ServiceNow CEO On Entrepreneurship, AI, and Automation — With Bill McDermott

Bill McDermott is the CEO of ServiceNow, a $113 billion, publicly-traded cloud computing platform that helps companies manage their operations. He joins Big Technology Podcast to discuss his career path, from owning a delicatessen on Long Island to now managing over 20,000 employees. We also dive deep into how generative AI helps companies foster innovation and force businesses to retool their workforces in the coming years. Tune in for a lively conversation with one of the world's most dynamic tech CEOs. ---- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/ Questions? Feedback? Write to: [email protected] Highlights: 7:20 Starting off his business career by buying his local delicatessen at 16 years old. 16:20 Getting his first corporate job at Xerox 21:20 Lessons from witnessing the start of Xerox’s decline 30:40 What ServiceNow offers 37:00 Does AI lead to job loss? 39:40 Retraining people for the new economic reality 47:50 Bill’s secret for closing deals Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  LinkedIn Presents.

• 0:05Alex Kantrowitz?

  This episode is brought to you by Genesis. What does it actually take to put a Gentik AI to work across an entire enterprise? I recently spoke with Genesis chairman and CEO Tony Bates about why orchestration is emerging as a competitive advantage in customer experience and what companies need to get right in the AI era. Then I sat down with Adam Mitchell, head of enterprise business solutions at Voya Financial, to go inside a large-scale agentic CX transformation, including the business decisions, trade-offs, and lessons along the way. You can watch both conversations now on my YouTube channel today. It's never been more challenging to get frontier compute. How do you know where to look, who to trust, or how much to pay?

• 0:48Alex Kantrowitz?

  Akash is an open cloud that provides easy access, flexibility, and peace of mind. That's how companies like Razer were able to cut their inference cost by 15 times. Visit akash.network slash Alex for a free consultation. That's akash.network slash Alex for a free consultation.

• 1:17Alex Kantrowitz?

  Welcome to Big Technology Podcast, a show for cool-headed, nuanced conversation of the tech world and beyond. Bill McDermott is our guest today. He's the CEO of the $100 billion-plus company ServiceNow, and he's a dynamic leader in the tech industry, who's also just a lot of fun to listen to. ServiceNow is deeply involved in the AI discussion we've been having. It's helping automate processes within businesses, along with some other use cases, including a big partnership with Nvidia. And I invited Bill on the show to talk a bit more about where he sees the technology going, where the market is getting AI right and wrong, and also to tell a few stories from earlier in his career, where he saw the importance of reinvention at Xerox, and also bought his own deli on Long Island.

• 2:01Alex Kantrowitz?

  It's a really fun one. Major CEO at a major company, this should be fun, dynamic, and I hope to leave you with a few new thoughts about business, leadership, and artificial intelligence. My conversation with Bill McDermott is coming up right after this. Bill, welcome to the show.

• 2:19Speaker 00

  Thanks for having me, Alex.

• 2:21Alex Kantrowitz?

  Great to have you on. I wanted to begin with to have listeners get a sense as to who you are as a person. We go biographical before we get into some of the things that you're doing with AI partnerships with Nvidia, all that. So let's start with the deli. At 16 years old, you bought the Amityville Country Delicatessen in Long Island, not far from where I grew up, for $7,000. So I want you to just give the story of like how and why you did that, just so we can learn a little bit more about what makes you tick in the beginning.

• 2:51Speaker 00

  Well, actually, there was a couple of reasons. One, I was trading in three part-time jobs for one full-time job, which was a delicatessen. So, you know, bussing tables, stocking shelves, pumping gas, doing all the side jobs that lots of guys like us who came from Long Island did. And I had an opportunity to work in the deli and then ultimately make an offer to buy the deli because the owner was selling it and it was pretty obvious after a year on the market that there were no takers. And I ended up getting it for $5,500, $7,000 with interest, and the rest is history.

• 3:34Speaker 00

  I think the big idea behind the deli that I always found inspiring is I had no money. But I did have relationships with the vendors and I asked them to give me the first order on consignment. I told them, "You might even charge me a little too much, but I'll always pay you back. At some point, you'll always get that money back on the first consignment order." And I had great relationships with the customers and just knew what they liked, whether it was their coffee, their brand of cigarettes, that was pretty big back then, and whatever beer they liked to drink, whatever sandwiches they liked. You know, I really could customize it to them. But the key to the whole thing was really the early days of video games.

