Scale-out parallel file system supplier Qumulo has laid off 80 employees as it tightens its belt after failing to meet growth expectations.
The cuts were first reported in Geekwire, which cited a memo sent by CEO Bill Richter to employees in which he said that planned growth had not materialized. “We must operate a lean organization, invest where there are clear and repeatable returns, and be honest about what’s not paying off or sustainable,” he wrote.
It needs, he said, to prioritize growth and profitability – and said it had not seen a slowdown in demand.
Earlier this week Qumulo was named HPE’s Global Storage Partner of the Year 2022 because of its exceptional results in financial performance, innovative solutions, and meaningful business activities. Now it has laid off 80 people, with the headcount around 350, when expected growth did not arrive.
A source close to Qumulo told us roles in engineering, product management, sales engineering and sales ops had been cut.
The VC-funded startup raised $125 million in mid-2020, just two years ago, at a valuation of $1.2 billion. The previous raise was $93 million in 2018.
Other startups in the storage space have gained funding this year: WEKA raised $140 million in January, LucidLink raised $20 million in May, HYCU pulled in $53 million in June. But fears of a looming recession have caused a VC funding squeeze and one could speculate Qumulo may not have been able to raise more cash on terms to its liking. It would not, for example, like to be valued lower than 2020’s $1.2 billion.
Why have sales underperformed? One answer may be that its main competitor, Dell EMC, has strengthened its PowerScale product, the Isilon replacement launched in 2020. Another may be that VAST Data has emerged as a strong enterprise file system supplier with its all-flash and single-tier Universal Storage with metadata stored in storage-class memory. VAST said in March that it has grown in three years to a $300 million run rate.
Richter told us in May: “We just crossed over $100 million of pure software sales [run rate]; now we just simply only measure software. We have nearly 700 independent customers and well over 1,000 deployments.”
That run rate is a third of the size of VAST Data’s, meaning VAST – founded in 2016, four years after Qumulo – is currently outgrowing Qumulo.
A third competitor is WEKA, with its high-performance scale-out parallel file system software, which it says is enjoying hyper-growth.
Qumulo CEO Richter was president of Dell EMC’s Isilon storage division from 2012 to 2014, having been CFO at Isilon from 2007 to 2011 and working in its corporate controller office from 2006 to 2007.
Richter was an entrepreneur in residence and partner at the Madrona Venture Group from 2014 onwards, with LinkedIn saying he is still a partner there. The picture being painted is that he is a scale-out file system supplier finance guy well versed in the venture capital world.
One issue we see with Qumulo is its product market positioning. Qumulo is a scale-out parallel file system software supplier running on commodity hardware on-premises and in the main public clouds with a focus on data lake storage rather than out-and-out performance.
Richter told us in an interview in May: “What we believe customers want is a multi-cloud platform for their unstructured data. And that’s what we built. It’s very, very different from the legacy box sellers, or even some of the new emergent folks out there that have completely different points of view of what the future should be like.
“We take share from NetApp. We take share from all the legacy folks as you can imagine – Dell PowerScale, IBM. And there are some of the emergent vendors that have made specific hardware optimizations. We see them sometimes, but actually less than you might think.”
NetApp is growing, Dell is growing, WEKA is growing, VAST is growing, but Qumulo is scaling back.
Qumulo has placed itself in a mid-performance, file-serving data lake, multi-cloud software market, where there is a feeding frenzy of competition:
- Other scale-out file system suppliers with a similar data lake, second file storage story, such as Quantum.
- Cloud-based data lake suppliers such as Dremio and unified transaction/analytics cloud database/warehouse suppliers such as Snowflake and SingleStore.
- Fast on-premises unified file+ object suppliers such as Pure Storage and VAST Data.
- On-premises unified file+block suppliers such as Dell (PowerScale) and NetApp.
Could Qumulo get acquired? HPE lacks in-house file system technology and could use a PowerScale competitor in its product armory.
Richter has taken quick action to stem Qumulo’s cash burn. He now has to get its product on a more competitive footing so it can win more sales against competitors.