How Snowflake Grew Into a $70 Billion Dollar Company & Had the Largest Software IPO in History

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Welcome to these success story PODCAST,the most useful podcast in the world. I'm your host, Scott, andtoday we're going to be breaking down how snowflake became the largest IPO in softwarecompany history. I'm going to walk you through the sales and marketing strategy thattook them to a seventy billion dollar evaluation. I hope you enjoy okay, solet's talk about snowflake and why I'm even doing this piece. So whenI first was looking into some case studies, I like like putting together a casein marketing studies from a nerd like that. I saw that there wasa lot of interest on snowflake and when you go on Youtube you see somepeople talking about snowflake, but most of the discussions about snowflake are investors wonderingwhy the hell they grew so much and how they grew so quickly. SoI thought, you know what Hell, I'm from sales marketing background. Let'stry and do a little bit of a deep dive and break it down.And there's a there is some information out there, but I want to Iwant to disseminate it to you and walk you through why it was so effective, why their strategy of so effective and also when you start to look attheir strategy for selling and marketing to major customers, it's actually not that surprisingwhy they grew the way they did. But let's get right into it now. If you don't know what snowflake is, you may be wondering, well,isn't it just another software company, another Silica Valley Story? Well,it is the largest IPO and software company history. That's one thing, butalso, to give you an idea of how impressive this IPO was, youknow Warren Buffett, you know Berkeshire hathaway. So they have not invested in anIPO and fifty year that they invested in snowflake. This is a bigdeal, this is this is historic IPO. So let's walk through the let's walkthrough Snow Flake. What do they do? So it's Snowflake is adata a cloud data warehouse provider. So they provide server services to companies.So companies, big companies, any lot of server space. They don't haveit all on site or they don't have, you know, the expertise to havethat level of server space on site. That's why Amazon is such a hugecompany, because lots of companies use Amazon for Server Space and cloud spaceand whatnot, but snowflake offers these services...

...to customers. Now, what snowflakeoffers is not brand new. To give you an idea of the people thatthey're competing against, oracles in this space, IBM's in this space like there arebig companies in this space. So snowflake their proprietary IP, their secretsauce, if you want to call it that, is the fact that whenthey provide cloud data warehouse services for customers, they allow customers to make massive amountsof request, that a retrieval request, simultaneously. So when a company isusing a cloud provider, they have application. Every company uses applications,you know whatnot. They have to pull customer data and that's not stored literallyin the building where the company is located. So it's stored, for example,at an area or in data center that Snow Flake trolls. So whena customer, when a when a company, needs to pull a lot of data, they put the request data, applications request data and sometimes you canhave hundreds of thousands or millions of requests at the same time and not everycloud data warehouse provider will be equipped or capable to service this many data requestsimultaneously. So sometimes if you go with a smaller provider, your request maybe throttled or if you're too big, a company just won't work for you. So that's that's sort of the the differentiator for snowflake. So they do, they really do have a great product. But besides the product, there's obviouslyother reasons why companies grow, and there's basically four reasons why snowflake grewat the rate that it grew in why it had such a successful IPO.One of them being the sales and marketing strategy, the second being the factthat they did perfect the cloud data warehouse product that they offer their customers.The third being that they completely revamp the pricing structure. So if you arein the enterprise, business to business software space be to be space. Alot of the pricing structure is license or seat base, meaning if you haveone employee that uses my software, I'm going to sell you one license.You have two employers, I'm going to sell you two licenses or seats,whatever you want to call them. But snowflake did a little bit different.What's snowflake did is they set their pricing...

...up so that it was based onutilization. So it makes sense, but it's actually not the status quote.It's not. It's not what a lot of companies do. So if I'musing SNOWFLA like, if I need more server space, I'm paying for more. If I need less server space, I'm paying for less. You knowwho else's does this? Amazon does this as well, but many software companiesdo not sell their services like this. They sell on a per license orper seed basis. So snowflake did utilization cost structure, which, of course, was very favorable for customers. And then, lastly, they did dosome strategic management changes free IPO. So they got rid of a well respectedCEO that had done very well with the company and they brought in Frank Sluteman, who has a record of IPOs under his belt. He is known ashe is known as a CEO WHO's only brought into IPO at high evaluations.He has an incredible track record. So that was also something it did verypurposefully for the IPO. But of course, let's discuss why. I'm not breakingdown three of the four items that really led to snowflake success. SoI'm not going to break down the fact that they built an amazing cloud product. Because there's a good chance you're not building an amazing cloud product and ifyou are, good luck. You're up against snowflake, Oracle and IBM.But I'm speaking and I'm putting together this video for a lot of people whowant to learn sales and marketing strategy who aren't building the next iteration of thecloud product that's going to compete with snow flake. Also, the util isa the utilization model, the pricing model for their software. Well, fora lot of people watching they may not actually be in a software company,so obviously that doesn't matter and it's not useful for them. But also,if you are a software company and you do have a pricing structure, pricingmodel that is not in line with that, I'm not going to recommend or giveyou any advice on how to change your pricing structure because I can bedamn sure your CEO is not going to be too happy when you told himor heard that you found out from Scott that you should change the entire wayyour company prices its product, because that is super disruptive and it's probably notgoing to drive too well. But if you have, for example, aninnovative sales or marketing strategy that I'm going to walk through. That's something youcan implement tomorrow. And then, lastly,...

