CreekPath Seeks New CEO

CreekPath Systems Inc. CEO Dennis Grant is stepping down as chief executive and becoming chairman of the board.

The SRM startup now has an interim CEO: Steven West, founder of Emerging Company Partners and former CEO of Hitachi Data Systems (HDS). West, who also sits on the board of Cisco Systems Inc. (Nasdaq: CSCO), will help with the search for Grant's replacement.

With the title change, Grant will take on a more strategic role and relinquish day-to-day duties, says a company spokeswoman. Grant became CEO in November 2002 and has since served on the company's board. CreekPath's previous chairman, Mark Perry, representing VC firm New Enterprise Associates, will remain a member of the board. No other board changes are being made.

"This doesn't smell good," says Kaushik Roy, analyst at Susquehanna Financial Group. "It seems like [Grant] is getting pushed out of operations. Otherwise, they would have already groomed a new CEO internally or decided on one from the outside."

Meanwhile, other changes at CreekPath are afoot. The company laid off employees a few weeks ago, but spokespeople would not say how many. Among those departing recently is VP of marketing Scott Hansbury, who was eventually replaced by new SVP of marketing and business development, Swamy Viswanathan (see CreekPath Appoints New SVP).CreekPath is "realigning" its staff to support new product development and has brought in almost as many new faces as it let go, says director of product marketing Paula Dallabetta (who's been there for a while). In addition to Viswanathan, recent hires in the executive ranks include VP of engineering Mark Sutter and VP of professional services Todd Blackmon.

The upheaval appears to be aimed at kickstarting the company's stalled momentum. Just a few months ago, CreekPath reeled in $22 million in funding, adding to its mystique as one of the more promising players on the SRM scene (see CreekPath Reels In $22M). Yet company sources have claimed 50 customers for many months. By comparison, fellow SRM startup AppIQ Inc. claims 125 customers to date (see AppIQ Recaps 2004).

"I heard a lot of good things [about CreekPath] as recently as six to nine months ago, even from large customers," says Susquehanna's Roy. "But in the recent past I haven't heard anything new from customers talking about CreekPath."

An example of CreekPath's attempts to lay low included missing a scheduled appearance at RBC Capital Markets Fabric Computing Forum event in New York earlier this month. The vendor was on the original schedule, but pulled out a week before the event without explanation.

All this turmoil fuels speculation that CreekPath is staking out a new direction -- perhaps via acquisition. A Merrill Lynch & Co. Inc. research note last September cited EMC Corp. (NYSE: EMC) as a suitor, but the report's author, Shebly Seyrafi, thinks time is getting short for that possibility."There aren't too many companies left of interest to EMC," says Seyrafi. "That's one of the reasons EMC went outside of storage to build its software business. The incremental revenue opportunity is 17-fold higher by going outside of storage."

EMC acquired System Management Arts Inc. (Smarts), a maker of network-correlation software, for $260 million in December (see EMC Gets Smarts).

Brett Mendel, Senior Analyst, Byte and Switch Insider