How a Small Startup Outmaneuvered Amazon Web Services

In 2006, Amazon Web Services revolutionized the tech landscape by offering virtual computing and storage solutions, setting the stage for a future of cloud-based services. Within this environment, a new player emerged: Snowflake. From humble beginnings, Snowflake aimed to become a cornerstone in the cloud data warehousing realm, even as AWS announced its own data warehouse solution, Redshift, in 2012. According to Fortune, this was where the story of David and Goliath played out in the modern tech theatre.

The Birth of Redshift: An Industry Awakening

When AWS debuted Redshift, a seemingly insurmountable challenge arose for Snowflake. AWS’s strategy was not novel; they levied low prices akin to software ‘freebies’ long-present in big tech tactics. Investors doubted Snowflake’s resilience against such a powerhouse. AWS’s formidable presence was reinforced by historically overwhelming competitors and influential positioning. Yet, within nine months, AWS attracted over 1,000 Redshift customers, pointing to an untapped thirst for cloud data solutions.

The Flaws in Goliath’s Armor

Despite gaining traction, AWS’s Redshift had a fundamental flaw: it was adapted rapidly from an on-premises solution, ParAccel, and didn’t fully exploit the cloud’s potential. This rushed cloud adaptation highlighted the difference between merely porting solutions and genuinely building for cloud-native efficiency. As businesses recognized the advantages of fully cloud-based solutions, Snowflake’s decision to persevere started to pay dividends.

Snowflake’s Strategic Patience

By 2015, Snowflake’s cloud-built data warehouse entered the market, albeit still competing against a formidable AWS with established customer bases. Despite these challenges, Snowflake’s foresight bore fruit; Redshift’s limitations became evident as it failed to scale with expanding workloads, bottlenecked by legacy designs.

Turning AWS’s Strength into a Catalyst

Snowflake capitalized on AWS’s market disruption. As Redshift users hit capacity walls, the limitations of a product designed for past technology paradigms became clear. Snowflake leveraged these opportunities, offering scalable solutions tailored to harness cloud computing’s full potential. Former CEO Bob Muglia optimistically foresaw Redshift customers naturally gravitating towards Snowflake’s innovative cloud solutions.

Ultimately, this David didn’t just survive—Snowflake thrived, transforming AWS’s initial threat into a keystone of their commercial success.

Excerpted from “Make It Snow: From Zero to Billions” by Denise Persson and Chris Degnan. Remember, the Fortune Global Forum returns in 2025 in Riyadh—don’t miss out on shaping the business future!