When Did Snowflake Validate Product Market Fit Pre-IPO?

When Did Snowflake Validate Product Market Fit Pre-IPO?

On June 18th, Infostrux CEO, Goran Kimovski (Kima) sat down with S. Somasegar (Soma) to discuss Soma’s experience and lessons as a board member and early investor in Snowflake. Kima and Soma discuss the concept and value of the data cloud and why data exchange will be as important as data warehousing. As an active angel investor and seed investor, Soma describes what makes a great investment and what he looks for while investing in both enterprise and consumer segments.

Kima: Was there a defining moment at Snowflake, pre-IPO, where their leadership team realized they had validated a massive opportunity ahead of them, and the product-market fit in relation to it?

Soma: I can give you two examples. One that is an internal example, and the other an external example.

The internal example was related to a significant performance enhancement that the company was making. The challenge with performance investments is that you split storage and compute, and your business model is all relying on compute, not on storage.

The faster your queries run, you actually lose revenue. In hindsight, when you’re not in the thick of things, it’s easy to see that it’s a no-brainer decision. But the company did debate this. They wondered what they should do – if we do this in the next quarter, revenue is going to be down. However, over a period of time, it will come back. 

I was so thrilled to know that it was not a meaningful discussion because the company was really convinced that they need to do what is right for our customers, and everything else will fit into its place. So to me, the way the team handled the conversation, the way the team made the decision, I thought was high integrity, high class, and focused on keeping the customer first and foremost. I knew we had a winning play on our hands.

The second thing was, without naming names, one of the leading financial institutions was evaluating Snowflake. Financial institutions are a tough nut to crack when it comes to putting data in the cloud. But this one large financial institution said, we want to take a bet on Snowflake, starting with a seven-figure deal, growing quickly to an eight-figure deal, and potentially getting to a nine-figure deal. That level of commitment from a financial institution, particularly early on, willing to take a bet on Snowflake, we felt that was a super defining moment that validated all of our hypotheses about this being an unstoppable journey where more and more companies are going to come to the public cloud. Snowflake is in the right place at the right time to deliver a phenomenal amount of value to our customers.

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