Author Topic: SNOW - Snowflake  (Read 4269 times)

winjitsu

  • Full Member
  • ***
  • Posts: 201
Re: SNOW - Snowflake
« Reply #10 on: September 16, 2020, 05:39:10 PM »
I have absolutely no expertise in the space, so I ask those of you that do. Does Snowflake have an offering that much better than for example a competing AWS product?

AWS does have a competing product called RedShift, but the key is that it's not tied to AWS, and allows vendors to move data around to GCP / AWS / Azure. The hypergrowth link from above goes into the technical but might be a little dense to those not in the industry.


RadMan24

  • Sr. Member
  • ****
  • Posts: 459
Re: SNOW - Snowflake
« Reply #11 on: September 16, 2020, 06:43:56 PM »
Did some work on this last week - it seems like a great business that I'd like to own. The link below does a comprehensive deep dive. I actually planned on participating at $120 but with where this is pricing ($240 range), it is a good portion of the TAM that mgmt outlines at $80bln. I'm hoping this will follow a path similar to the FB IPO, beautiful business but pricing at IPO got aggressive.

https://hhhypergrowth.com/a-snowflake-deep-dive/

Agree, it got out of reach when it started getting priced above $80. At this point, they will have to show some "disappointing" revenue figures, either due to consumption habits, or growth pains.

To those who complain about its loss-making, you haven't dived deep enough - it's a completely different business than a couple years ago.


Spekulatius

  • Hero Member
  • *****
  • Posts: 5336
Re: SNOW - Snowflake
« Reply #12 on: September 17, 2020, 04:02:08 AM »
What's interesting about the infographic from the infographic towards the end of this write-up is that Snowflake is kind of sandwiched between a number of different tools.

https://blog.publiccomps.com/snowflake-s1-ipo-teardown/

Not investing in this (or most Saas businesses) but its interesting to think about and try to understand.

Honestly MongoDB seems interesting as I understand the pieces more...

Yes, Snowflakes product indeed is sandwiched between other tools and runs on top of the cloud layer, that’s one reason why their gross margin is relatively low (62%), which makes it even pricier , if you use EV/Gross Margin as a relevant valuation metric. Not that this matters at these multiples.

Bill Gurley of course goes bonkers over the first day pop and somewhat rightly so. But then again, there is scarcity in play here - $3-4B in available product is nothing in today’s market. What always surprises me that with an IPO, institutions are not supposed to flip their allocated shares, but if this is indeed true, how would one be able to buy any shares then and why do more shares trade during the first day then where issued? I understand that there are day traders at work here, flipping the same shares many times over.

I think the fairer “IPO” would be direct listing with no lockup in place for any pre IPO shareholder.
« Last Edit: September 17, 2020, 07:42:41 AM by Spekulatius »
Life is too short for cheap beer and wine.

Jurgis

  • Hero Member
  • *****
  • Posts: 5610
    • Porfolio
Re: SNOW - Snowflake
« Reply #13 on: September 17, 2020, 06:38:48 AM »
I think the fairer “IPO” would be direct listing with no lockup in place for any pre IPO shareholder.

That's the argument made by people promoting direct listing or SPAC route.
The counterargument is that both of these are not trivial. And pretty much all three routes are good in bull market (or just market with appetite for IPOs). But all three are not that good if your IPO is not super sexy or market is blah.

In this particular case, yes, the insiders/early investors may have captured additional 2x if going direct or SPAC. But it is also possible that by the time they setup direct listing or SPAC, market turns and they are left with less. Overall since even recent private investors got ~2x in IPO, it's tough to feel sad for them. Some people will just have to live with smaller mansions and Porches instead of Ferraris...  ::)

Edit: I agree that direct listings should be simpler. I think there's some movement in that direction, but I don't remember details.
« Last Edit: September 17, 2020, 06:41:58 AM by Jurgis »
"Human civilization? It might be a good idea." - Not Gandhi
"Before you can be rich, you must be poor." - Nef Anyo
"Money is an illusion" - Not Karl Marx
--------------------------------------------------------------------
"American History X", "Milk", "The Insider", "Dirty Money", "LBJ"

Broeb22

  • Sr. Member
  • ****
  • Posts: 398
Re: SNOW - Snowflake
« Reply #14 on: September 17, 2020, 06:39:25 AM »

I think the fairer “IPO” would be direct listing with no lockup in place for any pre IPO shareholder.

