← Scrum Master Toolbox Podcast: Agile storytelling from the trenches
Scrum Master Toolbox Podcast: Agile storytelling from the trenches
BONUS: Why Embedding Sales with Engineering in Stealth Mode Changed Everything for Snowflake With Chris Degnan
00:26:58
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A
Hey there, agile adventurer, just a quick question.
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What if for the price of a.
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B
Hello everybody. Welcome to this very special bonus episode. Today we're talking about what it really takes to scale go to market from zero to billions. That's right, from zero to billions. And joining me is Chris Degnan, a builder of one of the most iconic revenue engines in enterprise software at Snowflake. And I'm sure many of you have heard that name before. Chris, welcome to the the show.
- [01:37]
C
Vasco, thanks for having me. I'm super excited to be here and super excited to talk about about the journey.
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B
Absolutely. Also because it's a, one would say counterintuitive journey. We'll get to that in a minute. This conversation is grounded in the transformation that Chris describes. Chris and Denise co authors describe in the book make it Snow. The journey from early stage chaos to durable aligned growth forged at Snowflake, an iconic brand in software today. Now one of the most counterintuitive moves that Chris and Denise pulled off is or was embedding sales with engineering while Snowflake was still in stealth. So take us to that moment, Chris. What problem were you trying to solve by putting sales next to engineering so early? One would even say counterintuitively early.
- [02:33]
C
So great question Vasco. So the person I love to take credit for it, but it was ultimately our initial invest investor in Mike Spicer from Sutter Hill Ventures. And one of the things that he was really felt it was important and he said to me coming in to Snowflake is Chris, I don't expect you to sell anything for two years which, which is a little bit weird for a salesperson. But what I really want you to do is get a ton of feedback and get customers to use the product so that when we come out of stealth mode we have this world class product and we have a product that has been tested and we really understand product market fit from that perspective. So that was really the thesis when I joined and I thought, you know, in all full transparency I thought maybe there were more customers than there were because there were zero when I joined and I thought that we would get out as a GA product sooner. And neither one of those came true. So yeah, when I joined we had no customers and then really it was the intention for me to just get customers to try the product, use it for free and break it. And they broke it and they broke it a lot. And to the point where we had to make some material changes to the product before we became came out of stealth mode and we're ready to go, you know, become a generally available product.
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B
That's a beautiful story also because it tackles one of the things that most people are afraid of, showing an early product to customers. In fact you were hired to do exactly that. Now I'm sure that didn't feel easy or problem free or risk free. So how did you tackle that and most importantly, how did you even get the engineers to accept that that was a good idea?
- [04:25]
C
Well, I would say that it again going back to having a strong investor in Mike. He knew that we were going to be competing in the database world. You're competing with the largest companies in the world, whether it's Microsoft, whether it's Amazon, whether it's Google, those are huge companies. And so he knew that we had to have product and then get market share before our competition had product and market share. And given that Amazon was really first to market with their cloud data warehouse called Redshift, he was hyper focused on us, you know, building a company that was, was sustainable. And so you know, going through that and the founders when I walked in I think were like, hey man, I don't know what you're doing here. I'm not sure that this is a good thing because you know, as, as we, as I came in and I started getting customers talking to us, there was a lot of like, hey, can we get our hands on it? And they were super hesitant at first to give, give access to the product, you know, a little bit to your point. And that took some time. Excuse me, that took us some time to get to a point where, you know, we were ready to give the, you know, just have companies run their business off of it and but it helped me shape are thinking around what the ideal customer profile is, or ICP as we call it. And that was really helpful and it gave me some time. And it's counterintuitive too to not think about revenue for two years. So there's a lot of startups, a lot of founders, a lot of venture capitalists think that hey man, you've got to show revenue right away. And that was something that Mike Spizer was like, hey, that doesn't matter. What matters is that we have a product that people cannot live without and that's what your job is to make happen. And that's kind of how I started building the go to market machine.
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B
Yeah. And I think that at this point it may be important to detail a little bit more. What do you, Chris, mean when you say go to market?
