Workday CEO Carl Eschenbach: Building the System of Record for the AI Era

Workday CEO and Sequoia partner Carl Eschenbach explains how the company is evolving its platform to handle both human and AI workers. He shares Workday’s three-pronged approach to monetizing AI through seat-based pricing, role-based agents and consumption-based API access. Eschenbach discusses why domain-specific agents with curated data will be more valuable than general-purpose models in the enterprise, and how Workday is helping enterprises navigate the transition to an AI-powered workplace while maintaining human connection. Hosted by: Sonya Huang and Pat Grady, Sequoia Capital

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

• 0:00Speaker 00

  As soon as you go in and you talk to the enterprise, a CEO, CFO, CIO, whatever it may be, it immediately goes to an ROI conversation. Like, this is gonna save me a boatload of money. And in some cases, it is. That being said, if you only focus on the benefit of the ROI, what happens is immediately, if you're an employee, you start to think, man, my job's being replaced. We need to flip that narrative as well. We need to start to think about how do we use this technology to drive ROI, to get dollars, to reinvest in the business, to drive growth.

• 0:41Speaker 00

  We need to talk about AI from a growth value proposition, not just an ROI value proposition. And that's how you get the employees and agents and AI to peacefully coexist in the enterprise and really drive growth for companies.

• 1:12Pat Grady?

  Greetings. Today, we're joined by current Workday CEO, former Sequoia partner, and perhaps the most beloved executive in technology, Carl Eschenbach. Workday, as you may know, is a system of record for people and the numbers produced by those people.

• 1:33Pat Grady?

  As we move into a world where people are complemented by AI agents, Workday is on a path to become the system of record, not just for people, but also AI agents, and of course, all the work done and numbers produced by those people and those agents. Carl talks about Workday's three-pronged approach to monetize AI through seat-based pricing, role-based agents, and consumption-based API access. He also talks about how to implement AI and how to transform a company while preserving your culture and values. We hope you enjoy.

• 2:10Pat Grady?

  Carl, welcome to the show.

• 2:11Speaker 00

  Thank you for having me. It's great to be here with both of you. I couldn't think of two better podcasters to be with, Sonya and Pat. Come on.

• 2:19Pat Grady?

  We couldn't think of a better venture capitalist who is moonlighting currently as a CEO to be doing this show with.

• 2:25Speaker 00

  Okay, moonlighting, I like that. Actually, I am moonlighting because I have responsibilities here with you and my other job, right? Some days I wonder which I'm doing more. No, I didn't say that. I'm doing the other one more, if I'm honest. But I appreciate still being part of the partnership. It's an incredible opportunity to still engage with what I think is the most iconic venture capital firm of all time, Sequoia, and just to be around it in some capacity and see people like you and all my partners is truly a blessing for me to still be involved. So, thank you.

• 2:54Pat Grady?

  Thank you. We really appreciate that. All right, we're gonna start with a question on Workday.

• 2:58Speaker 00

  Okay.

• 2:58Pat Grady?

  So, you guys are the ultimate system of record for people. In a world where AI is replacing people, what happens to the system of record for people?

• 3:11Speaker 00

  Interesting. So, if I may, we are the system of record for the two most critical assets of any company. Their people and their money.

• 3:24Pat Grady?

  Okay.

• 3:24Speaker 00

  Because we have the financials platform.

• 3:26Pat Grady?

  Good distinction.

• 3:26Speaker 00

  Interestingly enough, they're one in the same. And we get asked, and I get asked all the time, your system of record in the enterprise, AI is coming, it's a transformative technology, it's going to disrupt everything, especially in the enterprise, and companies like you might be in trouble. And I would say, with a bias towards being biased, I think we're in a very unique position. And let me explain why. Today, 20 years old as Workday, we've been managing and supporting our clients' most critical assets. As I said, Pat, they're people and their money.

• 4:07Pat Grady?

  Yep.

• 4:08Speaker 00

  And we now have a database, a highly curated database of more than 70 million users, that is processing 30% of the job recs in the United States last year.

• 4:22Pat Grady?

  Hmm.

• 4:23Speaker 00

  And when you think about AI... At the end of the day, it's all about data. I think you guys would agree with that. Now, it's not just about data, it's the context of the data.

• 4:35Pat Grady?

  Hmm.

