Buyer-Led M&A™ Strategy at Snowflake with Stefan WIlliams

We're back. The third annual M&A Science Fair, October 16th in New York City.

And this is not your typical M and A conference.

Forget the endless panels. Forget the consultants. Forget the sales pitches.

Seriously, no vendors, no consultants, no boring panels.

Instead, this is about collaboration.

It's about connecting with your peers and actually testing your ideas.

You bring your playbooks, your theories, your.

Frameworks, and walk away with techniques you can apply directly to your M and A practice.

That's right, it's practitioner led. Invite only. Limited just 60 people.

And the best part, tickets are only $250. Way better than paying thousands. Just as if through boring conference panels nobody remembers.

October 16, New York City.

Click the link to request Your invite. Spots are going fast.

See you at the science fair. Cheers.

Cheers. Fears.

The buyer led M and A Summit is back. October 30th. Hosting over 1000 corporate development, private equity, everybody on the buy side. You'll hear from the best in M and A from companies like Quadient, SBS, Commerce, iSalt, State Street. These are all leaders who have built repeatable, scalable M and A strategies. You're gonna learn how to prior prioritize deals, execute diligence under pressure, bring integration all the way to the front of your deal process so you can realize synergies faster. Did I mention we're going to do a live MA Science podcast with Keith Crawford, the head of Corp Dev at State Street Capital. Whether you're new to the industry or a serial acquirer, this is an event you don't want to miss. Hope to see you there. Bye. Check it out yourself@dealroom.net summit or look for a link in the descriptions. I'm Kisam Patel and you're listening to M and A Science, where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies and what actually happened during M and A deals. Welcome to the M and A Science Podcast. This podcast is part of a mission to rethink how M and A has done the old school seller led approach. Instead, buyer led M and A is all about strategy, alignment and efficiency. Putting value creation at the center of every deal. And let's be real, it's not just about closing the deal. It's about making it successful. We uncover what truly works in M and A by learning directly from the best. I'm your host, Kisan Patel, Founder and CEO of Deal Room and Chief Scientist at M and A Science. Joining me today is Stefan Williams, Vice President of Corporate Development and Snowflake Ventures at Snowflake, traded on NYSE Under Snow, Stephane leads Snowflake's acquisition strategy and oversees its corporate venture capital and startup accelerator programs. Stefan is at the forefront of how Snowflake scales through smart M and A and strategic investments, giving us a rare look at how a data giant stays ahead in a competitive AI driven world. Today we'll explore how Snowflake uses a disciplined cultural first approach to acquisitions when it prefers strategic investments over buyouts. And how its corporate development team aligns venture bets, startup partnerships and M and A to support growth. Stefan, how are you doing today?

I'm good. Thanks for having me. Welcome to Snowflake.

Thanks for hosting me. I love the campus. This is awesome.

It's great. Yeah. New digs. We moved in around three or so months ago. April time frame.

I appreciate you taking the time from doing deals to have a conversation with me.

Thank you for having me kick things.

Off a little bit about your background.

So I moved to the US in 2011. I started at a boutique investment bank in the Bay Area focused on IT service software companies. Quickly realized I wanted to be in house and came across company called Genesis which is in the contact center customer experience management base. Did a big deal with them, Did a handful of deals. The biggest and most notable was with a company called Interactive Intelligence which is a public company. At the time it was around one and a half billion. Back in 2015. Quickly realized obviously SaaS was a real thing and as I moved from a company that was migrating from an On Prem to SaaS environment, SaaS was obviously clearly a motion and a deployment model that was gaining a lot of traction when I was doing my research. ServiceNow was a company that started to get onto my radar. Joined ServiceNow in 2016. That's where I met Mike Scarpelli and Frank Sluwman who both came to Snowflake eventually. But where I first met them I was part of the corporate development team there. We did a handful of acquisitions. We stood up a venture CVC corporate capital arm where we invested in companies that were interesting to ServiceNow at the time. And then in 2019 when Frank Slootman came out of retirement and Mike Scarpelli moved from ServiceNow to Snowflake, if there was ever an opportunity to go to another rocket ship, you follow those two. Yeah. And I was lucky enough to get the opportunity to come and join Mike here at Snowflake where my charter was to stand up a corp dev team. We were at a point in time when it was pre ipo. The company was obviously getting a lot of traction and there was no rigor or process around inbounds. Companies often come to you and talk through strategic alternatives and there was really no one at the company that had any kind of experience and a way to navigate those waters. And so I was brought in to be corp dev number one and hire number one and build out that process.

Build it out from scratch.

From scratch, yeah.

So startup banking got it inside with corporate development at Genesis and went to the rapidly growing company that's a service now. Didn't have enough of that. You did it again and started from scratch here at Snowflake?

Yeah.

Originally from uk?

Yes and no. Born in San Francisco, raised in the uk.

Oh, interesting.

So, yeah, I'm one of the only local San Franciscans that you will meet because most people come from other places. I was actually born there.

I wanted to ask you about culture because I feel like I have to. Snowflake is very recognized for unique culture. If anybody hasn't read the book Amp it up by their CEO Frank Slootman, can we talk a little bit about what makes the culture at Snowflake unique?

It's definitely evolved over time. I came over when Frank took the reins. I know that Bob Muglia beforehand had a different way of running the company, but Frank's an absolute force, an operator that can execute. Snowflake had this incredible technology bringing Franking, which brought this muscle of clarity, the ability to execute, move fast and really enable the selling motion that Snowflake had on top of this incredible platform. Over the last year and a half, Sridhar has been at the helm and as an engineer by trade, has really accelerated the velocity of which we're able to develop product. He's leading from the top in terms of he acts as if, as he expects others to act. He puts in 110% every single day and expects that from everyone that he works with to operate a level of excellence. It's an imperative in this AI driven world that we're in. The world is moving so quickly. Technology is moving faster than it ever has with things like coding agents and productivity tools that are available to us now. And the world's moving faster and we need to continue to move quickly to stay on top.

Does that mesh well with your UK upbringing?