- [06:24]
C
Go to market is sales. I mean it's sales and marketing. I mean that's pretty much it is. You're trying to build an engine that is a sales team to go out and get customers. Now for some companies, they start off with a PLG or product led growth product that they put out there and people sign up for free. And then there's companies that are like Snowflake, which we were just an enterprise focused sales team that was just me and then eventually the sales team that I built out that went out and prospected to these customers. So, so we, we focused on just, you know, introducing Snowflake when we had no website and we had no, I couldn't, I had to stealth mode on my, on my LinkedIn profile even. And we went out and talked about the theory of what we were building and then that theory became real as customers tried it and we learned a lot. But the go to market engine was really about getting customers to use the product and then eventually sell them and drive revenue.
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B
And getting customers to use the product is one of the things we talk a lot about in the agile world. Get that feedback early, get the understanding of the customer need in a much more detailed understanding so that you can react to it. Now you said that go to market is sales and marketing, but in many organizations sales and marketing are actually different organizations. In the book though, make it snow book, you make a bold claim. You say alignment between sales and marketing isn't only a nice to have, it's existential. So when that alignment is real, what actually changes in the day to day decisions? Can you share some like concrete moments or story where the potential misalignment would have broken Snowflake's trajectory?
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C
Well, yeah, I mean, in full transparency. I think it started off not so great in that, like before Denise arrived. So I was at Snowflake for two years, maybe even, maybe even three years before Denise showed up. I was our demand generation team. We didn't really have a demand generation team, but as we started to hire people, I would get into arguments on the definition of what a marketing qualified lead is. Mql, we don't need to go into depth on this, but I would get sideways with people about it. And then over time, when Denise came in, you know, she said to me, hey, listen, I'm no longer gonna talk to you about marketing qualified leads. Ultimately, she cares about what those are, how many they're, how many are coming in. But she's like, I want to talk about quality qualified meetings for your sales team. And that's how I'm going to judge the success of the marketing team. And that was great. And then on top of that, like, there's a top level metric that she shared with me was if we're not driving revenue, if the revenue is not growing, then how the hell are we going to be successful? So ultimately, like, revenue was king. And I think she came in with that attitude. So whenever there was an issue with, you know, whether or not we weren't we're getting enough qualified meetings or whether or not we were hitting our revenue goals, Denise and I would share with each other the challenges that we had. And I think that was the key element of our partnership at building the, the go to market machine at Snowflake. And I think a lot of companies, the founders sometimes think, well, marketing is over here and I need them to generate a bunch of leads. And then I'm going to point to those leads like a scoreboard and tell the sales team, you're not getting to enough of those leads, or hey, marketing, you're not generating enough leads. And a lot of founders who are engineers think that they want to create this, like, friction between sales and marketing. And that's the opposite instinct you should have is you should have a sales and marketing team that are kind of symbiotic, that go to come together and say, hey, ultimately, if we're hitting revenue, that's what matters and that's how we approach things. And that's how we built a really a wonderful partnership over the tenure that we got to work together.
- [10:35]
B
I love that because that partnership also points to this idea of systems thinking, right? It's not what one team versus the other does, but rather what's the output of the whole system. And as part of that, one thing that comes strongly is that neither of you, nor you nor Denise tried to win leadership by authority. You coached your teams instead. So how did your approach to coaching leaders evolve as the company scaled, which of course can bring a lot of pressure?
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C
Well, you know, I think that was one of the nice parts, is because Denise and I had a very tight alignment at the top level of each of our organizations. You know, we both worked for the CEO of the company. We had. I had four different bosses, she had three different bosses at Snowflake. And we were a constant at Snowflake through those CEO transitions. And one of the things that we looked at is said, if there's a problem in one of our organizations, if someone comes with a mentality that is not great for us, we're going to give. We're going to give direct feedback to those people and to Denise. So if, for example, I hired somebody that, that was not respectful to her team, you come to me and say, Chris, you've got a problem and you've got to fix it. And I wouldn't just go and fire someone like, you know, willy nilly, but if there was someone that was not doing a good job or being disrespectful to her team, I would go and investigate that and fix that. And the same was true on the marketing side. There are you. There are multiple situations where either one of us have hired very senior people that didn't fit in very well into our culture. And that was really important to us to have something that we didn't want to have. This animosity between sales and marketing, we wanted to have a partnership, and that was really stemmed from our partnership. And then we made sure that we held everyone accountable within each of our organizations to have the same thing.
