Instacart's IPO filing suggests its Snowflake cloud spending will fall 71% YoY in 2023, sparking an online spat between staff of rivals Snowflake and Databricks
CNBCAri Levy
Context & Ripple Effects
Instacart's filing followed an IPO submission that showed a profitable 2022 and continued revenue growth in the first half of 2023, making its vendor-cost disclosures newly visible to public-market readers. The earlier IPO filing supplied the broader operating context for this spending signal.
The contrast is notable because Instacart had earlier added Snowflake CEO Frank Slootman to its board as it prepared for an eventual listing. That board appointment underscored the companies' prior proximity, without establishing why usage is now expected to decline.
First-order effects
Instacart is expected to materially reduce its 2023 outlay to Snowflake, lowering the near-term value of that customer relationship for Snowflake.
The disclosure gives Snowflake and Databricks employees a public data point for their rivalry, but it does not establish that Instacart has shifted the spending to Databricks.
Second-order effects
A prominent customer's disclosed reduction can increase scrutiny of Snowflake's consumption-based revenue exposure and of the retention or expansion of large accounts.
Data-platform rivals gain an incentive to frame cost control and workload efficiency as competitive advantages when buyers reassess cloud-data spend.
Third-order effects
If similar disclosures recur, public-company filings could make enterprise data-platform procurement more transparent and intensify competition around usage efficiency rather than headline adoption.
The broader implication is a more procurement-led market for cloud data services, where vendors must defend recurring consumption as customers tune workloads and costs.
The trend: This is one data point in the shift toward tighter governance of cloud-data consumption, with vendor growth increasingly shaped by customers' workload and cost optimization.
Never expected to see tech drama between cloud storage providers. It looks like Instacart migrated from Snowflake to Databricks and dropped their spending with Snowflake by 71%. This makes Snowflake look like the expensive choice and unfortunately for everyone involved, Snowfla…
One Reddit user wrote a post a few months ago, titled “Databricks and Snowflake: Stop fighting on social.” A commenter responded, “Is this the pro-wrestling of data engineering?”
@GrainSurgeon The biggest learning here I see is that all of this could have been avoided by Instacart not having the CEO of one of their biggest vendor on their board. Because all this started thanks to having to disclose Snowflake spending thanks to a conflict of interest via S…
Got more details: there is no Snowflake to Databricks migration happening at Instacart. It's Amazon Kinesis Data Firehose to Databricks migration for ETL pipelines; and a separate Snowflake cost optimization (likely not just Snowflake btw) So, business as usual pretty much?
Snowflake's CEO is on the board of directors for Instacart. The thing that blew my mind is how my email addressed only to Instacart's press team ended up at Snowflake (who I never contacted) and why Snowflake makes/can make definite statements on behalf of Instacart.
Interesting: Instacart deleted their Engineering blog post titled How Instacart Ads modularised data pipelines with Lakehouse architecture and Spark. Lakehouse architecture & Spark == Databricks, so they explained this migration. Only a 404 here: https://www.instacart.com/... [im…
@jakozaur In the end my take is: good on Instacart for 1. Optimizing their spend 2. Choosing technologies that work the best for the eng team's needs for features & cost, regardless of who is on the company's board 3. Everyone is optimizing vendor spend, not just Instacart.
Good addition by @jakozaur: Instacart usage of Snowflake might not be down by as much as their annual spend is. They could have eg prepaid in 2022 (hence the large bill) and doing so could have helped the company generate a profit in H1 2023. It is unclear if this happened from..…
According to Snowflake - who seem to have insider knowledge from Instacart, and somehow get my press questions routed to them - “Instacart is not migrating any additional workloads. Snowflake serves as the backbone of Instacart's data system.” Instacart never told me anything.
Dug into this. Instacart cut Snowflake spend by 70% in 2023, while starting to migrate ETL loads to Databricks - then deletes blog post detailing migration. I email Instacart press team with questions but Snowlake press team comes back with a comment on behalf of Instacart 🤯