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I'm really unclear on snowflake's valuation along with similar companies in the cloud data space. Why are these companies worth 100x revenue?

by lumost 5y ago

ZeroCool2u 5y ago
Snowflake is basically GCP BigQuery or AWS Athena, but they charge $40/TB of (highly compressed) storage and have a decent margin on compute too. It's also completely proprietary, so you're not exiting their platform anytime soon. The other big player in this space is DataBricks, which is a reasonable product, but their pricing is based on both instance type and volume of data consumed by a query, which can get pretty insane quickly when dealing with large amounts. Again, they rely on lock-in to a significant extent.
- fphhotchips 5y ago
  Snowflake employee here, speaking on my own behalf. It's no harder to get out of Snowflake than it is to get out of any other SQL based RDBMS. If we were relying on the fact that we manage the files in S3 instead of the customer to keep our customers on board, we wouldn't have a business. I will grant that there's non-ANSI features in Snowflake that our competition don't offer, but it would be weird to describe "have awesome features" as being lock-in.
ta988 5y ago
Strong beliefs from investors. I don't think there is much rationality at play here.
danielmarkbruce 5y ago
They are doubling revenue every X months (currently about 12). And it's a big market and getting bigger, so they might be able to keep X pretty low for a pretty long time. They are adding customers + adding revenue at existing customers. Double revenue every 12 months and you get to 32x in 5 years. And it's pretty sticky.
- blitzar 5y ago
  From last nights call: For the full fiscal 2023, we expect product revenue between $1.88 billion and $1.9 billion, representing year-over-year growth between 65% and 67%. So growth slowing from 100% yoy, hence shares -20% pre market
  - danielmarkbruce 5y ago
    Yup, it's interesting stuff. The efficiency claims (ie for customers) seems believable (like maybe 70% true?) so it will be interesting to see where those growth numbers go from here... up/down/sideways, it all seems very possible

I'm really unclear on snowflake's valuation along with similar companies in the cloud data space. Why are these companies worth 100x revenue?

by lumost 5y ago

I'm really unclear on snowflake's valuation along with similar companies in the cloud data space. Why are these companies worth 100x revenue?

ZeroCool2u 5y ago

Snowflake is basically GCP BigQuery or AWS Athena, but they charge $40/TB of (highly compressed) storage and have a decent margin on compute too. It's also completely proprietary, so you're not exiting their platform anytime soon. The other big player in this space is DataBricks, which is a reasonable product, but their pricing is based on both instance type and volume of data consumed by a query, which can get pretty insane quickly when dealing with large amounts. Again, they rely on lock-in to a significant extent.

fphhotchips 5y ago
Snowflake employee here, speaking on my own behalf. It's no harder to get out of Snowflake than it is to get out of any other SQL based RDBMS. If we were relying on the fact that we manage the files in S3 instead of the customer to keep our customers on board, we wouldn't have a business. I will grant that there's non-ANSI features in Snowflake that our competition don't offer, but it would be weird to describe "have awesome features" as being lock-in.

ta988 5y ago

Strong beliefs from investors. I don't think there is much rationality at play here.

danielmarkbruce 5y ago

They are doubling revenue every X months (currently about 12). And it's a big market and getting bigger, so they might be able to keep X pretty low for a pretty long time. They are adding customers + adding revenue at existing customers. Double revenue every 12 months and you get to 32x in 5 years. And it's pretty sticky.

blitzar 5y ago
From last nights call: For the full fiscal 2023, we expect product revenue between $1.88 billion and $1.9 billion, representing year-over-year growth between 65% and 67%. So growth slowing from 100% yoy, hence shares -20% pre market
- danielmarkbruce 5y ago
  Yup, it's interesting stuff. The efficiency claims (ie for customers) seems believable (like maybe 70% true?) so it will be interesting to see where those growth numbers go from here... up/down/sideways, it all seems very possible