...while I'm not talking about frank,well, you, for probably don't know Frank's Loutman. You probably can'tafford them. So that's kind of a mute point and it's probably not goingto have a big impact on your company. So let's talk about sales and marketing. So what do they do? What do they do, though,was so innovative? Well, nothing, it was innovative, and what theydid actually what they focused on with sales and marketing alignment. Why does thatmatter? Why does nobody get it? Well, in most companies, letme paint you a picture. In most companies there is no sales and marketingalignment. Companies have marketing teams and sales teams and marketing sends out collateral tocustomers. They put stuff up on the website, they push they put stuffup on social media and they do not communicate with the sales team. Theydo not tell the sales team what they're putting on social media. They don'ttalk to the sales team though, what they're putting on the website. Sowhen the sales wrap goes and call somebody, emails somebody. They have no ideawhat they're marketing teams actually focused on. To the conversation the sales team member, the salesperson, is having with the customer is completely different for whatthe marketing side of the business is focusing on. This is this is obviouslybroken, but this is how most companies function. So when a customer,when I'm the customer, I'm looking at a company social media, I'm I'mlearning about their product, I jump on the phone with the sales rep andthey're pitching me something completely different than what I was reading about online. Adifferent feature, a different product at different use case, whatever it may be. That's not a great feeling for a customer, but that's how most companiesoperate normally. The lefthand doesn't know what the right hands doing and left handright hand doesn't know what they're doing and vice versa. So at its core, snowflake focused on sales and marketing alignment, getting those two revenue generating business unitsto talk to one another. Now how did they do that? Willthey focused on ABM or account based marketing? What does account based marketing? Well, count based marketing. Again, at its core is focused on salesand marketing alignment, but also it goes a step further, so count basedmarketing. What it means is you are understanding which account do you want tosell and market to. You're building those profiles and then your sales and marketingstrategy is focused on selling to a specific profile of customer. This is calledan ideal customer profile or target customer profile.

So you build this customer profile.Now what snowflake did differently than most other companies is they didn't just modeltheir customer profile off what everybody else in the industry was doing. So whatmany people will do when they're building out an ABM strategy and they want tofigure out what their customer profile is, they'll say, we'll listen, let'stake this example. To say, IM SNOWFLAKE and I want to take aproduct to market. I know that Oracle is selling the same product or similarproduct. I know that I be am is selling a similar products. I'mgoing to say, well, why don't we just go after the same customersthat I be am an oracle are going after? kind of makes sense right, but pause for a second. What if there's a chance that I beam an oracle. Have not perfected their customer profile? What if it's notabsolutely perfect? Well, that's basically what's snowflake said. Not so many words, but they said we don't want to just go with the the ideal customerprofile of the category. We want to create our own and we want toback it up with data. We want to know with a hundred percent certaintythat it is absolutely correct. So what did they do? They built outtheir own customer profile, and that's a core tenant of a BM having acustomer profile. How did they build out their customer profile? Their ideal customerprofile there was specific to their product and their customers. They took their fiftybiggest deals and they took the fifty deals a close the fastest and they putthat into a tool. They actually used a tool called ever string, whichis a business analytics and information tool, and that used machine learning to generatethe perfect customer profile based on those inm so how how which customers close thefastest? Which customers are the biggest deals? That's we want to target and that'swhatever string did for them. So now they had their customer profile andnow they can use that for the marketing team and their sales team. Butthey took a step further and they didn't just let this customer profile be static. They can instantly tested this model. So when they closed fifty new customersbased on that customer profile, they brought them into this tool. They modeledout a new ideal customer profile. So they kept getting more granular, theykept getting more specific and and more exact about what that customer profile was.So now they have this constant, iterating...