• 4:36Speaker 00

  And when you have that much data and you have the context of it and you're in the actual workflow, the business process workflow, you can then use agents to drive actual results that people see value in doing, in using. This is where we start to talk about things like role-based agents and the impact it can have on the enterprise. The other thing I'd say, when you have 11,000 customers, you've been around 20 years, you've been that core system of record, it led to us becoming the system of truth. People trust us and anytime you go through one of these major tectonic shifts from one technology to the next generation of technology,

• 5:20Speaker 00

  I believe, especially in the enterprise, the enterprise customers look to us and say, "How are you going to help us with that transition?" Just like 20 years ago, you helped us with the transition from on-premises to the cloud for HR and finance.

• 5:35Pat Grady?

  Yep.

• 5:35Speaker 00

  So, the combination of the data, the context of the data, we're in the workflow, the trust we have, and I think at the end of the day, as we talk about agents, and I'm sure we'll talk about it here, I think domain-specific agents with highly curated data are much more beneficial in the enterprise and just general-purpose LLM models that are out there.

• 5:59Pat Grady?

  Agreed.

• 5:59Speaker 00

  That's why we think we're uniquely positioned. I get asked all the time, "Are the incumbents in trouble because of the startups?" And quite frankly, it's not an "or," it's an "and."

• 6:11Pat Grady?

  Hmm.

• 6:12Speaker 00

  There's going to be success across the board. You guys have a bunch of great companies that we work with that actually bring more value to the system of record. So it's both. I think there's opportunity for everyone, Pat.

• 6:23Pat Grady?

  And your point on trust is a good one, and that's definitely been a recurring theme amongst the application layer AI companies that seem to be working. Let me ask you a question on product, though. So- Let's say that I am an AI developer of some sort, or more practically, Sonya is an AI developer of some sort. And she shows up at Workday because she heard that there's this treasure trove of information that you've amassed over the last 20 years, all of these records and all the context around the records. How much of that is actually available for you to go build cool AI stuff with? And how much of that due to permissions or information, architecture, or 20-year-old company stuff? How much of that is not available?

• 7:08Pat Grady?

  Or said differently, in actually building with AI, all the data that you've amassed is obviously an advantage. How accessible is it? And what roadblocks are there to making the most of all that data when you try to turn it into product?

• 7:20Speaker 00

  Yeah, it's a great question. If you look at the amount of companies and technologies that access the Workday system of record, it's a lot. For example, identity companies. For example, Active Directory. When you onboard a new employee, guess where they all come and do that on top of the Workday platform? Today, they do it through an open set of APIs, general-purpose APIs that we put out there for people to develop on and connect with us. Going forward, as we start to think about this world of AI and the potential of all of these agents entering the world in the enterprise, someone has to think about how you onboard them

• 8:05Speaker 00

  in a secure, responsible, ethical, compliant way and make sure that our identity and access controls and all the data they get access to has governance around it. Today, that's the risk. That is the risk in the enterprise. When we talk to CIOs, the first thing they say to us, "We love agents, we love this technology, we love what potentially could happen with agents, but we are concerned we're seeing agents sprawl across the enterprise." My analogy, Pat, is remember when we always used to talk about shadow IT creeping up? And how do you get it back? Because of the security and compliance controls that you want in a corporate headquarters or a corporate function? That's what we're seeing.

• 8:48Speaker 00

  Now, what we're seeing is people want to bring agents into the enterprise. They want access to our records. They want to onboard them, just like we would a human worker. They want to do it with a digital worker. And what we're building is something called an AI gateway, where you're not going to be able to do that to a generic set of APIs that we have today. You're going to have to come through this agent, if you will, gateway to onboard into the enterprise through us.

• 9:14Pat Grady?

  Yeah, say more about this. So people are using Workday, or will be using Workday, to onboard AI agents analogously to how they might onboard human employees.

• 9:25Speaker 00

  Bingo. I'm going to hire you as my next sales rep, Pat. So what we announced, that was a good setup and you didn't even know it. About a month and a half ago, we announced something called an agent system of record. And think of it as the unification of a system of record between human workers and digital workers. Just like human workers get onboarded in the enterprise today, they come through Workday, they get onboarded, they get assigned to whatever organization they're part of, they get their benefits, they get tracked, they get monitored, and they get looked at for performance reasons. And then you do benchmarking of all your human employees to drive workforce management and capacity planning. The world of AI comes about, agents come into the enterprise. Everyone says they're going to come into the enterprise.

• 10:09Speaker 00

  Okay, how do they get into the enterprise? Who onboards them? What organization are they part of? What access rights do they have? Who controls them? Who measures them? No one today. We think in the future, and as we talk to our customers with this new agent system of record, that unification of human and digital workers on a common platform is the path forward. And then, once that's in place, you can start to do workforce management, workforce planning around all of your workforce, because it's no longer a workforce of human, it's a workforce of human and digital workers. And that's what we've developed and we're in the process of bringing to market.

