When an Innovation Ecosystem Makes Partners out of Competitors

As the tools for data storage and analysis evolve, there is increasing advantage in shifting from traditional on-premises data warehouses to the cloud environment. On this episode of Mastering Innovation on Sirius XM Channel 111, Business Radio Powered by The Wharton School, guest Bob Muglia, CEO of Snowflake Computing, discussed his experiences managing innovation both in cloud data services and other industries.

Snowflake’s customers not only span sectors typically associated with the cloud, such as entertainment and software as a service, but are expanding to include more traditional companies like banks and manufacturers. To meet these customers’ growing needs, Snowflake aims to innovate in areas such as increasing the capacity of end users on their services. Muglia discussed some key considerations in a company’s growth, such as developing strategic partnerships with competitors.

An excerpt of the interview is transcribed below. Listen to more episodes here.

Transcript

Bob Muglia (CEO, Snowflake Computing)

Saikat Chaudhuri: The world of competition is something we’re very comfortable with nowadays. There are scenarios in which we have to be part of a larger ecosystem or have certain supplier relationships or horizontal ones. In other cases, we actually are competitors, and that’s fine. Everybody sees the value and the rules.

Bob Muglia: That’s exactly right. It’s hard to find relationships these days that don’t have some aspect of competition associated with them. I had that experience, certainly, working at Microsoft for many, many years when I was running the server and tools business, where there were a lot of companies that we worked with very closely as partners that we also, in some dimensions, competed with. Amazon has similar experiences. Amazon’s been a very good partner for us. They’re a great partner. We enjoy working with them, and we do that in many ways, but we also do compete with them pretty much every day of the week, and that’s fairly typical these days.

Chaudhuri: Absolutely. If we turn to a different industry, the airline industry, we love to think about Star Alliance, SkyTeam, Oneworld, and how all the partners get along, do work together, and collaborate obviously; but at the same time, they’ve got their own interests to protect as well, and as long as everybody benefits, that’s okay.

Muglia: Sure. That’s the reality of the world. It’s interesting. This is one of the choices that a company such as Snowflake makes. We’ve chosen to be very partner-centric in the way we work and go to market. We’re working with literally hundreds of partners at this point in time — and some of them very, very deeply — to help our customers. We recognize that we can’t solve all their problems.

Snowflake can provide a critical component. We have what we think is the world’s best database to build on top of, but that’s only one component of the solution. They need tools to do analysis, tools like a Tableau or a Looker, to do analytics and visualize the data. They need tools to get the data into the data warehouse, and they use products like Informatica, Talend, or some of the newer software as a service products that allow you to get data out of your existing applications as easily as possible.

Of course, we wind up working with many, many systems integrators that help to solve the problem for the customer. This is part of the overall solution. We know that when we’re talking to these folks that they’re deploying Redshift, they’re working with other customers on Redshift, and they’re working with other customers on Oracle. That’s okay. That’s the way it’s supposed to be.

Chaudhuri: Like you’re saying, there’s too much to be done, and markets shift too quickly. There are too many opportunities to pursue, we’re resource-constrained, and you can’t do everything yourself, nor might you be good at everything.

Muglia: Truthfully, customers don’t want you to do everything. That’s the other thing. They want to be working with multiple vendors, and they want the ability to have choice associated with their decisions. Having those choices, in some sense, it helps put the customer in control. By working across the industry, we can provide the best portfolio of potential solutions for our customers.

“Truthfully, customers don’t want you to do everything. They want to be working with multiple vendors, and they want the ability to have choice associated with their decisions.” – Bob Muglia

Chaudhuri: Fascinating. Of course, Bob, you have a tremendous amount of experience in managing innovation. You spent time at Microsoft, you had a bit of time at Juniper, and then you went into CEO mode of a startup, Snowflake. I want to draw on your insights, experiences, and lessons. One of the things I want to ask you though, right off the bat, is when it came to Snowflake, the startup was in stealth mode for a long time. I was curious about that: how it impacted your ability to move that firm forward, advance its products, and get funding. What are the advantages and disadvantages of doing something like that?

Muglia: Well, it’s very common for new technology companies in their first years of existence to operate in stealth mode, to operate where they’re keeping what they’re doing relatively private. Snowflake was very much in that mode when I joined it, but not for too long. It was only about five months. We were stealth mode in 2014 after I joined. The company was founded in 2012, and we’d been in stealth mode for almost two years at the time. When you’re in that early stage where you’re building a product, it makes sense to not be broadcasting exactly what you’re doing because you want to get a good lead on anyone else who might choose to enter the market and compete with you. That’s why you go into stealth mode.

What’s challenging, though, is when you start. It’s not hard to get funding when you’re in stealth mode because — this is a separate conversation about getting funding — if you’ve got a good value proposition, being in stealth mode doesn’t hurt you in any way because you have no problem talking to VCs. You can get in and talk to the VCs about what you’re doing, and they may or may not choose to fund you. What is really challenging is when you’re trying to work with customers and start getting your product into trial.

We were in that stage when I joined the company. Our VP of Sales had come onboard about seven months before I did. At the time, he had built a small team. We were doing things like cold-calling customers, and then they would email messages to customers, telling them about what we were doing, saying a little bit more than what we would say on our website. Now, our website basically said, “We are reinventing the database.” We would explain to them a little more that we were building a new type of SQL relational database that ran in the cloud. We would reach out to customers, and some of them were interested. We had a number of very early adopter customers. They came on board, and we were able to penetrate into that even with the cloak of stealth.

Once you get their attention, the fact that you are in stealth means nothing because you can go and tell them everything you want to tell them under an NDA. We were able to get some early customers, but we very quickly transitioned out of stealth as we started to reach out and worked with customers because you really want to tell your story. It’s that transition point where you’re really trying to go reach customers where coming out of stealth makes sense.

Chaudhuri: That’s what I wanted to hone in on. Once you’ve got your first few customers, is that a good time to come out of stealth mode and start publicizing your message a bit more?

Muglia: Generally speaking, I think it is. That’s because you can’t easily grow your customer base without being able to use modern marketing techniques. One of the things that’s been fun for me to watch inside Snowflake, and I’ve really experienced this first-hand, is how much digital marketing has changed over the last 20 years. Marketing used to be an art. It still has an element of art associated with it, but it is very much a science these days about how you curate people, bring them to your website, draw them through your website, get them interested in things, and then ultimately get them into some sort of trial. You can’t do that when you’re in stealth mode, so that’s a good time to do it. What you give up, of course, is you become a little more transparent in what you’re doing. It provides some opportunity for others to potentially follow behind you, which is a risk. That’s the risk.

About Our Guest

Bob Muglia is CEO at Snowflake Computing. He has over 20 years of management and leadership experience. Most recently, Muglia was president of Microsoft’s $16 billion Server and Tools Business, responsible for products such as Windows Server, SQL Server, System Center and Windows Azure. He also led several business groups at Microsoft including Developer Tools, Servers, Office, and Online Services. Following Microsoft, Muglia was EVP of Software and Solutions at Juniper Networks. Bob holds a bachelor’s degree in computer & communication science from the University of Michigan.

Mastering Innovation is live on Thursdays at 4:00 p.m. ET. Listen to more episodes here.

Somina Lee is a Production Assistant for the Mack Institute’s radio show, Mastering Innovation. She is a senior in the Huntsman Program, concentrating in Finance and Marketing & Operations Management at the Wharton School and majoring in International Studies in the College of Arts & Sciences.

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