• 4:19Speaker 00

  Um, because I built a video game room on the delicatessen to draw the young people a block and a half past seven eleven to my store. And what was fascinating is I went down to seven eleven one day and I realized there was four kids in the store and like forty online waiting to get in. And I asked them, why are you all waiting online out here when there's a big store in there? And they said, well, they think we're gonna take things. I said, don't worry about that. You come down to my store. And I let them in forty at a time, playing video games, hanging out, treated with respect. And it really underscores um what it means to treat people as you wish to be treated. Because at the end of a long day, one of the young people said to me, Bill, when we

• 5:04Speaker 00

  wanna have good food and get treated with respect and play video games, we come to your store. And when we wanna steal stuff, we go to seven eleven.

• 5:15Alex Kantrowitz?

  So Bill, it's interesting because so many kids, by the way, like this is like actually the true Long Island childhood, I can say authentically that's the case. Um, but like so many kids, when they're younger, they say, okay, I wanna start a business. Maybe they do a lemonade stand. Very few actually go out and buy the delicatessen they were working at. So I I'm just kinda curious, like, what do you think made you take that that extra step? Was it something about being in control of of your future and your destiny that was something that that made you wanna go ahead and do it? I mean, you know, it is a very unusual step to do, so what was behind that?

• 5:47Speaker 00

  Well, I really wanted to make a living and I felt like, you know, working full time and building up enough cash to at least have a chance at buying it gave me freedom. It gave me the opportunity to build something and it gave me the opportunity to pay for my education. Uh, so, you know, I was able to contribute a little bit at home. I was able to uh get a car and do the things that young people wanna do. And I also put myself through school and really set myself up for what I really wanted, which was to take a shot after I graduated from college and go into the Big Apple and

• 6:32Speaker 00

  work for a big corporation and start my career. So it was just an evolution of leadership, you know, the desire to lead, the desire to control your own destiny, the desire to make a living, the desire to be a winner.

• 6:46Alex Kantrowitz?

  You know, and that's, that's one part of your bio that I don't fully understand. I'll explain why. Okay, because when you, when you actually set up and are running a successful business, right, when you're running, it's one of the things that actually it's, it's much easier to set up a business than a lot of people imagine. It's just about putting in the work to sustain that. And then you go ahead and you trade that in for being somebody else's employee. So that's actually a very difficult thing to do. I'm curious why you decided to do that.

• 7:12Speaker 00

  Because, you know, at the time, my dreams were bigger.

• 7:16Alex Kantrowitz?

  Right.

• 7:17Speaker 00

  Than being a delicatessen owner. And, you know, I would, there's nothing wrong with it. Obviously, I'm very grateful for the opportunity. But, you know, if you get up at five o'clock in the morning, enough days to get the coffee ready, get the rolls buttered and get the hot, you know, grill going so you can make egg sandwiches and serve people by the hundreds, do that for a while. And then finish the day at midnight where you're waxing the floors. So everybody the next day can come into an immaculate store. And just the grind of being a sole proprietor and doing that to make a living. It's really no cakewalk.

• 8:01Speaker 00

  And at the end of the day, I really wanted to be part of a giant corporation. And people would come into the deli in their suits and their ties on their way to Long Island Railroad. And I would say to myself, I'm going to do that someday. In fact, I even got into conversations with them, asked them about their jobs, what they were doing. And I just found that intellectually so interesting. So essentially, I did a direct mail campaign to several companies that were highly prestigious at the time. I got a result. Xerox invited me in and so did a few other companies. But I was really excited about Xerox because of the training program.

• 8:46Speaker 00

  The brand and at that time, you know, that was, you know, one of the most prestigious tech companies in the world and it was just a thrill to have a shot at the big city in New York and I went for it.

• 8:57Alex Kantrowitz?

  Yeah, it is interesting. I mean, obviously, I think trading in the deli for your career turned out to be a good decision. You're running a hundred and ten plus billion dollar market cap company today. And there is something about growing up on Long Island and I'm not going to spend the whole show talking about this, but I feel like, you know, having you here, this is sort of the environment that I grew up in also that inspires, it's, it's sort of, you grow up with, maybe you tell me if I'm wrong about this, but you kind of grow up with a chip on your shoulder. You see everybody in the suits going into Manhattan, but you know, somewhat internally, you're not part of it. And there is that, that bigger show out in the city and you want to be part of that. And it sort of does, I think maybe that is something that inspires people from Long Island to like, maybe put

• 9:41Alex Kantrowitz?

  harder work in or just go for it in ways that other folks can't match. Because I do think there is this ethos from Long Island, not to knock all the other boroughs and everything else, but there's something about that place, growing up there. And it gets this reputation as like a rich place, but it's actually quite working class. And it is, I'm curious what you think about that, about that hypothesis.

