Fast forward to October, and Slootman is not only CEO of a new company, ServiceNow, but is getting his old band from Data Domain — which he sold to EMC in 2009 after a takeover battle with NetApp — back together.

So what is ServiceNow? It was started in 2003 by Fred Luddy, the former CTO of help-desk management outfits Peregrine Systems and Remedy, one of which is now part of Hewlett-Packard, the other part of BMC. The ServiceNow idea is basically to compete with HP and BMC by replacing those old on-premise help desk management applications with a cloud-based software-as-a-service offering.

ServiceNow has grown like crazy, doubling its sales every year for eight years in a row — it now has 500 employees and boasts $130 million in recurring revenue. Slootman joined as CEO in April. And now he’s hired a bunch of his old buddies from Data Domain to join him.

Having earlier in the week tapped Arne Josefsberg — a 25-year Microsoft veteran who was most recently general manager of the Windows Azure service — as its chief technology officer, ServiceNow has just hired a batch of Data Domain guys away from EMC:

• Michael Scarpelli, the former CFO of Data Domain will now be ServiceNow’s CFO.
• Dan McGee, the onetime senior vice president of engineering, will be — you guessed it — senior vice president of engineering.
• David Schneider will be senior vice president of worldwide sales and service, taking the same title he held at Data Domain.

Though people know Slootman primarily for his work in the storage business at Data Domain — which he ultimately sold to EMC for $2.1 billion — he calls his journey into that line of business a “diversion.” Before Data Domain, he was a senior executive at Borland Software. “Before I was a storage guy, I was an applications guy. I worked in the software layer, so this is right in my wheelhouse,” he told me. “People say the cloud is hot, but what’s even hotter is cloud management, because people need software to manage it, and we’re right smack in the middle of that set of issues.”

So what’s the plan for ServiceNow? To kick things up a notch, naturally. “We’re getting the company IPO-ready,” Slootman says. And while it hasn’t hired any bankers yet, it’s not for nothing that Slootman just brought in a team of trusted execs who were along for the ride with Data Domain’s 2007 IPO and subsequent acquisition.

If and when it happens, a ServiceNow IPO will be rather different from so many others in recent history. ServiceNow is already cash-flow positive: It has $70 million in cash on the balance sheet, Slootman says, and started with practically no venture capital. It took a small $2.5 million round from JMI Equity in 2005; in 2009, Sequoia Capital invested by buying out some employees’ shares, and Sequoia’s Doug Leone joined the board of directors.

So what happened at Greylock? “I found out that I don’t have the temperament or disposition or DNA set to be a venture capitalist,” Slootman told me. “A lot of people told me I wouldn’t last, and they knew me better than I knew myself. If you’re going to fail at something, it’s best to fail fast and move on to the next thing.”

Slootman had helmed Data Domain from its founding in 2001 through its public offering in 2007 and sold it to EMC for $2.4 billion in 2009 following a bidding war with NetApp.

Data Domain’s claim to fame is a technology called deduplication that allowed hard drives to get competitive with tape systems for backup. When making daily backups if only 2 percent of your data has changed why back up the other 98 percent every day? The amount of data you have to manage quickly explodes, and the only way to manage it in a cost-effective manner was to use tape systems. Data Domain changed that. “We neutralized the cost advantage that tape had and tore down the tape storage business in the process,” Slootman told me.

Data Domain was one of the early targets in the string of enterprise storage deals that included the bidding war between Dell and Hewlett-Packard over 3Par, and another EMC deal for Isilon. After EMC closed its deal for Data Domain, Slootman stayed on for 18 months in order to help with the transition.

And though Greylock is best known for its investments in two giants of social networking LinkedIn and Facebook, Slootman said he’s joining to “bring more firepower” to its enterprise team. “There’s basically two activities in venture capital these days, enterprise and consumer,” he said. “There’s a lot of opportunities in data center storage and infrastructure technologies, networking, virtualization, enterprise apps. Basically stuff that gets sold to companies,” he said.

He says he’ll be on the lookout for companies that can repeat the what Data Domain did: Tear down an industry. “There’s only so much money in the world or in an industry. People are not going to spend net incremental money unless you can reduce their spending somewhere else,” he told me. “Your game is to move the money from point A to point B. You’re looking for wholesale replacement of things that people are already doing, but doing it better, cheaper or faster.”

Cloud computing presents an interesting opportunity he says. Unlike the pre-cloud days with applications were tied to specific hardware, cloud-based services tend to require that everything in the data center be standardized. Getting all that gear to run efficiently requires virtualization — essentially allowing one machine to act like many. Virtualization makes it easy and efficient to get services up and running without a lot of hassle, but also to shut things down easily when they’re not needed. “Big companies are looking for ways to pay by the drink. They want to be able to scale up and down.”

Greylock’s most recent enterprise investments was a $6.3 million stake in Proferi, a cloud based enterprise performance management firm that’s still in stealth mode. Andreessen Horowitz and Peoplesoft founder Dave Duffield also participated in that round. Others include Pure Storage, another company in stealth mode, and Cloudera. All three were led by Aneel Bhusri, who was an early investor in Data Domain and served as its chairman.

Which is exactly what Data Domain did.

One consolation: NetApp (NTAP) may have failed as a suitor, but it received a $57 million breakup fee from Data Domain (DDUP) as a result of the termination of the agreement.

Still, it’s a tough blow for NetApp (NTAP), which will now focus on “existing growth opportunities” instead of ill-starred bidding wars with rivals.

Said Dan Warmenhoven, NetApp’s chairman and CEO: “While NetApp’s acquisition of Data Domain would have produced benefits for customers and employees and complemented NetApp’s existing growth trajectory, we remain highly confident in our already compelling strategic plan, market opportunities, and competitive strengths.”

“NetApp applies a disciplined approach to acquisitions, one focused intently on creating long-term value for our stockholders.” Warmerhoven added. “We therefore cannot justify engaging in an increasingly expensive and dilutive bidding war that would diminish the deal’s strategic and financial benefits. NetApp has established leadership positions in virtualized infrastructure, storage efficiency, and unified storage, even in these difficult economic times, by helping customers meet their business objectives with less physical storage while reducing costs. That commitment will not change. We look forward to continuing to build on our foundation of innovation and customer service, and to continuing to execute our successful growth strategy.”

[Image credit: despair.com]