Frank Slootman
Appearances
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
People buy product for three reasons. They either buy it because it's going to help them make money. They buy a product because it's going to save them money, or it's going to keep them off the front page of a newspaper. There are VCs that are seagulls, fly into a meeting, fly into a location. They basically take a shit and they fly away.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
Speed is definitely one of the most important things. Speed of decisioning, speed of getting people answers to questions, speed of deciding what's important and then focusing on what's important, really, really important. I think people try to make a perfect decision. By the time you make a perfect decision, it's actually going to be the wrong decision because the issue's already changed.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
Yeah, I think one of the pieces of feedback I got at one point is get at least two points of data before making a decision. I sometimes was such in a rush. And I worked for a guy, Frank Slootman, who is famously saying, hey, you need to compress cycles every day. Let's make a decision. If it's the wrong decision, we'll fix it.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
I think we made a hiring decision at one point. We got convinced that we need to go outside of the company for a senior go-to-market leader because we hadn't seen some of the things that we wanted to see. We didn't know how to do certain things. Brought a gentleman in. I want to protect the innocent or not, but...
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
Yeah, but I won't say the person. But we brought a person in, and he was just the wrong cultural fit. And we were so used to being 105% to 120% of our number, and when we called a number, we were over it all the time. And the company he came from, they were used to missing their numbers, and no one ever got fired for missing their numbers.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
With us, if you didn't make your number, you were not long for the job. If you're missing your number at the end of the quarter, tell him you're going to do something, and then miss, that's unacceptable. And so I have to be able to, in my role when I was president and CRO at ServiceNow, is be able to look at the CFO and the CEO and say, I've got this.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
We can plan the number for the next six to 12 months and hit it, right? That's what I have to be able to do. And so if I had somebody on my team that was not able to execute there, that was a problem.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
It's a special place in my heart on this issue. On my journey at Data Domain, there was a moment in time where Frank could have brought in somebody else to run sales. Our first year was $3 million goal. I did 2.97. I missed, right? 2.97 against three. That to me is as big a miss as if I would have only done one and a half. That was a miss. The next year we were going to do $9 million.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
And they were getting nervous. Like, was I the right guy or not? And it was not apparent to me that even I thought I was the right guy, but I was going to go convince them I was. Well, lucky for me, instead of doing $9 million that year, we did $15 million. And then we did $45 million.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
So by the time they figured out I may not be the right guy, we'd already blown through that issue and they kept me. What Frank made the decision is, I'm going to ride this horse. He's got the energy, the intelligence, the willpower, the fear of failure that we need to drive this company forward.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
And whatever he doesn't know, we'll get mentoring for, we'll get coaching for, but the good outweighs the bad by a long shot. And so for me, it was that opportunity. So when I look at the young people in that role today, I'm rooting for them. I want them to be successful.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
So every board I join and I see the CRO or the VP of marketing, I want to take them under my wing and mentor them so they can achieve their potential and not get swapped out. So my whole goal is get these people to their potential, the CEO to the potential, the company to the potential, and the individuals on the journey to their potential.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
I disagree with you completely. I think there are certain founders that also don't want to work that hard. I think there are people that are misguided on that. I think there are people that know they'll never be a founder. Guys like me, I would never, ever be a founder. But boy, My job is to put, I use analogies a lot. So I viewed founders and engineer team, they were the artists.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
They were building this incredible product. It's like artwork. And the analogy I use is, remember when you were young and you'd bring your artwork home from your kindergarten class and you'd go, mom, look at this. And if on a good day, she'd put it up on your refrigerator, how'd that make you feel? My job is to put the artwork of these engineers on every refrigerator in the world. That's my job.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
I need to go find people that view that Not as a founder, but the partner to that founder that see that burden, that opportunity, the privilege of doing that is something that they want to do. And I think there are people out there that want to work that hard.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
When I joined, they had about 16 reps. And if you look at just sales capacity, that meant the capacity they had at about a million and a half dollars a rep was about roughly less than 30 million dollars. The goal for that next year was 100 million dollars of new business. I had 30 million dollars capacity going into it. I hired 150 people in less than 90 days and we did the 100 million dollars.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
What happened was there was market pull for the technology. There was definitely a receptiveness to it. We had probably underserved the profile of potential customers. We probably didn't have enough people on the street. So there was some pent up demand for us. One of the things we did is we changed our pricing as well. So I got rid of some of the discounting modes that we were dealing with.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
We basically doubled street price in that first quarter, which helped us double the revenue for that first quarter.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
And because I had gone to that user conference and was watching the feedback from these customers, giving massive standing ovations to the founder, telling me this was the best technology they've ever purchased, I had a lot of confidence in the value of the product against the problems we were solving.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
If I go back in ServiceNow, we knew that we wanted to take that company public in a year and a half to two years after getting there. That was just our mode of thinking. Our job was get liquidity for investors, take this company public, get it out in the public market so that customers would have visibility and understanding of who we were, what our financials looked like.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
We wouldn't be portrayed as some small little Silicon Valley startup or San Diego-based startup anymore. We wanted to be a public company.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
