Snowflake Chairman Frank Slootman attends the Snowflake Summit 2022 in Las Vegas on June 14, 2022.
Snowflake | By way of Reuters
Information of Snowflake CEO Frank Slootman’s retirement sparked an 18% plunge within the firm’s inventory value on Thursday, its steepest selloff for the reason that information analytics software program vendor debuted on the New York Inventory Trade in 2020.
Slootman’s departure was introduced late Wednesday as a part of Snowflake’s quarterly earnings report, which included disappointing steerage. Analysts at Mizuho Securities wrote in a word that the inventory is getting hammered “as traders digest the resignation” of Slootman, who joined in 2019 and led the corporate via its blockbuster IPO the next yr.
Whereas the announcement induced consternation on Wall Avenue, Slootman advised CNBC that he is not fearful a couple of wave of Snowflake workers following him out the door.
“This isn’t a private cult, OK?” Slootman stated.
Slootman, 65, is being succeeded by former Google advert chief Sridhar Ramaswamy, who joined Snowflake in June through the corporate’s $185 million buy of Neeva, a startup Ramaswamy co-founded in 2019.
Snowflake was the third enterprise expertise firm that Slootman shepherded via the IPO course of, following Knowledge Area in 2007 and ServiceNow in 2012. Snowflake marked his largest monetary windfall. He managed roughly 6% of the corporate’s inventory on the time of the IPO, and owned 10.6 million shares as of Feb. 9, a stake that is at present value about $2 billion.
Moreover, Slootman’s complete compensation in 2023 amounted to $23.7 million, virtually completely from inventory and choice awards.
Earlier than becoming a member of Snowflake, Slootman spent about six years as CEO of ServiceNow. He advised CNBC that ServiceNow has continued to flourish since his departure. Annualized income has grown from $1.5 billion to virtually $10 billion.
“Some persons are nonetheless there that I employed — fairly a number of of them, truly,” Slootman stated. “There’s additionally new ones, clearly.”
ServiceNow’s workforce stood at 23,668 by the tip of 2023, in contrast with 603 in December 2011, months after Slootman had joined, in response to regulatory filings.
“We put ServiceNow on the rails. We have carried out that with Snowflake as nicely,” stated Slootman, who’s sticking round as chairman.
Taking three corporations via huge and profitable exits is a uncommon feat in expertise, and has gained Slootman loads of acclaim. However he is additionally attracted consideration for entering into controversy on points just like the tech trade’s concentrate on variety. In 2021, as company America was wading via the fallout of the George Floyd homicide, Slootman famous that variety should not trump benefit. He later apologized.
In his 2022 guide “Amp It Up,” Slootman supplied recommendation leaders on how you can elevate requirements inside corporations, citing Steve Jobs’ insistence on greatness at Apple. “Do not let malaise set in,” he wrote.
Based in 2012, Snowflake constructed a cloud-based information warehouse for storing and analyzing company data. Now the corporate needs to assist purchasers construct synthetic intelligence fashions and purposes on prime of the info.
Ramaswamy stated Snowflake has a transparent imaginative and prescient, with the info cloud on the heart and apps round it.
“Simply delivering on that at scale with pace is what I will do,” he stated.
The problem will likely be to keep up the corporate’s momentum.
Snowflake generates about $3 billion in annualized income, rising at about 32% a yr, in contrast with underneath $200 million earlier than Slootman changed former Microsoft government Bob Muglia as CEO in 2019. Because it tries to proceed its fast growth, Snowflake faces competitors from Databricks, valued at $43 billion final yr in an funding spherical that included Capital One, which beforehand backed Snowflake.
After Snowflake purchased Neeva, Slootman stated he made an effort to get to know Ramaswamy. The corporate put Ramaswamy in essentially the most vital function on the time, main its AI efforts. Slootman had a realization.
“Holy s—, that is the chance we have been ready for,” he stated.
Ramaswamy stated he is been spending plenty of time with Slootman. They’ve traveled collectively to London and Berlin, together with home journeys to Arizona and Las Vegas. Ramaswamy stated he is held conversations with over 100 purchasers, together with many with Slootman.
Now that he is on the helm, Ramaswamy has to cope with the naysayers.
“It’s little question regarding to see Mr. Slootman, who has a robust monitor report and is nicely regarded by traders, step down after 5 years within the function,” Deutsche Financial institution analysts wrote in a word on Thursday, although they maintained their purchase advice on the inventory.
However no person has extra at stake in Ramaswamy’s success than Slootman, who stays one of many firm’s largest traders.
“Snowflake is in a particularly good place, having Sridhar on the helm,” he stated.
WATCH: A part of Snowflake’s downfall is expounded to CEO Slootman’s retirement