It's been 15 years in the Bay Area now, so you've adopted, you know, I'm a sports guy at heart. I love competition. I love being in the heat of those moments. And we're in a battle right now. There' this incredible opportunity to be kind of an enduring business. We've Got a seat at the table where there's a real opportunity to go and get that as a competitor. I know many folks in the company are highly competitive and we want to win.

The word that stuck out was excellence. I actually had a friend that has been at Snowflake for a number of years with Frank and the predecessor and has seen a dramatic shift in terms of the impact leadership makes on the organization. It has some very interesting things. Way to describing it. One phrase I heard was it feels like you're going to get fired any day. But it was attributed to the greatest experience and professional development that person's ever had that brought the best out of them. I wanted to bring that up because I think it's going to come up in this interview. The thing I'm really curious about is if you look at an organization that is committed to that excellence, it drives growth. I mean, ultimately that's what the goal is, to be competitive and win. And if you experience that in these last two organizations, that's why I'm really curious because I think there's very few organizations that can actually pull off that high growth velocity organically and then still manage acquisitions with it. That's where I'm really curious to learn from you, is how do you do that? If we want to jump right into it, yeah.

So how do you think about M and A in a high growth company?

Exactly.

There's a flywheel that's moving in the early days. There's a muscle that needs to be built around M and A. It happened at ServiceNow and it's happened at Snowflake, where you start to look at ways in which you're able to accelerate the velocity of which that firewall moves. So from a product and technology perspective, what are the palatable acquisitions? Small groups of people, teams and IP that you can bring into the company that can accelerate the velocity of which you're able to build product. That's the case, at least within my experiences. M and A is a muscle that needs to be built. You can go as a deal person, go in and execute a deal, but the reality is the company needs to digest and make that successful. And it's not just me doing the deal. There's a team around us that are working through the product integration, the people integration, the technology integration. Starting small is something that we've always done. ServiceNow is exactly the same case. We started small and when I say small, it's sub 100, even sub 50 people. Bringing on those teams, creating success, proving out the thesis and the rationale measuring success against what you thought you were going to do and using that as a way to think about expanding that muscle into new and interesting areas.

So the main driver sounds like is to build product velocity at the beginning.

So that continues. Right. And I think when you're growing so fast, m and a talk about this muscle. But it takes a lot of energy to integrate. There's senior people in the company that need to make sure that they're directly responsible and sponsors of the acquisition. It takes a lot of time them to go and cross pollinate, make sure that cultural values are kept together, not that they're not ostracized, that we're setting them up for success. Starting small has always been helpful, but when you're growing at 100% or 50 plus percent, there's less of a need to go and think about a new growth engine. It's more a case of holy crap, we've got to hold on to this. This rocket ship is growing so fast. I remember Snowflake in the early days it was growing 100 plus percent year on year. And you're like, wow, let's just keep the car on the road and keep going forward. And less of a need of where do we find more growth? It's more how do we harness the existing growth that we have? And over time, as obviously the base gets bigger, growth rates come down, you start to see a little bit more appetite on a little bit bigger and a little bit bigger. And a pin up of that is Salesforce. They've done a bunch of acquisitions trying to hold onto that 20% year on year growth. As you mature as a business, the appetite to do more and bigger acquisitions definitely increases. And having that muscle being built over a number of times of doing smaller acquisitions and iterating on that and perfecting that process and allowing the business to catch up on. What does it mean to integrate a company? What does it mean to bring these people on board to the mission and make sure they sign up for this charter and show success? Like that's something you have to do over a number of different deals.

You really have to build M and a muscle. It sounds like a lot of the linchpin is around the integration. You gotta make sure that you get that right. That takes some time to really build that capability around. And then the cultural values. This is gonna be a big one. Can you walk me through what it was like starting an M and a function from scratch? Like, where do you start?

Yeah, I remember coming in and it was pre IPO for us so it was a lot of it was getting IPO ready and make sure the S1 is in decent shape, less attention on, we need to go and buy companies more. How do we make sure we get out and do it right? I remember I was effectively interviewing the different product leaders in the company whilst learning the business as well. Databases aren't an easy technology to comprehend. Snowflake is an easy product to make it work and abstract that complexity. But learning about the database space and then interviewing different subject matter experts and product leaders internally was where I started. And making sure that you have strong alignment with the leaders in the company, the people that are driving the strategy, driving the innovation and where the product's going was week one, week two, month one, that's where you stop.

So start off, get to know your key people in house, product leaders, SMEs. Make sure you're aligned with where they want to go. What is the conversations like? Are you like you guys have any product gaps we can solve with M and A? Like what does that look like?

It depends where you are in the stage and this even happens today. You're trying to make sure that you're plugging yourself into the drivetrain of the company as to where are we going and how are we getting there. This is the beauty of what I think corporate development is, is that whilst it's very financial, you need to understand how to model, you need to understand the finances, you need to have funding, environment, venture capital, diligence, all that stuff. But on the other hand, you're learning product and that is continuously evolving. You have to become a student of your industry and understand what the product roadmap is, what's the broader mission of what this particular area of our business is trying to do, what is our development timeline to get there? Understanding the different companies in that space, what are the landscape of vendors operating in that space, going, talking to them. How do I speak to as many CEOs as I can? How do I speak to as many venture capitalists that are investing in this space as I can? And how do I speak to as many internal subject matter experts as I can? How do I educate myself continuously on the areas that we need to be going and spending time in and start to form an opinion. And that's one of the unique places we get to sit. And corp dev is that you get those three really important data points, whether it's VCs, entrepreneurs and CEOs internal stakeholders that allow you to start forming an opinion. The best corporate development professionals are those that are Able to weave the math, the finance, the VC type mindset along with product strategy and understanding and getting into the pulse of where the business is trying to get.

Is that naturally shaping your M and a strategy or is there more to it?

100%. There's a couple of ways to look at it. So one is I'm understanding the different product motions internally and I'm trying to form an opinion on look, it's going to take us 12, 18 months to go and build this. Let's go and have conversations with these companies and think about what we're able to do to accelerate those motions and how do we think about the time value of money and the benefit that brings us and our customers. As you get bigger and more scaled, you start to look at it from a top down approach as well. What are the different markets, the opportunities, the adjacencies that make sense. And you can do more of a top down approach as well. You're trying to tackle it from all directions and pressure test existing build paths and and holding people accountable to delivering products when they say they're going to deliver those products and using that as data points going forward. The one thing you'll always hear is but we can build that. We can have that in six months. And in reality it's a lot harder to go and build things. Do you think products can be built relatively easily but there's magic to product market fit.

