Did VCs sideline Snow’s CEO?
On September 27th Snow announced they had crossed the $100m milestone for revenue, citing growth in Cloud as the primary driver. They’re optimistic that the challenges in managing “As-A-Service” IT deployments will benefit them over the coming years, citing recent Gartner research on growth in that sector in the press release.
So far, so what? Just a standard results press release that’s light on detail, as is usual for a privately-held company where they cite growth but don’t publish profit figures. Then comes the interesting bit – founder Axel Kling is handing over day-to-day running of the company to current Chief Operations Officer Vishal Rao. This is somewhat buried in the press release and feels rather odd. It isn’t every day that a company crosses a significant milestone and then moves their founder to a new role. So, who is Vishal, and what might be the reasons for these changes?
Rao joined the Snow board in 2016 and only became full-time COO in July 2018. He has a background in “cloud-first” organisations including Splunk and most recently Cloudera. He has also worked in the ITSM space with BMC & Remedy. Splunk are strong in network scanning, primarily for IT Security Operations, and Cloudera specialise in machine learning and analytics. As ITAM evolves to meet the expanded regulatory and legal demands of the Cloud, this background has the potential to benefit Snow.
The Venture Capital angle
Shortly after Vishal’s appointment to the board, Snow secured additional funding – including $120m from Sumeru Equity Partners & Ontario Pension Board in 2017. Snow have remained privately-held since Axel founded them in 1997 – by no means unusual for a Scandinavian firm of their size. Prior to the investment in 2017, Snow’s sole VC (Venture Capital) investor was Vitruvian Partners who have been onboard since 2012 and have therefore overseen Snow’s growth to the market leader they are today. Clearly Vitruvian had faith in Axel for a number of years and they’ve benefitted from growth over that period.
The Growth Angle
With growth often comes a degree of pain. Snow revenues have grown at least 50% year-on-year since 2012 (source: Vitruvian Partners) and they experienced rapid employee growth in 2016. In my experience as a former Snow customer it was noticeable around this time that service levels and release quality both dropped off. With the release of Snow License Manager 8 came a commitment to quarterly updates but these put pressure on the partner network, particularly for cloud-hosted clients. Feature growth has been somewhat cautious since then and I’m not convinced by their in-house approach to addressing the need for “As-A-Service” inventory, compliance, and optimisation requirements of their customers. From company reviews on Glassdoor it appears that there are some organisational issues in the US operation. With the US accounting for the majority of Snow’s revenue is there a concern that growth in that market is suffering?
What about Axel?
Axel has moved to Innovation and Strategy, a shift reminiscent of Bill Gates stepping aside at Microsoft. It remains to be seen if Rao is a Ballmer or a Nadella. The press release is light on detail about Axel’s new role, and even lighter on praise for his efforts in growing Snow to the market-leader position it holds today. I’m surprised not to see more of a celebration of his contribution to both Snow and the ITAM market as a whole. Instead there are comments such as;
“The journey ahead under Vishal’s operational leadership with Axel focusing on innovation and strategy promises to fulfil more of Snow’s potential”
“We’re confident that under this new leadership structure the Snow team will be able to fully realize the opportunity in front of them”
– both of these are from VC partners, so is this evidence of dissatisfaction with financial performance? Is there a feeling that earnings haven’t matched growth and that an operational hand on the tiller is required? There comes a time in every IT start-up’s journey where that becomes essential, and typically it is handed to someone with Operational experience to deliver. Has this been planned for some time? Rao was only appointed COO in July 2018 so by any measure this is a rapid rise to the driving seat.
Snow customers are seeing commitments to improve service and deliver new features, in particular business analytics functionality to improve reporting. With Vishal’s long-standing operational focus and recent experience with cloud-first organisations it would appear Snow are well-placed to push through these growing pains under his leadership.
- Tags: CEO · executive board · Snow · Snow Software