• 10:47Speaker 02

  That's so fascinating. So it's a system of records for your people and your money, but your people includes your human people and now your agents as well.

• 10:54Speaker 00

  Exactly. And there's a lot of fear out there, Sonia, that these agents, as they come into the workforce, are going to completely displace all the human workers, right? And we're going to, you know, I hear some of my peers go out there and talk about, we're going to see a 20, 30, 40% reduction. And the human worker, right, going forward by all of the agents in this whole AI revolution. I fundamentally don't believe that to be the case.

• 11:19Pat Grady?

  Yeah, it's interesting. I remember the, I remember 15 years ago, hearing a Neil articulate the vision for Workday and part of it was the reason people and financials go together and the analogy to the last generation before that, which is, you know, the ERP systems of yesteryear, SAP and such, physical manufacturing was the economy. And so the same system that took stock of all of your machines was the system that was your financial backbone. And with the original Workday, we're moving into a knowledge-based economy. And so the same system that takes stock of your people is the system that provides your financial background backbone. And now as we move into an AI-driven economy, the

• 12:01Pat Grady?

  same system that takes stock of your agents is the system that's also your financial backbone. And because it's fluid between the people and the agents, it makes sense that we'd all live in one place.

• 12:12Speaker 00

  And if you think about, you know, the Workday platform, everyone thinks about us having a HR platform and a finance platform. But if you look at the architecture, they're one and the same, exactly as you just described. Now layer on top this new workforce called digital workforce, on top of it, that benefit you've got for the last 20 years continues, but it brings these agents into the enterprise in a much secure way.

• 12:38Pat Grady?

  Yes, yes. And then practically speaking, how do you, how do you take this to market? How do you, how do you roll this out? Do you, do you need some sort of a standard unit of pricing and packaging that an AI agent builder can adhere to? You know, a person is a person. And granted, there are lots of different types of people, but everybody's got a date of birth, you know, everybody's got a title. What are the common characteristics of AI agents that will allow them to sort of? Map into this framework that you guys are now providing.

• 13:10Speaker 00

  And how do you price them as well?

• 13:11Pat Grady?

  How do you price them?

• 13:12Speaker 00

  Also, how do you go to market, right? I remember being at Sequoia, I'm gonna back up and then I'll answer your question. Do you remember when this whole, actually, I was talking to Ruloff about this last week. Everything was gonna go PLG.

• 13:25Pat Grady?

  Yeah.

• 13:25Speaker 00

  Everything's going product-led growth. You don't need sales reps. You don't need, you know, 37-year sales veterans like myself anymore. You don't need the enterprise. You don't need the top-down. I'll tell you, the times are coming back. With AI, it's a top-down sale in most cases. It's not product-led growth up through the enterprise. You're selling to the heads of departments or heads of functions or a CIO.

• 13:47Pat Grady?

  Yep.

• 13:47Speaker 00

  So I think the distribution is coming back to a much more inhuman sales motion. I don't know if you're seeing that.

• 13:54Pat Grady?

  We're absolutely seeing that. I think that's a common thread. If you look at the AI companies that are really working.

• 13:57Speaker 00

  It's fun, because I told Ruloff when I saw him last week, I'm like, see, I told you, PLG is good, but it's not the panacea that everyone thinks. You are still gonna need people like me someday.

• 14:06Pat Grady?

  Yes.

• 14:06Speaker 00

  And they do, right? So I just thought I wanted to talk about, as far as pricing goes, there are multiple ways people are pricing AI. And then I'll speak specifically about agents. Let me back up two years ago, when co-pilots came to market. A lot of our peers, a lot of my peers and competitors, immediately went to market and they basically said to their customers, we now have a co-pilot. And because we have a co-pilot, we're gonna raise our pricing 20%. And we made a decision, and I specifically said, I do not want to do that. I don't think it's the right thing. Co-pilots are gonna become part of the core foundation of all products.

• 14:50Speaker 00

  And it should be built in, not bolted on. And it should be the value our customers get and receive by paying us a subscription fee on an annual basis. We have to innovate.

• 14:59Pat Grady?

  Yeah.

• 15:00Speaker 00

  To be honest, we got beat up quite a bit. Why aren't you doing this? You have co-pilots, you should be monetizing. And I said, because it's the right thing to do. When we bring true value, right? With our agents in the future. And we can show you a strong ROI or a value equation, then you'll pay us. Fast forward to today. We price our AI solutions in one of three ways. Number one, we pay price it based on seats. So we are a seat based company for the most part. And if we have an agent or an AI technology to provide value to all of the employee population, then we will do an uplift based on that agent or that technology.