That's true.

Fighting that battle consistently as well.

Is it fair to say there's almost like there's two views. There's a sort of internal view that you gather from all these conversations around the product vision and then velocity is your ultimate goal. Then the other view you mentioned, the top down, that's essentially the traditional like market mapping exercise to know where you sit in the current market where the adjacent markets and have that view a hundred percent.

Yeah. The earlier you are on as a company, on your corporate development M and a journey, you know you probably start on the logical accelerators and teams and talent and IP that you can bring in to help you accelerate. And at least we have. And then as you mature you start to probably lean a little bit more on broader strategic top down. You'll always be doing both and you'll always have a perspective on both. But as a company, at least the ones that I've been involved with it seems to have been on that spectrum of start smaller and then think about the bigger ones.

How does that get socialized? Is it you send out the C suite, talk to the board, how does it ultimately get alignment across the organization?

Yeah, aligned is a word that I'm told I use too much.

What's your job?

It's maintaining the right relationships across the organization. Like one of the threads I was talking about was just managing those internal relationships with different product engineering go to market leaders. Having an incredibly tight relationship with our head of product, our head of engineering. I'm lucky enough to be in a position where one of the companies we acquired, the CEO of that company is now the CEO of our company. I have a naturally a good relationship and a good functioning relationship with him where I have the ability to talk through and soundboard and make sure that I'm not going down a rabbit hole without at least some level of alignment. We have regular cadences with the different leaders internally and try to bubble that up into different themes and to make sure that we get the right executive exposure. And there's obviously memos that get drafted and those are used to further iterate on what makes sense, what doesn't. Are we spending our time in the right areas? Are these the right priorities? And you go from there.

So that just tends to get a little bit more public in the organization when you're sharing those memos.

No, try not to. I mean M and a pretty sensitive usually impacts both internally and externally around when you're doing an acquisition. We try to keep it pretty buttoned.

Up as a team, the leadership level.

So yes at the leadership level but there's also deal sponsors that you're basically part of a team. So Corp Dev is one arm we help navigate and help folks make sure that they're walking the right path as it relates to the process we have. But we're working with them to build a business case that ultimately the team stands behind and gets conviction behind and promotes to the executive leaders. With us it's not just coop dev saying hey, we're going to go, we want to buy this company. It's like no. It's a team of people that collectively believe this is the right thing. And that team is small and it's cross functional. So it usually stays within those teams and then obviously with the executives in the company.

And that's an evolving process. You get the strategy obviously environments, lives and breathes.

It's iterative. Every week it's being tinkered and updated.

What was it like building out your team? Who was the first role you hired for? When did you hire them?

We went public and we started to get a lot more activity and we started to buy a company or two and it was clear that I know I couldn't be the only person doing this. I did bring on one at the time, a manager, which was kind of a mid level corporate development professional to help with some of the blocking and tackling. So that could at least up level myself a little bit and make sure that the ship was still being steered in the right direction. So that was about a year or so into my journey at Snowflake and we started a venture group and about a year in we made our first investment in late 2020. That's a different motion. There's a different motion around how you think about investing in companies. Maybe two years and we brought in somebody that was going to focus a little bit more on the venture side of things. And then you go from there and.

Then you have venture. You also have partnerships.

Yeah, Charter is M and A. It's ventures, it's startups and strategic partnerships.

What do startups mean?

Startups. So as a platform, Snowflake is extremely relevant for startups. We can abstract the ability to get a company and our product up and running extremely quickly. We can be a core component of their infrastructure. We can be a very interesting deployment model that gives them access to data, AI and enterprise customers. There is a whole community that are building products on top of Snowflake. Our startup team, Snowflake for Startups is a group of people that can help startups think through the right partner programs that we have. We have accelerators, we have different programs, we have technical resources. There's a whole effort on how do we make sure that when startups are thinking about building data driven applications, data and AI driven applications, that Snowflake's a component of that conversation and that team is chartered to go and help those startups stand up their businesses and be successful.

Interesting. You consider that still like part of the non or inorganic.

It's not really. Part of what I was saying earlier is that I'm speaking to VCs all the time. I'm speaking to startups all the time. I'm speaking to internal stakeholders all the time. As part of that, you start to get plugged in in the startup ecosystem. It's part of how you keep a finger on the pulse.

Interesting.

Six plus months ago the opportunity came up to take over that team and it's been an incredible expansion of my charter and we've been able to make some real headway in terms of the communities that are starting to build on Snowflake. We have an annual startup competition where we had nearly a thousand applicants that applied for this, the startup competition that ultimately came to a presentation at our user conference in June. And then we've got great things around the SVI Hub. So the SVAI hub, it's the Silicon Valley AI hub. It's here in the Middle park office on the top floor. It's a dedicated space for startups to come in and collaborate and have as a workspace and to talk about data and AI. And obviously Snowflake's a key component of that. It's a really interesting way to keep your finger on the pulse. When I put my M and A and Venture hat on, I'm well read, I'm informed. I know what's going on, especially within the Snowflake ecosystem.

The Venture Group, I'm familiar with M and A, we talked through that. But what's the thinking behind the Venture Group? I'm curious. Cause I feel like it's evolving in the industry. I feel like there is this. Just did a podcast kind of calling it version 1, version 2. Where originally it was similar to the venture where you wanted to make some bets and look for a return on it, now it's like more of a focus on getting access to technology or IP so that you can accelerate without necessarily acquiring the early stage startup that might have a crazy high valuation.

