your signed customers grow their pockets grow to spend more on the solution. Takes about 3-6. If I use Snowflake today at company X without issue and I switch jobs in a couple years to a new company that hasn't picked their platform, what do you think most people will pick?
sjg007 6y ago
Snowflake is basically the alternative to Google big-query. It's slightly cumbersome and needs a better Web UI but pretty good. It meshes the idea of public and private databases.

by davedx 6y ago

PhilipA 6y ago

That is pretty normal on high scaling SaaS solutions. If you earn 100k a year on a solution, and you know they in average stay for 5 years, you might spend 150k to acquire them as it is still a good business.

davedx 6y ago
By that logic, as long as you're growing you'll always be losing tons of money and never be profitable? How is that a good business model? I mean we're only talking about revenue vs sales and marketing spend here -- the business has a load of other costs too.
- snovv_crash 6y ago
  You're effectively gambling on running out of new customers at some point. What a world!
- throwawayfire 6y ago
  That's a great business model if you have investors. You get a proven long-term return of 25% per annum. If you're doing it out of your own bank account, you'll bankrupt before realising this return: it's not a lifestyle business.
- alangibson 6y ago
  > as long as you're growing you'll always be losing tons of money and never be profitable? Basically yea. This effect is just assumed in the world of physical products. As long as you're growing you're nearly out of business because you need to use N revenues to buy your next N+1 of stock.
- ckdarby 6y ago
  You hit a tipping point with enough market grab that customers start to approach you without advertising. There is volume discount as you grow. There is upsell potential on the customers you've signed. As your signed customers grow their pockets grow to spend more on the solution. Takes about 3-6. If I use Snowflake today at company X without issue and I switch jobs in a couple years to a new company that hasn't picked their platform, what do you think most people will pick?

sjg007 6y ago

Snowflake is basically the alternative to Google big-query. It's slightly cumbersome and needs a better Web UI but pretty good. It meshes the idea of public and private databases.