Monday 8 February 2021
Snowflake was one of the best IPOs of 2020. The data warehousing company was led by veteran CEO, Frank Slootman, that is developing a reputation as a ‘CEO-for-hire’ (a label that doesn’t really mean anything, isn’t any CEO a CEO-for-hire?). When Slootman took over, Snowflake was valued at $4 billion. Today, it is valued at $85 billion. This isn’t the first time Slootman has successfully taken a company public. Before Snowflake, he successfully took tech companies Data Domain and ServiceNow through their IPOs. He is developing a reputation as the man to bring in to lead a company as its preparing to go public.
This article takes a look at Slootman’s playbook and the success he’s had as a ‘CEO-for-hire’ (we still hate that label…). The first company he led as CEO, Data Domain, was in the dumps when he took over. Despite having good underlying technology the company was running out of money and investors brought Slootman in to save it. After doubling revenue for the next four years, Slootman was able to take the business public in 2007. His next challenge was ServiceNow, after again being tapped by investors (this time superstar VC firm Sequoia) to right the ship. After taking ServiceNow public he was asked by Snowflake’s co-founder to come and work his magic a third time.
If anything, the biggest challenge Slootman faces today is the sky-high expectations of the market. His successful track-record may be the sowing the seeds of his demise. The company currently trades at 140-times estimated 2021 revenue (meaning if the company doesn’t grow, for shareholders to get their money back, the company would just need to take every dollar it makes, incur no costs to make those sales and return every dollar to shareholder for 140 years…). This valuation shows the sky-high expectations investors have for Snowflake. Yet, it is competing with some of the best companies with Google, Amazon and Microsoft all offering competing data warehousing products.
This article takes a look at Slootman’s leadership style and some of the practices he’s put in place at these three companies over his journey.