Snowflake CEO Bob Muglia replaced by former ServiceNow CEO

In an apparent ouster, former Snowflake CEO Bob Muglia abruptly left the company after leading the cloud data warehouse vendor for the last five years.

The data-warehouse-as-a-service vendor replaced Muglia with former ServiceNow CEO Frank Slootman as its new chairman and CEO.

The unexpected change in leadership comes as Snowflake, a once obscure startup, has surged through a period of rapid growth, raising nearly $1 billion in venture funding since it was founded in 2012 and building itself into a position to viably compete with the likes of tech giant Amazon.

The vendor is likely headed toward an initial public offering (IPO). Slootman's experience taking ServiceNow and also Data Domain public appears to position him well for that kind of business leadership.

Muglia, a former longtime Microsoft executive, led Snowflake through a crucial growth period, said Donald Farmer, an analyst at TreeHive Strategy.

"[Muglia's] time at Snowflake has seen outstanding commercial growth built on a combination of high customer satisfaction, smart pricing and very effective marketing," Farmer said.

But Muglia's departure looks like he was "pushed out in a move to get costs in line," said Tony Baer, principal analyst at Ovum, based in London.

"He's not the technical architect, but ... he knows how to develop a major database platform service," Baer said. "He's the guy who knows how to build the channel and who knows how to build a formidable sales organization. He clearly brought his Microsoft DNA [to Snowflake] and was very successful at it."

He's not the technical architect, but ... he knows how to develop a major database platform service.

In a May 1 statement, the Snowflake board of directors thanked Muglia for his efforts in building the vendor's business and brand and said they look forward to working with him through the transition. Snowflake representatives declined a request for further comment on Muglia's departure and the new Snowflake CEO.

Before arriving at Snowflake, Slootman most recently ran his own venture fund and sat on the boards of Elementum, Pure Storage and Medallia Inc.; he is still a member of the Elementum and Pure Storage boards.

From 2011 to 2017, Slootman was chairman and CEO of ServiceNow, a leading SaaS vendor, with a market capitalization of $31.6 billion.

While at ServiceNow, Slootman led the company through an IPO that helped boost its revenue from $100 million to $1.4 billion.

Frank Slootman

Before that, Slootman took data backup vendor Data Domain through an IPO process as chairman and CEO.

The change in leadership comes as Snowflake has been gaining momentum in the data management services industry and is looking to better position itself among tech giants, like AWS and Microsoft. AWS boasts the Redshift data warehouse, and Microsoft has the Azure cloud platform.

Snowflake has raised nearly $923 million in venture capital funding from investors such as Sequoia Capital and Meritech Capital. The company was valued at $3.5 billion as of a funding round in October.

"The fact that they are actually a viable competitor to Amazon -- and they're not Azure -- is quite a miracle," Baer said. "They really got to elasticity in the data warehouse first, before [Amazon] Redshift. Snowflake beat Amazon to its own game there."

Experts said the vendor may be positioning itself for a forthcoming IPO -- a process Slootman knows well. Muglia had recently told Silicon Valley Business Journal that he expected to take Snowflake public in 2020 or 2021.

But like other alternative data warehouses on cloud technologies, Snowflake faces challenges in how it approaches the new field.

"The current state of cloud data warehousing is that it is a healthy market, but with little in the way of important product differentiation," said Curt Monash, longtime database management system industry observer.

The popular use cases for cloud data warehouse are ones for which commodity features suffice, Monash said. Commodity features, meanwhile, are the strong suit of competitive cloud providers such as AWS and Microsoft.

Bob Muglia

Snowflake was Muglia's first CEO role.

Before becoming Snowflake CEO, Muglia was a prominent figure at Microsoft for more than two decades.

He worked in a variety of roles at Microsoft, the last as president of Microsoft's $16 billion server and tools business, responsible for products such as Windows Server, SQL Server, System Center and Windows Azure.

In a memo to staff in 2011 announcing Muglia's removal from that job, former Microsoft CEO Steve Ballmer said it was time to put in place new leadership for future growth.

"This is simply recognition that all businesses go through cycles and need new and different talent to manage through those cycles," Ballmer wrote.

Senior news writer Jack Vaughan contributed to this story.