The great thing about Snowflake is it's a consumption based business model. When we can enable a startup to work with Snowflake and solve customer problems with their data, that customer is getting more value from the data they put in Snowflake. They're likely more sticky and they're likely driving more consumption. And we make money when customers drive consumption or query their data. From a venture perspective, if we can use ventures as a tool in a suite of tools, one was obviously the startup team and all the programs and benefits that come with that. But for those that are really showing product market fit, that are showing customer success, it's a tool that truly is strategic capital where we want to put wind behind the sales of a motion that we know is working and that can really help a broader suite of customers if they only had the opportunity. When we invest, we actually formulate a strategic partnership or a commercial agreement whereby we get in a room, we get the smart people in the room, we talk about what are the integrations with the two technologies that we can round out and build that's ultimately going to lead to better customer experience and better customer traction. And we say, okay, you know, whether it's 1, 2, 3 phases over 6, 12, 18 months time, what are the things that make sense such that we're going to we're doing the right thing for the customer and we agree on those. We also agree on, okay, once we hit these different milestones, we think here's the go to market things that we can do actually drive traction across our sellers, across our customers, across our partners. We document that and it's our North Star. We've all agreed that these are the integrations that we're going to do collectively and largely that's on the startup team to go and build those integrations out. And if these are going to achieve, we're going to go and put these go to market motions in place that really brings this kind of strategic narrative to the investments that we're making. It's here's a company that's typically doing something pretty interesting with AI and data, something that's probably resonating with some Snowflake customers and something that's actually going to be doing a lot more in the future if you want to sign up for whatever they're offering. There's some real go to market motions that we can enable to these startups. So long way of saying we're not investing to get eyes and ears and to potentially acquire. We're investing to build an ecosystem around AI and data in service of our customers. And so they can get use of data in more ways than just from Snowflake. They can utilize their data by using best of breed products across common underlying data platform that is Snowflake that might touch. Snowflake typically would service the cio, but now with Partner X, the CISO or the CHRO or the CRO or the CMO now can actually start to get functionality through applications powered on data that they already have.

So you get them as a committed customer and then you're able to help them accelerate their growth with the go to market.

Sometimes when there's different deployment models. So yes, sometimes they can be Snowflake's customer directly, others we can actually be a deployment model for the partner. So partners can actually connect into the customer's underlying Snowflake in a secure and governed way and get access to a technology without having to go through a bunch of vendor security risk assessments and governance and legal requirements. As a startup. I'm a five person startup based in some random country in the world. If I'm building and deploying within the boundaries of Snowflake through Snowflake's marketplace and with a Snowflake customer, you're able to do so with much less friction and you're able to do so at enterprise customers. Now you can go and deploy AI enabled data applications at the biggest companies in the world as a small startup without having those lengthy vendor risk assessments that take months and that hinder business.

That's interesting. That's why we see this model like popping up with other ecosystem plays. Just create the startup fund. But it's more. Now I get a real sense of why they do that.

For Snowflake, obviously more data gets put in Snowflake. Customer stickiness drives consumption. Yes. For the customer, they get to activate and use more of the data that they have in Snowflake across many different lines of businesses and workflows. So I would say best of breed data platform with best of breed modular applications that sit on top of that in a common underlying data infrastructure. And then the partners, they get streamlined, go to market and they get access to data to empower their applications. To the extent we can show real success, we can lean in more on the go to market side as well. So it's a three way win, which is organic and it's not a stick, it's a carrot.

I asked about the journey about building the M and A function. Now you've already expanded it to the three different pillars. You went from M and a venture startup, strategic partnerships. We talked about the team brought in a mid level person. I take it they're helping with more of the execution, financial modeling, quarterbacking, diligence. How did the team expand from there? Did you bring in leads for these different groups and just things A lot.

Of them naturally already somewhat stood up. So there's teams that were in place. We've got people in the startup team that have been here for 10 years who were part of the sales organization when it very first started. Those are folks that have already been established and there was a natural alignment between the two teams where it made a lot of sense. We were having the same conversations. The startup team was talking to venture capitalists, they were talking to startups, we were talking to venture capitalists and startups. And it's like, hang on, why are we having the same conversation twice? A lot of it was like streamlining the systems and processes internally to unlock a lot more efficiency. And now I feel like we've done that. Now we're on the offense, we're working as a team and driving.

So that makes a lot of sense. On this sort of front end, you've got alignment on the strategy, you're getting the right people in place and everybody's getting aligned on what the Goals are when it comes to going back to what we mentioned, like the biggest risk is the integration that doesn't go right and like how you made that point. He's small and build up to it. Was there anything there that you had to do to get the organization ready?

There was a couple of early deals that, you know, when you get the deal done, you ring the bell, you pat each other on the back and like great, let's think about the next one. Or some, you know, some leader in the company comes down on the next deal that's like the next highest priority and suddenly the company just acquired. It's not really top of mind and had been bulls that were dropped. We did bring in somebody on the integration side, one person that focuses on a lot of the project management and integration efforts and make sure that nothing's dropped. Because there's definitely this when a deal is on and you come very tunnel vision on getting that deal done and you can lose sight of some of the smaller things that maybe in and of itself aren't going to break things over time they start to accumulate and things start to get dropped. It was extremely important to bring on this integration lead who had six, seven years of integration experience directly onto the team. So that when we do think we did, you know, eight to 10 deals in one year where we needed it. And that was really where we had to make sure that we were a scaled team.

This is where we turn into a little bit of therapy session. We might revisit some painful memories here. But bear with me when we think about this first one, two acquisitions. What were those lessons learned? You want to frame it that way that got you thinking about what needs to change.

There's always lessons learned whether on completed deals, but also deals that don't materialize for one reason or another. And we try to do a good job of making sure we take some time after every deal to think through. What are the things that work, what are the things that didn't, what do we need to change? What should we do more of and document it. We've done a pretty good job of making sure that we're learning from our mistakes.

So fine. When I do my first deal, I'm going to screw a lot of things up. I'm trying to shorten my learning curve here. So if you can just kind of.

Give me a few Chase.

Yeah, give me a few things to.