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B
Now talking about that partnership now, you try to create a culture through those attitudes and those coaching opportunities. But when a company is growing as fast as Snowflake did, usually culture breaks before the systems break. So looking back, which early cultural behaviors do you think scaled well and which ones did you have to intentionally redesign as the company moved from dozens to thousands of people?
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C
I think it's actually probably the same answer for both. So I'm very much a velocity salesperson. So what that means is I put a hyper focus on new customer logos, so acquiring new logos. And so we thought the way that both Denise and I thought about things was in terms of new logo acquisition. And it goes to the macro statement from our investor of saying, hey, get market share before your competition gets product. And so we, when we came out of stealth mode, we knew we had a very, a much better product than anything else on the market. And so then it was on us to go build a sales and marketing machine to go and get as many customers as possible. So, so what we focused on was this new logo acquisition. And I really, that's all we really talked a lot about because we knew we had a very high net retention rate, meaning that customers who bought initially would buy again in 6, 9, 12 months, a lot more. So it was all about landing customers. And, and so when we were building the company, we centered around that and that was, that was amazing. And that worked really well. I think a mistake we made is when we got ready to go public is we took our foot off the gas on the new logo acquisition because there was this perception that not at all new log are equal and that turned out to not be true. New logos mattered tremendously. And so as I was leaving Snowflake and under the guide of Sridhar Ramaswamy, who's the current CEO of Snowflake, we redesigned the sales team again to go reinvigorate that new logo acquisition machine. And that's working quite well for Snowflake now. So that reorganization that we did in my last year, there was something that was really needed and something that we, that was our kind of origins of the sales Org. And then we forgot about it, got, you know, dumb and lazy kind of thing. And then, and then we kind of went on and decided in a, you know, hey, we're going to go, you know, get a little bit more fit and figure out how to go get the new logos again. And that's what we did. And that works really well.
- [15:22]
B
This reminds me that success is never a good advisor about the future, right? Like, it's when you fail that you really learn and then you get your act together again and, and you reinvest in the things that worked or you come up with other ideas, depending on the context, but then you try to become better. And one of the things that you guys did is Snowflake could have positioned itself as a massive platform, which it is much earlier, but it didn't. So how did you decide to keep the message narrow versus when to maybe focus more on the platform story? What advice would you have for. For founders and tech people out there who feel the pressure to sound, quote unquote, bigger than they really are?
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C
So, so we looked at it and this was part of the sale process for me of joining Snowflake. Prior to Snowflake I had worked at a soft a security software for a year and a half that got bought by my old employer at emc. And it was in the identity and access management space. That space, the company that I was working for was a market leader, but that market was about a billion dollars a year spent. Okay, so not, not a big market. And then when I joined Snowflake, the market that, that was at least available to us was for the enterprise data warehousing market. That was a 10 to $12 billion annual market growing at like 30% year over year. And, and there was about 5 to 7,000 enterprise customers. So, so the difference is like a billion dollar market versus a 10 to 12 billion dollar market. That means you're going and selling to existing budgets. And selling to existing budgets is incredibly important because you know, if you look at large enterprises and you're selling a large enterprises, they go through annual planning processes. They go through like, hey, this is how much revenue we have to hit. This is how much money we can spend. And so, you know, if you're coming in with an unbudgeted, you know, line item, you have to then take money from something that they've already budgeted for. And so, so that was always hard in my previous job. But at Snowflake, because we knew that customers were spending that much money in the enterprise data warehousing space, I knew I could access existing budget. That meant instead of having a sales cycle of nine to 18 months, I had a sales cycle of, you know, anywhere from three to six months, which was a big difference. Right. And so that, that became incredibly important so to founders out there. Eventually. I know you want to be a platform, right? I'm sure everyone wants to be a platform. And Snowflake certainly had had an issue because we were so good at, at calling ourselves the enterprise data warehouse. The cloud Enterprise data warehouse. That's how our competition tried to then basically corner us and say, hey, they're great, they're a cute data warehouse because we're better than everyone else in the market, but here's how we're better for everything else, so just leave stuff in the corner kind of thing. And so we had to then work our way out of being just the data warehouse, which is a great problem to have, meaning you've gone and you've done a really good job of getting market share in a very large market, which we did. And then we had to then stretch our wings out and go after more use cases and build out our technology to support the data cloud and all this other stuff, but I think having a targeted market when you're initially launching the company, that people are spending money on a product and makes it easier for your sales team. That's what I'd say.