From day one. Well, that first year getting $200 million from a hundred was very important on that goal. And it really came down to Two last deals at the end of a Q1, 20, oh goodness, what year was it? 2012 that I was working on that we got over the line that allowed us to hit the button to file our IPO.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
And then we had to prove that we had visibility of the pipelines so that you wouldn't miss for the next four to eight quarters after you go public.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
170 billion. And by the way, during the IPO process, we had Gartner show up at a lot of the investor pitches and say, the size of the ITSM market is gonna be capped out at a billion dollars. We don't see the growth potential for ServiceNow. That was Gartner.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
It was one of the reasons we hated Gartner for a while at ServiceNow, but that was a real big blow and we had to talk our way out of something. And now that business is much, much bigger than a billion.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
I put a lot of focus on how big the market is, but I also don't think it's easy to understand when it's going from an on-prem world to in the cloud world. And as it becomes easier, and anytime you make technology easier for the customer, the markets grow.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
And so I think that there's some value in understanding if I can consumerize something that was really difficult before, does that make the market grow?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
It's true. You can be too early in markets, and it's hard to know when you're too early until you make the investment.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
Yeah, I think the pain from the existing strategy has to be understood. If you don't know what you're solving for, when I'm listening to founders, they're like, here's the reason why now is the time for X, Y, or Z to be successful. I'm going to then go validate that in our research calls with external parties to try to make sure at the right time.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
And there's an art of discovery that is what we call it in sales, where you get into a conversation with a customer and you start asking questions. And that question then leads to another statement, which then you can probe around. And it's a natural conversation like this interview is between two new friends. And we have that discourse.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
So as I talk to them, I'll be like, okay, well, what do you think about this? Why is this important? How would you sell it internally? What would you be taking out to be able to afford it? Things like that become really interesting to me as I'm doing diligence.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
When you're interviewing potential board members, look for relevant experience. Not the fact that they've been on eight other SaaS boards, but have they ever done anything themselves?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
So yeah, I think it helps, but I think it's that art of the question and not being satisfied with just the first answer, but digging deeper because the truth is usually the second or third question you ask will get you closer to the truth.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
Yeah, you don't want to talk just to hear yourself talk. And I tell salespeople all the time, like, hey, you got two ears and one mouth. Spend equal amount of time listening where the two ears is talking. You should be asking questions, not just talking. That will get you closer to a motivation, truth, a reason why to buy than just by talking.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
So we made a mistake. We were getting pressure down market from what I call low-end competitors. But we started getting worried because, you know, if some of these people could get traction down there, would they ever be able to go up into our customer base? We were worried about the low end. We built a product called ServiceNow Express.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
It was written by the same people that wrote the enterprise product. We tried to dumb it down. We did a terrible job of dumbing it down. We brought it to market. There was interest in it. We were selling it for $10,000 to $15,000 versus $50,000 at the entry price. Did a lot of transactions and made a lot of companies unhappy. Product wasn't easy to use. It became a burden for us on support.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
And quite honestly, we were an enterprise company trying to act like something else. And what I realized is there's 10 competitors down market. Let them go beat the crap out of each other down there. They'll drive all the investor dollars into the toilet. And we'll just sit here and focus on what we do really, really well and own the market that matters. And so that's what we did.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
We exited a market. We made that mistake. How quickly was the mistake apparent? Probably in the six months. We just didn't want to hear it. How long did it take to make the decision? About a year and a half. I've had worse. Yeah. I mean, we are pretty ruthless about decisioning. And as I said, one of our strengths was make decisions quickly.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
At the same time, we had to be bold enough to say some of the decisions I made of the journey aren't perfect.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
What started happening at ServiceNow that we took advantage of was our customers started using our product in places it wasn't originally positioned for. Turns out that by 2015, we had hundreds of customers using us in new ways. And so what we started to do is just listen.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
And then we productized what they did and built full-on customer service product, full-on security incident vulnerability products, full-on HR employee experience products. And because we just followed the customer, we had better success. That was not easy because we ended up creating business units.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
I had to come up with a different selling model to sell new technology because the buying persona was outside of the core. I didn't do it until I was fairly penetrated and winning in ITSM. If I didn't feel like I was already winning there, and it was not a distraction, then I could do it.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
I think a lot of it has to do with how we manage our teams and what we did from an extreme ownership perspective. There was one metric that mattered to everybody at ServiceNow. In fact, up until recently, they had a bonus profile that was every quarter, we would fund a bonus pool based on the company's achievement of net new ACV, which was new business minus any churn.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
So everybody was worried about churn revenue and top line revenue, right? New business. So everyone was focused on that. Then as we started to launch these new business units, I remember when Frank and I were talking about it, and this is Frank's genius. He did it before John came in, and it was like his parting gift to the business that is still sustainable today.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
We said, we need people that are going to wake up in the morning and care about this. Because I had a business that with ITSM and with our IT operations management products, my reps were already blowing out their numbers. So I needed to worry about the strategic issue two to three years from now. If that market ever slowed down, if we got penetrated, What was going to be the next act?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