• 10:01Speaker 00

  Yeah. Well, as you know, you know, Long Island is a pretty diverse place and socio-economically, you know, it runs the gamut. And I came from a blue collar, working class family and I'm really proud of that. And at the time, I loved Long Island because the people were dynamite. I, I loved the water, you know, so the Great South Bay or Robert Moses or Jones Beach, you know, I think about those places and literally driving in my car over the bridge, three hours in traffic to get to a beach was like such a privilege. So you do grow up hungry. You do grow up humble, but you also do have a desire.

• 10:46Speaker 00

  To get out of Long Island and be somebody. And so you kind of spend your whole life thinking about, how am I gonna make it? What am I gonna do to get there? And then, once you get on your path, you have that built in blueprint of hard work, determination, in fact, I would just say like wanting it more. And then ultimately being in a position mentally, physically, and emotionally to do whatever it takes to win and be a winner. And that to me was the gateway to prosperity, just to really want it more than everybody else. I remember my first interview at Xerox.

• 11:30Speaker 00

  And, uh, you know, my dad.

• 11:32Alex Kantrowitz?

  Oh, I know the story.

• 11:33Speaker 00

  Drove me to the railroad station that day, as you know, my house flooded. And my brother basically carried me to my dad's car so I wouldn't get my new suit wet. I got a ninety-nine dollar suit at the mall, charged it on my credit card, first credit card. And, uh, I get out of the car finally at the railroad station, I tell my dad, I intend to come home tonight with my employee badge in my pocket. And my dad said, Bill, like, you're a good guy, just do the best you can. I said, no, no, no, I guarantee it. I go up to, you know, escalator, get on the railroad, and I read the annual report about this guy, David Kearns, who was reinventing this company called Xerox. And I started out going to interview for a sales job.

• 12:17Speaker 00

  By the time I got to Manhattan, an hour and a half later, I wanted to be the next David Kearns. So that dream inside you is the reason I named my book Winner's Dream. Because all the winners I've ever read about or seen began with a, a dream, a bold dream. And I get to the, uh, interviewing center, top of the sixes in Manhattan, and I'm looking around the room. And you know, this, this person graduated from Notre Dame, this one's Yale, this one is, you know, some other prestigious school like Columbia. And they came from, you know, the pedigree, for the most part, of families that were either wealthy or had white collar workers in their past.

• 13:01Speaker 00

  Cause I asked them, you know, what's your dad do? What do you do? And starting conversations with everybody.

• 13:06Alex Kantrowitz?

  Waiting room. Yeah.

• 13:07Speaker 00

  Exactly. And so as I'm waiting, I'm getting warmed up, just talking it down. And what I realized, Alex, is they would say, well, I'm interviewing here, or I'm interviewing there, IBM, Burrows, Goldman Sachs, Morgan Stanley, you know, and play in the field. And that was the moment that my superpower kicked in. And all the nerves went away because I knew I wanted it so much more than they wanted it. And I'll never forget getting to the last interview that day with the big boss Emerson Fullwood in his office in nine West 57th Street. And I'm on a couch, sitting next to this gentleman, David Andermichael.

• 13:49Speaker 00

  Can you believe this? Who's a great friend of mine to this day.

• 13:53Alex Kantrowitz?

  Hmm.

• 13:53Speaker 00

  And Joanne Siciliano was the receptionist and I go up to Joanne and I said, Joanne, you know, I've been here for a while. I just want to let you know, I'm here to see Mr. Fullwood. And I'll wait as long as he needs me to, but I just wanted to make sure he knew I was here. Next thing you know, boom, I get an interview into his office. Walked to the office, man is beautifully groomed. I'm looking over his shoulder on Central Park from nine West 57th Street on the 38th floor. And I realized as I went through the hearth of that door to sit down with him, that I wasn't going for a job interview at all. I was in a fight for my life because if I could get that job,

