20VC: Why Model Providers Will Kill Many Startups Moving into the Application Layer | Why Deepseek is not a Threat to OpenAI & Why OpenAI Beats Anthropic | Apps vs Models vs Infrastructure: Where is Value in AI with Sridhar Ramaswamy, Snowflake CEO

26:29It is hard to create a data product by copying. You have to keep innovating. Obviously, this is like Databricks has come up in the last five years as a very credible player in the data space. You know, more good as to them. But there are things that we have Snowflake are very proud of and very different from how Databricks operates. We need to continue to innovate and be up there, but do money doesn't buy you amazing foundation models doesn't buy you snowflake. My question on Nvidia was one side of that. The other side you mentioned was Databricks and I spoke to friends, four members, investors and instead the essentially Databricks might be a head and AI I work with with Mosaic, with MLflow, direct model hosting.

27:12How do you think about that? Do you think snowflakes behind in that respect? So we should separate out machine learning from AI. I joke to people that all of the machine learning people branded themselves as classic AI. Look, they were first to market. That was their sweet spot. And they've been good at it for a while. We were very much in catch up for. But AI is a much younger field. Don't really exist. Let's call it pre -chat GPT. there, I feel incredibly confident that you're not only cutting edge, but ahead of them on a number of fronts. We have thought of both methodically but very quickly, made AI into a reality at Snowflake in everything from how do you do data transformations, data engineering better, to how do you make sense of unstructured data, and how do you get reliably to structured data, and then we are putting all of this into this agentic framework called snowflake intelligence that is coming out.

28:08Then it comes to AI, I feel very good about where snowflake is. That isn't an issue. I have worked to do in terms of getting the word out there, getting more and more customers. We have amazing, marquee names, a ton of them that are using snowflake AI in production. I feel good about where we are on that side. And it's a fast moving space. The thing that I pride myself on and the AI team, Many of whom I've worked with for a lot of time is in fast -moving spaces. My attitude is I can run as fast as anyone else. Bring it. I love you, Shreddaw. I'm like, okay, I'm not going to fight. Like, don't worry, I'm not going to bring it.

28:46That was fantastic. You kind of remind me of Nick from Ravallude, which is like, when you're talking, you're like, you know what? I don't want to fight you. You do you. I'm going to support you. I'm a believer, dude. Keep going. So, yes, I completely get you. Can I ask which structure do you think AIDS innovation better and AIDS winning better? Being a super late stage private today, like Databricks, or being a public company, likes snowflake. Innovation is not an option. It's just something that we have to do. Do I have more constraints than Databricks being private? Absolutely. I mean, it's very clear that they're buying a bunch of business, that they don't have to worry about things like pre -cashable.

29:31They have doubled the number of sales people that we have. But as I also tell people, you know, it's easy to lose a lot of money. It's very easy to be uncalibrated about spending money. You should be careful what you wish for. Do we operate under constraints? Absolutely. But that's what innovation is about. is how can you drive in the face of constraints? And you know this, in some ways like deep seek is yet another illustration that, you know, having rich uncles is not always a good thing. Why have the constraints helped you? And why have they hurt you? With AI, for example, we said, we were not going to be unreasonable about how large the team is.

30:11I didn't ask for a blind chef. We said, we know what we need to do. We need to have clarity around the things that we need to build and we need to be very good at doing it. With a modest investment, we were able to very quickly catch up in AI. I think having those constraints drives clarity. You're not trying to do everything. And you're not also trying to chase every possible, unscalable, you know, kind of kind of business. Constraints can be problematic. There are dramatic market reactions, for example, because people can over -interpret changes that happen quarter to quarter in numbers. and I would say in some ways, like the snowflake stock journey, the ups and the downs and then the ups, or a reflection of the scrutiny that a public company faces.

