How the founder of ServiceNow has a market value of $12.34 billion from bankruptcy to billionaire | Entrepreneurship | Economic Week

“Everyone behaves very happy when they see you, and honestly feels like a rock star,”

Luddy had left extra time early in the morning to shake hands and chat with fans waiting for him.

ServiceNow, with a market value of US$30 billion, is headquartered in Santa Clara, California, and ranked first in the Forbes list of most innovative companies in 2018.

ServiceNow, with more than 6,000 employees, has more than 4,000 customers, of which 850 companies are listed on the Forbes Global 2000’s largest public companies.

Every year, more than 500 companies spend at least US$1 million on ServiceNow products. In 2017 alone, ServiceNow’s revenue was US$1.93 billion, and this year’s growth rate is expected to exceed 30%.

Luddy’s success also comes from innovative management strategies. He knows when to step back and let others take over and run his own “heart and liver baby”.

Luddy retired from CEO in 2011 to become chief product officer. The current CEO is John Donahoe, the former eBay CEO, said: “Fred is an excellent consultant, coach, friend, and person who challenges us to improve user experience. Make sure our products are easier to handle.”

His father was an accountant and his mother was a teacher in a Catholic school.

The young Luddy is not good at communicating with people, but he is so fascinated by machines that he can take almost everything apart.

At the age of 17, when he was working at American Standard, looking at an Hewlett-Packard computer in the office, and with the help of programming guides, Luddy turned into the company’s programmer (Programmer) in just ten days.

At that time, he had an insight into the power of software to make people’s lives better. He first wrote an order entry program so that company employees did not have to write dull order papers all day.

He recalled: “Not to give others a technology, but to let them do something they never thought they could do.”

Since he spends all his time writing programming instead of attending classes, he dropped out of Indiana University midway and headed to Silicon Valley.

Before the rise of ServiceNow, Luddy was the chief technology officer of an IT software management company called Peregrine Systems, which had a market value of more than $4 billion.

Luddy, who has worked for Peregrine Systems for more than 13 years, used fraudulent means to expand its revenue and stock price within two years. In 2002, Peregrine Systems suddenly filed for bankruptcy, and several management including the CEO entered prison.

Although Luddy was not involved, his $35 million stake disappeared overnight.

After Luddy lost his job, he started researching ServiceNow products at his home in San Diego.

In July 2005, ServiceNow raised its first funding, a US$2.5 million Series A financing led by JMI Equity.

In the fall of 2005, the company sold its first contract to WagerWorks, an overseas gambling site. Although the growth rate was slow in the first few years, with only a few dozen employees and a few million in revenue, it was very stable.

Until 2009, ServiceNow’s revenue doubled every year, the company’s cash flow was positive, customers included Deutsche Bank, Intel and McDonald’s, and there were 100 employees.

At that time, Luddy decided to step down as CEO because he knew that he was fanatical and familiar with the product, and the company needed a CEO who could drive revenue.

By 2016, ServiceNow’s revenue reached 1.39 billion U.S. dollars and its market value was 12.34 billion U.S. dollars. The ServiceNow team began to think that they should not only serve the IT department, and began to conceive of extending their services to other areas, such as customer service and human resources.

When expanding the scale of development, Luddy and others realized the need for a CEO who has a deep understanding of human resources and security.

As a result, last year, ServiceNow hired former eBay CEO John Donahoe as the new CEO.

Although John Donahoe has no IT background, he paid special attention to PayPal while working at eBay.

“Why can I reset my PayPal password in 20 seconds, but it takes 20 minutes and a phone call to reset my email? Consumers want a seamless experience, and so do employees.”

Therefore, Donahoe brought ServiceNow networked and easy-to-use IT support system to every corner of the enterprise.

These services are called “emerging products” internally and help connect each department to a shared online database and analyze data from it.

ServiceNow launched a mobile application last year that can handle all the troublesome things of employees’ entry, daily work, relocation, vacation and resignation.

In one application, employees can find out where their desks, colleagues, and office maps are, and can solve payroll and computer problems.

“This is not technology. We want to improve the quality of life of our employees, whether professionals or users.”

Luddy and Donahoe are competing with a more agile team, including Salesforce, Microsoft, IBM, and Workday.

The only advantage of ServiceNow is that it can up-sell and use its IT service advantages to deploy related products.

ServiceNow expects subscription revenue in 2018 to be approximately US$2.4 billion. Although most of this will still come from IT growth, emerging products are expected to account for at least one-third of the value of new contracts this year, up from less than 20% at the beginning of last year .

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