Famous exec Bob Muglia is out as CEO of $3.5 billion Snowflake, just weeks after saying an IPO isn't imminent
- The enterprise startup tech world was shocked on Wednesday by the news that Bob Muglia suddenly left hot startup Snowflake, replaced as CEO by Frank Slootman, another well-known name in the business.
- Under Muglia, Snowflake shot to unicorn status in just four years, and is now valued at some $3.5 billion.
- Things appeared to be going so well that in mid-April, Muglia told an interviewer that Snowflake had plenty of cash in the bank and didn't plan to do an IPO for another year or two.
- And then, suddenly, he was completely out.
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The enterprise startup tech world was shocked on Wednesday by the news that Bob Muglia suddenly left hot startup Snowflake, replaced as CEO by Frank Slootman, another well-known name in the business.
Muglia was famously known as one of Microsoft's top executives, who served under both Bill Gates and Steve Ballmer - the latter of whom fired him twice, Muglia once told Business Insider.
The first time, Ballmer demoted him from a star position to a tiny role. Muglia fought back, he said, and climbed his way back up the ladder.
His hard work in the face of that demotion won Ballmer's admiration so thoroughly that Ballmer put Muglia in charge of one of the company's four major units, the Servers and Tools business, which was doing $15 billion in revenue at the time and had 10,000 employees. Ballmer wound up firing him a second time over strategy disagreements. Ballmer promoted Satya Nadella to take Muglia's place; Nadella later became CEO after Ballmer resigned.
Snowflake offers a cloud data warehouse database, sold via Amazon Web Services, and, more recently, via Microsoft Azure cloud as well.
Over the next four years, Muglia grew the company to a $3.5 billion valuation, after two mega rounds of venture financing in 2018. All told, Snowflake has raised $923 million total.
Snowflake's backers include Sequoia, Red Point, Sutter Hill, and Capital One Growth Ventures. Snowflake also landed about 1,000 customers, it says, including Capital One, which opted to invest in the company after trying the product.
Normally, these are all signs of a healthy company; it's not common for a customer to become a strategic investor unless something is going right.
And Snowflake was doing well, even in a market that forced it to go head-to-head with giants.
It competes with Amazon Redshift, a similar database product that launched a couple of years before Snowflake. Redshift has been a hugely successful database product for Amazon. As of Amazon's last quarter, Redshift now has 10,000 customers who analyze two exabytes of data with it every day. Capital One is also a Redshift customer, notably.
Meanwhile, the second-place cloud provider, Microsoft, also has its own popular database - one that Muglia originally helped to build. About six months ago, Microsoft launched a new version of its cloud data warehouse, a product which it said has drawn more than half the Fortune 1000 onto Microsoft's cloud.
None of this appeared to scare Muglia. Snowflake actually launched its product on AWS two years after Amazon Redshift debuted. And it was growing apace, even in Redshift's shadow.
A sudden move
Things were going so well, that in an interview with the Information that published just two weeks ago, Muglia said the company had plenty of cash in the bank, was going to remain in growth and investment mode, and that he didn't plan to pursue an IPO for another year or two.
But he's not going to get the chance.
On May 1, the company announced that Muglia left the company completely.
His role as both CEO and chairman was handed over to Frank Slootman, who is best known as the hired gun CEO who took ServiceNow public in 2012, in the first big tech IPO after Facebook debut as a publicly-traded stock didn't go so well. Slootman grew ServiceNow from $75 million in revenue to $1.4 billion in six years.
He left the CEO job at ServiceNow in 2017, staying on for a while as chairman. Prior to taking ServiceNow public, Slootman was the hired CEO of DataDomain, taking it public and then selling it EMC for $2.4 billion.
Indeed, it's possible that Slootman's appointment may have something to do with his history of taking companies public.
Snowflake board member Mike Speiser, from investor Sutter Hill Ventures, said that the company's directors were pleased with Muglia's performance but believed Slootman was the "right person" for the company today, he told the Wall Street Journal.
While Slootman told the Journal that he wasn't diving straight into an IPO, insiders believe this is really why he was brought in.
One industry analyst who knows both CEOs explained to Business Insider: "[Bob Muglia] was happy. Investors needed someone to take them to IPO. Bob is a great technical leader and visionary. An IPO-type CEO requires another type of demeanor."
The execs didn't reveal revenue to the Journal, except to say it had tripled in the last year. Slootman also told the WSJ that Snowflake is not profitable, as is common for young, high-growth tech startups.
A big question
A big question: Could the board have decided and hired a new CEO in the few weeks between the publication of his interview with the Information and now?
Possibly. The enterprise tech world is a tight-knit one. For instance, Snowflake venture investor Patrick Grady, a partner at Sequoia, has known Slootman for years. Grady was a venture investor and board member for ServiceNow when Slootman was CEO.
And Muglia, for all his unquestionable success at this startup, was burning the candle at both ends. He never fully relocated from his Seattle home to the San Francisco Bay Area, where Snowflake is based. For the past seven years, since he worked at Juniper Networks, he commuted home to Seattle every week on Thursdays, the San Francisco Business Times reported.
Muglia could not be reached for comment, however he told the WSJ in an email that he was helping the company with a transistion. No doubt, this isn't the last we've heard of him.