Salesforce built one of the world's most successful platforms around CRM data. Can Snowflake do the same for analytics?
For platforms, I use the Gates definition,
A platform is when the economic value of everybody that uses it exceeds the value of the company that creates it.
Applications are already being built on Snowflake, powering the so-called Modern Data Stack. A cloud data warehouse enables the next generation of business intelligence, ETL, and workflow orchestration. At least the private market valuations of these companies exceed the value of Snowflake ($38B).
But data doesn't always make a good platform. Facebook's failed attempt at platformization shows that even precious consumer data (the social graph) doesn't always translate to platform economics.
And there's a line between Salesforce (a platform) and Oracle (debatably not a platform) that Snowflake must walk1. Oracle warehoused some of the most valuable data – financial accounts, CRM, and everything in between. Yet, Oracle could never become a platform, and PeopleSoft (Oracle) never beat out Salesforce.
Platforms need to be careful not to become abstractions. TCP/IP is a great abstraction, but near-zero value accrues to companies at the TCP/IP layer. Salesforce and Windows benefited from their deep relationship with the user who worked with the platform directly, manually inputting data or running programs. Snowflake can quickly become an abstraction – a standard API buried within the stack—infrastructure, not a platform. In the IaaS world, the question is whether or not AWS is a Dumb Pipe?
Another way of putting this: where does Snowflake sit in the value chain? Do applications capture the SaaS premium, or does Snowflake?
They have challengers squeezing on both sides: cloud hyperscalers, which have significantly more data lock-in (the rest of the stack), and over-the-top applications, which have great UX and a relationship with the end-user.
1Marc Benioff, CEO and Founder of Salesforce, was previously an executive at Oracle. Benoit Dageville, Thierry Cruanes, and Marcin Żukowski, founders of Snowflake, were senior data architects at Oracle before founding Snowflake. Coincidence?