• 14:34Speaker 00

  the destiny of my life was now within my personal control. We sit down, we have an unbelievable meeting at the end. He said to me, Bill, very interesting young man. Thank you very much for your time. And the HR department's going to get in touch with you within the next couple of weeks. I guess some of your listeners might've heard the HR department story before. And I said, you know, Mr. Fullwood, I don't think you completely understand the situation, sir. And he kind of looks at me, tilts his head. And he and he's like, what's this kid up to? And I said, I haven't broken a promise to my dad in 21 years and I guaranteed him. I'd have my employee badge in my pocket when I get home tonight. And he kind of tilts his head again, looks at me and he said,

• 15:19Speaker 00

  Bill McDermott, as long as you haven't committed any crimes, you're hired. And I said, I certainly haven't committed any crimes. So you mean it? I'm hired. We shake hands. I kind of embrace him, carry him around a little bit, put him down safely. Blow past Joanne Siciliano, get on the elevator, go down 38 floors. Go to Sixth Avenue and 57th Street to Bunnenburger, throw quarters in the phone, call up my mom and dad. Now, this is Long Island style. And I said, Mom and Dad, I got the job. We're going to celebrate tonight, break out the Corvell. And the rest is history.

• 15:56Alex Kantrowitz?

  Yep. And it's interesting when you talk about the vision that you saw at Xerox at the time, it was one of reinvention. And it is sort of the challenge that's facing every company right now. And it's one that maybe Xerox, you know, handled for a while, but ultimately didn't. And you've you were there, you know, for the heyday and you were also there as the company sort of started what began its decline. Um, I won't say you were there for it, but you definitely saw it in action. What lessons do you think? Now, look, the the conventional wisdom is Xerox didn't see the shift to digital coming and it was so slow that by the time it realized uh what to do, it was it was toast. Um, I bet there's a more nuanced story than that.

• 16:39Speaker 00

  Yeah, there definitely is more nuanced story. There is, you know, first of all, I got there in nineteen eighty-three. Um, and and that's um the summer of eighty-three um when I got the job. Um, at that time, Xerox had already.

• 16:57Speaker 00

  Been in a situation where it was facing an onslaught of offshore competition. And the competition was building a product, building a product that actually performed better than many of Xerox's products. And they were selling that high-quality product for the same price that it was costing Xerox to build a product that perhaps in many cases was inferior in terms of the performance. But the company still had a great brand. And the company had a CEO that wanted to reinvent the company, as you said, based on total quality management.

• 17:38Speaker 00

  And really followed the Deming principles from Japan on quality. And essentially, the main lesson in quality is do the job right the first time. Because the cost of quality, when you don't build a great product and you don't take care of your customer with a great service, is you're chasing your tail, trying to clean up the mess in the market. And even if you sell things, you don't make a lot of money doing it that way. So the whole force field towards quality reinvented the company. So they did see digital. But they saw digital through the prism of printing and copying. And while I was there, one of the real breakthroughs in the company

• 18:22Speaker 00

  was the division I had the pleasure and the privilege of being responsible for, which was called Xerox Business Services. And at that time, it was very clear that the market was moving away from owning boxes and paying maintenance on boxes. They were really interested in procuring a service, a digital document management service.

• 18:49Speaker 00

  And my division went from 700 million to over four and a half billion in just a few years by providing the document, the people that managed the documents and the digital nature of the document as a service. And that was the early days of cloud computing. So what might have been missed is that business came at a lower margin than just hard selling boxes because it had a labor mix in it, like many of the cloud computing companies do today. And companies have to be willing to change their business model and lean into where the world's going, not where the world has been, if you want to transform yourself and win.

• 19:34Speaker 00

  So if there was any lesson to be learned, digitization was one aspect that you had to lean in, but also providing everything as a service was another one. And if you think about cloud computing and distributing things on demand, Xerox had all those ideas, but didn't necessarily lean into them with a single purpose at the time. I think that could have made a really big difference.

• 19:59Alex Kantrowitz?

  Now, how much of this is the actual decision making versus the amount of work that it takes to maintain the flagship product? Because I have a book about this Always Day One, which talks about how the tech giants have sort of reduced some of the, and this is going to be a nice setup for us in a bit, but reduce some of the work they're doing on internal processes so they have actually more room to reinvent than the others who like, you know, they'd like to make these decisions to go towards these future products, but they can't because they're just so loaded down on maintaining the flagship and they know that without the flagship, they're toast. So talk about what you've seen in Xerox and elsewhere in terms of like, what is the thing holding back most companies? Is it, is it the will and the deter, because like you mentioned, Xerox had the vision,

• 20:44Alex Kantrowitz?

  they knew digital was coming? Or is it the fact that they just are so overloaded on maintaining flagship that they can't think about anything else?

