Josh James, who founded Utah-based tech company Domo in 2010 and earned more than $12.3 million there in 2021, resigned effective March 1, according to a company news release.
Replacing James as CEO and joining the American Fork company’s board of directors is John Mellor, 55, Domo’s chief strategy officer since 2019.
The software company is considered one of Utah’s few “unicorns” — privately held startups valued at $1 billion or more — though its finances raised questions when it went public in 2018.
Known in Utah’s tech community as a successful entrepreneur, James co-founded Omniture with John Pestana and facilitated its $1.8 billion acquisition by Adobe before starting Domo.
Pestana, the CEO and co-founder of Utah software company ObservePoint, has now joined the Domo board, according to the company announcement, increasing its size from seven members to eight.
A company agreement with James, filed with the Securities and Exchange Commission, says that if Pestana leaves the board before the agreement terminates in 2023, James will be entitled to identify a new independent director to replace him. The board also will not expand in size without James’ consent, during the term of the agreement.
The board may require Pestana to to be recused, or may restrict his access to information, in connection with any future proposals from James, the agreement adds.
Recent tax break
James made headlines this year after he suggested Domo was awarded a Utah tax incentive worth up to $23 million to keep the company in Utah, even though he reportedly had no plans to relocate. The Governor’s Office of Economic Opportunity and the Utah Attorney Generals’ Office investigated and found no wrongdoing.
The company retained the tax benefit, known as Economic Development Tax Increment Financing. Such incentives run from five to 20 years, enabling companies to earn a portion of the total refund every year if they meet goals specified in the incentive.
Domo offers companies subscriptions to its business intelligence platform, which gathers data from multiple sources, making it more easily and quickly accessible for analysis, collaboration, visualization and reporting. “Data is no longer a currency only to be banked, but is the fuel that drives the business,” it said in its recently filed annual report.
Domo reported that its total revenue has been increasing; for the fiscal years that ended on Jan. 31, its 2020 revenue was $173.4 million, its 2021 revenue was $210.2 million and its 2022 revenue was $258 million.
Its continuing net losses for those years were $125.7 million in 2020, $84.6 million in 2021 and $102.1 million in 2022. The company first publicly announced its platform in 2015.
In disclosing risks, the annual report also notes that the way Domo’s common stock is structured — in two classes — concentrates voting control with James.
Its Class A common stock has 40 votes per share, and its Class B common stock has one vote per share. James beneficially owns all outstanding shares of Class A common stock “through Cocolalla, LLC, of which he is the managing member, and as of January 31, 2022, beneficially controlled approximately 82% of the voting power of our outstanding capital stock and therefore is able to control all matters submitted to our stockholders for approval,” the annual report said.
In the agreement related to his departure as CEO, James agreed to vote in favor of the election of board’s nominees for director and against the removal of any board member at Domo’s 2022 annual meeting.
In the company news release, James said he was “very excited for Domo’s future” under Mellor’s stewardship as the new CEO.
“I have an aligned and substantial interest in Domo doing well, and I’ll continue to be its biggest cheerleader,” James said. “I look forward to seeing the next generation of management take Domo’s performance to the next level.”
Board of directors shuffled
In its announcement about James, Domo also announced promotions and changes to its board of directors.
Catherine Wong, Domo’s chief product officer and executive vice president of engineering since 2013, was promoted to chief operating officer.
In a shuffling of its board of directors, Carine Clark, who joined the board in 2019, was appointed as executive chair. Clark is a longtime tech executive and the current chair of the Go Utah Board, which serves as the board of directors to the Governor’s Office of Economic Opportunity.
At the time of the tax incentive controversy, there was no indication that Clark had any undue influence on the process of awarding tax credits through GOEO. A review of GOEO board meetings showed Clark recused herself from the discussion over approving the Domo incentives.
Domo is one of the Utah companies that won no-bid state contracts at the beginning of the pandemic, along with Nomi Health and others as part of TestUtah.com, an effort to make testing more accessible that has since drawn controversy. Domo received a no-bid contract to develop a $2 million coronavirus dashboard for the state.
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