The recent Instacart IPO filing contained a seemingly innocuous paragraph about the company’s business ties to Snowflake, causing a commotion between two companies that are not directly related to grocery delivery. Instacart’s board member, Frank Slootman, is also the CEO of Snowflake, a cloud-based data warehousing company. The filing disclosed that Instacart made payments to Snowflake, which raised concerns at first glance. The payment figures indicated a decline in spending on Snowflake’s services, leading employees of Snowflake’s rival, Databricks, to take to social media and suggest that Instacart was shifting its workloads to Databricks. Snowflake employees fired back, claiming the numbers were being taken out of context and accusing Databricks of spinning a false narrative. The controversy escalated on platforms like Reddit, LinkedIn, and Twitter, with some posts since being deleted, creating a fierce rivalry between the two companies.
The Deleted Blog Posts and Case Study
In the midst of the controversy, Instacart deleted a blog post titled “How Instacart Ads Modularized Data Pipelines With Lakehouse Architecture and Spark.” The blog discussed a migration to Databricks’ technology and the resulting cost savings. Similarly, Databricks removed a case study outlining Instacart’s use of its technology. However, both companies still have other related content on their websites. Representatives from Instacart, Snowflake, and Databricks declined to comment on the situation, further fueling speculation.
Looking closer at the figures presented in the IPO filing, it becomes clear that the decline in spending on Snowflake’s services is not as drastic as initially thought. The footnote in the filing indicates that while Instacart’s payments to Snowflake declined by $13 million in 2023, the actual usage of Snowflake’s technology only dropped by $17 million. On an annualized basis, this equates to a decrease of approximately 21% rather than the alarming 71% portrayed by the payment figures. This discrepancy highlights the importance of considering the context and accurately interpreting financial data.
The Role of Frank Slootman
The controversy surrounding the Snowflake and Instacart relationship was only brought to light because of Frank Slootman’s position on Instacart’s board. As the CEO of Snowflake, Slootman’s involvement raises questions about a potential conflict of interest and the transparency of financial disclosures. It is essential for companies to ensure that board members have no conflicting ties to the partners or competitors of the company they serve.
Snowflake’s Statement
In response to the social media firestorm, Snowflake released a blog post titled “Snowflake and Instacart: The Facts.” The post emphasized that Instacart’s use of Snowflake’s technology had been misrepresented on social media. Snowflake did not mention Databricks in the post, a consistent approach for the company, which avoids naming Databricks as a competitor in its financial filings. Snowflake clarified that it works extensively with various teams within Instacart, highlighting the breadth of its technology’s usage throughout the company. The post also challenged the conflation of payment schedules with actual usage, stating that a decline in spending does not signify a loss of business to an unnamed competitor.
The controversy between Snowflake and Instacart comes at a crucial time as Instacart attempts to enter the tech IPO market, which has been stagnant for nearly two years. The IPO process allows for multiple updates to the prospectus, giving Instacart the opportunity to address the matter with investors and clarify any misconceptions. It is imperative for Instacart to provide comprehensive and transparent information to instill confidence in potential investors.
The Snowflake and Instacart controversy sparked a fierce social media battle between the two companies. While the initial payment figures suggested a substantial decline in spending on Snowflake’s services, further analysis revealed a less dramatic decline in actual usage. The deleted blog posts and case study added to the confusion surrounding the situation. The involvement of Frank Slootman as a board member raised concerns about potential conflicts of interest. Snowflake’s statements aimed to set the record straight and emphasize its extensive collaboration with Instacart. This controversy serves as a reminder of the complexities of business relationships and the importance of accurate financial disclosure.
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