• 20:51Speaker 00

  Culture is the number one thing. You have to have a great company culture that's built on simplifying everything so you can do anything. You have to distribute net new innovation.

• 21:07Speaker 00

  To the marketplace. You have to build products the world doesn't know it yet needs. But once it gets them, it doesn't even realize how it ever lived without them. So this whole bias has to be net new innovation led. Where you're building things that are really changing the game and the marketplace. That's where the leverage is. To pull that off, you have to have a company culture. That's not looking internally, but it's seeing the world through the eyes of the customer and understanding everything from the external viewpoint. And it sounds simple. It sounds basic, and it is.

• 21:49Speaker 00

  But basic things done extraordinarily well have proven hard to do for a lot of folks. So my feeling on it is you have to have an uncommonly great vision because people have to see themselves in a beautiful picture. The culture has to be radically simplified. And ultimately, it has to be innovation driven and customer led. And if you could pull all that off, you got a good chance of doing some big things.

• 22:18Alex Kantrowitz?

  But you can't always listen to the customers. So here's one example that I learned in researching my book, that in Microsoft, there was chief information officers who were responsible and chief technology officers responsible for maintaining the on-premises servers. And Microsoft brought this idea of cloud up to them, they laughed it off and they said, no, we're not moving to the cloud. We like the setup. And the reason was because they would lose their power if they moved to the cloud. And then Microsoft looked a level deeper and said, hey, wait a second, you know, after really going through the economic analysis, they realized that these people would either be A, onboard with cloud in a few years, or B, fired. And so they said, okay, we're actually going to put, and this was under Satya.

• 23:02Alex Kantrowitz?

  And that's how Azure was really turned into what it is, is they didn't listen to the customers and went ahead and moved forward. I'm curious what you think about that.

• 23:10Speaker 00

  Well, I'm really fortunate with ServiceNow because we're natively

• 23:16Speaker 00

  Built in the cloud, architecture and company. So we were in the cloud in the 21st century as opposed to taking a 20th century architecture and trying to reinvent it from on premise to cloud. So this has been refreshing for me because I've been in both worlds. And it is true that you have to see past the corners that your existing customer base might be caught in. But it's also true that it's not only about technology and the technologists that use your product. It is also about the business people.

• 23:54Speaker 00

  And this is why I believe IT and business have to be co-joined in a shared vision for the future. So you have to spend a lot of time, not just with the technical people, but also the business people on what their dreams and goals are and how I think IT has really transitioned. Is the IT strategy because of digitization has become the business strategy. So now the business people are going to IT saying, take me someplace new because these are the goals that I have to hit. These are the things I have to do, whether it's taking cost out, improving productivity or putting growth into the business.

• 24:35Speaker 00

  And IT now has become the catalyst in helping business do that. So we're in a new era now and you're right. You can't just simply serve what got you from there to here. What got you from there to here will not get you from here to there. And it is the here to there that you have to spend your critical thinking and your resources on to create that net new innovation.

• 25:01Alex Kantrowitz?

  So I'm going to hand you a challenge and I think you can pull it off. So I'm going to ask you to describe, because this is kind of my level of understanding sometimes in business. Describe what what service now does to the level of, let's say, a later in their career high schooler. And maybe do it within under two minutes. People who haven't really been introduced to the company can get a sense of it because it goes down to, it really goes to this idea of reducing some of the processes that these are working to, you know, well, anyway, I'll get, I'll lend it to you, but I do think there's something to be said about the.

• 25:38Speaker 00

  Let's tell that later stage high school individual what's going on.

• 25:44Speaker 00

  Companies have spent billions and billions of dollars trying to digitally transform their companies. So they become a digital company. So the experience you have with your digital phone on your living room couch and that great user experience you get from Google and many other wonderful companies needs to come into the enterprise. And the reason that the enterprise has not provided that great consumer-grade user experience is because there's 50 years of sludge and mess in these enterprises.

• 26:26Speaker 00

  And 80% of those billions of dollars that got invested by these companies in digital transformation has failed to deliver a positive ROI, return on investment. And so then the question becomes, why? And the answer is one word, integration. The IT system doesn't talk to the employee system, that doesn't talk to the customer system. And the smart people like yourself, a young person coming out of school that just wants to build an app and do something different and innovate, can't do it because the platform doesn't allow for easy low-code or no-code development.

