From stealth mode to over $70 billion. Sounds hard to believe, right? What is even more unbelievable is that this happened in only six years. But this success didn’t just happen, it is based on a well-thought-out strategy. This means that this is not an isolated case, it is repeatable. The question still stands: How did they do it?
So, what is Snowflake and what do they do? Snowflake is a cloud data service provider that offers storage and data analysis services to its corporate customers. In its first two years of activity operated from a state of secretiveness and in 2014 made its official launch.
After six years of public activity, Snowflake managed to reach a record-breaking sum of $3.4 billion after the company made its initial public offering (IPO). This event made history and Snowflake’s IPO became one of the largest software IPOs in all history.
Snowflake Used a Secret Playbook to Succeed in Such a Short Time
Now, let’s see what was behind Snowflake’s success story. The secret behind Snowflake’s incredible success can be resume to the venture studio model. You may wonder: what exactly is a venture studio and how does it work? The venture studio model is also known as the startup studio model. Simply put, a venture studio is an organization that has as its goal the creation of startups.
Venture studios work as startup incubators, but they present a slight but notable difference compared to traditional incubators. Instead of focusing on one business at a time, venture studios launch several companies not just one. One of the greatest benefits of this model is that it’s less time-consuming, it’s efficient. But, more than that, there is a possibility of collaboration between the startups that pertain to the same venture studio.
One of the possible challenges of this model is that resources must be allocated to all startups while ensuring that the startups are on their way to success. However, this model was only of help for Snowflake, proving that the venture studio model can bring results never imagined before.
In the case of Snowflake, the company was incubated by Sutter Hill Ventures (SHV). This means that from day one, SHV offered Snowflake its resources such as capital and experience so the company could grow.
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Now, Let’s Take a Closer Look SHV Helped Snowflake’s IPO Become The Biggest in History
From the very beginning, SHV’s CEO, Mike Speiser, was strongly involved in Snowflake. From the initial $5 million founded to the name of the company, Speiser is considered the Snowfake’s co-creator. However, being a venture studio means you have to give up the spotlight to the company you're incubating. And this is exactly what SHV did. They kept quiet, leaving the co-founders to receive all the attention.
In terms of capital, as is the practice with venture studios, they fund the company before the launch. The funding received by Snowflake from SHV is reported to accumulate to the sum of $200 million. As a consequence, currently, 20% of Snowflake’s shares are owned by SHV.
Not only did SHV co-create and fund Snowflake, but Speiser even helped the company build its team. Speiser had personally convinced the right people to come take leading positions in the company so Snowflake could benefit from the biggest growth possible. SHV also passed its knowledge on the Software as a Service (SaaS) world.
Snowflake’s IPO story is the perfect example of how the venture studio model grows a company from scratch and helps it reach its pick of success. Snowflake’s story didn’t have to be the longest to make an impression on the market and leave its name in history.
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