Why Redpoint invested in Snowflake in early 2014

Redpoint Ventures
Feb 10 · 3 min read

By Satish Dharmaraj

Congratulations Team Snowflake! On the occasion of its most recent funding announcement and $12.4 billion valuation, we wanted to pan back to when we first met the Snowflake team, when it was pre-revenue and pre-product. Back then, our expectations were high, but the Snowflake team has outmatched even our wildest expectations, with its incredible execution and strategic savvy. The kind of revenue growth that Snowflake is putting up is unprecedented — we have never before seen it in our history, nor in our examination of the fastest-growing public companies in the enterprise sector!

As a throwback to when we did the deal, we pulled the deal memo we wrote and looked back at the balance sheet we had for the company at the time. It’s always great to look back at the journey and think about the time when Snowflake was just getting started, as a glimpse into what we saw and why we decided to do the deal in the first place. Here are some excerpts from our deal memo and a conclusion!

Excerpt from Deal Memo—March 2, 2014:

Reasons to be interested:

Very strong team with highly relevant domain expertise. Team is the #1 reason to do this deal

Huge multi-billion dollar market

Very high technical barrier to entry and unique IP

Risks

AMZN Redshift is going to offer significant competition

Pre-revenue and pre-product company (product in alpha) in what will be a super competitive market

Price is super high relative to stage ($60M pre) and even at this level there is significant competition from our peers

Our partnership voted to do the deal after much discussion. It wasn’t a controversial vote, but it’s such a good throwback to think that $60M pre was a barrier back in the day. Why did we do this deal despite the huge price (relative to those days) and the significant risks involved from an incumbent AMZN? It was a 100 percent bet on the people and the team more than anything else, and the belief that they will build something faster, more scalable and easier to use than the incumbent. Benoit, Thierry, and Marcin were — and are — special.

“It was a 100 percent bet on the people and the team more than anything else, and the belief that they will build something faster, more scalable and easier to use than the incumbent. Benoit, Thierry, and Marcin were — and are — special.”

And when we met them we knew it. Spending time with them made it clear to us that we had to back them. Below are some references on the architecture they had built and what we heard about the founders; this helped seal the deal for us to bet on this pre-product company. This team was going to do special things and we could feel it. I’m thrilled we didn’t talk ourselves out of this one based on incumbent competition. It’s also exciting to see the amazing progress and this huge milestone for a seminal company. So many more great milestones to come.

Congratulations Snowflake!

A few references from the Deal Memo — March 2, 2014:

“Took one month of ad platform data and did an A/B test against Redshift. Redshift took an entire day to load compared to Snowflake’s alpha product at 12 minutes. Had some SQL issues but they will solve that. Think Benoit and Thierry are amazing technical guys. Good mix of cloud and DB expertise. Think they have the opportunity to destroy Redshift.” — Reference from a top content/media platform in our portfolio

“Very few architects in Oracle and Benoit is top 1% among them. Very few architects who can design, then code a prototype and then code it for production. Goes all the way. Great design/arch skills in performance and scalability” — Reference on Benoit

“Thierry was very well versed in Systems, Sync, Query Optimization and Massive Parallelization. Was a great mentor and a manager. People loved to work for him and learn from him” — Reference on Thierry

“All-star team. Marcin authored a seminal DB paper. This team can execute on this architecture.” — Reference from Redpoint founder

Redpoint Ventures

Since 1999, Redpoint Ventures has partnered with visionary founders to create new markets and redefine existing ones.

Redpoint Ventures

Written by

Redpoint partners with visionary founders to create new markets or redefine existing ones at the seed, early and growth stages.

Redpoint Ventures

Since 1999, Redpoint Ventures has partnered with visionary founders to create new markets and redefine existing ones.

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