...process of developing this customer profile,of refining this customer profile, and now that's what marketing and sales runs with. So marketing is marketing to this customer profile. Sales knows exactly what marketingis doing because they're they're working off the same customer profile and they're communicating andit's this is how you do proper ABM account based marketing. Now one morething they did was they did a specific one to few, one too manysales outreach strategy. What is this mean? Okay, so when when snowflake wasfirst starting out, they had roughly thirty sales rep they assigned one hundredcustomers, and these are enterprise customers to the like huge, huge companies.Is a customer to each of these sales reps. what the sales reps didis they split their outreach. So they did one to few, one toomany. The one too many is automated, so they took nine of the hundredcustomers and they were sending automated outreach to employees within these ninety customers orcompanies they were targeting. Then the one to few. The one to fewwas personalized outreach to the top ten customers that they wanted to personalized outreach toevery IMP employee of every company that they were reaching out to. So,because these are enterprise companies, they were probably reaching out to ten to twentyto thirty different employees within each one of those hundred customers. So when Isay customers, not just one person that they're actually communicating with. They wouldreach out to multiple people within each one of those customers. But ten ofthose customers, it was all personalized. By the way, the act ofreaching out to multiple people within a company to try and close a deal.That's called multi threading. It is a very good strategy for enterprise large dealswhen you're trying to close a deal. Not Going to get too much intothat right now. Topic for another day, but look it up and if youare in the enterprise space you should try multi threading. So now wehave this one too few where they're doing personalized that reach the ten customers andone too many where they're doing automated. What this allows them to do isto personalize to the customers they really, really, really want to close.Then they also have automated so that they...

...can have some scale, because ofcourse you cannot personalize everything to everyone all the time. So you have anice healthy mix of both personalized and automated, and that obviously did quite well forthem because they kept bringing in more customers, that kept refining their customerprofile and, you know, rinse in her pretty, rinse and repeats,use me, so on and so forth. And this was the core of theirproduct, this was a core of their strategy. This is how theybrought in customers that were the right size. They brought them in quickly and anotherpiece they focused on was retention. So part of this entire model wasfocused on retaining customers. It's not part of the initial it's not part ofthe initial, for example, customer outreach, but when you model your customer profileyou want to make sure that the customers that you're bringing in our customersthat are going to stay with you for a long time. So that's alsowhy they focused on getting that model right at the onset so that when theybrought in customers, those customers wouldn't turn, the customers wouldn't leave. Actually,I wanted to walk through the exact because I was when I was doingresearch for this video, I actually found the exact text at that snowflake use. So this text act was put together. Shout out to Douglas Car from MARTEC, MARTECH DOT zone. So Douglass was at some sort of it wassome sort of event and he was listening to director from snowflake breakdown their techtact. So the text act, this is the sales text act by the way, or the the account based marketing and sales text that. So they broketheir ABM process into four pieces. They broke it into target, reach,engage and measure. So for the target stage they used ever string and Bombora. They basically were discovering businesses that match their best clients that are displayed andintent to purchase a product. Number two, for reach, they were utilizing terminussister and Linkedin s no flake was assembling personalized content experiences that touch perspectivebuyers before they may even be aware of their solution. The keynote was statingthat one customer had been had seen snowflake...

...software four hundred and fifty times acrosssocial or on Web before they had submitted a request for a demo. Thethird stay, a third step, is engaged. They utilized Uber Flip.So snowflake has content experiences that are owned by the sales account manager but producedby the ABM team to provide highly targeted content to drive the buyer into thecustomer journey. So, again in Layman's terms, basically the content is isbeing signed off on by the sales team but is being actioned by the marketingteam. So the sales team is saying this is the content that I needto sell, the marketing team is actioning it and the two are communicating backand forth so that there's there's congruents across these two department then, lastly,the last step is measure. Utilizing Engageo, tableau and looker, snowflake developed aproprietary means of scoring the leads, providing sales intelligence needs. The salesaccount managers to assist them in closing the deals and then again, once thatdeal was closed, their bringing that into their initial ideal customer profile model.What were the results? Well, this besides of seventy billion dollar IPO clickthrough rates increase a hundred forty nine act on ABM ads and half of allthe content that snowflake produces was seen by cust stomers, by customers and ABMtargeted organizations. That's an insane metric that that ratio is incredibly is incredibly good. So half of the content they ever put out is being seen by exactlywho they want. They want that person see the content. So basically thestory of Snowflake is they focused on alignment across marketing and sales. They threwout any preconceived notions and used and trusted data to provide that model, andthen they just they adopt the traditional outbound to allow their sales seem to scale, but they made sure when they're doing that outbound they're still communicating with theirmarketing team anyways. This, obviously is all the right pieces of what amodern day sales and marketing process should look like executed properly. You'll hear alot of people speak about different components that...

I mention today, but a lotof people do not execute it religiously, properly strictly. So you have totrust the process, you have to trust the data, and that's exactly whatsnowflake did and that's why they were so successful. anyways, if you likethis case, studying this rundown of snow flakes processed, hit that like button, hit subscribe and leave some comments below. Let me know who else you wantme to analyze and break down their sales and marketing process. Have agreat day.

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