ServiceNow ft. Frank Slootman and Fred Luddy - From Starting Over at 50 to Dodging a $150B Mistake

**Frank Slootman** (0:02)
It was much more existential than, oh, we got some tough challenges on our hands. I didn't think we were going to live through this. This is so huge, so enormous. How do you survive this? Because there are no good explanation, there are no reasonable stories to be told. This is just insanity.

**Roelof Botha** (0:23)
Welcome to season two of Crucible Moments, a podcast about the critical crossroads and inflection points that shaped some of the world's most remarkable companies. I'm your host and the managing partner of Sequoia Capital, Roelof Botha.
Picture the office mail room of the 1970s. In that mail room were stacks of typewritten forms. A form for expense reports, a form for vacation days, a form for purchase orders, and so on. A few decades later, a programmer named Fred Luddy was determined to reimagine that workflow system for the internet age and the IT departments tasked with managing it. His low-code, no-code solution would be able to handle anything from reporting a broken laptop to managing the world's largest particle physics lab. Today's episode is about ServiceNow, a cloud application platform for digital workflows. ServiceNow evolved from an IT service tool into a workflow platform that can be used in any department. With this evolution, its market cap has grown to over $150 billion. Difficult questions and hard choices shaped ServiceNow's journey. How does one rebuild their life after catastrophe and devise an innovative idea in the process? When do you know it's time to hand over the role of CEO for the good of your own company? And how do you decide whether to take what seems like a once-in-a-lifetime offer to sell your company or take a gamble and remain independent? These are the Crucible Moments that forged ServiceNow.

**Fred Luddy** (2:10)
I'm Fred Luddy and I'm the founder of ServiceNow. My journey into coding was really pretty much an unconventional one. I left home at a very early age, right around the same time I got my driver's license, and started working in a factory. In the office part of the factory, a machine came down the hallway that was wrapped in plastic, in this clear plastic. I didn't even know what the machine was, but I followed it and it went into this room with this white raised floor and people were wearing lab coats. Somehow, I knew that that was the place where I needed to be. For a couple of weeks or months, I poked around and tried to find out what was going on in that room and found out that it was a computer, an HP 2100C, and that there were people building applications to do things like payroll and order entry. I found the passion of my life at that moment. I never really wanted to leave that room until I went to a bigger computer room and that holds true today.

**Roelof Botha** (3:14)
In 1990, Fred became CTO of Peregrine Systems, a company that built some of the first IT service management software. But in 2002, the company faced a major crisis. The SEC would find the company guilty of massive accounting fraud. Peregrine went bankrupt, and several of its top executives went to prison for fraud, embezzlement, and lying to regulators.

**Fred Luddy** (3:42)
I had all of my net worth tied up in this company, and my net worth went from 35 million to zero in an instant. I had fear because I wasn't sure what I was going to do next. But then there was relief, because fundamentally, I didn't like working there. The year at this point is 2002 You could see on the horizon that there was going to be just tectonic shift.

**Pat Grady** (4:09)
ServiceNow kind of sat at the intersection of two major tailwinds. My name is Pat Grady, and I'm a partner at Sequoia. Tailwind number one was as simple as the cloud transition and the benefits that this new business model provided for software companies.
The second was a very specific tailwind, which is this thing called ITIL, or I-T-I-L, which stood for IT Infrastructure Library. It was basically a language for talking about what was happening in IT. It coincided with this broader transition from the heads of IT, the CIOs, being hackers who had gotten promoted up into the role, to being professional business people who were more likely to have an MBA than a CS degree.

**Fred Luddy** (4:59)
ITIL defined different processes for running your IT organization. Largely break, fix, change management, upgrades, application development cycles, security, risk, etc. Nobody, to that point, had built something to this ITIL standard. So there was no set of applications available. So we ran into really, I think, a perfect storm, if you will, of market opportunity. The idea for ServiceNow was that we were going to create a completely extensible, low-code, no-code platform that would let you build applications with just a tiny amount of technical knowledge. We really wanted to build something that empowered people that had been previously intimidated by technology stacks. But my heroes were Steve Jobs and Bill Gates and Page and Brinn, and they all started at right out of puberty. All of a sudden, they're building these great corporations, and I think, what the heck am I thinking trying to build a company, especially starting it after 50?