A banner celebrating Snowflake Inc.’s initial public offering is proudly displayed at the New York Stock Exchange. However, amidst all the excitement, a small paragraph buried on page 280 of Instacart’s IPO filing sparked an unexpected conflict between two unrelated companies.
Frank Slootman, the CEO of Snowflake, serves as a board member for Instacart. Consequently, Instacart is obligated to disclose its business ties to Snowflake. The spending figures disclosed by Instacart initially raised concerns about Snowflake’s performance.
Instacart revealed that it made substantial payments to Snowflake in the years 2020, 2021, and 2022 for utilizing its data warehousing services in the cloud. However, an anticipated decline in spending for 2023 prompted Snowflake rival, Databricks, to seize the opportunity to taunt Snowflake on social media platforms. Databricks employees theorized that the decrease in spending was due to Instacart switching to Databricks’ infrastructure.
Snowflake’s employees swiftly retaliated, asserting that the numbers were being taken out of context and accusing Databricks of constantly trying to portray itself as taking business away from Snowflake. Many of the posts on social media platforms have since been deleted.
In a rather puzzling move, Instacart removed a blog post discussing its migration to Databricks’ technology just as questions surrounding the IPO filing arose. Databricks also took down a case study highlighting Instacart’s use of its technology. While representatives from Instacart, Snowflake, and Databricks declined to comment, it is clear that the rivalry between these companies is fierce and has spilled over onto social media platforms before.
Snowflake had an incredibly successful IPO in 2020, raising over $3 billion and establishing itself as the largest U.S. IPO ever for a business software company. Databricks, though still privately held, is valued highly by venture capitalists, with a valuation of $38 billion in 2021.
Despite the controversy surrounding Instacart’s spending figures, it is important to note that the decline in payments to Snowflake for 2023 is not entirely indicative of the company’s performance. The actual usage of Snowflake’s services by Instacart remained relatively consistent, showing only a slight decrease when analyzed on an annualized basis.
To provide clarity amidst the confusion, Snowflake published a blog post addressing the situation, emphasizing that the decline in spending does not equate to losing business to a competing company. Snowflake stated that it continues to work closely with Instacart to optimize efficiency and that its technology is extensively used by various teams within Instacart.
Fortunately, the IPO process allows for updates to be made, giving Instacart an opportunity to address and clarify the matter with investors.
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