The more I see how IPOs are priced and trade the more I agree. It's a big tax Wall Street and the major financial institutions levy against IPO companies, many of which don't need to capital being raised at IPO anymore.

lnofeisone

  • Full Member
  • ***
  • Posts: 156
Re: SNOW - Snowflake
« Reply #15 on: September 17, 2020, 01:23:23 PM »
I have absolutely no expertise in the space, so I ask those of you that do. Does Snowflake have an offering that much better than for example a competing AWS product?

The best way to think of Snowflake is that they do everything a tad (very small tad) bit better than AWS/GCP/Azure because they are very narrowly focused on their product. They are a bit cheaper than all those 3 when storage + compute are taken into account. They are also cloud-agnostic which is starting to be an interesting play. One very clear differentiator, when compared to AWS's Redshift, is JSON support.

Might not seem like a big deal but I contend it is. Today, Snowflake (and others) are focused on SQL (structured) data. There is a whole new world when it comes to unstructured. I think someone mentioned MongoDB above. MongoDB is great but the problem is that the algorithms that are needed to compute over unstructured data (e.g., video, images, text) are still very expensive and haven't really been optimized to embarrassingly parallel levels. Just look at GPT-3, 140+ million features...that's A LOT even by AWS/GCP/Azure standards to do anything with even if you employ transfer learning.

There is another data domain that appears to be somewhat untapped - graph. This is where Palantir plays. There are number of vendors here - Neo4j (biggest and probably most mature), TigerGraph, etc. All of these rely heavily on JSON format in some way or shape. (Graph is really a specialized care of SQL that eliminate recursive joins by using pointers [e.g., C++ pointers if you care to Google]). I can certainly see Snowflake move into graph space via parntership/alliance/aquisition and be lightyears ahead of AWS/GCP/Azure.

Long way of saying, I'd definitely be a SNOW buyer, maybe once we get a tech sell off.

Broeb22

  • Sr. Member
  • ****
  • Posts: 398
Re: SNOW - Snowflake
« Reply #16 on: September 17, 2020, 01:44:38 PM »
Thanks for that color (which I probably 50% understood).

Can you expand on MongoDB and its limitations and why more people aren't moving to that standard?

PJM

  • Jr. Member
  • **
  • Posts: 90
Re: SNOW - Snowflake
« Reply #17 on: September 17, 2020, 04:12:40 PM »
I have absolutely no expertise in the space, so I ask those of you that do. Does Snowflake have an offering that much better than for example a competing AWS product?


Might not seem like a big deal but I contend it is. Today, Snowflake (and others) are focused on SQL (structured) data. There is a whole new world when it comes to unstructured. I think someone mentioned MongoDB above. MongoDB is great but the problem is that the algorithms that are needed to compute over unstructured data (e.g., video, images, text) are still very expensive and haven't really been optimized to embarrassingly parallel levels. Just look at GPT-3, 140+ million features...that's A LOT even by AWS/GCP/Azure standards to do anything with even if you employ transfer learning.


From what i read in the prospectus, SNOW seems to be suggesting that are able to store and compute over unstructured data, but you are suggesting thats not the case. Who are the key players in this space of handling and computing over unstructured data?

Another qst if you have insight. It seems that SNOW charges clients on use basis, both for storage and compute. Since compute over unstructured and graphs seems to require more processing and intelligence, do you think the real money and margins is to be made in this space compared to structured data.

mcliu

  • Hero Member
  • *****
  • Posts: 789
Re: SNOW - Snowflake
« Reply #18 on: September 17, 2020, 04:44:41 PM »
Don’t know much about this, so would love to hear an informed opinion on how difficult would it be for the big players (MSFT, AWS etc) to replicate Snowflake features on their own databases?

Munger_Disciple

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 619
Re: SNOW - Snowflake
« Reply #19 on: September 17, 2020, 04:51:52 PM »
With the handicap of a very rudimentary knowledge of Cloud based DB technologies, I am trying to get a layman's understanding of what makes SNOW so special. From what I can tell, they provide customers with two distinct advantages:

1. Their customer can be cloud provider agnostic since SNOW works with all the three big players. SNOW buys cloud storage and compute capacity wholesale from AWS, Azure, Google Cloud and sells retail to individual customers in a highly customizable format for storage and compute nodes separately with their own software tools which allows their customer to process data efficiently and securely.

2. I read on one of the blogs this but i am not sure this is correct: SNOW also provides the advantage of co-location of storage and compute within a datacenter which makes the processing of data much faster.

TIA to all the DB/Cloud SW experts on this board.
« Last Edit: September 17, 2020, 09:23:31 PM by Munger_Disciple »