And so we actually launched four products at the same time in 2015. I thought we were going to kill two of them. For me to be viable, it had to be 100 million in three years. That was sort of the goal we had for each of these things. Zero to 100 million, which would be equal to be some of the fastest growing startups in the Valley ever, right? Take a product from zero to 100 million in three years.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
We were doing that inside of ServiceNow. We did all of them at the same time. That was really, really frigging hard.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
In the early days, I would say byproduct was different and all of my reps cared about all the revenue. So we had a land expand, retain model. We did not believe in customer success. We can talk about that too, if you want.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
and so every rep every se was responsible for the full life cycle of a customer from the first time he got them excited about the idea of something to the time where they'd upgraded many many times and bought other products that's what i wanted from the people i cannot not to ask that why not believe in uh cs we had chris degnan on from snowflake and he's like just completely denigrated cs and said that's why we don't have it and it's basically
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
Frank and I, when we got to ServiceNow, there was a group called Customer Success. What I found in that group was when I asked them, what do they do? They basically did three things that should have fit into other groups. They either were taking calls from customers saying, something's not working, help me, support me.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
Our support department was woefully under-resourced, so they weren't getting the responsiveness. So that job should have been handled by support. Get rid of that and make support do that job. I want to add more capacity. You're doing well. How do I add more licenses? That job should be done by sales. How do I configure something in my system? I'd like help hands on keyboard.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
That should be a paid for professional service. So we got rid of customer success because quite honestly, it was a make-believe organization that didn't need to exist. A lot of people get excited about it because they're worried about the churn in their business. We were 98% plus renewal rate. So I didn't have a churn problem.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
How are they going to show up and say, what did I do that was uniquely me that was different that I could measure and get outcomes? I could never get customer success people to tell me what they actually did during a day that made us make money. And so the same problem that I said, people buy product to make money, save money. I had another problem. I had to fund more people in support.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
I had to fund more people in sales. And I had to build my professional services and partner ecosystem. So I got rid of it. And I brought it back slowly over time in very boutique ways, but the customers actually paid for those resources, not given away.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Scaling ServiceNow to $5BN in ARR | Leadership Lessons from Doug Leone, Frank Slootman and Bill McDermott | VC Value Add: Is it Real and Why the Worst VCs are "Seagull VCs"
I think that many of them are coming to the same realization. I was talking to one CEO of a fairly largely scaled SaaS company, and he told me, we are going to be revisiting these decisions. It's fun because, you know, I can't say to people, I told you so, but I start planting the seed. What are they doing? What's your metric? How many do you need? What's your factor?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
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Most customer success organizations come at it with, hey, I need this many people for this many accounts or for this much revenue. In every organization, I think, how do I become more efficient over time? And so every structure, I've got to drive efficiency. How many dollars per sales headcount am I driving?
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How many dollars of revenue am I driving for every engineering resource, revenue in finance? So if I can't get efficiency, I'm not doing my job as a leader in a business.
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My first response is probably because he doesn't know how to help them. I think everybody in life could always use a friend to talk to, could use an honest conversation. And there is a difference, by the way, between founder friendly and founder helpful. And I think I have to walk the line between what I call founder friendly.
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I'm in your camp, but I'm going to also tell you the truth and I'm going to get you ready for what's coming. And sometimes that truth is hard to hear, but I got to be doing that. And you have to know as a person like me that your job is not to do it for somebody. Your job is to coach, guide, consult, be a mentor, almost like being a grandparent versus a parent.
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What was the hardest thing about making the transition? Learning that I wasn't an expert. learning how to have a beginner's mindset on something, not get the accolades. I used to travel into London or Japan and there'd be a whole team of people waiting to meet me and fancy dinners and car service and all this other stuff. This is like, hey, you gotta start again at the beginning
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add value figure out your value to those people and not come out with a massive ego i'm sure you know we have many mutual friends who are bluntly very powerful i'm sure you have many powerful people tell you advice on entering venture what advice did you get most of them said don't do it most of them said you're at the apex of your career you could go do a ceo job if you wanted to go be another president or cro every company under the sun wants to recruit you and to be clear everybody called
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You name the top company in the valley, they all called me looking for me to join the companies. And it still happens today. I am making a conscious decision that at this point in my life, this is what I want to do. And I'm having a lot of fun doing it.
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Oh, I think it's taken me a couple of years because I went through a bit of a cycle in 21 when I joined. It was, let's get deals done. There's a lot of pace to it. That was kind of fun. And what I figured out really quickly was- How long did it take before you did your first deal? Probably too quickly. I did my first deal in about two months.
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I think you have to be careful. Every opportunity is worth diligencing on its own. And you've got to be able to underwrite what you think the value is going to be. The biggest risk factor is something starts slowing down before you expect it to. So you make the investment. You think you've modeled it out.
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It's going to go from X to Y to Z. And we usually even take a haircut on that model from whatever the company tells us. And for whatever reason, it slows down too fast. And then we don't get to the kind of return multiples we want. Again, enter Dave Schneider. My job is to help you make sure you're hitting and beating your revenue goals.
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Again, if you're a Series B or a Series C founder, the opportunity is right now, pick the right investor for this stage of your company that's going to make a difference in your business.