30:58In an ideal world, I am able to tell my team and investors, we got discovered, just don't worry about it, everything will be great, absolutely have to worry about it, because people are making mortgages based on what their stock is worth. And so you get into externalities that are difficult to manage. It raises the bar on operating responsibly, that's sort of what we had to learn quickly last year. But that's an example of something where being a public company, you don't have to worry about dramatic reactions because they can end up having a bunch of second -order consequences. If you could, would you rather take the company private and remove the constraints?

31:35I think the visibility is a good thing. You don't get to bullshit anymore. It provides for liquidity. Being able to grade yourself, I think, is an important part. It is very easy to fool yourself into thinking that things are going to be great, and you don't actually get any feedback. We are in the world of almighty dollars. They are well calibrated. You know, either you make money or you don't. Either there's free cash flow or there's not. I think that dose of reality is actually helpful. Even if you look at the computer that we talked about for a few months, it was all about like amazing AI is going through the roof.

32:09I haven't heard much from them about AI recently, all of a sudden. Amazing. It's equal going through the roof. It feels like a bit of three card multi to me. And I think being a public company forces you to be open and show your work all along the way. I want to touch on two areas, which is kind of enterprise adoption of AI first. You know, I was sitting with a bunch of CEOs at a summit the other day as painful as they can be as we both know. And they were like, Hey, we're still waiting on new fuckers from technology land to actually deliver much ROI. And my question to you is, do you think we've seen like excitement and then we're going to plateau like we did with self -driving?

32:46Or will we actually just see the exponential acceleration of adoption within enterprise? And it will bluntly be a very smooth hockey stick up into the right. I think it is going to be gentler in terms of just growth. On the other hand, I can very confidently tell you AI is creating value today and it'll continue to create end -during value. Many, many things that used to be just crazy hard for you and me to deal with are easier. You know that, I know that. And if some CEO is telling you that they're seeing no value from AI, I'd be like, I'm not sure you know a whole lot. So let's get into the examples, right?

33:24The obvious easy ones. Okay, I was at Davos, I did 30 meetings, I absolutely used things like dictation and transcribing tools to write notes for myself. I also hand wrote a whole lot of notes. And you know, somebody on my team was like, Oh, dude, 25 pages, really? I don't want to read this. How about you give me a summary? I just take it. I plan call of my notes into cloud. And I go like, I want a one -line summary per meeting. Outcomes the beautiful concise summary. It's magical. Similarly, we have internal chatbots that have access to structured data. And they can handle questions that you have to like click around in dashboards and like you need to provide a lot of context again In Curb of value Davos is an interesting collection of wilds biggest sea.

34:10Yeah Was there any enduring takeaways for you from the sentiment that you saw at Davos? I mean first of all I took a very utilitarian view of Davos and less into you know The bigger thing this was my first time and I was terrified by the idea of spending five days away from work especially with like board and earnings coming up. But it's well worth it. Amazing number of meetings, amazing number of key folks from companies. You know the message that I heard from CEOs was much more of that of help us create utility. Tell us what is possible. And when I talk to them, both of what we can do with unstructured data in terms of being able to create a chatbot on a document corpus quickly, our structured data, they got it.

34:50But then when I tell them, now you get to mix and match them and create agentic platforms where you can access a whole lot of related information in one place. People are excited. When I talk to them about here is how you can automate parts of underwriting by bringing together all of the structured and unstructured information that you need to have in order to underwrite insurance for a building. People are like, oh my god, that is amazing. You're correct. We need to continue to be focused on utility, but I didn't face a lot of like rampant skepticism about who he Because I just rip out my phone and show them here are the five stupid and fun things I did yesterday with AI In terms of like innovation speeds It feels like we've never seen incumbents innovate at the speed that they are and friends with Scott Balsky for example Who obviously former C .P .O.

35:40to doby just recently everyone's moved so much quicker the whole point of tact I was like, incumbence is super slow and shit. They're not a slow and shit anymore. Yes. What's happened? Have you ever seen incumbence move this fast? I think it is three cycles of disruption. All of us remember our history. We all know no one wants to be the person that is going to be known for the IBM deal with Microsoft. People understand how much of a dramatic shift that was and how companies like Deck, remember Deck, disappeared, man. We took over SGI's buildings. They were the door links. The first buildings at Google took over in Mountain View was the SGI Plex with that funky purple.

