As upstart tech companies experience rapid growth, some of the old guard — including Microsoft and Oracle — are starting to stagnate. Snowflake, for example, recently reported an impressive quarterly sales bump, up 83% to $497 million, an indication that new, cloud-powered companies are closing the gap between startups and big tech “boomer” companies. Another multi-billion-dollar unicorn, Databricks, has surpassed $1 billion in annualized revenue; it also boasts a robust valuation of $38 billion.
At the same time, Microsoft and Salesforce have reduced their short-term outlooks, resulting in stock drops and cost-cutting measures — including hiring freezes — and Oracle has already started laying off talent. The big tech software companies seem to be bracing for a potential recession, and smaller companies are capitalizing, harnessing investor and customer enthusiasm for new options.
The industry-wide pivot to the cloud, as well as the emphasis on digital transformation, in general, isn’t doing any favors for superstar companies like Salesforce or titans like Amazon. These same companies have already proven that cloud computing has the power to create new innovators. And although the titans will continue to dominate, the upstarts — like Snowflake and Databricks — have the potential to evolve into the next generation of major players.