Snowflake President Frank Slootman attends the 2022 Snowflake Summit in Las Vegas on June 14, 2022.
Snowflake | Via Reuters
News from Snowflake CEO Frank Slootman’s retirement triggered an 18% plunge in the company’s stock price on Thursday, the steepest sell-off since the data analytics software provider debuted on the New York Stock Exchange in 2020.
Slootman’s departure was announced last Wednesday as part of Snowflake’s quarterly earnings report, which included disappointing guidance. Analysts at Mizuho Securities wrote in a note that the stock is taking a hit “as investors digest the resignation” of Slootman, who joined in 2019 and led the company through its successful IPO the following year.
While the announcement caused consternation on Wall Street, Slootman told CNBC he wasn’t worried about a wave of Snowflake employees following him out the door.
“This is not a personal cult, okay?” Slootman said.
Slootman, 65, is succeeded by former Google advertising director Sridhar Ramaswamy, who joined Snowflake in June through the company’s purchase of Neeva, a startup co-founded by Ramaswamy in 2019 for $185 million.
Snowflake was the third enterprise technology company led by Slootman in the IPO process, following Data Domain in 2007 and ServiceNow in 2012. Snowflake marked his biggest financial windfall. At the time of the IPO he controlled about 6% of the company’s shares and as of February 9 he owned 10.6 million shares, a stake currently worth about $2 billion.
Additionally, Slootman’s total compensation in 2023 was $23.7 million, almost entirely from stock and options.
Before joining Snowflake, Slootman spent about six years as CEO of ServiceNow. He told CNBC that ServiceNow continued to thrive after his departure. Annualized revenue grew from $1.5 billion to nearly $10 billion.
“Some of the people I hired are still there, quite a few, actually,” Slootman said. “There are new ones too, of course.”
According to regulatory filings, ServiceNow’s workforce stood at 23,668 at the end of 2023, up from 603 in December 2011, months after Slootman joined.
“We put ServiceNow on the rails. We did it with Snowflake, too,” said Slootman, who remains president.
Taking three companies through large, successful exits is a rare feat in technology and has earned Slootman a lot of acclaim. But he has also attracted attention for intervening in controversies over issues such as the tech industry’s focus on diversity. In 2021, as corporate America was experiencing the aftermath of George Floyd’s murder, Slootman noted that diversity should not trump merit. He later apologised.
In his 2022 book “Amp It Up,” Slootman offered advice to leaders on how to raise standards within companies, citing Steve Jobs’ insistence on company-wide greatness. Apple. “Don’t let the discomfort creep in,” she wrote.
Founded in 2012, Snowflake created a cloud-based data warehouse to store and analyze business information. Now the company wants to help customers build AI models and applications from data.
Ramaswamy said Snowflake has a clear vision, with the data cloud at the center and apps around it.
“Simply what I’m going to do is what I’m going to do on a large scale and quickly,” he said.
The challenge will be to maintain the company’s momentum.
Snowflake generates about $3 billion in annualized revenue, growing about 32% annually, up from less than $200 million before Slootman replaced its predecessor Microsoft Bob Muglia as CEO in 2019. As it seeks to continue its rapid expansion, Snowflake faces competition from Databricks, valued at $43 billion last year in an investment round that included Capital One, who had previously supported Snowflake.
After Snowflake purchased Neeva, Slootman said he made an effort to get to know Ramaswamy. The company gave Ramaswamy the most critical role at the time, leading its AI efforts. Slootman had a realization.
“My goodness, this is the opportunity we’ve been waiting for,” he said.
Ramaswamy said he spent a lot of time with Slootman. They traveled together to London and Berlin, as well as domestic trips to Arizona and Las Vegas. Ramaswamy said he has had conversations with more than 100 customers, many of them with Slootman.
Now that he is at the helm, Ramaswamy has to contend with the naysayers.
“There is no doubt that it is concerning to see Mr. Slootman, who has an excellent track record and is well regarded by investors, step down after five years in the role,” Deutsche Bank analysts wrote in a note on Thursday, while maintaining the their buying position. title recommendation.
But no one has more to do with Ramaswamy’s success than Slootman, who remains one of the company’s largest investors.
“Snowflake is in an extremely good position, having Sridhar at the helm,” he said.
CLOCK: Part of Snowflake’s downfall is tied to CEO Slootman’s retirement
