Sramana Mitra: Let’s switch gears a bit and talk about hyper growth. The SaaS industry, especially, is going through hyper growth and there are lots of great companies in the market right now that are going through hyper growth. You sit on the board on one of the most prominent of those. Tell us what you have learned about managing hyper growth.
Anita Sands: First of all, it has been an amazing experience. I’ve been on the board for four years now. The company was doing very well before I got there. Hopefully, it will be doing very well after I leave. I think there are some great lessons to be learned. Some of these will seem obvious. When you really see where the rubber hits the road, they’re not that obvious at all. I have yet to see a company that is as disciplined around execution and that has a high performance culture as ServiceNow has. That’s been embedded in their genome from day one. That’s my number one observation.
The second thing is, they have a myopic focus on the customer. From the very early days, they really wanted to do something that could make the lives of their customer better. They stayed relentlessly focused on that. They’re now working through the creation of a customer success organization because they are becoming a predominant player in the ecosystem of major enterprises. That’s been very important.
The third thing was really a leadership question. I give Fred Luddy a tremendous amount of credit here. Fred was a little older when he started ServiceNow. He had the maturity, foresight, and self-awareness to appreciate that there was going to come a time when he wasn’t the right person to lead the company. He’s still involved. He’s the Chairman of our Board. He remains involved as an iconic figure loved by employees and customers alike. He realized that he needs to bring in a professional CEO who knew how to scale a company and who knew how to put all of the pieces in place to create the success story that has happened today.
Fred handed the reins over at the right point in time. I’m working with and advising a lot of earlier stage startups. Many of them have this technical founder in place. Some of them really don’t have that same level of comfort, confidence, or self-awareness to realize that their company could do so much better by bringing in a CEO who’s actually not learning everything on the job. It’s a great thing for these founders to embrace running a company and starting up and getting going.
But really? Do you want to have to learn every single thing new on the margin as a first-time CEO? I think that jeopardizes your chances of success to quite an extent, depending on the individual in question. Equally to give Frank his dues, Frank realized that he had taken the company right through the IPO to the $2 billion in revenue. They publicly stated an objective of $4 billion in revenue by 2020, which they’re on a great path to achieve. ServiceNow started by selling into the CIO organization, but it is a workflow platform that extends across the enterprise.
Now, they’re selling into other parts of the enterprise. They’re selling into marketing. They’re selling into HR. They’re selling into customer service. Frank said, “Could I lead this company for the next phase? Yes, I could. Is there somebody out there who could do a better job, who knows enterprise transformation, and who knows the world beyond the CIO domain? Absolutely.” He set out the expectation that when the time came he would hand over the reins. As a Board Director, that was a very magnanimous, mature, and thoughtful approach.
We had the luxury of solving for an outcome and not a timeline. We could look at candidates over a period of time. When we really felt we had complete conviction around a certain individual, we could act. Therefore, when John Donahoe came along, the Board found his vision and experience very compelling. What we loved about John were two things. One is that he comes from the consumer world.
Frank and Fred had a really strong conviction that the expectations of customers and employees are merging. It’s not okay for customers to have this seamless and delightful experience with all of the software they’re using in their home lives and then they walk across the threshold into a company and have to deal with the clunky, outdated, unintuitive applications. We don’t think that’s the future. We don’t think that’s acceptable anymore. We wanted somebody that brought that consumer DNA into the company.
John was also the CEO of Bain, the consulting group. He has a very deep set of experiences in enterprise transformation and he knows how to talk to CEOs about thinking about that. Innovation and transformation extends way beyond just what you do with your technology. It’s about your process, culture, and people. John has an incredible amount of depth there. There’s an amazing lesson there for startups.
Have the thoughtfulness. Have the self-awareness to know when the time is right to hand the baton on to the next guy. I hope that people surround themselves with a board that can advise them to do that and can bring that objectivity to that decision. Frank often talks about one of the hardest things for a startup is realizing when you have outgrown somebody. The person that took you from north of $10 million to $100 million isn’t the person who can take you to a billion.
It’s very hard for founders to let go of people who have been in the trenches with them from day one. If you want to be successful, you have to be willing to recognize when somebody is at the limits of their experience or capabilities.