Scale-out and parallel file services supplier Qumulo laid off around 80 people last week, attributing this to growth not meeting expectations among other factors. We asked CEO Bill Richter some questions about the circumstances surrounding the decision.
Blocks & Files: Did Qumulo try to raise additional funding in 2021 and this year?
Bill Richter: Qumulo raised $125 million in 2020 and has not needed additional capital since.
Blocks & Files: Were the growth expectations that failed to materialize the result of market factors such as COVID and China-caused supply chain issues, the Ukraine War, and lower consumer spending due to inflation? Or could you take a look at products and go-to-market structure?
Bill Richter: To be clear, we achieved record growth in the last fiscal year, and have hit records since. The supply chain challenges are real, however. Qumulo is software-defined and runs on standard storage servers supplied by a half-dozen major OEMs. So if one supplier has longer delays than another, customers have choices. That’s incredibly strategic compared to other vendors that operate on bespoke hardware from a single or narrow channel.
Qumulo’s products remain the most innovative and trusted in the industry. Ask any of our 700-plus customers or check out our 4.9 out of 5 star rating on Gartner Peer Insights from over 100 of them. We make two fundamental promises to them every time they purchase – outstanding capability on day one and constant innovation and service they can rely on in the future. It’s not enough to make half that promise, and that’s what drove our thinking about restructuring the business for long-term sustainability and profitability. Our mission is to help customers store, manage, and curate their data anywhere and forever.
Blocks & Files: If market factors were the cause, then will other storage suppliers have to hunker down, as it were, as well?
Bill Richter: I’ll let others speak for themselves. I have seen reckless spending from others in the industry and the troubling thing is the risk that creates for customers. Overly hyped, flash-in-the-pan vendors are the biggest offenders. If a storage vendor isn’t thinking about long-term sustainability, then customers should be worried.
Blocks & Files: Did the expectations fail to materialize across the breadth of Qumulo’s market or were some sectors affected more than others?
Bill Richter: Actually our demand has been strong and consistent across the geos in which we operate. We power core mission-critical applications at the heart of the enterprise, and those don’t turn off or slow down during economic cycles. I’d be more worried if my business were tied solely to GPUs powering the ups and downs of Bitcoin mining.
Blocks & Files: Can Qumulo move towards and reach profitability without additional funding?
Bill Richter: Yes, we have a very strong balance sheet and no debt outstanding. The changes we made this week were simply designed to accelerate that path. We may choose to raise capital in the future, but only opportunistically.
Blocks & Files: How will Qumulo refine its product and go-to-market strategy to enhance its growth and profitability prospects?
Bill Richter: Customers love our products and believe in our vision to help them store, manage, and curate their data anywhere, forever. The “anywhere” part is a key area of focus, which is why you’ve seen us focus so much on public cloud capabilities and HPE GreenLake, and increase the number of storage OEMs that power our software. In 2022, if you’re not thinking that way, then you’re keeping customers in the past.
We recently added some outstanding industry veteran leadership to go even faster on both go-to-market and product development. We have built powerful leveraged channels to deliver our products to customers all over the world efficiently, which is where you should expect us to double down our focus. Spending not directly tied to innovation or leveraged growth was the focus for our restructuring.
Blocks & Files: Qumulo’s leadership website shows no Chief Revenue Officer, Chief Marketing Officer, Chief Operations Officer or head of product engineering. How are these responsibilities being fulfilled? Will executives be recruited for the positions?
Bill Richter: We have a really simple leadership structure designed for customer outcomes:
- Eric Brodersen (Chief Customer Officer) is responsible for end-to-end go-to-market. From the first moment of marketing awareness, to the commercial sales process, to ongoing (and industry leading) customer success. Customers want a high-continuity experience and our GTM organizational structure is designed around that.
- Kiran Bhageshpur (Chief Technology Officer) is responsible for all of product development. Again, customers want continuity from our big vision to the features and capabilities they use today. Our leadership structure is designed around them.
- Matt Frey (Chief Financial Officer) is a seasoned industry leader who leads all of Qumulo’s business operations.
Underneath these executives, we have outstanding leaders that are aligned around our mission and more than capable of powering the business forward. As we grow, you should expect us to continue to add leadership within the organizational structure outlined above.
Blocks & Files: Should Qumulo pursue the high-performance primary file serving market for GPUs (GPUDirect for example) and similar data-intensive, low-latency application areas as well as the bulk capacity secondary data storage market?
Bill Richter: Qumulo delivers a software-defined storage solution. Our performance is more than sufficient for a wide variety of workflows, including HPC workflows, for a diverse set of customers. Furthermore, we expect, over the next 12-18 months, to more than double performance across a variety of axes through software optimizations.
Our customers value our innovations that deliver high-performance storage for a wide variety of workloads without relying on specialized hardware or non-standard software.