• 15:40Pat Grady?

  Uplift per seat.

• 15:41Speaker 00

  Per seat.

• 15:42Pat Grady?

  Okay.

• 15:42Speaker 00

  The second would be based on an actual agent itself. Like if I can come to you, Pat, and say, we're rolling out a payroll agent. And you think about how many payroll administrators you have today. But we bring a role based agent into the market. I'm making this up and we're going to say it's $50,000 a year for this agent. Today, you have a payroll agent or a payroll employee over here, looking at everything. All you they're doing is administration and that costs $200,000. You'll say, hmm, I'll do this. So you can do it based on the role.

• 16:14Pat Grady?

  Do some of those cannibalize the seat based model of core workday? Meaning if I now have a payroll agent, I need to hire a fewer payroll people. And I would have been paying for a seat in workday for each of those payroll people. Does the agent business cannibalize the sort of original seat based business?

• 16:32Speaker 00

  I don't think so.

• 16:33Pat Grady?

  Okay.

• 16:34Speaker 00

  Because what AI should allow that payroll administrator to do is go off and do more high value tasks and drive more strategic outcomes for the company as opposed to just being replaced. If you think about what we do today, you, me, everybody, we spend the majority of our day. Working with technology, sitting at our desk, working on a phone, we're working with technology. The power of AI is going to happen when we transform that equation and the technology works for us.

• 17:04Pat Grady?

  Yes.

• 17:05Speaker 00

  And we don't even know what's happening. Right now, we're interfacing with all of these, you know, chatbots and all of these different, you know, LLMs out there, the consumer. But in the enterprise, what's going to happen and the value is going to happen when these agents and AI technologies start to work on our behalf, we don't do those tasks and we go off and do other things. So we're going to flip the equation around. So that's where I think the value comes in for existing employees to go get new skills. Just like the AI momentum could be called the revolution, I think we're going to go through a skills revolution with the existing workforce to train them to go do other things.

• 17:44Speaker 00

  And if you look at the history of time, people, like all of us, all employees, they're very pliable.

• 17:52Pat Grady?

  Yeah.

• 17:53Speaker 00

  They're adaptable. And what do we always figure out to do? How to leverage technology? Technology is the single biggest source of productivity gains in the history of time.

• 18:04Pat Grady?

  For sure.

• 18:05Speaker 00

  Right? That leads to GDP growth, that leads to company growth. The other thing we need to work on is this narrative that's out there. As soon as you go in and you talk to the enterprise, a CEO, CFO, CIO, whatever it may be, it immediately goes to an ROI conversation.

• 18:23Pat Grady?

  Hmm.

• 18:24Speaker 00

  Like, this is going to save me a boatload of money. And in some cases, it is. That being said, if you only focus on the benefit of the ROI, what happens is immediately, if you're an employee, you start to think, man, my job's being replaced. We need to flip that narrative as well. We need to start to think about how do we use this technology to drive ROI, to get dollars, to reinvest in the business, to drive growth. We need to talk about AI from a growth value proposition, not just an ROI value proposition. And that's how you get the employees and agents and AI to peacefully coexist in the enterprise and really drive growth for companies.

• 19:07Pat Grady?

  Yep.

• 19:08Speaker 00

  Sorry, we sidebar. Let me come back. There's another way to monetize it and how I'm thinking about it.

• 19:11Pat Grady?

  Okay, so we got, first off, we have uplift on all the seats. Secondly, we have price per agent.

• 19:16Speaker 00

  Yeah, think about that value-based pricing, right? And then the third is consumption-based.

• 19:21Pat Grady?

  Okay.

• 19:21Speaker 00

  Meaning how many times is something like I was talking to Brett Taylor at Sierra, right? They do it based on consumption and outcomes, right? And as you know, Pat, being on their board, right? We're thinking about the same things. How many times, back to the initial question, are people hitting us to get access to our data? So we can base on consumption?

• 19:42Pat Grady?

  Okay.

• 19:42Speaker 00

  So when all of these agents come out in the world and all of these agents say, wow, I need to get access to the data to be registered or whatever it is, we got to get access to Workday. Okay, great, please do so, but we're going to charge for that access going forward as opposed to just that open set of public APIs.

• 19:58Pat Grady?

  So in that case, it's a, it's a platform business and it's sort of metered, almost metered.

• 20:03Speaker 00

  It is. It is. It's a consumption based billing on the API. And then you can price it. Do you go out, a lot of people today are going out and saying, here, by so many, you know, so much consumption and then as you do it, you burn it down over time, right? That's, that's a big model that's out there.