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B
And actually that brings me nicely to the next question, which is this idea of recognizing market and how the technology is evolving and bringing those two together. Now many of the people in our audience, they are mostly from tech, but they see opportunities and they don't know maybe how to bring them up with the sales or the marketing team. They don't know how to express the value. What are some of the key lessons you've learned during that Snowflake story about how to allow and help technology people to understand the potential and the value that could be created in the market and then bring those two together?
- [19:32]
C
I mean, I think that the hardest part for us, like when we're building the company, we were all of a sudden like everyone had been used to buying a fixed resources because this is back in 2013, 2014, 2015, where the cloud was still, you know, Amazon was certainly great, but it wasn't what it is today. And I think there was still this, this mindset from a lot of CIOs that thought that they would leave data in their data centers. And so, and so we, we would go in and say, hey, we have this consumption based product that is not a fixed amount of CPUs and explaining to a procurement person, an illegal person who has a fixed budget saying hey, go out and use this product that is, that is variable in usage. You know, I would liken it to, you know, buying a cell phone plan that, that you know, you go up and down and it wasn't a fixed amount of money every month. And so that was, that was certainly very interesting of, of explaining a consumption model and selling a consumption model to people that tried to force us and tried to really force us into, you know, selling in the old way of saying, hey, we want just a fixed budget. And, and we knew that we couldn't do that because underlying cost of goods was Amazon and Amazon is elastic architecture. So that elastic architecture allowed customers to do things so differently than they had ever done in, in previous worlds. Like you, typically you would load data on the weekends and then you would let your analysts look at that data during the week and you wouldn't load data during the week because you wouldn't want to disrupt the, the system. And we, we, we changed that dynamic in a material way. You could, you could because we had this like different architecture and elastic Architecture. We, we had customers that would spin up a thousand servers for like four hours, load a bunch of data. All the while their users were, were doing analytics against that same data set and they were not impacted. There was no performance impact. So those kind of things, it was, it was people first of all didn't believe us. There was a very much a, like a mindset that like this isn't real. So I had to then get customers to, to try the product. And, and we had to, I always would say like don't believe anything I say. Try it. And we would set up proof of concepts of people to try it or pilots for people to try it. But that was hard and that was fun. At the same time, that was some of the fun things that we did.
- [21:54]
B
And there's a lot of other very interesting stories in the book. The book is make it Snow. Was it From Millions to Billions? That's the subtitle. How did you come up with that subtitle?
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C
So, so we had an investor who was San Francisco 49er football player. And he came in one day and he's a super nice guy and he said to us one day I was explaining to him how the business is going really well and he texts me, he says, hey Chris, make it snow or you're making it snow. And so we kicked around making it snow because our stock ticker on the New York Stock Exchange is snow. Uh, and so I, you know, we're like, hey, the, everything that, that has that snowflake, whether it's a conference room, it might be a ski mountain, but different products, all the products are snow something. So it's, it, you know, it was just very, you know, on brand and that. I'll give 100% credit to Denise on that. I, I, you know, luckily she's a world class marketer and I didn't choose the name but, and she, she said this is, this is going to work. And so I think that's, that's how, how we instead of making it rain and that's a thing that people use in, in, in sales, hey, you're making it rain money. We're making it snow. Right? And so that was the same same thing.
- [23:21]
B
So make it snow from zero to billion. How Snowflake scaled its grow go to market organization and hyper growth and coaching and leadership. Lots of lessons in the book. But Chris, if people want to know more about you and the work that you're doing, where should they go now?
- [23:39]
C
Well, we'll certainly makeitsnow book.com that you could go to that and buy the book on Amazon or Barnes and Nobles or something like that and then certainly follow me on LinkedIn. I am currently an advisor to a bunch of different startups and I help them. I really focus my energy on early stage startups that haven't built go to market and there are early founders that want to do that. That's what I genuinely enjoy. That's how I spend my energy of helping early stage startups build their organizations. And then I also help out one of the venture firms that invested in Snowflake early on in the iconic venture team that led our Series D round.
- [24:25]
B
Absolutely. So makeitsnow.com, the book is makeitsnow available on your usual book outlets. Chris, it's been a pleasure. Thank you very much for joining us and for being so generous with your time and your knowledge.
- [24:38]
C
Pascal, thank you so much for having me. It was great to talk to you.
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A
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