36:24And I used to tell everyone that joined my team for like five years after that. You know, SGI built these buildings and then I would look at them to see if they got it. We learned from that. But I would actually say that like mobile was a big platform shift in which the incumbents did pretty well. Mark went after mobile web for Facebook and then said, forget it, I'm doing an app. Same with Google. They took search, moved it over. I led my team for five terrifying years when we took mobile monetization from being 10 % of desktop to being 100%. I would actually say even in the previous round, all of the tech players got pretty smart.

37:01Amazon didn't get disrupted because of mobile. Mobile did produce truly new things like Uber and Lyft, but I would say that generation of companies had already smarted up to the world that platform disruptions where they're going to be a pretty big deal. And this is why you see these companies do like these crazy investments into the future because they see something and they have the money to be able to do it. This is why Facebook became meta. And you know what? Mark doesn't care that augmented reality fell flat on its face. He was like, bring it. Okay. I'm on to AI now. I think that is companies truly learning from the past and innovating hard.

37:37Should I, where does this go? I hope you're my friend. Please advise me. I'm seeing you mark and invest $65 billion in data centers. You're seeing the $500 billion announcement of Stargate. I know there's equity in debt and it's not such a straightforward deal. But we've never seen money thrown at anything like this. This is the kind of arms race of AI. Why? What is it end? With a bubble bursting, as all bubbles do, just like this super funny conversation and insightful conversation that Ben Thompson from Stratekary had with Nat Friedman, where they talk about, is this a good bubble, like the Telcom bubble in the 90s that eventually laid fiber for the whole world that Google and Facebook and you and I took advantage off or is this the dumber web and stuff that just like burnt money in the early 2000s trying to get you groceries and we had to wait 15 years for Instacart to then show up.

38:37Let's face it, you and I don't know. And if the bulk of those investments are going into things like power and buildings, you can say like, okay, it's created surplus for the world. Something good is going to come out of it. On the other hand, it goes into crazily depreciating hardware that is value disappearing in a poof. I think it's early, but back to your point about what do we do? There's still scope for innovation. OpenAI cannot possibly do every workflow that there is. And what you and I need to do is what are the things that are still ripe for disruption? Where is value being created? I think Harvey is a great company.

39:16I don't think it's going to get disrupted by OpenAI. And so I think finding niches like that and investing in them is kind of our formula for success. Money doesn't always buy you stuff. It absolutely doesn't. Speaking of money doesn't always buy you stuff. The street is saying, the thing with Snowflake is where it's gross. To what extent can you buy gross? And how do you think about an M &A strategy going forward to add the extra 10 points of growth to get the street to where they want to be? First of all, three and a half billion going on 30. sounds pretty cool to me. It's not a bad place to start from.

39:50But what we have done, and I said this in our last earnings, is we have significantly expanded the aperture of what Snowflake is taking on. We played at the gold layer. We said you do analytics with Snowflake, and all by the way, we do a little bit of machine learning. We have gone from that to we will help you with data ingestion. We want to be a key part of how you set up data engineering. Absolutely analytics and machine learning. End user access with AI, both in terms of tools that we create, but platforms like Snowflake Intelligence, the aperture just got a whole lot wider. We have a team that is not only driving things like how do we get even more of the analytics market, which is our sweet spot, but going and disrupting others in each of the other very large segments that they're on in the data space.

40:38Absolutely. We will continue to look at companies and inorganic kind of unrelated acquisition strategy is not something that I'm excited about. I think it will be a disruption. Snowflake is a product led innovation company. We are not a PE shop. Now this is nothing wrong with being a PE shop. It's just a different skill. That's not us. And so a lot of our growth has to be driven by product innovation. Will we do smart acquisitions here and there? snowflake spent some $150 million for a new one. I think it's more than paid for itself. Those are the kinds of things to be doing. What line of revenue is small or insignificant staphous snowflake that in seven to ten years will be a dominant line of revenue that we should consider?

