Snowflake CEO Slootman steps down, Ramaswamy takes over
Slootman resigns after five years at the helm of the data cloud vendor. Revenues grew fivefold under him and the company went public in a record-setting initial public offering.
Snowflake CEO Frank Slootman resigned after five years at the helm of the data cloud vendor.
Sridhar Ramaswamy was named his replacement.
Ramaswamy, who had Snowflake's been senior vice president of AI for nine months, joined Snowflake in 2023 when the vendor acquired Neeva, a search engine vendor whose platform is fueled by generative AI. Ramaswamy was one of Neeva's co-founders.
The move was a surprise to Doug Henschen, an analyst at Constellation Research. However, given the surge in interest in AI over the past year -- and generative AI, in particular -- the move from Slootman to Ramaswamy is a logical one, he added. "Snowflake is under pressure to step up on AI, and Slootman is more of a business leader rather than a tech leader. The selection of Sridhar Ramaswamy signals the direction the board is looking to emphasize."
Frank Slootman
Snowflake revealed Slootman's resignation shortly before the vendor unveiled its fourth quarter 2023 earnings late Wednesday afternoon.
Based in Bozeman, Montana, but with no central headquarters, Snowflake is a data cloud vendor whose tools enable customers to query and analyze data. Competitors include Databricks along with tech giants such as AWS, Google, IBM, Microsoft and Oracle.
Data management and analytics vendors had struggled for nearly two decades to extend use of their tools beyond a small percentage of data experts. Self-service analytics platforms that included such capabilities as natural language processing (NLP) and low-code/no-code tools showed promise.
Ultimately, however, the limited NLP and low-code/no-code capabilities aimed at expanding analytics use were still complex enough to hinder widespread BI adoption.
Then came generative AI, which enables true natural language interactions and virtually eliminates the need to write code to query and analyze data. In addition, generative AI models can be trained to generate code on their own and automate repetitive, time-consuming tasks.
Therefore, over the 15 months since OpenAI's launch of ChatGPT marked a significant improvement in generative AI technology, most vendors have made generative AI a focus of their product development.
That includes Snowflake. The company, in addition to acquiring Neeva, has developed tools on its own aimed at enabling generative AI model development.
Given Ramaswamy's background in AI, it makes sense for him to succeed Slootman, according to Henschen.
"Ramaswamy has a great reputation as savvy technologist and leader with depth in AI," he said. "It's a great choice, and I'm looking forward to the rapid maturation of the [API and model development] side of the Snowflake Data Cloud."
Donald Farmer, founder and principal of TreeHive Strategy, likewise lauded the choice of Ramaswamy to take over as CEO of Snowflake.
"Sridhar is an awesome choice for the next CEO," he said. "His track record and experience all suggest he's the right person to lead the strategy for Snowflake in the AI era."
However, Farmer cautioned that leading Snowflake will be far different than leading Neeva.
"[Ramaswamy] does not have experience at the helm of a public company, which comes with a different set of challenges than being a founder and leader of a private company," he said. "But Frank staying on as chairman should mitigate that. All in all, an excellent move."
Completed responsibilities
While generative AI development will be critical to Snowflake's future success, Slootman wasn't hired in 2019 to revolutionize Snowflake's technology.
Instead, he was brought on to grow the 2012 startup and take it public -- which he has done, the analysts noted.
Snowflake was a private company at the time Slootman became CEO. But since taking the vendor public in September 2020 when Snowflake's initial public offering set a record for the largest IPO ever by a tech vendor, Snowflake's revenues have risen from $592 million in 2021 to $2.8 billion in 2023.
"Frank has done his job -- taking the company public -- and he has done it beyond expectations," Farmer said.
Henschen similarly said Slootman accomplished what was expected of him when he joined Snowflake.
Having done that, and with technological innovation likely playing a larger role in revenue growth going forward than it did in recent years, now is the time for Snowflake to have a new CEO.
I was brought to Snowflake five years ago to help the company break out and scale. I wanted to grow the business fast, but not at all costs. It had to be efficient and establish a foundation for long-term growth. I believe the company succeeded in that mission.
Frank SlootmanChairman of the board and former CEO, Snowflake
"Slootman joined Snowflake in May 2019 and quickly and spectacularly achieved what he was brought there to do, which is take the company public," Henschen said. "Future growth will depend on being a bigger part of the AI future, and I think Slootman himself recognized that it was a good time for a change."
In fact, when explaining his resignation during Snowflake's earnings call on Wednesday, Slootman cited economics as a reason for his hiring.
"I was brought to Snowflake five years ago to help the company break out and scale," he said. "I wanted to grow the business fast, but not at all costs. It had to be efficient and establish a foundation for long-term growth. I believe the company succeeded in that mission."
Regarding Ramaswamy's appointment as his replacement, Slootman added that Snowflake's acquisition of Neeva provided the opportunity to name a successor.
"The board has run a succession process that wasn't based on arbitrary timeline but, instead, looked for an opportunity to advance the company's mission well into the future," he said. "The arrival of Sridhar Ramaswamy through the acquisition of Neeva last year represented that opportunity."
Tepid market response
Despite Snowflake's revenue growth in 2023, Wall Street reacted negatively to the vendor's earnings report in conjunction with Slootman's resignation.
After the close of trading on Wednesday, Snowflake's stock dropped from $229.96 per share to $183.40 as of 8 a.m. ET on Thursday and was valued at $184.90 at midday.
While revenue increased, chief financial officer Mike Scarpelli issued tepid guidance for 2024 during Snowflake's earnings call.
"Consumption trends have improved since the beginning of last year but have not returned to [previous] pattern," he said. "We have evolved our forecasting process to be more receptive to recent trends."
Scarpelli predicted continued growth, but not at previous levels. Rather than the $700.4 million year-over-year growth last calendar year, he estimated about $420 million in year-over-year revenue growth this year.
In addition, Scarpelli said that product revenue for the first quarter is expected to be between $745 million and $750 million, lower than the $759 million expected by analysts, according to CNBC.
This story has been updated.
Eric Avidon is a senior news writer for TechTarget Editorial and a journalist with more than 25 years of experience. He covers analytics and data management.
Frank Slootman