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First, do they know their customer? And who are their customers? If you are a business selling to other young technology companies and that's your source of revenue, I'm going to discount some of your future opportunity just from day one.
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Oh, it's absolutely great to be here. I've been listening to the podcast and I feel like listening to your podcast was part of my education in becoming a better investor. So thank you for doing what you're doing and it's just great to be here.
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If you had shown me proof of selling to the large enterprise or a combination of size customers, I'm going to believe that we can sell to other like-sized companies in the future. And the smaller companies are more susceptible to the waves of the market, especially with venture funding being hot or cold at any one point in time.
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If you started winning in pharmaceutical and banking and others, other big verticals, I think it starts to get more applicable and it stretches out more. Who are your customers, the source and quality of the revenue? Have you been through a renewal cycle yet? Is a big question that a lot of investors miss. I'm looking for, have they gone through a renewal cycle? What happened?
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Did the ACV grow at that renewal? Did they add more product to it? Or did it shrink or not renew?
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so you start seeing an nrr right so even in year one at service now when we sold a contract it could be a million dollar contract we never really fully sized what the customer could be because they didn't even know they were expecting it to be a certain number of users what have you what happened service down which it got implemented more people would start showing up to use it it would grow so six months after the go live of the system we used to see 20 to 40 percent increase in acv size
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I'm looking for something like that. Did they have this second product that came out? Was it welcomed in the market? If you didn't have a great first experience, you're not going to say yes to the second product. There are ways, even in a multi-year relationship, to start seeing upticks in revenue from those customers.
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I think we're in the process of figuring that out. Some of them are re-accelerating the growth right now. So that's one category. Those should be fine. I really believe some of those are going to come out really, really good and they'll be better for this journey. There's a few others where, yeah, I'm not so sure.
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I would honestly say they're probably worth more as cash than they are as independent companies. And some of them have made the choice to refund the cash back to the investors, sell off the assets. There's a couple out there that that's happened to recently. And then there's a few others that maybe they'll use the cash to come up with the second or third act, right?
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They've got enough if that founder has the fortitude and wants to continue on that journey. A lot of the founders are like, boy, this is hard. I'm not so sure.
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Yeah, I can see the logic of that. I think it's rare that your first product's a billion dollar product on its own. There are some.
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I'm talking billion dollar revenue. Billion dollar company, I think you could do with a single product. Exactly. I'm saying a hundred million dollar revenue. Yeah, that's not a problem. I think about valuation a lot. And I think about the steps that you need to do to get there.
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Oh, sure. In 21, I definitely feel like sometimes that time and place, we probably paid too high a price. At the same time, because I was worried about that, I missed a couple at earlier stages where I thought they were too expensive. And I came back.
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I looked at them in the A, I looked at them in the B, maybe even looked at them at the C, thought they were expensive every way and then bought in at the D and built relationships with people who are like, okay, these guys have continued to pivot the right way and it's expensive for a reason.
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And when you have that combination of founder, market, team going on, then it's probably worth spending money on. But you've got to get really convinced that that team and that founder has got what it takes to keep going forward and making it.
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is it harder or easier to win deals than you thought i think every great company is competitive there's a lot of dollars chasing deals do you think every great company is competitive it's rare i've had founders specifically tell me they want me on their board and so then it's a question of can we get close enough to what expectations are to what makes sense
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You know, there was a specific situation where it was a Lightspeed earlier stage company. The founder was selecting four board members that could help scale the company and help with no route to market. And he selected Carl Eschenbach and myself. We split it around with Sequoia 50-50. And Carl and I both joined the board.
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Probably the two, I can say this for sure with Carl, one of the best executives out there who knows more about revenue generation and leading companies than almost anybody in the Valley. So to be alongside of him on this journey and build out this company or at the request of this founder was phenomenal.
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I'm typically in a growth deal trying, if I'm going to take a board seat, it's usually a $75 million check. I'll break the rule and go to 50 sometimes, but mostly it's 75 minimum with the goal of doing more over time before it goes public.
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Ownership percentages aren't necessarily the most important things. I want to be in the right vehicles in the right places and have enough money to work to make it matter.
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Well, thank you. It was a 30-plus year operating career. So in that 30 years, there were some tough years and some good years. But the two things that kind of stand out, I spent almost nine years at a company called Data Domain, where I joined at $0 in revenue.
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Yeah, we're usually in growth trying to underwrite, can it be 5 to 10x outcome? We have a kind of a view of what we call super stamps, the companies that we really want to be in that are the future IPO companies. And those may not have the same direct return. The risk is much less.
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And then there's the what we think are the future franchise earlier stage bets that we're going to go in and kind of layer in over time and look for even more upside. So we kind of bifurcated our growth view a little bit, trying to do right by our investors and right by our portfolio.
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It's continuous. It doesn't always mean we participate every round, right? So sometimes things get too expensive and we'll make a choice that our risk adjusted rate of return for that deal isn't something we want to pursue at the same level as we would have an earlier round. We will try to participate every time we can.
