Why Neeva Pivoted to Enterprise AI with Snowflake 

A part of the founder's job is to see beyond the corner and get a feel of what is coming
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Annually, Google allocates about a whopping USD 10 billion to sustain its dominance in the search engine sphere. This was revealed by the US Justice Department during an ongoing antitrust trial in Washington. Google’s formidable presence and widespread use pose considerable obstacles for rival search engines trying to establish a foothold in the segment. While Google undeniably ranks among the foremost search engines, it may not necessarily be the absolute best. The search engine has its own share of problems, with many opining that Google Search has become terribly bad over time. 

However, the advent of LLM was a silver lining and presented opportunities for others to create differentiation in the search engine space. Back in 2021, Sridhar Ramaswamy and Vivek Raghunathan set out to address the gap in the search engine space and launch an alternative product. In February 2023, Neeva AI launched its search engine powered by generative AI. The LLM-powered search engine challenged Google’s fundamentals and offered an ad-free and privacy-focused search experience. 

However, just three months later, data cloud company Snowflake acquired Neeva AI for an undisclosed amount. AIM recently caught up with Sridhar Ramaswamy, who currently serves as the Senior Vice President at Snowflake, at the Bengaluru leg of the Snowflake Data Cloud World Tour 2023.

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Ramaswamy, who previously worked with Google for over 15 years, and led its USD 115 billion advertising tech division, appeared to be the right man to challenge the tech behemoth. In an exclusive interaction, he said, competition definitely creates better products. “I was passionate about search and genuinely felt that there could be a better search engine if the focus was just on the user.”

Creating a better search engine 

Neeva AI was indeed an ambitious project, given that even Microsoft, with all its might and GPT-4 integration, has not managed to cause Google any trouble in the search engine space. Ramaswamy’s primary focus was not to break Google’s near-hegemony but to create a better search engine for users. “Yes, it was an ambitious project,” he notes but so was Google. 

“But part of the benefits you have as a startup is you can change your techniques when you see an opportunity. And so, while the first two to three years of Neeva were very difficult, both technically and in terms of product adoption, early last year, we saw what was happening with GPT-3 and realised that that could be a technological breakthrough,” he said.

“Users like answers upfront and do not want ten different links to further delve into searching for the correct answer,” Ramaswamy, who also worked at Bell Labs for three years, said. While ChatGPT, initially was touted to be a Google killer, its knowledge was limited to September 2021, back then. “ChatGPT can’t give you real-time data but Neeva can,” Ramaswamy had said, at the time. 

Interestingly, Neeva AI was not the only search engine building on the strength of generative AI and making strides in the search engine space. You.com and Perplexity are among the companies that ventured into the search engine market, each offering unique value propositions. However, the surprising twist came when Snowflake acquired Neeva merely three months later, leaving millions of users who were hoping for a superior product taken aback.

The grim reality

The search engine space could possibly be the toughest space to enter for a startup. Ramaswamy states that becoming the default search engine in Safari, as it turns out, is an incredibly convoluted endeavour. In reality, there is no formal process; it all hinges on Cupertino’s (Apple’s) subjective judgement of one’s qualifications. “There is no process and it’s pretty tough to create a sustainable business,” the veteran said.

Since its inception, Neeva AI raised USD 77.5 million in funding prior to being acquired by Snowflake. “The weird thing is that we absolutely could have raised another round since we created an amazing product in a very hot space.” But, Ramaswamy believes a part of a founder’s job is to see beyond the corner to gauge what is coming.

He said Neeva was not on the path to a sustainable valuation. Today, Software-as-a-service (SaaS) companies are getting valued at 10-15 times their revenue. “So to justify our previous USD 300 million valuation, we needed to make USD 20 million in revenue. Even though we might have hit 10 million this year, not USD 20 million and hence we just felt like we were out of time.”

Moreover, the search engine market, unequivocally dominated by Google, paints a disconcerting picture of digital monopolisation. Google’s overwhelming presence stifles competition, curbs innovation, and raises privacy concerns. In fact, Google’s monopoly has not gone unnoticed in the eyes of law. Google will soon be subject to the biggest antitrust lawsuit in over a decade

Bringing LLM search to enterprise 

When the duo realised it was no longer feasible for the company to carry on in the consumer search space, they decided to make better use of their resources and looked towards enterprise. “We had amassed considerable expertise in the realm of search technology, particularly in cost-effective AI utilisation. We recognised the potential of these assets to effect substantial change and decided to integrate them into an enterprise where their impact could be truly transformative.”

Snowflake became the top choice because the co-founders of Neeva found the company sincere in its desire to focus on AI/ML and deliver great products to customers. “I had multiple chats with Snowflake, including the co-founder Benoît Dageville. We thought it would be like a very natural cultural affinity between the teams and a chance for us to make a big difference. And in fact, we have merged all of the machine learning and AI teams within Snowflake under my co-founder Vivek.”

Integrating Neeva’s search capabilities brings a host of benefits for Snowflake’s customers. “Our focus lies in developing conversational marketplace and catalogue search solutions. Additionally, we also have incredible expertise with language models. These areas are integral to enhancing Snowflake’s core product. As we introduce these functionalities, we anticipate increased customer adoption, thereby driving higher consumption,” he concluded.

Pritam Bordoloi
I have a keen interest in creative writing and artificial intelligence. As a journalist, I deep dive into the world of technology and analyse how it’s restructuring business models and reshaping society.

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