• 27:10Speaker 00

  What if we had one platform that could lift up an entire company

• 27:17Speaker 00

  and integrate that mess so you never had to see it again? And your user experience in a corporation could be as simple as using that smartphone on your living room couch on the weekend? And the consumer-grade experience could be just as good. What if we could do that for you? Would you be interested in that?

• 27:39Alex Kantrowitz?

  Okay, and so that's ServiceNow.

• 27:41Speaker 00

  That's it.

• 27:42Alex Kantrowitz?

  So it's great because it sounds like we talked about it in the beginning, but just like the amount of processes and the amount of work companies have to maintain their flagship product, right? They're in all these point solutions and they just can't handle it. And, you know, by the time they are able to get a task done, they don't have time to think about what's coming around the corner, which is why I think that your company is very interesting and it also gives you an unbelievable perspective into what all these debates about automation, like what they're actually going to amount to, because that's something that you are working or hoping to work with clients on, is to automate a lot of these processes that they end up spending time on, giving them more time to invent and create that next reinvention.

• 28:26Alex Kantrowitz?

  So why don't you sort of give your perspective on these big automation questions? It's interesting, I'll tell you, Bill. When I speak with, you know, people speaking publicly, they always say automation will lead to more productivity and more employment. And then, you know, behind the scenes, people say, yes, that's going to happen, but we're going to have to lay off 50% of our workforce to get there. So talk a little bit about what this will do to the human side of this question.

• 28:53Speaker 00

  Yeah, I think first and foremost, the ServiceNow vision is it's all about people. What good is technology? If it doesn't help people have a little bit better experience in the office, do something that they were probably incapable of doing before because technology got in the way. This is about liberating people. So if you think about an employee and a day in the life of an employee in most companies, let's go for that one. Let's take this high schooler that wants to come into the workforce. How do you recruit them? How do you actually hire them? And then, once you hire them, how do you onboard them? They get their computer, they get their phone, they know where their office is,

• 29:38Speaker 00

  they have a complete map of what to expect when they get there. Then, when they get there, you train them, you certify them, you teach them what they need to know. And then, once they're now smart, they know how to do their job, they have a question about their comp plan, they have a question about their healthcare, 401K, long-term this, maternity leave, the other thing. All of these things should be so simple and it should just be on their Cell phone. And they should be able to do everything on their smartphone without going any place else. Think about that. Think about that for starters. Let's think about a customer now.

• 30:22Speaker 00

  A customer doesn't necessarily want to go to your bricks and mortar store anymore to buy something. They want to have a direct to consumer relationship with your company. How do I get my smartphone to look at your product? Order your product in the form that I want it, the configuration, the price, ship it to me where I want it to go. And then service me. You made me a promise that this was going to perform well. But unfortunately, the size didn't fit. Something went wrong with the delivery. How are you going to recover from that? Because if you don't do that really well, especially if you can't recover well, I'll likely not do business with your brand anymore.

• 31:06Speaker 00

  This is all digital transformation on the ServiceNow platform. But here's another big one. There's going to be a billion apps built in the next two years by the customers we serve on our platform. How do we make it easy for you to take an idea? Maybe you now have been promoted. You're a new manager and you want to have a rewards program for your team. I want to recognize three people that did a great job. I don't want to go to the HR department and the finance department. And six months later, come up with a solution to that. I just want to build a simple rewards recognition program

• 31:48Speaker 00

  on the platform and let that app roll out in a few minutes. Not a few hours or a few days or months. Like is the case in a lot of companies. Just do it on the ServiceNow platform.

• 32:00Alex Kantrowitz?

  And you don't think that this is going to lead to lots of people like in those other functions, losing jobs?

• 32:07Speaker 00

  No, and here's why. Here's why.

• 32:11Speaker 00

  The big thing about jobs is growth. Hmm. So when you think about the generative AI opportunities in front of enterprises today.

• 32:23Speaker 00

  Think about this. With ServiceNow and great companies like Nvidia. Hmm. We're taking large language models. And we are building them in use cases specific to the ServiceNow platform. And within these enterprises, there's literally thousands of opportunities to build conversational next generation applications on the platform. So you say, well, what if you reinvent a call center? And the call center, instead of a thousand people, only needs a hundred people.