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And if the prices are right and the business is executing well, we're going to definitely layer in. We have a fairly significant size fund, so we've got a lot of powder, but it's very important that we get the kind of returns we need.
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I was gonna say, usually three to six months you undercover all the warts that you didn't see that they hid from you in the diligence process. I've had assumptions not be correct. Assumptions we made on a deal that didn't come to be, something changed really fast in the business. And you saw that with a lot of what we call the COVID winners.
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And then the people that now that COVID is sort of in a different chapter, their business isn't acting the same as it was before.
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Feedback when you decide to make an investment or when you decide not to make an investment?
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I try to call every founder, thanking them for the time. How many founders do you meet a week? I'd say between four and eight. Now, if I'm not the one leading it, my partners who are leading it, I'm sitting in those meetings. So if it's one that I'm leading, I'm going to definitely make that call. But I also tell people, even if I don't make the investment, call me sometime. And that's a test.
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And by the time I left, we'd gone through an IPO, took it to about a billion dollars, and then we got acquired by EMC in a hostile acquisition in 2009. Whole story about hostile acquisitions, if you ever want to get into that.
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I want to know if they're thinking about me as a resource. Because maybe there's something about it where I just didn't have the conviction yet. But I still want, I'm curious enough. about the business. And I'm curious about them on, are they going to ask me smart questions? Are they going to engage?
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Are they going to understand the value of David Schneider and Kotu or, you know, one of my partners on their cap table? And if they do, then that's great. And if they don't, so be it. I'm always in the business of matchmaking, right? So I've got this massive network of people that used to work for me that are always looking for jobs.
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So if somebody, again, not even in my portfolio, is like, hey, I'm curious, I'm looking for, this happened last week, looking for a sales leader in Chicago. I'll hit my Chicago Rolodex and say, hey, there's five guys in Chicago that are worth talking to. I'll make a couple introductions and go on the way. Have you lost a deal yet? Partially. There was a deal that I got really excited about.
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When it came down to valuation, we did not hit the number that the company wanted. And I'm sure glad I missed it. So that was one that I probably dodged a bullet because it was the height of 21 in the billions of dollars. And we just looked at it and said, it's just too rich for us. And we walked away after being told he wanted us to lead it. And then we walked away over price.
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So that was a good learning opportunity, but I don't know if that's a loss. There's another one where we got smaller positions than I wanted. And that's a really hard part for me, Harry, because if my position's too small, it's hard for me to dedicate the time. And so I have to try to tell these founders, you know, this is going to be awkward.
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I know you want us, you want me on the board, but I can't use one of my spots anymore.
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I've said no a couple times, and one that I said yes to, I do think it's going to be a generational company, and I really love the founder. I've known him for 10 years. So it was one of those where existing investors preempted around. We got a smaller piece than I wanted. There was a commitment to try to drive more. It didn't happen.
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And then the next one is I spent 10 years at ServiceNow joining Frank Slootman again, who I had the privilege of working with at Data Domain into that company, which was about 80 million or so in size when I joined. And when I left, it was 5 billion in revenue and felt like job was well done to make that happen.
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And so now we've had the honest conversation about, hey, it's going to be harder for me to spend the kind of time you need. And unfortunately for him, he's in the process of needing that help. But I got to figure out what the right thing is. I want to be friendly, but I also have a business to run and I got to watch my time.
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My terminology from experience is there are VCs that are seagulls, fly into a meeting, fly into a location. They basically take a shit and they fly away. They talk a lot. They give work to do for other people to do on the management team that distracts the management team from doing anything that's important. And you've got to control for the seagull.
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This goes into the quality of the board that you're bringing on and the kind of people. It also goes into, as a management team, you need to set the tone and set the agenda for what's important to you. So, for example, when I led the review of any portion of ServiceNow or Data Domain, I started with the three things that were working that were really green and the three things that were red.
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If somebody wanted to help me on something in the red, be my guest. But if you wanted to bring another thing on my list, it wasn't welcome because I already know my business. And so having the confidence as an operator to say to the board, this is what's going on in my business. Here's what I'm working on.
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And I think it is really important to control what you want to have a conversation about. Set the agenda. Spend time before the meeting talking to people what you want to have a conversation. Don't surprise people. Give them time to do the pre-read. If any board member is coming in without doing the pre-read, that's shame on them. You actually don't need them. They've got to do the work too.
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Yeah. Sometimes it's. needs to be at the board meeting, sometimes it doesn't. I do think it's up to the management team to drive the clarity of thinking and avoid when you're interviewing potential board members, look for relevant experience, not the fact that they've been on eight other SaaS boards, but have they ever done anything themselves? And I would just call that out.
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There are now enough people in the venture and growth investing world where people have had hands on experience that you should drive from and some people don't have it. And so it's that kind of a nice mix that you want to look for.
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Well, so Doug Leone was on my board at ServiceNow. He's on two boards I sit on now. He's phenomenal. Love working with him. What makes him so good? He's got wisdom. He's practical. He also knows just about everybody and can get people together on topics very quickly. And he doesn't tell people what to do. He gives them ways of thinking about it, which is what I try to do as well.
