Ali Ghodsi, Co-Founder and CEO of Databricks.
San Francisco-based start-up Databricks quickly grew into a respected provider of cloud software for managing data on behalf of companies, doubling its annual revenue. Then came the coronavirus pandemic.
The health crisis has weighed on the film, hospitality and travel sectors of the economy. For the tech industry, however, Covid proved to be a melting pot, revealing which technologies were necessary and which were not.
“There was a bit, maybe a month or two, where everyone was frozen in time as to what was going to happen,” said Pete Sonsini, an investor at New Enterprise Associates who joined Databricks’ board in 2014.
After this first phase, according to Sonsini, companies rushed to analyze data in the cloud to unlock computing resources without having to worry about managing the infrastructure in their own data centers.
“They have definitely accelerated through the pandemic,” he said, adding that the acceleration will continue through 2021. Now the company will generate sales of at least $ 1 billion in 2022.
Databricks announced in February that it had raised $ 1 billion on a $ 28 billion valuation that included the three largest U.S. cloud infrastructure providers – Amazon, Google and Microsoft. Investors were keen to put $ 2-3 billion in Databricks during the funding round, CEO Ali Ghodsi told CNBC at the time.
Databricks is increasingly looking for companies like Snowflake that offer data warehouse products that are used by large companies to store data from various sources, Sonsini said. In September, Snowflake made a monster debut on the New York Stock Exchange, ending its first day of trading with a market cap of $ 70 billion, down from $ 12 billion seven months ago. The stock has lost some of the momentum it gained after going public, but it’s still worth more than $ 60 billion.
Snowflake’s sales growth accelerated when the pandemic first hit. Growth has slowed since then, though the company is still doubling sales every quarter, which is an obvious competitive target.
Snowflake and Databricks initially focused on different things. Engineers relied on Databricks to cleanse large amounts of data and prepare it for analysis, while data analysts often looked to Snowflake to query the data and learn more about it. But the two have gotten closer. Databricks introduced the technology in November to query data stored in its software using the popular SQL query language.
When Snowflake took over from former ServiceNow CEO Frank Slootman in 2019 to succeed Bob Muglia, former CEO of Microsoft, as CEO of Snowflake, Muglia’s separation agreement said he couldn’t work with Databricks – or with the world’s leading cloud infrastructure companies . “They were a great partner but wanted to do more of what we do,” said Mike Scarpelli, CFO of Snowflake, in a fireplace chat hosted by JMP Securities in March.
It got to the point that data science consultancy Datagrom posted a blog post in November entitled “Snowflake vs. Databricks: Where Should You Put Your Data?” Published. The picture at the top of the post was a Venn diagram showing what the two companies have in common.
Ghodsi tried to differentiate Databricks from its competitors on his CNBC appearance in February. With Databricks, clients do not have to copy data into their software in order to work with it. Instead, data can stay where it already is, such as in Amazon Web Services’ widely used S3 object storage system, and Databricks can continue to process the data, he said.
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