The Exchanges

Q Um, if you were to fast forward five years, like, what do you think is different about the employee base at ServiceNow or even like the work being done?

A I think that in terms of employee base, I think you're going to see that the net new added headcount will be dramatically reduced. And that's because the company will be far more productive. The agents are real and they will take on a tremendous Workload. So where to keep up with growth in a growth company like ServiceNow, you would have to hire thousands of people in finance and HR and the supporting functions and services just to keep up with it all. And now the agents are going to be able to do a lot of that. So you're going to invest in things that really matter, like humans that engineer great innovations and that humans that actually manage the relationship. And the importance of human to human connection, building trust, um, making promises and keeping them, and enduring a relationship and the net present value of loyalty in that relationship, that's all going to be human. Um, but I, I can see a company where, you know, you don't have to really increase head count to achieve that goal. And I do think that the, uh, the bar got raised in terms of differentiating your skill set. And making sure what you're capable of doing can be easily replicated by an agent. Um, not just in service now, but in all businesses, if an agent can do it as good or better, that's an easily easy economic decision to make, which is why, you know, there'll be 2.2 billion of these agents entering th…

AI assessment note: “net new added headcount will be dramatically reduced. And that's because the company will be”

Q What is the biggest thing that's changed in customer conversations for you about AI over the last year?

A Right now, I think it's just, tell me what I need to know. Um, it's not like, let me come in and discover your problems, or let me bring you a solution, because I have one in my pocket, and I can't wait to share it with you. Um, it's like, you know my business. If you don't know my business, there's no conversation. But let's assume you know the business. Be very prescriptive. Tell me very specifically. At the macro level, depending on the level you're talking to, how do I transform the company in keeping with the CEO vision or the management team's vision? At a departmental level, you really understand whether it's sales, it's human capital, it's engineering, or it's technology or CTO and its orientation. You really understand the landscape and you have very quick Solutions that can get up and running and deliver the value in a highly predictable manner. And it's AI driven. Like they have to have AI in there because they know the AI is the force multiplier. And so I would say the dance, um, has gotten brief. The execution is where they want to spend their time. Get me there fast.

AI assessment note: “the dance, um, has gotten brief. The execution is where they want to spend their time.”

Q you know, the repeats of dealing with a lot of different types of people is useful. Um, so it's still, like, amazing and strange to me. You talk about this set of customers that you, um, you know, understood and tried to serve. Like, were you just sitting there in the deli observing them before you bought the thing? Like, how did you even figure out these are the people?

A I worked there first. You know, and, ah, what happened was the owner, ah, was going through some personal divorce circumstances and wanted out. And I was the guy that was always there anyway. So, he tried to sell it. It was only a one-year lease. You never owned the land or the building, so he was selling a one-year lease. The lease was owned by Sunmark Industries, which is Sunoco Gas Station. And they could throw you out anytime they wanted. So only a kid who didn't know any better would pay anything for it. So eventually that's how the deal got put together. I said, I don't have any money, but I'll, you know, take a note from you and pay you back with interest. If I miss a payment, you get everything back. What was really interesting about the story is I didn't have any money. Um, but what I did have because I work there is relationships with all the suppliers. So I got them to give me the first order on consignment. I said, I will always pay you back. This is not a favor. This is a chance for you to get your shelves filled up with your stuff that I'm gonna sell for you. But in the end, I'll always owe you that first delivery. And probably they charged me too much on the margin, but I didn't care. I was in business, and that's all I wanted was a shot. And that's all I've ever wanted. Is a shot, and I'm so honored that in my life I've had the shot, and when you have a chance, …

AI assessment note: “I worked there first.”

Q Um, uh, ServiceNow originally began with, like, IT Service Desk as the workflow, but how do you, how do you think about, like, how the positioning is, uh, and the actual work is very different now, and then, like, you know, how, how you got there?

A Yeah, I think that had we only, um, done what you rightfully point out, which had been an IT Uh, service company as an example. That might have been a system of record for the IT department, but I think when CEOs look at a corporation, And they say, what are the needle movers? Those are the companies that, since you mentioned the two that I work for, um, you know, one is running the financial system of global corporations of mass scale and multiple currencies, geographies, industries, um, and it's really kind of thorny, um, and complicated to even think about removing something, especially something that's probably been mass Customize for the unique attributes of that business. Um, so the investment scale was great. The switching costs are very high. I think you would consider that a platform, and I would say the same is true in a certain sense for a company like ServiceNow, um, but for a different reason. Yes, it's a system of record for all the things IT and the services that it provides, but it's even bigger than that in the sense that All of the other systems of record integrate with it. So now you have roughly 800 of the more substantial systems of record that integrate into it, and because of our in-memory open source data platform, so it's built on the open source technologies, but its speed, its scale, its ability to ingest data, we could take as much as you give us. Bu…

AI assessment note: “Yes, it's a system of record for all the things IT... but it's even bigger”

Q Uh, and then in terms of just the, the, the day-to-day in between your, your dreaming, um, what is the day in, uh, the life of Bill McDermott as ServiceNow CEO look like?

A Well, it, it, um, it depends on where you're physically at at the time, um, based on what you're doing, because the time zones are all different, but if you're in, um, California, which we are today together, um, you know, you start your day off, um, it really is easy to understand this with Europe. You migrate yourself then to the United States and you wrap up with Asia. Um, so you always have to keep the tempo around, The time zones and what's happening in the global economy. I just try to be a global person and be a leader that's involved in all dimensions of the company in any time zone in the world. So that's one, one aspect of it.

AI assessment note: “you start your day off... with Europe. You migrate yourself then to the United States”

Q Um, how do you think about, like, you know, in getting everybody at your company or encouraging other people to have that type of reaction to change, that it's all an opportunity?

A Well, for one, I agree with you that a lot of people are frightened of change to begin with. The era of AI has disrupted Every industry, every business, every person, and everybody needs to really rethink everything, and it seems to be coming all at once. So my approach to that was to lean into it, and one of the ways we did that here is put together a white paper On the blueprint for agentic business, which I'll happily give you a copy of today, um, and train them on, you know, what is the difference between a language model and an enterprise platform? Not saying better or worse. They're both important. They're both extremely important. And one actually makes the other stronger. But if you don't know where one begins and one ends, It really is kind of confusing for people. And that was a big unlock. I literally had CEOs tell me that that white paper actually let them see the world totally different, that there were many things in it that they didn't know or didn't realize. One such example would be, you know, um, let's take an example that's real. Every company today has a compensation issue. So, okay, we have a compensation issue on aisle seven. In XYZ corporation, the language model will do a great job of telling you in a compensation situation like this, please consider step one, two, and three. Excellent. Does it in milliseconds. Fantastic. Only problem is it doesn't actua…

AI assessment note: “one of the ways we did that here is put together a white paper”