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He's also patient but demanding. which is kind of a little bit like me too. Like you can be demanding, but you have to be patient, understand the cycles. And he's incredibly responsive. If I make a phone call when I was at ServiceNow to Doug, and it was very rare, usually he was calling me for advice. So he was responsive to me at wherever he was in the world within seemingly like 15 minutes.
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I would say Mike Volpe, who's now, I think, in the process of retiring from active doing new boards. He brings an operator mentality with him.
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The other guy that was on one of my boards, Anil Bushri, who no longer does this as a living because he started Workday, but he was on my data domain board and he was awesome because of all the people he convinced the engineering and product team before they started putting hands on keyboard to go spend 100 conversations with customers to know their problems.
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And I think so many founders get it wrong. They rush to start building a product without knowing the customer and knowing what you're building for. That kind of advice is so practical still to this day. And I think that's a lesson I learned from Anil.
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Everyone has a superpower. And I think everyone's job is to find their spike and try to leverage it on behalf of the companies and people that they're dealing with on a regular basis. For you, it's probably a bit of the networking that you have and your perspective on the world. Your PR capability from what you do here at 20VC is pretty amazing.
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And I think, again, pattern matching for people because you're seeing so many different situations.
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Well, I think the first part of that journey that was so important is the first year we didn't have the right product. We had an initial product that I almost would refer to as a paid for beta. We knew it had some of the features and elements of what the customers needed. And we were talking about the product in a way as a backup appliance.
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I don't compare the Frank Slutman that exists today after three IPOs to the founders that I'm working with at a series B or A. That's not a fair compare. I can compare because I worked with Frank at Data Domain when it was his first CEO job and how he was and what he was doing to drive urgency.
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The reason I picked Kotu out of all the firms I was looking at was they themselves are innovative. They themselves are entrepreneurial. They themselves are trying to build the best company in the world in the categories that they serve. They're not afraid to try something. And Thomas had great vision. He said, the color of money isn't going to change.
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It's going to be green in the case of the US dollar. But the way in which we can service our investments will have to change if we want to be world class. And so he went out and recruited guys like me and Dan and Karen and others to join the firm to make us different than everybody else who is just doing traditional growth investing.
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People are the difference makers. If you can get a group of people together who have a lot to prove, who really have the hunger to do something, that can really make the difference in a problem. And you've got to let them run at the problem.
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Now, the biggest lesson is you're there for a reason. It's to go talk to customers and impart your wisdom on the culture of the company. Every time you're in a city, don't waste any moments. If you're not having a dinner with a customer, have dinner with employees or partners. Understand that the time, the windshield time in a car with employees is valuable.
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Don't be distracted by your phone or your social media. Talk to them about their lives. Talk about their hopes and dreams. And what you find is people are fairly aligned. We all have similar hopes and dreams. We may want to get there a little differently, but it's financial security for our families, doing interesting work, maybe get promoted, taking a couple of vacations a year.
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Those are the things that tend to be the most common. And you can really sink into that with everybody.
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I went from wanting to be liked to wanting to be respected. And that was a very important lesson as I went from an individual contributor to a manager to a leader. You know, respect is something that's earned. That's the most important thing.
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And very quickly after talking to customers, they're like, it's not about the backup guys. It's about the recovery. And so we got really good at finding the first use cases where we could be effective every time. And so the other thing we did is it was simple to integrate into existing technologies. We didn't force customers to change their environment.
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I'm a believer that feedback is a gift and it needs to be given frequently and as quickly to the situation as possible. And there are moments where I need it too and I've gotten it and I've made massive corrections on my behavior.
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Okay, so my shit sandwich moment. Early days at Data Domain, I was really nervous about getting the product deployed and getting a couple of good experiences going. And we had a proof of value running at a very, very large national lab in the Bay Area. And the product was not working the way it was supposed to work. In fact, it was a disaster.
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And I'd come from big companies where responsiveness between sales and engineering was slow. In my old company, big company mentality, I sent an email and I sent it with about enough flames on it that would catch a mountainside on fire. And I sent it and copied Frank Slootman, thinking that Frank's going to have my back and he's going to force them to go pay attention to me. And I was like, okay.
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Frank comes marching down to my office, closes the door. And I thought he was going to say, what can I do to help you? Instead, he said, if I ever see another fucking email like that, that'll be the last email you send here. And he goes, these people have been building this product for three years before we showed up. Give them the chance to be successful. Get up out of your chair. Go talk to them.
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Ask them to go visit the customer with you. Solve the problem. I immediately went over to all those people, apologized, brought them donuts and other things the next day, trying to rebuild trust because I just broke trust. And I should approach it from a human perspective. I need help. Can you help me? Within three days, we got that thing working, flying colors, sold a bit.
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The biggest deal we ever did in the company's history, we learned a lot together because the feedback was so instantaneous. It allowed me to fix something that I could have created a mortal sin around. And I tell people all the time, go first person in conversation. Don't send email. Talk to people, pick up the phone, go meet them.
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If it means flying across the world to go have that conversation, better do it that way than having an email. When Sluterman's pissed, is everyone scared? It's not a pretty thing. When I'm pissed, everybody's scared. I mean, we, I mean.