• 33:05Speaker 00

  Well, the call center right now is experiencing forty percent annual turnover anyway. So the people you hire can't stand the work they're doing because they don't have the information at their fingertips that ServiceNow can give them. So they basically leave because they can't handle answering the same ten questions a hundred different ways without the real insight on solving the problem for the customer. So now with AI on the ServiceNow platform, the human has all the contextual information they need to solve the problem. So you need less humans doing that. So the company is spending less money on things that technology can do better

• 33:50Speaker 00

  to make the human experience better. And instead of having forty percent turnover, maybe a five percent turnover. Now, where'd the nine hundred jobs go? They're going to be retrained and retooled to do things that can actually help the company grow and get bigger. And when you get bigger and you grow, you need people and you create jobs. So there's going to be retooling, there's going to be reskilling, there's going to be retraining. But there's also going to be new vectors of prosperity. And that's what's missing. We have to focus on growth again. So right now, everything is cost out, productivity in. Where's growth? So the winners will focus on that growth and they will use technology as the weapon.

• 34:35Speaker 00

  To get them from here to there. And I do want to say a little something about ServiceNow for your listeners. We have a program right now, Rise Up with ServiceNow, where we're actually putting our money where our mouth is. And we're training, re-skilling, retooling, and certifying a million people in the economy in the next year. And you say, that sounds like a lot. I think we'll blow past that number. But that's one that we stated publicly that we'll do. We already have 400,000 on board. Now you're like, well, is that self-serving? I mean, how are you going to hire a million people? I'm not. We have a vast ecosystem of partners and customers that have now realized that ServiceNow

• 35:20Speaker 00

  is the intelligent platform for end-to-end digital transformation. So all things that get done in a company can now be activated on the ServiceNow platform. So we need the people in the ecosystem to do it. That's going to equal enormous job creation on the ServiceNow platform and opportunity for your listeners if they want to be in tech and they want to win.

• 35:44Alex Kantrowitz?

  So you mentioned artificial intelligence, which is obviously going to play a large role in this automation. You're the CEO of a large public company. I want to get your response to this. So this is a quote from Scott McNeely, who was the CEO of Sun Microsystems, talking about what happened after the dot-com collapse. So he goes, "Two years ago, we were selling at 10x revenues when we were at $64. At 10x revenues to give you a 10-year payback, I have to pay you 100% revenues for 10 straight years in dividends." That assumes I can get my shareholders on board. I mean, that assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard for 39,000 employees. That assumes I have to pay no taxes, et cetera, et cetera.

• 36:29Alex Kantrowitz?

  And he goes, now, having done that, would any of you like to buy my stock at $64, which was 10x revenue? The amount of enthusiasm about AI is blowing past that. Nvidia, one of your partners, is now 37x revenue. Isn't this a glaring alarm bell right now that we should all slow down in terms of our enthusiasm? Not that it's not going to have an impact, but the public market seemed to be just completely nonsensical in some ways about the valuations they're ascribing to companies that AI touches.

• 37:01Speaker 00

  Well, if you look at Nvidia in particular, I don't know of too many companies that had a quarterly forecast, as you look into the next quarter, that goes up about $4 billion. So what you have there is a company that has reinvented the computer and basically taking 60 years of computing into a new platform that's based upon generative AI. And if you believe like I do, that this is now a secular movement that's undeniable and one that will fundamentally change the enterprise, then you'd have a bull case on

• 37:41Speaker 00

  Nvidia and all companies in the enterprise that can be generative AI market leaders. And why do I think that the enterprises, and not everyone's going to win here, but the ones that have permission to win and brands that can resonate are going to tremendously change the rules of the game in the enterprise? So for example, I started my day to day talking to a CEO that's in the travel industry. We're going to take his chatbot and reinvent it on the ServiceNow platform. And the idea there is not just applying the logic of large language model and generative

• 38:25Speaker 00

  AI on huge oceans of data, but that's enterprise data.

• 38:32Speaker 00

  And that's not purely off the internet data where a lot of the hallucinations exist. This is clean enterprise data, not perfect, which is why you have to govern it. And you have to manage the process and you have to make sure you're doing this properly. But with that data now, this particular company can reinvent. How he services the air industry globally. He can completely rethink the consumer experience of what his customers are doing for their customers. That is a completely new business model.

