Notes on Amp It Up

Notes and commentary on Amp It Up, by Frank Slootman, CEO of Snowflake.

Source

I recently read Amp It Up, by Frank Slootman, who is the current Chairman and CEO of Snowflake. Overall it is a fascinating read and provides a lot of down-to-earth insights into how to scale companies. Slootman was the CEO of Data Domain (2003–2009), ServiceNow (2011–2017) and has been leading Snowflake since 2019.

Sales Strategy

It is very rare in management books, especially the ones written by tech CEOs, to see a discussion around sales. Yet a good sales strategy is a big differentiator for a company’s success. Here are some interesting insights I got around this topic:

• Before you tackle your sales program, you want to make sure your product is superior in most features to any other product on the market. If you ramp up sales too soon and your product is not ahead of your competition, your customers and competitors are going to notice and your reputation will suffer. What was interesting is that when Slootman joined ServiceNow and Snowflake, he felt that their products were already ahead of the competition, but they were not putting enough focus on sales execution. If you’re a founder, sometimes you might lack the perspective on how to balance growth and product development. You might be asking too often “Is this the best product I could make?” instead of “Is this the best product on the market?” If you answer yes to the latter question, you need to think of ramping up a sales program.
• When you ramp up sales, you want people to be energized and busy. A typical salesperson schedule would involve being in prospect meetings and calls for 8–10 hours a day. The idea is to build momentum and acquire market share in a way that major competitors did not see it coming.
• To keep the Sales team busy, you need strong lead generation. You can start building leads before you ramp up sales. For example, you could reach out to different data practitioners and ask them to try out the product for free. Eventually, when you’re ready to sell, you can use the network of leads to build internal advocates within prospective companies. Slootman mentions that it would not be unusual to have three people work on lead generation for every salesperson on the team.
• Sales need to be aligned with company revenue metrics. For example, instead of incentivizing the Sales team based on the number of contracts closed, it is much better to incentivize based on how much consumption the new customer is bringing in. This fits very well with Snowflake’s pricing model, where you pay per consumption.

Folks will forgive mistakes if you're successful

Generally, when you get a new CEO, you don’t expect any major changes in the first quarter. This is a time when the CEO gets the lay of the land, acquires context, and proposes initiatives that don’t compromise current work. With Slootman, you could expect reorgs and layoffs within the first 90days, if he thinks they need to happen. Slootman feels like it is a more effective strategy to fire and hire instead of retraining an org that is compromised. It’s just often easier to start with a blank slate and bring in the people you know. By having extended evaluation periods or being indecisive, you’re doing a disservice to everyone.

This type of first-impression acting can be unpopular internally since you might be perceived as rash and radical. This gets alleviated in two ways:

1. If he is wrong or his leadership is not effective, he suggests that he should be let go by the board of directors. The standards he sets apply to everyone, including himself. Personally, I think this can be difficult to do in practice since boards generally refrain from switching CEOs unless there are very good reasons to do that. Moreover, many CEOs, like in Slootman’s case have an overwhelming influence on the board’s actions and opinions, making board governance difficult.
2. That employees will forgive radical leadership if the company grows 10x in value. The financial return to existing employees is life-changing, allowing folks to retire early, buy homes, and take care of their loved ones. All he wants in return is for people to meet his expectations. I think this is a fair assessment. If my CEO tells me that his plan will 10x my compensation, I will be more willing to hear and follow what they have to say.

Amp up your growth

Many founders underinvest in their growth strategy. For example, you might grow at 70% YoY and be proud of that, but if your market share is 1%, is it really a big accomplishment if next year you are at 1.7%? Slootman highlights that a more ideal outcome is to focus on what could allow you to 10x the growth rate and work backward. Ask people internally what would it take to get a really big improvement in numbers and focus on those initiatives while specifically discouraging incrementalism.

Your competition is an enemy and this is war

Slootman often uses warlike analogies when describing competition and he makes it very clear that business is a zero-sum game. One strategy he mentions implementing is capturing talent from competitors, so they are unable to execute their strategy. Given this, companies like DataBricks need to be very mindful of their compensation for key roles and be much more strict in the enforcement of NDAs or the protection of their intellectual property.

Be careful of landlocked markets

When Slootman worked at Data Domain, the company ended up “landlocking” itself. Data Domain was developing solutions that provided backup and replication, and they were the first to introduce network redundancy and inline deduplication that effectively made tapes obsolete. Unfortunately, their product was so good that most consumers associated Data Domain only with the data backup market. Data Domain locked itself to a niche and could not expand to other markets. Snowflake was in a similar position in 2019, where many folks considered the company as just another database in the cloud. This severely limited Snowflake’s potential, and drove a change in strategy to become a data cloud service instead of just a data warehouse service. This provides more light into their shift to Snowpark and Streamlit’s acquisition.

Execution vs Strategy

The book talked a lot about strategy vs. execution. Generally, most management books focus on how to design good strategies. Slootman’s perspective is that you won’t know if you have a good strategy if your execution is poor. In his opinion, it is better to have a less-than-ideal strategy and a very good execution. One of the things I wish he elaborated more on is how to differentiate between good and bad execution. There are not enough details on that, which is unfortunate given that this is what helped him become a successful CEO.