41:26Starting with AI, 100%. I think it's going to be a big deal. I think it offers the opportunity for disrupting BI as we know it today, more of a director consumer. I actually would say the thing that can turbocharge growth for Snowflake is people building on Snowflake. We have the likes of FACSET of JPMC, of BlackRock, FICE SERV, Zeamons. They're all building data applications on top of Snowflake and we let them do some pretty nifty things when it comes to how they can bring together both their own data and data from their customers in order to create these data applications. I would say that is small today, but I fully expect that that will be a pretty massive overall revenue opportunity for Snowflake.

42:13And the really cool thing about this is, you go from being an expense item to actually being part of the top line of these companies, much better partnership than I'm excited you can imagine. I want to be able to say, we make money, even you make money. If we expand that to kind of the model landscape, look at it and I go, I don't know where this is in five to seven years Do we have a world of many models specialized and verticalized? What do we have a world of fewer models generalized and very large? I'm just intrigued especially with the Google experience that you have it such a unique perspective I remember reading what like historically where people thought such would actually be verticalized to the certain point and they did not anticipate these huge multi behemoths, really owning it all.

42:57I think this is a really good question, and unfortunately my answer is going to be predictorally and predict often. If we were to deconstruct Google search and why it came to dominate, first and foremost, Google did a bunch of deals to basically become the default search engine with the whole pile of players, Yahoo, AOL, and then soon people like Firefox, and then all the PC manufacturers was a very deliberate strategy to be the center of search. Microsoft was asleep at the wheel for a lot of those early years. That's kind of how Google got started. Organic marketing was a part of it, but honestly it was a small part of it.

43:36It was a gravitational pull that enabled them to then go knock out every other vertical that there was. If you'll amuse you to know that live .com, which is a predecessor to Bing, had the better image search. They had the best image search. Google did not. But with this thing called Universal Search, basically Google said, oh, you're looking for images. We will put them right on the main search page. You don't need to go anywhere. That basically was the vector by which Google conquered pretty much every other vertical that there was whether it is shopping or videos or maps. So that is how by that central sticky property that is how Google conquered the consumer world.

44:23Now if you look in the world of AI, it isn't obvious to me, especially in the enterprise that there is a single entry point. On the consumer side, I know you disagree. I think chat GPT is getting to be that entry point. And so if I are a extent that there are variations in models and specializations, I think that will include the incumbent. And the incumbent 100 % is chat GPT and OpenAI. I think entry points for other models are just fragmented. At some point I used to worry about, you know, oh my god, is there going to be one single enterprise entry point that is going to conquer them all? I still worry about it.

45:05I think there is still that kind of opportunity, but on the enterprise side I absolutely see there being all kinds of specializations because so far in whatever the last 50 years It's not the case that there's been an equivalent of Google search. I totally agree and I also love the kind of historical analysis There on Google's distribution strategy with the partnerships. I didn't know that to such extent. Oh all of us think Google Immaculate consumption one fine day all of us decide we should use Google Which was the most needle moving which partnership would you say had the largest impact on Google's distribution ability?

45:41Yahoo and a well earlier those were the entry points. A well didn't know how to do search Yahoo didn't think search was important does being first really matter 100 % if I remember correctly we paid AOL, more money than we made. This is like 100 plus percent ref share. Why those were the most valuable users then? The Google founders were amazing. They made a bunch of just incredibly smart business decisions. Yes, it was a great product, but people underestimate the part of business. When you go back to those days and you reflect on them, is there anything now where you sit as CEO of an incredible three and a half billion dollar revenue generating public company?

46:21And you think back and go, So I can take that. I can learn my lesson here. What are those? Relentlessness. I still remember every discussion with Larian Sarge used to be exhausting. They never ended. They just argued with every single topic. But you know, good stuff came out of that. You examined every possible thing and you pushed yourself really hard. I also joke to people that by the time I became head of ads, things like working with the legal team was a whole lot easier because they had been battered around by Larry and Sergei just pushing the envelope with things like Google Books or YouTube, which was a legal nightmare early on.