• 20:17Pat Grady?

  Yes.

• 20:18Speaker 00

  And we're going to do all the above.

• 20:19Pat Grady?

  You mentioned AI for productivity. Okay. You are easily top three most productive human beings I've ever met, possibly top one, probably top one, honestly, but you're certainly top three. As an insanely productive human being, how are you using AI to make yourself more productive? Have you, have you, do you have any favorite products? Do you have any favorite workflows?

• 20:39Speaker 02

  Studio Ghibli pictures.

• 20:41Pat Grady?

  Any great Studio Ghibli pictures? Yeah. What are you doing with AI to make yourself more productive?

• 20:46Speaker 00

  Yeah, so inside of Workday, and now I'll talk about how I use it too. Inside of Workday, we've rolled out a whole bunch of, you know, productivity tools around AI. We have Slack AI, we have Zoom AI, we use Gemini all the time. Gemini is something I use all the time. So an example, I'm preparing for earnings every 90 days, which is so much fun. Please join me if you guys want. All the analyst reports come out, right? And you go, how do you summarize them? How do you, it's amazing, you throw it in Gemini and boom, and they give you, you save your hours of reading. That's one example. Or you're on a Zoom call that you missed, like how does that get summarized back to you? I use those type of things all of the time.

• 21:26Pat Grady?

  Yeah.

• 21:26Speaker 00

  And it just makes me that much more productive, clearly. One of the things we're doing inside of Workday, and I think it's first of its kind at scale, we're launching this month, something called Everyday AI.

• 21:41Speaker 00

  Where all 20,000 employees have to go through training on AI and how to learn how to use all of these tools to drive personal productivity and do that personal productivity gain, workday gets gained. Yeah, yeah. Right? So we, and they have to test out, there's an entire curriculum. It's a really interesting way to get people excited about AI, how to engage with it and leverage the technology as opposed to be afraid of it. And we think it's one way to drive, if you will, that peaceful coexistence between the technology and the humans to drive overall gains for the company. And that's another example of how the whole company has to do it and I'm launching it in two weeks. Very cool.

• 22:22Speaker 02

  Can you tell us more about the agents that you're bringing to market? So you mentioned the payroll agent. What other agents should folks expect from you?

• 22:29Speaker 00

  We bought a company at this time last year, about a year ago, called HiredScore. And they have what I would describe as a recruiter agent. So if you think about recruiting, Sonia, in the HR function, it is talent acquisition or recruiting is probably one of the most expensive functions you have, right, in HR. This recruiter agent we brought to market, we can give it to a recruiting organization or talent acquisition organization and they, in a very short matter of time, can see a 50% increase in recruiter productivity. Just think, you get hundreds of resumes for a job. Today, someone searching now, it basically can do that in seconds

• 23:12Speaker 00

  and say, here's the top two or three you should go after. But it's more than just recruiter productivity. It also has proved to accelerate time to hire by 20, 30, up to 40%. So your recruiters are more productive and you can accelerate your time to hire. Then, once you get them inside the building, we have two other AI products. One is called Talent Optimization, and the other is a Talent Mobility Agent. And when you implement them, we have seen upwards of forty percent reduction in attrition. And the reason for that is, for the employee, it takes a look at of all your skills, your background and your experience.

• 23:56Speaker 00

  And for the manager, you say, I have this project or outcome I'm trying to achieve, and it starts to do the matching between the two. So what it drives is an increased level of internal mobility with your workforce, which drives down attrition because people feel like they're getting new opportunities. So that's like a full life cycle of agents from recruiting to onboarding, to talent optimization, to talent mobility. And all that we can monetize because people can actually see, you see a reduction of fifty percent of, you know, you know, um, need for additional recruiters, that's pretty powerful.

• 24:31Pat Grady?

  Yes. Can I ask you a question on, you mentioned this idea of matching talent to other opportunities inside of their company.

• 24:36Speaker 00

  Yeah.

• 24:37Pat Grady?

  One of the ideas that we've heard from a few different companies at this point is this idea that, thanks to AI, the matching problem, that is, here is a job to be done, here is the right person to do the job. Thanks to AI, that matching problem is now possible. Historically, it wasn't, because you'd have to collapse the dimensionality of that problem to things like, what is the title, what is the GO, what is the pay scale? Which really doesn't tell you whether or not this person is going to do a good job. And so I'm curious, are you, are you a believer in the ability of AI to actually match the right talent to the right opportunity? And if so, is that a big theme for Workday going forward? We heard a glimpse of it with the internal product. Is there more of that to come?

