Why Snowflake could become a tech giant

The U.S. Stock market is facing a barrage of initial public offerings this week, as 14 companies plan to raise almost $8 billion. It’s the busiest week since 2014, according to the good folks at Renaissance Capital who track this sort of thing. Some are pretty basic. Broadstone Net Lease owns buildings that house Red Lobster restaurants, among other corporate tenants. Pactiv Evergreen probably makes the plastic containers that Red Lobster uses to wrap up your leftovers.

Then there are the more interesting tech companies. No Silicon Valley startup has gone public yet this year, but that bleak stretch is about to end. Cloud analytics firm Sumo Logic, game software developer Unity, and future database titan Snowflake are on the schedule for this week, to be followed shortly by Asana, Corsair Gaming, and Palantir.

Snowflake is getting the most attention, and deservedly so. As the indie leader in moving database applications to the cloud, Snowflake has been growing at triple-digit rates and wowing customers with insanely speedy services. Expected to go public at a valuation around $30 billion, it will be the highest-valued software startup IPO ever (and the fifth highest-valued tech IPO of any kind). And you have to love their stock symbol: SNOW.

I spent time earlier this summer talking, remotely of course, to CEO Frank Slootman and co-founder Benoit Dageville, while also tracking down some of their customers, rivals, and analysts who follow the market. It’s a classic Valley story, with two guys toiling at one tech giant (Oracle) while dreaming of founding their own. They hole up in a little apartment in San Mateo and whiteboard their way to seeing the future of how the probably most important business software tool there is, the database, could be revolutionized by cloud computing. Their startup grows like mad, complete with Snowflake-shaped waffles in the company cafeteria, but gets a little off track until they bring in a grizzled veteran tough guy, Slootman, to prep for the IPO.

As in any good story, there are also antagonists. If this were HBO’s Silicon Valley, the big rival would be run by a headstrong billionaire who loves to fly jet planes, buy Hawaiian islands, and talk about shooting their competitor’s dog. Oh, wait.

Snowflake has a number of ingredients that signal future tech gianthood, including the product customers can’t stop raving about, the unstoppable mega-trend that’s fueling their rise (the cloud), and the vast “total addressable market.” But they also have some major challenges, including not just Larry Ellison’s troops, but also the competing cloud database apps from the three big cloud providers, Amazon, Microsoft, and Google. And since Snowflake’s apps all have to run on those clouds, too, it could be tough if the big three don’t fight fair. But that would never happen, would it?

However it goes, expect a lot more great stories from this battle royale in the cloud.

Aaron Pressman

@ampressman

[email protected]

NEWSWORTHY

Time flies when you're having fun. Any other news happening today? Oh, just a lil' new product keynote in Cupertino. Definitely expect new Apple watches and iPads. Maybe a new fitness service and/or a bundle of services. Don't hold your breath for new iPhones or that first Apple silicon-powered MacBook. And the long-awaited augmented reality glasses? It's 1,000 to one. In other launch news, Walmartkicked off its Amazon Prime competitor, Walmart+, and Microsoftopened its cloud gaming service, xCloud, with over 150 games but no iPhone app.

A rolling stone gathers no moss. Every great investment bubble has its great villains. Think Enron and Worldcom or Bear Stearns and Lehman Brothers. A whole lot of investors are hoping emission-free truck startup Nikola won't be the poster boy for any bubble that ends up popping in EV stocks. It's not looking great after the company admitted that, yes, it did push a truck downhill in a promotional video, but, no, it never said that the "truck was driving under its own propulsion." Nikola's stock gained 11% on Monday after falling 14% on the short seller Hindenburg's attack on Friday.

Who could it be, believe it or not it's just me. Maybe you think I make too many jokes down here in the news summaries section, but this is no joke: LG introduced a phone called the Wing with a screen that flips sideways across its body to reveal a second screen underneath. Okay, well, I didn't promise it wouldn't turn into a joke: I don't think LG is going to get off the ground with this innovation.

I hope this email finds you well. While we track the bevy of companies going public, there's still plenty of private backing for hot startups, too. Swedish payments platform Klarna raised $650 million in a deal that values the company at over $10 billion. And cloud spreadsheet Airtable raised $185 million in a deal pushing its private value to $2.5 billion. Co-founder and CEO Howie Liu tells Bloomberg that there’s “easily a $100 billion opportunity ahead of us.”

First kick I took was when I hit the ground. A group of laid off IBM employees who say the company discriminated against them based on age got some vindication last week. The Equal Employment Opportunity Commission found that IBM had engaged in discrimination. IBM says it will continue fighting the case. In more current layoff news, Dell Technologies is cutting an undisclosed number of jobs.

FOOD FOR THOUGHT

Nvidia's deal to buy chip designer Arm for $40 billion continues to intrigue. My Coins2Day colleague Jeremy Kahn takes a deep dive into the possibility of combining the A.I. Efforts of both companies.

(Nvidia's) GPUs represent more than 97% of the A.I.-specific computing infrastructure offered by big cloud service providers such as Amazon's AWS and Microsoft's Azure, according to a report last year from research firm Liftr Cloud Insights. Nvidia's data center revenues overtook gaming-related sales for the first time ever in the most recent quarter, bringing in $1.75 billion.

What Nvidia's purchase of Arm does is allow the Santa Clara, California-based GPU giant to extend its dominance in A.I. From data centers and dedicated servers down to mobile phones and small microprocessors, which are increasingly being used in connected vehicles and other networked devices—from street lamps to washing machines—that are part of the so-called Internet-of-Things (IoT).

ON THE MOVE

Netflix promoted local-language originals VP Bela Bajaria to run its global television effort. Prior TV boss Cindy Holland is departing the company...Chad Fentress, chief compliance officer at SoftBank and a WeWork board member, is leaving both positions. Former Sprint CEO Michel Combes gets the board seat but no word yet on the compliance post...former CIT CFO Carol Hayles and LinkedIn senior vice president of engineering Mohak Shroff are joiningeBay's board, as founder Pierre Omidyar and activist investor Jesse Cohn drop off...At Amazon, former White House director of space policy Peter Marquez joins with a similar role and former director of the National Security Agency Gen. Keith Alexander joins the board of directors.

IN CASE YOU MISSED IT

What’s Oracle? TikTok users react to proposed Oracle dealBy Danielle Abril

Why Nvidia’s purchase of Arm worries the U.K. Tech sectorBy Jeremy Kahn

IBM plans a huge leap in superfast quantum computing by 2023By Robert Hackett

‘A 2nd or 3rd tier player’: How the size of Oracle’s China business helped it win TikTokBy Eamon Barrett and Grady McGregor

Tech sell off was a ‘head fake’ as stocks rebound, say analystsBy Anne Sraders

Eastern Europe leads the world in cryptocurrency adoption—legal and otherwiseBy David Z. Morris

If the U.S. Cripples Huawei, will China retaliate against Apple?By Grady McGregor

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BEFORE YOU GO

David Bowie famously mused on whether there might be life on Mars, but maybe the rocker had his eyes on the wrong planet in our solar system. Evidence from the clouds of Venus uncovered a chemical compound called phosphine that may be a byproduct of tiny, living microbes. I wonder if they'll ever know they're in the best-selling show?