Make sure I know the first deals that we were doing, they were very small in nature. One of the things I've learned is that once you do a deal and we talked a little bit about it on the integration side. But on the product side, who's directly responsible for the success of that integration? Because everyone has different priorities and everyone has things that they need to get done. And if you don't have one person or maybe two that are directly accountable to the success of the deal and make sure you have defined timelines post acquisition to get back in a room and talk through, here's what we said we were going to do and here's where we're at. Be honest. Hold yourself accountable to what we said we were going to do and where are we at On a regular cadence. 30, 60, 90, 1, 80 after the deal, days after the deal. That's a very important thing to just not lose sight of. Because again, as deal people, we get excited by the next deal. And once you get it, it feels like another notch on the belt. That's just the beginning. Do the deal. That's the beginning for the company. How do you integrate yourself and be part of that process to make sure that it's successful? Because guess what, if it's not successful, you can have a harder time doing the next 1, 2 and 3 deals.

Accountability, integration and then having clear, having owners, timeline owners.

You need somebody to have as a directly responsible individual. We call them Dris.

Dris. All right, I like that. This is helpful. So first deal, double down on that. Make sure you got folks that are really going to hold accountability, ownership, Dris for the integration. Then have clearer timelines. These companies when you acquire them. We talked about culture earlier. How do you look at that? I guess then versus now, you look at an organization and it's more about you're identifying a culture fit and that sort of lens to make a go, no go decision. Is that part of it? Is it more of this is how we're going to change this company's culture? Or this is maybe going to modify our integration plan based on their culture. Like everybody's got a different view.

Culture is super, super important. And it's hard to put your finger on. Oh, ask these questions and you'll have the magic number. My magic answer or magic number? I often allude to M and A being like the process of getting married. It takes many different engagements and interactions to validate. Is this the right person for me? And do we have the right values and how do we think about these things, whatever it might be like culture and trust, you discover and get that over time. That's part of diligence. That's part of why? At least in my experience, and I know it has happened in different deals. But like M and A isn't done really. You can get deals done in a month or whatever time frame. It needs to be weeks of these days. It's really. Relationships are built up over time.

But now here's the thing, take it you're not buying all your assets on auctions because if you really want to build relationships, you got to take the buyer led, be proactive out there building relationships ahead of time.

100%.

Is that most your deals?

Most of our deals are very much not the first time we've engaged yet we typically engage with them beforehand. Not all of them, but most of them. Coming back to the concept of culture, how do you identify whether folks are the right culture or not? It's something that you get a perspective on over time. The earlier you can have conversations with companies that maybe at the time you're looking to acquire, you have a relationship, you have a partnership, you've want some joint customer success. All of that kind of leads into understanding how the company operates, how the company thinks.

So this is like dating. You got to spend the time.

It's very similar to dating. You got to just. Yeah, you got to put the time in. You got to ask the right questions. You got to understand the incentives of people. You need to understand how they operate, how they treat people, how they treat their customers, how they treat their investors, how they treat their employees.

How many deals you've done since you start the Snowflake? Yeah, M and A deals.

We're coming up to probably 20 acquisitions.

20 acquisitions out of 20. I'm curious about this. So you're obviously proactive. You're getting to know everybody. How many of them like turn into full blown auctions? That proactive relationship development that give you a leg up in an auction process.

It's interesting. Every banker will tell you that you need to have a competitive process to drive the optimal, the most optimal price.

Yes. Every banker listening to this right now would agree. What I'm trying to get to is you put all this effort and this is like I did this buyer LED framework and this is like the first pillar is really having a clearly defined strategy. If you have a clearly defined strategy allows you to actually go be proactive and build those relationships, then what I'm curious about is what does that look like when it unfolds?

Because really biolet or is it really like a process?

Yeah, because I mean it's inevitable at times. It's inevitable if it's something that obviously the person is like multiple people inquiring then they're probably going to hire a banker or something like that. So that's what I was curious about. 20 deals. How many of them actually end up in a bank process and then what does that look like? Because sometimes it's a banker is in there but it's still they're just facilitating versus running an actual competitive process. Other times they're running a competitive process and then I'm just curious because you've invested in that time how does it impact the outcomes of those scenarios?

We often get banker processes and if you have a relationship with the CEO at the time that's that's going to be very helpful for your participation in that process. I don't think there's ever a case in which a relationship that you have is going to hurt you in any type of process. For a buyer led motion obviously that's going to CEO. To CEO is incredibly important. Cultivating that relationship over time and, and everyone's different. This is why M and A is so personal. Everyone acts different and when you're doing deals you've got different things that different folks care about. Every seller has different motives, every person is different and you need to kind of dial in to understand what's their motivating factor. A relationship with the CEO and the relevant. Maybe the relevant board like those are helpful in and of themselves. Ever going to stop seller or a company's being bought not sold. Are they going to stop them testing the market? Depends how strong that relationship is. Depends on the price that you're talking about. Depends on the conviction that the and the relationship that the folks have. There's just a lot of different factors that come into play to say so.

How to deal, how many, how many ended up in a full blown auction and then how many ended up just being represented and how many were purely proprietary.

There's definitely some that are buyer led and that were done in a way which enabled us to get a deal done without having to go down the complications of an active process for one reason or another. I would say the norm is probably companies that are and it happens on a daily basis at this point in time is I'm testing the market, I'm raising my series ABC whatever it might be. But I've also one of these conversations has turned strategic and so I'm talking to a handful of companies and if I was going to think of anyone I'd love to think of Snowflake as a potential outcome. Is this something of interest that's the most common outreach that we get.

That's somebody you've already talked to. They're just responding back.

Typically we could be an investor, we could be a partner. We might not be a partner and we might be banker and outreach. But I guess to level up a little bit, part of what allows you to operate a little bit more efficiently is that have a good understanding as to where is the company going from a product perspective. What are the strategic priorities? How do we think about proactive M and A versus reactive M and A and how do we have a buyer led process versus hey, this company's for sale. Are you interested? Which we'll always look at. You can cut through the noise a little bit if you're focused on what matters for you versus being reactive all the time.

Were any of those 20 deals came in from a banker book? First time you heard about the company?

I don't think so. First time I've heard of the company is unlikely. At a minimum, I've heard of the company. Haven't had a conversation, maybe not had a conversation.

So a very, very proactive approach in terms of how you guys build pipeline and ultimately execute these deals.