• 25:20Speaker 00

  Absolutely, and it all becomes completely or highly dependent on skills.

• 25:28Speaker 00

  It's all about skills. It's not about pedigree or college or anything else like, you know, there like, let me give you a one statistic and then I'll come back to say how we do it. Accenture, one of our biggest partners out there, who's a very reputable, as you know, system integrator, global system integrator. Today, their new hires, thirty to thirty-five percent of their new hires do not have a college degree.

• 25:54Speaker 02

  Hmm.

• 25:55Speaker 00

  It's pretty amazing because what they've done, they're probably one of the most advanced companies I've worked with that looks at skills and job outcomes or job recs are trying to fill, and then they use AI to match the two.

• 26:08Speaker 02

  Hmm.

• 26:09Speaker 00

  Right? And that's what our product does internally. Let's say you have 10,000 employees. Because we are the system of record, we know all the skills you have. And you have this, if you will, database of all the skills of your employees. So now, when you want to try to hire someone, you first look inside and say, this is what I'm trying to fill, this job. These are the projects this person's going to work on, and these are the type of skills that are required. Then you look at your own 10,000 employee population and say, wow, here's all the skills Billy or Suzie have, and you do that internal matching. And so as we move to a skills-based outcome world, right, this becomes more and more valuable inside of companies for people not to just hire based on pedigree is how we like to think about it.

• 26:55Speaker 02

  Carl, I remember when I interviewed for Sequoia, you were very memorable. And I mean, so much of, so much of that interaction, though, was just the human, can I see myself working with this person, being inspired by being around them every day? Do you think that AI can actually, agents can disrupt the actual interviewing process? And, and, you know, the process of actually selecting the right candidate for the job in, in terms of some of the human judgment elements?

• 27:20Speaker 00

  It's a great question, because you know me, I like doing this with my partners like you. It is all about the human touch and human connection in the relationship you establish with the other person. That's really what's important at the end of the day. But that's also why we always talk about, and you talk about probably the same thing, there's going to be a human in the loop in all of this, especially in hiring. I personally would not accept someone into our company if they was 100% done purely based on skills and skills requirement. There has to be a human in the loop all the time. I think. Yeah, and I know we talk about where AI is going in the future and it will have emotions,

• 28:03Speaker 00

  it will have feelings, it will have empathy. I'm trying to get there with everyone, but I still think this is required ultimately when you're going to hire a human. In fact, one of the things I think that's going to change, and here's an example of where humans will not just necessarily be replaced by AI, but since AI is going to have such a profound impact on human productivity, it's going to free us up to move from a world of technology transformation to a skills transformation by people like us now going and picking up skills that I actually think we've lost in the workforce. Right?

• 28:44Speaker 00

  Those life skills, those people skills you're talking about, how do you learn to network? How do you learn to give feedback if you're a manager? How do you collaborate? How do you lead with empathy and feelings? That's, we lost a lot of that during COVID. And now we got to get that back. As people come to the office, how do we educate and train and mentor the younger people? You can't do it all the time over Zoom. There has to be a human connection to make that happen. So we're now talking about how do we use the AI transformation of the workforce to transform skills that we think are missing in the enterprise, to bring the two together, ultimately to drive better outcomes for both employees and companies.

• 29:25Pat Grady?

  This is one of the optimistic views of AI that I think we very much believe in. And we hear similar things. You know, Winston at Harvey talks about how the legal profession is going to kind of go back to what it was 50 years ago, where it's less about processing transactions and it's more about human connection and the advice and the consigliere role that people can play. You know, Christopher O'Donnell at Day talks about how because AI-generated CRM does a lot of the drudgery for you, you can actually focus on the human connection too. And so I think the optimistic view and sort of what I'm hoping for out of the world of AI is, technology, to your point earlier on how we work for technology and it's going to work for us, technology kind of fades into the background because AI is doing a

• 30:08Pat Grady?

  lot of the work and it sort of frees you to have the human connection be more, you know, front and center.

• 30:14Speaker 00

  Well said. We move from a world where we're working with technology to the technology working for us. And today it's front and center and we talk about how we're using AI. But the power of AI is these models learn, right? And they start to do things autonomously on your behalf. So you don't even have to do it. So you go do new things. And the last thing I'd say is this is, this is factual. Technology enables change.

• 30:44Pat Grady?

  Mm hmm.

• 30:45Speaker 00

  That's all it does. It enables change. To drive change, it still takes people, no matter what.

• 30:52Pat Grady?

  Well put.

• 30:54Speaker 00

  People are going to be involved with AI. They have to implement it. They have to embrace it. They have to teach people how to use it and they have to teach people new skills. Technology only enables change. It doesn't drive it. It still takes humans.