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Yeah, I'm a teddy bear until I'm not. And then I'm like a grizzly bear. So, and that confuses people because I really do care deeply. But there are things that are unacceptable to me. And, you know, now in hindsight, I totally understood where Frank was coming from. And I respected him so much for coming to me right away. He fixed my behavior.
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He may not even remember that conversation, but it's one of the most cementing moments of my life around how to build great culture in a company and how to destroy culture in a company. That was a massive learning opportunity for me. I'll never forget it.
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We just plugged right into their existing backup software. Simple does win in technology a lot of times, and people need to keep that in mind.
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So I worked with Bill at the end of my ServiceNow career. He joined in a kind of weird situation. We had John Donahoe, who's a great human being, great CEO as well. He's now the CEO of Nike. John was on the board at Nike, got the offer of the lifetime to go be the CEO of Nike. It was something he'd always been interested in doing. And so he took it.
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Bill gets parachuted in on our third CEO transition in the 10 years that I was there. And what really is apparent to me is Bill understands enterprise SaaS. He understands sales as well as anybody. I'm really good at selling. Bill may be even better, which is hard for me to admit.
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creating stories about understanding customers, listening, meeting them where they are, trying to solve the business problem, then Bill is just really smooth. Like I can sometimes fumble over a word here and there. I've never seen Bill fumble over any word. He just has a certain way about him. And then his relationships with executives is second to none. He spent, I think, 10 years at SAP.
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He knows every large CEO, large company CEO, CIO, world leader on speed dial. He's just super connected. So as a CEO in a company the size of ServiceNow, at times we need help getting to a board level discussion because the funding decisions are so big. We're talking $10, $25, $50.
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million dollars a year sometimes for these transformational efforts that's a big lift for any company final one what question are you not asked often or ever that you should be asked more that's a great question part of my superpower and it's part of what drives me i fear failure even though i don't know what it looks like meaning i'm afraid of not doing my best work and somehow dropping the ball or disappointing someone or something in the process
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And so for me, it's this drive to constantly think about all the different possibilities so I can do the best job of stewarding a team myself through a situation and get to the outcome. So, you know, when I go to sleep at night, I'm thinking, yeah, the day was pretty good, but I'm also thinking about, okay, what do I need to do?
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to improve for tomorrow and how do i make it a better day and i think that's part of who i am now i've tried to harness that in some kind of mindfulness exercise be a little more sane in my approach but i was always kind of unsettled thinking i needed to do more was part of my my issue i found the most reassuring thing the recognition that 90 of your worries have never actually happened
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Yeah, anytime you get close to one of those worries happening, it's a scary thing. You know, we all have our foibles, and as I said, we're all survivors of something. We have to grow from every experience. I think as I've gotten older, one of the things I've realized is the past is the past. What did I learn from it? How am I going to adopt it going forward?
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And now when I work with executives, we're debriefing about a quarter. I'm like, the thing I'm really looking forward to, what do we learn from the last 90 days? How is that going to change our approach for the next 90 days or the next year? And how are we going to build from here? I don't want to spend too much time worrying about the past.
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I want to build from whatever just happened and go forward. And I think that's a very powerful way of positioning that insecurity into a strength. And I'm trying to deal with that.
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I love listening to your podcast. Again, I learn along with everybody else who's listening to your podcast. So thanks for doing what you're doing. And I appreciate it.
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I think anytime you bring a new solution forward in an enterprise, anybody who's bringing something in today has to be asked, what are we taking out of the budget? What are we replacing? How is this augmenting? How is it going to make our world better? What I always try to tell my team, my whole team, the engineering team, the product team, is people buy product for three reasons.
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They either buy it because it's gonna help them make money, they buy a product because it's gonna save them money, or it's gonna keep them off the front page of a newspaper, which is usually what security products are being bought and sold for. That's the reason why. So you gotta show them how are they gonna make money, save money, and that's really important.
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yeah you know what we had this but it got pushed to next quarter it got pushed to next quarter how do you think about instilling that urgency in any of those three because urgency i guess is important in all of them the common refrain we had the sponsor it just got pushed that's really a discussion around was the value of my solution worthwhile for them to make the choice for us
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Or was some other solution that was being proposed, not even if it was competitive to us, but another thing in the company that was being worked on. There's only so many projects somebody can run at once and so many dollars to go solve the problem. So basically the seller's job is to make sure that the value that you're providing is well understood.
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We adopted a sales methodology at ServiceNow that featured this, where we had joint value discussions, and we called it a value prompter, that we did with our customers so that when it was time to go up to the CIO or CEO for $5, $10, $20 million worth of funding, that they knew what the business case was, and it held true.
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Because deals that slip at the end of the quarter are the nightmares, the bane of your existence, if you're the management team or board. And after a while, you lose faith in your sales leadership about their ability to guide the business. And so my job always was be able to call the number 90 to 180 days in advance, plus or minus 3%. So if you can do that reliably, you can keep your job as a CRO.
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But more importantly, you know how to guide the business, who to hire, where to hire, how to allocate resources as an executive team on building out a company.
