ServiceNow, a cloud-based IT services company, is making a major acquisition today to enrich its long-term strategy and become an important player in the field of enterprise automation and artificial intelligence. It is acquiring Element AI, a Canadian startup.
Founded by a pioneer in artificial intelligence and supported by some of the world’s largest artificial intelligence companies — it has raised hundreds of millions of dollars from companies such as Microsoft, Intel, Nvidia, and Tencent — Element AI’s goal is to build and provide artificial intelligence-based For enterprises, IT services are not essentially organizations of technology companies in many cases.
A spokesperson told TechCrunch that the terms of the transaction have not been disclosed, but we now have multiple sources telling us that the price is about $500 million. In some cases, Element AI was valued at between 600 million and 700 million U.S. dollars in its last financing, that is, 151 million U.S. dollars in September 2019 (or 200 million Canadian dollars at the time).
Even if it is 500 million US dollars, this transaction will be ServiceNow’s largest acquisition, although it will be a considerable depreciation compared to the last financing price of the startup.
A spokesperson confirmed that ServiceNow is undergoing a comprehensive acquisition and will retain most of Element AI’s technical talent, including artificial intelligence scientists and practitioners, but after integrating what it wants and needs, it will gradually reduce its existing business .
“The focus of our acquisition is to acquire technical talents and artificial intelligence capabilities,” the spokesperson said. This will also include Element AI co-founder and CEO JF Gagné joining ServiceNow, and co-founder Dr. Yoshua Bengio as a technical advisor.
Those who do not belong to these teams will receive severance pay or assist in finding other jobs in ServiceNow. A source estimated to us that this may affect about half of the organization.
This startup is headquartered in Montreal, and ServiceNow’s plan is to create an artificial intelligence innovation center around “accelerating customer-centric artificial intelligence innovation in the Now platform”. (This is the brand name of its automation service.)
Last but not least, ServiceNow will begin to rebuild some of the features of Element AI, she said. “We expect to reduce most of Element AI’s customers after the transaction is completed.”
This transaction is the latest move by a company that aims to build a modern platform suitable for our time.
ServiceNow, under the leadership of CEO Bill McDermott (who joined from SAP in October 2019), has made large-scale investments in the name of bringing more artificial intelligence and automation technologies to SaaS companies. This includes multiple acquisitions this year, including Sweagle, Passage AI with Loom (US$25 million, US$33 million, and US$58 million respectively), as well as regular updates to its larger workflow automation platform.
ServiceNow was founded in 2004, so strictly speaking it is not a traditional business, but the same is true. This currently listed company with a market value of nearly $103 billion is scrambling to position itself as the “first choice for digital transformation” —— this This year’s popular term for enterprise IT services, because everyone is scrambling to do more online, in the cloud, and remotely to continue operating under the global health pandemic and any circumstances that follow.
“Technology no longer supports business, technology is business,” McDermott said earlier this year. In a tight market where Salesforce is likely to acquire Slack, ServiceNow is using more tools to cover its own field.
ServiceNow’s Chief Artificial Intelligence Officer Vijay Narayanan said in a statement today: “As companies compete to digitally transform the processes and business models of the 20th century, artificial intelligence technology is evolving rapidly.” “ServiceNow is leading this once-in-a-lifetime opportunity. , Let people work better. With the powerful capabilities of Element AI and world-class talents, ServiceNow will enable employees and customers to focus on areas that only humans are good at-creative thinking, customer interaction and unpredictable work. This is one A smarter way of working flow.”
For startups, Element AI has always been a very ambitious concept. The 2018 Turing Award winner Dr. Yoshua Bengio co-founded the company with AI experts Nicolas Chapados and Jean-François Gagné (CEO of Element AI), Anne Martel, Jean-Sebastien Cournoyer, and Philippe Beaudoin. He saw the company’s presence in the market. .
Their idea is to provide artificial intelligence services for those companies that are not technology companies in their DNA, but they still need to use the innovation of the technology world to continue to develop and maintain their competitiveness with these technology companies as technology companies deepen their development. In a wider industry, the company itself needs more and more complex operations and development. Essentially, they need to disturb themselves first, and then unceremoniously disturbed by others.
Most importantly, Element AI can cooperate with technology companies that make strategic investments in Element AI, because these investors hope to use some of their expertise and cooperate with startups to provide more services and win more transactions in the enterprise. In addition to the four (and sometimes fiercely competitive) investors, other supporters include companies such as McKinsey.
However, it is never completely clear what form all this will take.
Last year, when I reported on the latest funding for this startup, I noticed that it was not very honest about the actual situation of its customers. Checking its website, it still isn’t, although it does list a few verticals in which it aims to work. They include insurance, pharmaceuticals, logistics, retail, supply chain, manufacturing, government, and capital markets.
There are other positive aspects. Starting in 2018 with Amnesty and most recently Mozilla, Element AI has also worked hard to play a strong moral card through its AI For Good. In fact, 2018 – a year after Element AI was founded – is also the year when AI seems to have entered mainstream consciousness – and it also began to look a little creepy, with algorithms misfires, facial recognition everywhere, and more “automation” The app didn’t work as well, etc.-so starting an ethical goal definitely makes sense.
But for all of these, it seems that there is not enough thread to require larger fabrics as an independent business. Glassdoor’s comments also mentioned the widespread organizational chaos of the startup, which may not help, or may be a sign of a bigger problem.
“Element AI’s vision has always been to redefine how companies use AI to help people work smarter,” Element AI founder and CEO Jean-Francois Gagné said in a statement. “ServiceNow is leading the workflow revolution, and we are inspired by its mission to make the world of work work better for people. ServiceNow is our clear partner in applying our talent and technology to the most significant challenges facing businesses today.”
The acquisition is expected to be completed in early 2021.
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