• 31:06Pat Grady?

  So this is one of the ironic things. I completely agree with the point and maybe a different way to frame it. One of the ironic things, ironic things about this agentic economy. Agency is the thing that is uniquely human, right? The ability to determine what is it that I want to achieve here? That is still a uniquely human thing. You can dispatch an AI agent to go reason through the steps and figure out how to get there. But deciding what question should I ask? What is the objective? You know, that's still a uniquely human thing. I think another framework would be, you know, Google sort of commoditized knowledge. OpenAI is sort of commoditizing intelligence. Agency is the thing on top. You know, intelligence is making use of that knowledge. Agency is determining to what end. And that's the thing that is still uniquely human.

• 31:51Pat Grady?

  And I think the argument in favor of AI is it gives you superpowers to go do that.

• 31:55Speaker 00

  Yeah, I, I think it's well put. Again, especially in the enterprise, Pat, I think there's so much opportunity. I think AI will drive a step function change in human productivity. No doubt, no question about it. I think how we get there, there's different views, there's different opinions, right? And I think, you know, we at Workday and myself for sure think it's going to be a peaceful coexistence of humans and technology working together, just like we've done in, you know, the past major tectonic shifts. I remember when cloud evolved and came about, everyone said everyone's going to, CIA organization are not going to need any more people. I don't know, there's probably more people than ever working in the CIO's organization. People say developers aren't going to be needed. I'm not sure that that's going to be true.

• 32:40Speaker 00

  We'll need less junior developers, but really architects and senior developers are still going to do the final work and prove it or not, back to Sonya's point.

• 32:49Speaker 02

  We're not going to have Carl Vibes coding the dead code base.

• 32:52Speaker 00

  Yeah.

• 32:53Pat Grady?

  I would love to see Carl Vibes coding.

• 32:54Speaker 00

  That would be a problem. There are some things I can do and there's a lot I can't. That's one I can't, right?

• 33:01Pat Grady?

  So we talked about transformation a bit and how people are going to transform and AI is going to transform the workplace. The timing of your transition into the CEO role at Workday was pretty interesting because it was January of 2023, I believe. And so we're just a couple of months post ChatGPT moment.

• 33:23Speaker 00

  Yeah.

• 33:23Pat Grady?

  And so you you came into a company that was at that point 17 years old, 18 years old, something like a big company, already many billions of revenue and tens of thousands of people. And from the outside looking in, it seems like you have driven transformation on at least two vectors. You know, one is driving just efficiency and velocity and just kind of basic, you know, cleaning up the business, getting it in better shape sort of transformation. And then the second, of course, is the AI transformation. And so the question is, because I think there are a lot of people, you know, looking at transformation over the next few years, what did you do to drive transformation? What was effective for you? What were some of the, maybe what was a crucible moment or two that you had to sort

• 34:07Pat Grady?

  of bust through to actually drive change in an organization with that much scale?

• 34:11Speaker 00

  Yeah, no, listen, it is a big company. When I joined, it's one of the most successful, obviously, software companies of our generation, if not ever. And it wasn't Carl who drove any transformation. It was a team that drove it with me, right? And to get their support was probably what I had to do and work on most. Let me start with what hasn't changed and what will never change because I think it's very special and it will never be transformed. When Neil and Dave, the founders of Workday, who worked together and Dave was the founder of PeopleSoft, when they sat down to start this company 20 years ago, Pat, the first thing they did is they said, what kind of company do we want to build?

• 34:56Speaker 00

  And what is the core foundation of the company? And how we're gonna scale from this day forward? And the first thing they did is they sat down and they wrote values. They wrote six values of the company. And to this day, we still talk about those six values as the foundation for the company. We focus on our people first, our customers, two I's, integrity and innovation. And the last two is that we like to have fun. And the sixth one is profitability. And profitability is the sixth one for a reason, because we do the first five right, we're gonna be profitable. And even today, that's all I talk about when I'm in front of the company or in front of customers. We talk about how important a values-based company is. That being said, our culture is strong because of those values.

• 35:40Speaker 00

  But culture, while the values will never change, culture does change as companies scale and grow. And part of our transformation is to think culturally, how do we actually become a bigger company? How do we run things more effectively, more efficiently, and drive a deeper level of operational rigor? How do we transform? A lot of work has been done because probably of my experience and background, I can't change who I am or where I came from on the go-to-market side. How we've segmented the market, how we've gone deeper into verticals. How we've expanded and, you know, built a true partner ecosystem. I now say I don't wanna build just an ecosystem around Workday, I wanna build an entire economy.