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I don't. I just want you to be able to answer the question. Are many founders able to? No. Not until we start asking. Now, the best founders, the ones that I really get excited to work with, are the ones that have clarity of thinking about that process.
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I think in any market that's worth going after, there's going to be some competition, especially in the enterprise space. The secret for me was it was easier for me to unlock dollars from existing known spend areas than it was for me to create a new spend category and create new budgets that didn't exist before.
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So if I could show more efficiency or better mousetrap type things, I was going to win more deals faster in those situations. Now, the thing about competition is not all competitors are created equal, Harry. Imagine this is the backdrop. You're at ServiceNow in 2011. The transition to the cloud is happening. The market is starting to give signals that everybody wants to move to the cloud.
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The two companies we were competing with were BMC and HP Software. Two companies that quite honestly were dead already in my book. All they were trying to do is take money out of the revenue stream and drop to the bottom line. They weren't focused on the customer anymore. So now all of a sudden we have this new idea, same kind of product, but just a lot fresher in a cloud.
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And I unleashed the hounds of hell of an incredible go-to-market team at the same time. And I just decimate a market that they existed in. Decimate. That's the fun part of a competition because if you have singular purpose and you know what you're trying to do, you can have a lot of fun blowing up other organizations.
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Most of my team would be crushing, partially because there's a way to get them to be effective. This is going to go into the how do I build a company and how do I think about it? The way you get sales teams going is you identify what your target customer is, the ICP. So know where you need to play. Know what the issues are that they're facing.
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Listen to the other customers who are already using your product. Use those stories to tell the stories about transformation, difference making, et cetera, to the other prospects you're working on. Teach your sellers those stories, the playbooks, and we'll talk about playbooks. What do I say? Who do I say it to? What's the profile of the customer that we want to go after?
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What's the likely objection they're going to give us and how do we overcome it? All of that's inside of the realm of possibility for training and onboarding for my go-to-market team. Then I got to hire a bunch of people that just have to want it a lot more than everybody else. I look for people with a chip on their shoulder.
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I look for people that have something to prove where the best days are in front of them. I called it at Data Domain, the land of the misfit toys. I wanted people that didn't fit in normal places because I wanted to give them a home where they could do incredible things and be welcome and supported.
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So given the training, given the playbooks, given the stories, then hire people that really, really care, that are hungry to change.
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One of my first and most important questions when meeting someone is I ask people, tell me something that you're proud of that you had to work really hard for. I'm looking for where they had to dig down and make something important happen. You tend to find a pattern with people. If they've had to overcome something, and I also say we're all survivors of something, just pick your something.
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And what I want to know is what did they have to get through to get where they are now? What makes them tick?
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I think people know the truth. And so you're almost better off addressing any issue, strength and weakness head on. There are also lots of ideas inside of a company. And what I tried to do is almost reverse the pyramid of how organizations would think about, you know, some people say everything's top down. I don't agree with that.
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I think we have a strategy or we have a vision of what we should go do. But then I look for the people closest to the customer, closest to the problem, closest to the technology to say, how would we solve it? And if you can empower those people down below, they're going to bring their best self to work on a regular. And you're going to get a lot more ideas trying to solve the tough problem.
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I could think of a couple of specific situations where we were dealing with a customer opportunity that's at ServiceNow. And one of my sales engineers said, I'm working on something where it is ticketing, very similar to what we did for IT service management, but they want to use us for HR. And we don't really have that product.
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I said, well, let's work with them because this may be a really interesting use case. We basically put this SE in charge of listening to the customer and demoing back what he'd heard, not through engineering yet. This was just a proof of value kind of experience.
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And this gentleman, Eric Hemmer, still remember his name, was so important in the gestation and building of the understanding of what the idea was. We then took that to like three or four other customers and we showed it to our engineering team. All those customers got really excited about it.
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We brought it back to engineering and said, we'd like us to build something on the platform, which already does 99% of this. We just need to relabel some things. And That's probably a billion dollar product now, inside of ServiceNow, because we just listen to customers. And that was Eric, who was close to that problem, who listened and said, I've got an idea, can I go forward?
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And we were just smart enough to listen.
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I wish I would have known it was as big as it is. When I got there, it was far from a perfect story.
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It was a little bigger, about 80, 90 million. And Fred Luddy, who was the founder, great human being, one of the most special founders I've ever met and worked with. Why?
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as he said i'm making up for all the sins of my past by building this other thing which i love that story i love repeat founders on solving a similar problem just with a better approach you'll find that as a theme of mine when i make investments it's that tough for you as a gtm leader though when you have like customer demand through the roof you can sell sell sell but actually there's technical debt there's infrastructure problems and you have to be tempered in your decimation approach
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Not really. I'm a believer that if I'm with the right CEO and the right founding team and the right executive team, that we can be flying the airplane to Japan from San Francisco and doing maintenance on the engines at the same time. And that's what we had to do at ServiceNow. So every once in a while, things were a little bit crazy, but we got through it.
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And you can't take your foot off the accelerator or somebody else is going to catch you. So even as uncomfortable as that was, we had to go do the maintenance on the airplane while flying it.