46:59That is my lifelong takeaway, which is pressing hard, being very first principles. Remember the Dutch auction? What other companies done the Dutch auction? And for IPOs, they did it. Obviously it's Google, but still, I think just the amount of energy that they brought into to every discussion and the relentlessness of driving to the truth, to the right business outcome is absolutely something that I carry forward to this day. I can talk to you all day. I'd love to move into a quick fire. So I say a short statement, you give me your immediate thoughts. Does it sound okay? Sounds good. How do you feel about founder mode?

47:36You've also been founder of NEVER. How do you feel about found a mode. I think it's just a shortcut for describing effective people. I think anyone can be that. You have a 23 year old and a 25 year old. You have great relationship with them. My brother's just had his first baby. I'm an uncle for the first time. What advice would you give my brother? He's just had his first baby. In my humble opinion, parenting is 90 % presence, 10 % luck you're done. Sounds like that. The book that you want to buy, the cool software, I'm like bullshit. The best gift that you can give to your child is you yourself, just being there.

48:20What do you believe that most around you disbelieve? The possibility of change. What do you mean? I think people just assume that too many things cannot be changed, including in themselves. I think we straightjack it ourselves in terms of what we can do and what the people that are on us can do. I heard a great statement which is the heaviest things in life and not iron or gold, but unmade decisions. What unmade decision do you think about most? I followed my instincts generally. It was crazy for me to come to the valley because I was a successful researcher in Jersey. It was crazy for me to quit my first company, but I was running a team of like 120 people.

48:59I went from that to being a software engineer. I don't have many regrets. I have a wonderful family. and espouse that let me make these crazy decisions. Be more dolls. I'll choose. Sorry against it. There's much closer. Many more friends. I just do stuff, man. And I fall flat on my face very often. I pick myself on walk -on. You can be CEO of any other company for a day. But you'd be CEO of. I love my job. It's no flake. Okay. Looking at your question. Noting this back, okay? I was the favorite brand and why then? I have to admire the order that Benioff brings with Salesforce. It's not just brand, it's a brand in the marketing.

49:39I think is a remarkable human being. Do you think brand and marketing is important for Snowflake today? Yes, absolutely. Too many of our own customers who love Snowflake think of us as like, ah, very good warehouse, I like that. And absolutely, I think we have a work out. What's the hardest thing about being CEO of Snowflake? At the end of the day, you're dealing with people. You want to be a good human being, but you also want your team to succeed, making sure that you're driving while still being a good human being. It's hard thing. It's not something you should ever take lightly. Final one, you're interviewed by a lot of people, you ask questions all day, team members, employees, kids, family, you name it.

50:22Well, a question does no one ask you that you're like, they should ask me that. You know, one interesting question could have been, what are you most proud of? I don't think anyone asked that. What are you most proud of? Probably most proud of being a good dad. Can I ask you, how do you define being a good dad? The thing that my wife and I did was very much that thing around presence and love. We were there when they needed us the most. We set good examples for them. Both of us worked. My wife has never missed a day of work in her 30 -year career. like at one day. So to me it is like setting a good example, being there and helping them become thoughtful independent people.

51:06She'd never missed a day of what does she want a job? I'll hire her. That sounds fantastic, Sherdo. Please. That's great. Oh, the artist night of that is like, you have a cold? Really? You can go to school. It's all fine. Really? You look fine. Not fever, not a fever. Uh, uh, so don't listen, I so appreciate you doing this, I so appreciate our friendship. Thank you so much for being so open and I love doing this. Thank you, honey, this was a fun, fun, fun conversation. Thank you. I mean, that was such a fun show to do with Shred Har. He's been a fantastic friend for a long time now. If you want to watch the episode, you can of course find it on YouTube by searching for 20VC, that's 20VC.

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