We try to be as proactive as possible, but you need to be very receptive to being reactive. And having clarity on your strategy can help navigate those waters a lot more efficiently. If you do have that clarity on where do we think M and A is going to be able to be most utilized, Whether it be from a aqua hire product acquisition or even transformative is maybe a different case. But across the different spectrums of M.

And A, this is a big investment of time to build a relationship with all these CEOs, date them, understand the culture, things become actionable. Like I feel like early on you're investing a lot of time in the relationship. But if we think like ultimate outcome is to have a successful integration, how do you take this phase in between your. Your confirmatory diligence? When you get things signed and move to close, you know, how do you take that time to really set the deal up for success? Especially like culture is a big part of it.

There's a rigorous diligence process. You learn from a lot of deals that you've done. Every deal you learn something new. We have pretty refined business cases that get put together that have how we're thinking about integration. What are the measures of success? What are the integration milestones? Over what time frames? It's documented. Everything's documented.

You basically create like an integration thesis.

100% it's documented. There's an integration thesis. And by the way, it's something that you need to collaborate on with the target. You kind of are peeling the onion with every layer of diligence. And at some point you get to a place, once you've got through maybe the initial term sheet and you've agreed on price, the elephant in the room, and broad deal structure, things become a lot more collaborative because you're all on the same train of trying to get a deal done. It's not just a case of this is our view and this is how we're going to do it. And then day one, the company comes in, is like, right, how are we doing things? What's going on? So we've been working on this for the last few weeks. We were in agreement on not only the integration plan, but the timeline and my charter. You start with a thesis, you refine and iterate internally. You get through an initial hurdle of, let's just say, the term sheet, and then you start to work increasingly collaboratively with the target. Get to a place where there's high conviction on that integration plan and you're acting as a team.

You're socializing the integration plan with the target.

At some point you have to, during confirmatory diligence, this is opening up. In the process of getting married, you have to start to open up. You do have to start to share and they're going to start to share information that is increasing sensitive. As a buyer, you need to lean into that. It's a two way thing. It's not just tell me, give me everything and I'll make the decision. It's collaborative. And by the way, founders have perspectives on what am I going to be doing, what's my channel, what's the team going to be doing? Are you going to split them up into the four corners of the company? Are we going to maintain being a team? Do we have a goal? What's our responsibility? Who do we roll into? What's the hiring plan?

If we get married, we're going to buy a little house on the prairie, get a chicken coop.

Yeah.

Bunch of dogs and cats running around.

Build the empire.

Like, we want to be clear about that before.

Exactly how do you build conviction? It's a process. You start with a thesis, you pressure test it, and then you collaborate on it and you collectively own it. And at the point of signing the definitive agreement, we're already acting as a team. It's we and us, not you and me. And day one, it's like, right, let's go get this done.

You told me you did eight deals in one year.

There was a year that was very busy.

I'm curious about this part because you took all the stuff we've already talked about. There's a lot of effort, complexities, alignment and accountability. Managing concurrent deals, I feel like is its own challenge. And I'm curious about like, what have you learned from. Because obviously you don't do eight sequentially. Like they're running some concurrent deals. And how do you do that without blowing up people?

You don't. It's a short answer. I think we've done three deals at one point in time and then we're obviously at different stages and this is where you do need to start building the team out and making sure that both the corp dev team but also the functional diligence and integration teams, we can probably do those deals. But it does bear on the company and it distracts people from their day job. And this is incremental to their day jobs. You do end up burning the midnight oil a little bit. It's deal based work. When it comes, you've got to be all on. And we didn't do three deals off the bat. Team of one. I had two deal leads myself an analyst that was helping. We've got an integration manager that's working on the integration, that's orchestrating all the different functional diligence and integration teams. There's often 70 to 100 people on the integration team across all the different functions in the company, making sure that we're integrating the systems and processes and people. And it's a big effort. It's tough because there's different term sheets and deal terms and negotiation tactics to think through the different dynamics of every deal. It's making sure that you're extremely organized, documenting things and trying to stay on top of it. It's not something I would like to do consistently, but it has happened.

Make sure you got the right people.

The right teams in place, built that muscle so that it's not new to anyone. They've done it before and look, some of them were smaller so it was a lot easier to go and do the diligence and integration. These aren't huge deals that you're doing three concurrent, but they can handle it.

This is how we do things at Snowflake.

Amp it up.

Do you convince people to sell? Is it the relationship game and you're waiting for the phone call back or a call from the banker or there's.

Like the tactical of like on the economic side there's an economic answer to that question, but I don't think we're trying to convince people to come and work at Snowflake. That's probably not the right deal to be doing. Often people see Snowflake as a scaled company by which the technology that Target company has built can really impact the world. I think of conversations that haven't really started that way. I don't think convincing somebody to sell is like the right part to start.

Sounds like you got the better together story.

The early discovery is the early part of that relationship is what would that better together story look like? Does that interest you? Trying to have a pretty open conversation up front? Where's your heart and your head at? And is this something we should lean in on? Or is this something maybe you're not ready for and you need to start getting signals as early as you can. You don't want to be going down a process where there's just no chance this company's going to sell and you're trying to convince it the whole way. That sounds like a lot of wasted energy.

Inspire them to sell. Let them put the pieces together.

You want them to want it, right?

Yeah, it's almost a little bit of.

There's something. When you get into these cycles of talking about deal, there's genuinely, there's some sort of excitement. You talk about the Gartner hype cycle and the more you engage, you're like, wow, this is going to be incredible. We're going to change the world. And then you get, this is amazing. And then it's, wow, we need to integrate into this way. And this is going to take time and it's going to get into this trough of disillusionment. And then you get onto this path of like, all right, I see the light and we've got a real path here. If you're starting off that beginning part of the hype cycle, that is excitement's.

Got to be seated within that company, that target CEO, like, they got to have some. It's almost like an organic excitement.

Yeah, I think so. You nurture and cultivate that through the CEO to CEO and leadership to leadership conversations that you have. And you're going to know pretty quickly coming out of that meeting whether that's really it. That's actually really cool. It's usually not one party saying that. Usually you come out both kind of thinking along those lines. Convincing somebody to sell doesn't feel like the recipe for success.

