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Comment by davedx | Hacker News Reader

Sounds like Snowflake. If you dig into their income statement you see on 264m revenue, they spend 293m on Sales and marketing. [1] Whether Snowflake is actually a great data warehouse product or not, the main driver of its success is that they spend more than a quarter of a billion dollars per year selling it.

This is the state of play in the SaaS business.

[1] https://www.sec.gov/Archives/edgar/data/1640147/000162828020...

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That is pretty normal on high scaling SaaS solutions. If you earn 100k a year on a solution, and you know they in average stay for 5 years, you might spend 150k to acquire them as it is still a good business.

By that logic, as long as you're growing you'll always be losing tons of money and never be profitable? How is that a good business model? I mean we're only talking about revenue vs sales and marketing spend here -- the business has a load of other costs too.

You're effectively gambling on running out of new customers at some point. What a world!

That's a great business model if you have investors. You get a proven long-term return of 25% per annum.

If you're doing it out of your own bank account, you'll bankrupt before realising this return: it's not a lifestyle business.

> as long as you're growing you'll always be losing tons of money and never be profitable?

Basically yea. This effect is just assumed in the world of physical products. As long as you're growing you're nearly out of business because you need to use N revenues to buy your next N+1 of stock.

You hit a tipping point with enough market grab that customers start to approach you without advertising.

There is volume discount as you grow.

There is upsell potential on the customers you've signed.

As your signed customers grow their pockets grow to spend more on the solution.

Takes about 3-6. If I use Snowflake today at company X without issue and I switch jobs in a couple years to a new company that hasn't picked their platform, what do you think most people will pick?

Snowflake is basically the alternative to Google big-query. It's slightly cumbersome and needs a better Web UI but pretty good. It meshes the idea of public and private databases.

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