Having the title of biggest software initial public offering (IPO) in history is quite a feat. Snowflake, founded in 2012, now holds this prestigious designation, but how did it get here? How did this startup make its name in an industry dominated by Amazon, Microsoft, and Google?

Going from Startup to the Biggest IPO

Benoit Dageville, Thierry Cruanes, and Marcin Zukowski, the founders of Snowflake, reimagined building data platforms for the cloud. They built the first data warehouse for the cloud from the ground up. This crucial innovation now enables organizations in any industry around the world to leverage the true value of their data.

There are lots of startups with great ideas and innovations, but they don’t all take the path of Snowflake. What makes Snowflake so much more valuable? There are a few reasons:

• It took a unique approach to growth and incubation with the Speiser formula.
• It had a solid product that was in high demand and made the product accessible to all businesses.
• It had experienced, strategic leadership.
• It had great foresight and took advantage of new opportunities when the world pivoted due to COVID-19.
• Its customers really liked its product.

The Speiser Formula

Mike Speiser, the founding investor and a current board member, is a highly successful venture capitalist. He invests only in startup companies and has a nontraditional approach.

The basics of the Speiser formula:

• Speiser begins as interim CEO, letting the technical founders focus on what they’re good at instead of forcing them into roles they won’t thrive in, while a seasoned CEO takes the helm.
• The company refines the ideal customer profile while Speiser manages seed funding and external fundraising.
• The organization hires for key positions to keep moving the product and the company forward.
• Speiser’s formula yields consistent high returns by focusing on incubations, offering more attractive terms to potential incubations, and continuing to invest in future rounds.

A Unique, Accessible Product

In many cases, deploying the product would’ve just looked like taking an existing on-prem solution for data warehousing and building a platform to host those databases in another party’s data center. That’s not the route Snowflake took.

The database market wasn’t new; it’s more than three decades old. Snowflake wasn’t inventing; it was innovating. The cloud was an opportunity, and so was removing friction. Snowflake’s product is easy to use and cloud-agnostic. Simply put, the company made the idea of understanding data to make decisions straightforward and accessible.

Snowflake also understood that this desired goal wasn’t just for large enterprises. Resolving the friction and other challenges around data warehousing would have mass appeal, and it would make the world of data analytics accessible to companies of all sizes.

Leadership

At the two-year mark, Speiser left as interim CEO, and Snowflake brought in Bob Muglia. He was well-suited for the role, with previous executive positions at Juniper Networks and Microsoft.

Muglia was critical to the company’s growth and funding. While private, Snowflake raised around $1.4 billion from various investors. Its last injection of pre-IPO funding was in February 2020, when it raised $479 million, increasing its valuation to $12.4 billion.

In 2019, Frank Slootman took over from Muglia. Slootman knew the company was ripe with opportunity. He had previous success with taking tech startups, including Data Domain and ServiceNow, to the IPO stage.

A COVID-19 Data Project That Wowed the Business World

Although Snowflake did have momentum before 2020, the pandemic actually helped it rise to acclaim. Snowflake created a way to tap into Starschema’s COVID-19 epidemiological data. In the current environment, this data is extremely valuable to almost any company seeking to make critical decisions in a data-driven manner.

By leveraging the Snowflake platform, Starschema was able to aggregate different data streams into a single source of truth. Organizations, public and private, can access it on an intuitive platform to create new models quickly.

This collaboration has led to more customers and popular on a larger scale for Snowflake. Many also think that this is just the start for other partnerships, which could benefit public health and beyond. The ideation around this is endless. Apps could notify travelers, shoppers, and diners to avoid high infection areas. Brands that serve these customized experiences may then work with apps to push personalized ads to those users.

Impressive Customers and a High NPS Score

Snowflake has thousands of customers, many of which are well known and highly successful, including Adobe, Nielsen, DoorDash, Capital One, and Overstock. Having an impressive customer list is one thing, but how those customers feel about the company matters even more. Snowflake has a Net Promoter Score (NPS), which is 3.5 times higher than the average for B2B tech companies.

The IPO

On Sept. 15, Snowflake priced its IPO at $120 per share, which was above the expectations of $100-$110. Demand was strong, and by the next morning, shares opened at $245, ending the day with a 112 percent gain at $254, which raised the company’s valuation to $70 billion. Snowflake sold 28 million shares, raising almost $3.4 billion through the IPO. This stunning debut quickly overtook the past software IPO of Dell-backed VMware (VMW), which raised $1 billion in 2007.

All the attributes mentioned earlier made Snowflake a hot commodity; it also had some reputable backers in Salesforce and Berkshire Hathaway, which purchased $250 million worth of shares each. Salesforce is eager to partner with the organization to compete against Amazon, Microsoft, and Google.

Snowflake’s Success Story: A Great Product, Strategic Growth, and Innovation

The trajectory of Snowflake is impressive, but it's not a complete surprise. Its foundation was creating a useful product that met the needs of the company’s ideal buyer. The tech experts focused on building the product while experts such as Speiser led the business side of things. Snowflake is also continuing to innovate and make its product better while ensuring its customers are happy. Those are all the right pieces for success.