Snowflake's CEO on AI: 'Constraints Make You Think Harder'

Sridhar Ramaswamy sits down with Upstarts. Plus: tips on shipping enterprise-grade products from the CEOs of Glean and Windsurf and OpenAI's startup lead.

Snowflake CEO Sridhar Ramaswamy says: “My hot take is that constraints make you think harder.” Credit: Justin Sullivan / Getty Images

The Upshot

CEO Sridhar Ramaswamy has a rule of thumb he uses to think about startups that might make sense for his company, Snowflake, to acquire.

After going public in 2020, Snowflake currently trades at a market cap of about $75 billion. Ramaswamy’s framework: if a startup demands a premium price tag of, say, 50x or 100x its revenue, it must have “line of sight” to plausibly grow into that price such that it would reflect a multiple closer to Snowflake’s own (15x or 18x) over the next two years.

“You can work out the math that a startup has to be growing way faster than us to make those two curves meet,” Ramaswamy tells Upstarts. “Does this mean that we are unlikely to spend $2 billion on a company making $3 million in revenue? Yes, and I actually think that it’s a good thing, being allergic to stupid stuff.”

We’re meeting in Snowflake’s offices in Menlo Park, where the cloud data company is unveiling the Silicon Valley AI Hub, a new coworking and event space for AI founders and partners to meet and work out of – part of a wider Snowflake for Startups initiative.

And amid the AI boom lifting startup valuations and making strange bedfellows of companies across the stack, Snowflake’s vantage point stands in fascinating contrast to the other startups that Upstarts is onsite to interview for a panel discussion: the CEOs of enterprise data unicorn Glean and the recently-acquired code editor Windsurf, and the head of OpenAI’s startups program.

“My hot take is that constraints make you think harder, constraints make you work harder at producing great outcomes, and that innovation with constraints is the ultimate art.” — Snowflake CEO Sridhar Ramaswamy

On one hand, Snowflake is now the establishment, offering up office room, capital and connections for a new wave; on the other, it lacks the big-stack flexibility to take money-hungry swings at the scale of still-private players like Databricks and Openai.

“The world is complicated,” Snowflake’s CEO says.