Snowflake’s Slootman not fearful about exodus: ‘not a private cult’

Information of Snowflake CEO Frank Slootman’s retirement sparked an 18% plunge within the firm’s inventory worth on Thursday, its steepest selloff for the reason that knowledge analytics software program vendor debuted on the New York Inventory Alternate in 2020.

Slootman’s departure was introduced late Wednesday as a part of Snowflake’s quarterly earnings report, which included disappointing steering. Analysts at Mizuho Securities wrote in a word that the inventory is getting hammered “as investors digest the resignation” of Slootman, who joined in 2019 and led the corporate by way of its blockbuster IPO the next yr.

Whereas the announcement brought on consternation on Wall Avenue, Slootman informed CNBC that he isn’t fearful a couple of wave of Snowflake workers following him out the door.

“This is not a personal cult, OK?” Slootman mentioned.

Slootman, 65, is being succeeded by former Google advert chief Sridhar Ramaswamy, who joined Snowflake in June by way of the corporate’s $185 million purchase of Neeva, a startup Ramaswamy co-founded in 2019.

Snowflake was the third enterprise expertise firm that Slootman shepherded by way of the IPO course of, following Knowledge Area in 2007 and ServiceNow in 2012. Snowflake marked his greatest 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, nearly completely from inventory and possibility awards.

Earlier than becoming a member of Snowflake, Slootman spent about six years as CEO of ServiceNow. He informed CNBC that ServiceNow has continued to flourish since his departure. Annualized income has grown from $1.5 billion to nearly $10 billion.

“Some people are still there that I hired — quite a few of them, actually,” Slootman mentioned. “There’s also new ones, obviously.”

ServiceNow’s workforce stood at 23,668 by the top of 2023, in contrast with 603 in December 2011, months after Slootman had joined, in accordance with regulatory filings.

“We put ServiceNow on the rails. We’ve done that with Snowflake as well,” mentioned Slootman, who’s sticking round as chairman.

Taking three firms by way of large and profitable exits is a uncommon feat in expertise, and has gained Slootman loads of acclaim. However he is additionally attracted consideration for moving into controversy on points just like the tech business’s concentrate on range. In 2021, as company America was wading by way of the fallout of the George Floyd homicide, Slootman famous that range should not trump advantage. He later apologized.

In his 2022 ebook “Amp It Up,” Slootman supplied recommendation leaders on find out how to increase requirements inside firms, citing Steve Jobs’ insistence on greatness at Apple. “Don’t let malaise set in,” he wrote.

Based in 2012, Snowflake constructed a cloud-based knowledge warehouse for storing and analyzing company info. Now the corporate needs to assist shoppers construct synthetic intelligence fashions and functions on high of the info.

Ramaswamy mentioned Snowflake has a transparent imaginative and prescient, with the info cloud on the heart and apps round it.

“Just delivering on that at scale with speed is what I’m going to do,” he mentioned.

The problem shall be to take care of 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 mentioned he made an effort to get to know Ramaswamy. The corporate put Ramaswamy in essentially the most crucial function on the time, main its AI efforts. Slootman had a realization.

“Holy s—, this is the opportunity we’ve been waiting for,” he mentioned.

Ramaswamy mentioned 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 mentioned he is held conversations with over 100 shoppers, together with many with Slootman.

Now that he is on the helm, Ramaswamy has to cope with the naysayers.

“It is no doubt concerning to see Mr. Slootman, who has a strong track record and is well regarded by investors, step down after five years in the role,” Deutsche Financial institution analysts wrote in a word on Thursday, although they maintained their purchase advice on the inventory.

However no one has extra at stake in Ramaswamy’s success than Slootman, who stays one of many firm’s greatest buyers.

“Snowflake is in an extremely good place, having Sridhar at the helm,” he mentioned.

WATCH: Part of Snowflake’s downfall is related to CEO Slootman’s retirement