• 39:15Speaker 00

  And potentially takes massive friction out, improves productivity dramatically and helps him get more revenue. And when he grows and he beats expectations, he can hire people, expand his operations. And do so in parts of the world that he's not covering right now. So we have to think differently. We have to see things differently before we can do things differently. And to debate whether a particular share or a particular buy in on the capital markets. It's too frothy right now because generative AI has too much hype around it. I would basically distinguish that by saying.

• 39:59Speaker 00

  What hype, what kind of hype? Because with businesses and tech businesses in particular, that can put that to business. Use cases on platforms like ServiceNow. With fundamentals that come with a great company like Nvidia. You go from the chip all the way through to how you help the customer solve their customers' problems. That's game change.

• 40:29Alex Kantrowitz?

  Yeah, for sure. It's just a question of, I mean, I guess this is one of the things that's sort of out of your control is how exactly, you know, the market prices it, but it does seem quite high. So.

• 40:39Speaker 00

  Well, isn't it, isn't it nice to have something that's working in the market?

• 40:43Alex Kantrowitz?

  I mean, listen, I mean, I'm sure investors are happy, but we saw, we've seen recently that like, you know, something's working. That's great. But eventually it faces the music, like the market is no longer able to sort of run on.

• 40:56Speaker 00

  Well, we'll see, we'll see, we'll see. You, you know, it depends. I mean, I think, you know, this is an iPhone moment.

• 41:04Speaker 00

  For the industry and it just depends on who's doing it, how innovative it is and how much value it creates. But I will say this, I've never been a guy in terms of stock and valuations that looks at the R measures, meaning the actual result or the actual price. What you have to look at, especially in quality terms, is the process measures, the in-process measures. Are you building a great product? Does it have unique market differentiation? Are you providing an uncommonly good service? Do you have the ability to articulately tell a clear and specific story? On how you're impacting value?

• 41:50Speaker 00

  Are you inspiring a new generation of employees, customers and partners to aggregate around that vision? And finally, are you creating the next net new innovation machine? Because it's all about innovation and it's all about a pipeline of innovation. And that's really where we started this conversation. Net new innovation equals immense opportunity. How people price that, that's a TBD, but I wouldn't get caught up in that as much as I would right now. Look at the brands that are built to win because the market opportunity is gigantic.

• 42:31Speaker 00

  For example, you know, there's a $7 trillion opportunity just in reinventing data centers. That have existed in a similar fashion for the last half century. So think about that opportunity.

• 42:47Alex Kantrowitz?

  Yeah. All right, Bill, I want to close with one question that I'm curious about because having spoken with people who know you, one of the things they say is deal is stuck at 90%. You put Bill on the plane, that deal closes. What do you do in those meetings after you fly into the client that will sort of, yeah, make that deal go across the finish line? What's your secret sauce there?

• 43:08Speaker 00

  Yeah, you know, going back to the beginning, you can get anything in this life you want if you help enough other people get what they want. So everything that I do, everything I compose is always based upon helping the customer I serve get what they want and operationalizing that in a way that is extremely clear, very articulate, and ultimately you got to deliver. And so over time, you get a reputation. Yes, he's going to want to win, but his win comes from your win. And if he says he's going to do something, that word

• 43:52Speaker 00

  is his bond and he does it. And I speak on behalf of ServiceNow. If I tell you it's going to happen, it's going to happen. And I think that's why it's not a difficult thing to get somebody to see the idea of going forward with us because there's always a case behind it. The case is always based on their needs and ultimately you got to deliver and we do. So that's it.

• 44:21Alex Kantrowitz?

  Bill McDermott, thanks so much for coming on.

• 44:23Speaker 00

  Thank you so much, Alex. Appreciate you having me.

• 44:25Alex Kantrowitz?

  Thanks for being here. Always great to connect with another Long Island guy, so.

• 44:29Speaker 00

  Appreciate you.

• 44:30Alex Kantrowitz?

  And that'll do it for us here on Big Technology Podcast. Thank you, Bill McDermott, for joining. Always fun to speak with you. This was really good. Thank you for telling those stories earlier in your life. And I think we're just going to follow the way the market treats AI and it's going to be very, very interesting to watch. Okay. Thank you, Nick Watt, Nick for handling the audio. Thank you, LinkedIn, for having me as part of your podcast network. Thanks to all of you for listening. We will be back on Friday for our traditional recap of the news. So stay tuned for that on LinkedIn or on the feed. I hope to see you there. Thanks again for listening. We'll see you next time on Big Technology Podcast.

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