When you're talking to CEOs, how do you decipher between this is An M and A conversation versus the venture conversation. Because you even mentioned that you'll have folks that are at their next venture round, but then they're exploring M and A. How do you sort of look at that? Opportunities of which hat to wear or does it just come up through those early conversations?

It goes back to something we talked about earlier. Just being plugged into the business and understanding what's interesting from an M and A perspective and what's not. There's a lot of opportunities that come my way or it's clearly not going to be an acquisition opportunity for us. But there is often a partner motion. And given that they're raising and so we don't lead rounds, we typically participate in rounds. So given they're raising a round, they're like, is there a conversation to be had on the investment side? Which then comes down to what is it from a product perspective that we're doing that's interesting? What is the movement of data? Do we have any joint customer success today? And if we did get into a room, is that what are the things that could be interesting to really double down on from a product and engineering perspective that could lead to a better outcome for customers? And if there's something to talk about there, that's when ventures can be a lot more impactful. But deciphering between one or the other is making sure again you have alignment with where the product is going, what our strategy is, how we think about M and A, make sure we have alignment across the executives and hopefully by understanding that you at least know when something's interesting or not from an acquisition perspective. And if it is, then obviously there's a path to go and double click and learn more and have the right conversations across both companies to hopefully get to a no, which is always the easy answer, or that's actually a little bit interesting. Why don't we go and do these one or two things more to learn more.

So if you're participating in these venture deals, you're not negotiating for a call a call option?

No. Write a first refusal. No. We ask for a right of notification. Yeah, Rofin Notification. Right of first refusal.

I know there's an acronym for it.

Yeah. Right of first notification, which is basically, we're going to invest, we're going to lean in the partnership, we're going to try to give you some go to market benefits. We're going to try to in good faith do the right thing. And if you're going to sell the company, I just want a heads up. I don't Want to read it about it in the Wall Street Journal or the Financial Times? I want a heads up. And that heads up is, hey, we've been approached. Before I sign anything that's exclusive, I'm just giving you your notification. I don't have the right to understand who the buyer is, how much it's for, but I do have the right to participate if I wanted to put an offer in. And then you get, as a founder, get the decision to make as to whether that's interesting or not. But at least I have a seat at the table when the decision is being made. That's a fair outcome.

That's fair. Can we talk about just some of the deals? Like you don't have to name the company, but I'm just. What is like a deal you're most proud about? Just want to hear like how it went down and yeah, recency bias a.

Little bit just because they're more top of mind. But Nivo was a pretty cool deal. Street R is now our CEO buying a company that ultimately ends up being the company that you work for. CEO. There's value that you're adding. As a corporate development professional, you're always trying to think about how am I bringing value to the table and are these deals actually driving real business outcomes and success? And Streetao is obviously an incredible leader and leading the ship at Snowflake. Now. It's been an incredible year and a half. Maybe an acquisition. Sridhar's company, Neva, we acquired through an acquisition and now Sridhar is our CEO.

Oh wow.

That was obviously a really good deal for the company. And Sridhar's co founder is the head of our engineering team and it was really the foundation of a lot of what we do in AI today. An incredibly important acquisition for the company and we've obviously got the most important leaders in our company now being driven by a lot of that company that came into Snowflake. So extremely impactful acquisition. I'd say two more recent ones are pretty interesting. We acquired a company called Data Volo, which is now what Snowflake calls OpenFlow, which is a kind of a connectivity platform that allows a lot of data to come in by structured and unstructured into Snowflake. The whole framework that we've stood up upon, the product we acquired, which has been extremely impactful. We announced it at our user conference. So again, when I answer these questions, it's like, what are the most successful? I guess I'm answering in most impactful. And then the most recent one we did was crunchy data, which is a whole new opportunity. It's a postgres database in a managed service company or has a managed service around hosting Postgres databases and the prospect of weaving and integrating it into Snowflake and the workloads that are going to be relevant for us as a company going forward and the applications that are going to be more relevant. That's extremely exciting. Top of mind, they're more recent ones, but yeah, those three have been pretty impactful. Hopefully continue to be successful at the company.

That would be so daunting like joining your team at this time because it's just matured so much when early days when I got to know Snowflake.

I'll take that as a compliment. Hopefully we've matured.

No, these are awesome to hear about some of those deals and I guess what I wanted to lend into is just this current market we're in. AI. Things are getting pulled under your rug in multiple different directions and how do you keep up with it? We're in a tiny little space of M and A technology and I can't even keep up with how many AI companies for M and A are popping up. I'm sure they're reaching out to you.

Yeah, companies just going from 0 to 10 to 100 million in a couple of years, which is just. It's unheard of. And the product market fit there is incredible. So how do you stay on top of it? It's just continuing this theme of just being a student of your industry, a student of your. Of the product that you have, the landscape that you operate in and the newest and most innovative technologies that are coming out in the world. And obviously that's AI today.

Ask me, how do you do this? How do you diligence these companies? Even know you're buying the right thing?

You use AI. A good answer, out of the box. Knowing the right thing is. It's not one thing, it's a combination of things. As we talked about earlier, it's having the right systems, processes, the right alignment, the right ownership, the right measurements of success, right integration plan. All of that is like going to lead to whether a deal can be integrated and successfully driven to hopefully the conclusion that you thought it would be. But staying on top of industry trends. I speak to a VC pretty much every day. These guys are putting money where their mouth is. Their livelihoods are based on carry and they're investing a lot of time into a particular space. And I'll do your job. I'll question upon question and just be curious and inquisitive and understand the trends and double down on that and ask the same question to another founder or investor or whatever, whoever it might be, and then go and have a similar conversation internally. What do you think about this technology category? Have we thought about this? Are we looking to build? Are we looking to potentially integrate? What are your thoughts on that? This kind of hunger to always learn, always be curious, always question and make sure you understand. If you can continue to do those types of things, again, lead you to be the student of your profession, you're going to be much better situated to go and figure out how to navigate the waters in a vastly evolving AI market.

Got to do your homework.

Got to do your homework.

When you look at just this AI landscape and all these companies popping up, how do you even keep tabs on them? That's something I'm even struggling with. My tracker just gets longer and longer every day.

The tracker does get long. Yeah. There's obviously the logistical, like how do you keep tabs on track and document and make sure you're keeping tabs on them? I think for companies that are either AI relevant or being built in and around data and AI, thinking about Snowflake, that's where the Snowflake for startup teams is really helpful in having a feed of information. It's almost a little bit like a pipeline, more on the venture and partnership side versus M&A. But it's always good to know who's doing well in and around the ecosystem as it relates to AI. There's a huge push in the company to be increasingly AI forward. We've got some incredible initiatives out there. We've got the Cortex Rest API service that can abstract the complexity of which underlying foundation model you want to have and put your data against, or have your application run against the whole Cortex service. With Cortex Analyst, Cortex Search and Snowflake Intelligence, which is an intelligence layer across all of your data, where you get to ask questions of your data. There's so much activity happening with companies building on top of those primitives that Snowflake builds. It's extremely exciting. And one of the good things is we have a lot of telemetry on the activity and the consumption that these startups are making happen. Within Snowflakes. There is a data feed that you have that helps understand who's driving the best outcomes, what are the signals from customers that we're getting. So that's obviously one way we keep abreast of it, but that's a smart.

Way to do it. You got a big startup ecosystem.

We Got a big startup ecosystem. We get a lot of data. There's a whole separate kind of partnership team as well. Outside of the strategic partnerships that I manage that are managing a lot of those relationships and making sure that we're making the right kind of tags or getting them to provide the right telemetry to ultimately give us information to help make them successful to the extent they're able to be successful, there's a lot happening. And when I just level up a little bit and talk about a lot of the cortex, the AI services that we provide, the principle behind how we are relevant is that whether you're a company or a startup, you're able to use the most innovative AI technologies against your data. From a customer perspective, it's going to allow increased business outcomes. From a partner perspective, it allows you to get access to a lot more data to drive those business outcomes. One of the more interesting areas that we're spending a lot of time is agents are everywhere. And agents are the ability to act as if a knowledge. As a knowledge worker and pick your function and if you can empower knowledge workers with obviously the AI capabilities that are generic but also specific and bespoke to your data, your needs. I think Snowflake's an incredible platform to think about as you look to use AI to drive those business outcomes.

I'm going to revisit it. I'm like, we're in deal room. We got to figure out how we can leverage and connect with Snowflake especially so many organizations.

We should work together on that.

We should. There's some opportunity there. I got a couple just quick little fire questions before we wrap up here. I want to know what's the top thing that you look for when you talk to these founders, CEOs of companies? What is the top trait that gives you a good signal that this is a strong company to talk to?

From a company perspective, customers success speaks volumes. If customers are willing to pay for something, there's obviously real value there. What's the traction? What are those retention rates look like? What's the growth profile look like? Net new customers coming on board. What are the growth patterns there? So customer data points and customer metrics speaks volumes and obviously rolls into revenue. From a culture perspective, I like to meet founders that are hungry, humble, and know how to hustle.

That's the ideal.

Being humble isn't underrated. Having humility and the ability to kind of appreciate one's perspective, but have strong conviction in your own opinion and being willing to debate and talk through things is an extremely appealing trait. But I think in this world of AI, if you don't have hustle, you're not going far.

Those are good. I think they even get harder as you start achieving success. All of a sudden it gets harder to be humble.

Yeah, it does. When you start to see success, it's hard to have those hungry, humble.

And unfortunately, I got immigrant parents. I go visit them. They remind me. They remind me, I need you to go help clean the sweep the floor. If you can. Tell me what are like the red flags? Just what are the red flags they should look out for to run away from a deal early on.

Usually you're speaking to just the founder or CEO. The red flags are probably going to be from conversations with them, signals on prioritizing outcomes for an individual versus thinking about the broader mission and team. Having founders that care about the joint mission going forward to care about how their employees are treated versus sol. I mean, folks economically will try to solve for the highest dollar. But there's within reason that there's. Obviously it needs to be the price needs to be right. But equally important is landing on the right mission and having the right message to deliver to their team. And if that starts to become out of focus, that's a red flag.

It's a really good point. Got to be more than yourself.

Yes.

What's the craziest thing you've seen in M and A?

I haven't seen as many crazy things or heard as many crazy things as you have. But I would say in line with it's not done till it's done. The deal's not done till that you've signed on the dotted line. We've been down at least one process I remember, pretty far down a path, pretty much ready to go and sign a deal only to be informed by the CEO that an offer three times the amount has been put on the table, which at the time was already a pretty high price for the company. The size and the scale that they were. It goes to say that no deal is done until it's done. Don't count your chickens before they hatch and put us a little off guard. But these things happen.

One of the big three came in overpaid.

No comment.

Technically it's big four, but yeah, okay, that happens. Isn't that good?

Not fun. No, it wasn't fun. A lot of effort for nothing. No outcome. Then again, deals happen as part of the seller.

You could have a breakup fee. If the buyer doesn't commit. You can have a breakup fee, but if the seller falls out. There's no nothing.

There was no breakup fee in the deal.

Yeah, because you want to do that. So this is a great conversation. I really appreciate taking a break from doing deals to help me become a better M and A scientist.

Thank you. Thanks for having me. Appreciate the time. Good conversation.

Anyone is still listening this. You made it all the way to the end. You are my fellow brother, sister, M and a scientist out there. I love to hear from you. Reach out to me. LinkedIn Love to hear your ideas for topics criticism. I take it so I get better at doing this. Till next time. Here's to the deal. Thank you for taking the time to explore the world of M and A with our podcast. We love hearing feedback. Tag us on a LinkedIn post, add a review on Apple Podcasts. We'd love to hear from you. If you need help standing up an M and A function or optimizing one that you already have, we're here to help. And if we can't help you, we probably know someone that can. You can reach out to me by email kisan k I-s o n a science.com or you can text me directly at 312-857-3711. If you just want to keep learning at your own PA case, visit mascience.com for a lot more content and resources. That's where you can also subscribe to our newsletter. Again, that's mascience.com here's to the deal. Views and opinions expressed on M and A Science Reflection Only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.