• 36:24Speaker 00

  Our partners are now not only deploying us, but they're all now taking us to market. They're selling on our behalf, they're being rewarded. And most importantly, they're innovating like crazy on top of the Workday platform. We're unique that we're both a platform company and an application company at the same time. And the platform is starting to resonate as we open up the aperture, some of the things we talked about earlier, to allow people to get access to the platform. They're innovating on top of us. And then they build it once a partner can, sell it to our marketplace, and sell it to our 11,000 customers, right? Build it once, sell it to many, so we've done a lot on that side. And then on the technology side. Yeah, I stepped into this. Everyone knew about AI. We knew AI was going to become,

• 37:07Speaker 00

  you know, a big part of a company like Workday. It always, you know, has been on the roadmap. In fact, you know, if you talk to Neil, who I think is one of the most, you know, thoughtful, mindful and smartest, you know, enterprise software guy I ever met, like, he's been doing AI and machine learning in the platform for a decade, right? That's what he said. So this is just the next evolution. I didn't know stepping into this, like, this was going to happen this quick. And I think one of the things that we've done in some of the transformation and crucible things we're doing is moving with speed and velocity at scale.

• 37:41Pat Grady?

  Yep.

• 37:42Speaker 00

  Like, we're moving much faster. We have a sense of urgency. Because we think we're uniquely positioned because of the data set we have, we think we got to move quick before anyone tries to come and disrupt us. So we're focused on disrupting ourself. And I think that's been a lot of fun. Unfortunately, you know, to support all of these growth initiatives and these transformations that we're going through, one of the hardest things I've ever had to do in my career is a sizable, you know, transformation of our people, where we did a restructuring earlier this year, about 8% of our workforce, about 1,650 people.

• 38:24Speaker 00

  And listen, that was the hardest thing I've ever had to do in my career, when it's on your watch and your time, to do that at a values-based company is not easy. So getting all the leadership and my partner Neil and the board to support that was a heavy lift. But the way we did it was incredible. The empathy we showed, the caring, the loving, the embracing of our workmates that were leaving us, the packages and severance we gave them was done in such a way that I think people felt as good as they could going through this type of a transformation. And now we freed up all of these OpEx dollars to go

• 39:07Speaker 00

  invest in these transformations on both go-to-market and the product side. It's been incredible. It'll be two and a half years here in a couple of months. It's been a great experience. And I'm grateful for the opportunity. I feel a sense of...

• 39:26Speaker 00

  You know, pride to continue to, you know, endure this company well beyond, you know, my time here and feels like days. There's a lot of pressure if I'm not lying, but you know, I have an amazing set of people that I get to serve alongside that believe in our mission, believe in the product, believe in the technology and believe we're actually having an impact on the world because we manage more employees than anyone out there today. That's pretty fun.

• 39:51Pat Grady?

  Pretty cool. So if the first 20 years of Workday were sort of helping usher your customers through this on-prem to cloud transition, in the next 20 years, I know this is oversimplified, but the next 20 years are helping to usher your companies into this world of AI. Does the nature of the moats that you build as a business change when you go into the AI world? Or said differently, you've had this wonderful moat historically, which is being a core system of record that a lot of other applications sort of orbit around. Does the nature of the moat for the next 20 years change with AI? Or is it kind of more the same? It's just the AI version thereof?

• 40:31Speaker 00

  I think the moat remains the data. And I think about data. Data is the new UI UX for AI. Think about that. Data is the new UI UX for AI. Right? Garbage in, garbage out. Highly curated data with context in, great outcomes with agent. So I think it's a both. I think our moat is what allows us to build the next set of moats, and that is role-based agents. And if we can bring role-based agents, because if you think a lot of today, what you see in agents, a lot of them are just super co-pilots. They're task agents. They call them agents, but they're doing a task.

• 41:14Pat Grady?

  Yes.

• 41:15Speaker 00

  And it's automating some repetitive task, right? Think of RPA on steroids almost, right? When you go into a world where we leverage the moat of data and we have the context of the data and we understand the skills. Humans have, think about now building role-based agents that doesn't do a task, it picks up skills.

• 41:37Pat Grady?

  Mm-hmm.

• 41:38Speaker 00

  And because we know that, I think that's going to become our next big mote, along with the data we have, as we transform how people work alongside of agents, and not just use them to solve a repetitive task.

• 41:53Pat Grady?

  Hmm.

• 41:54Speaker 00

  So I think as the world goes into the future, because of that mote, I think people do trust us to help them navigate the unknown of AI, to help them, you know, take advantage of it in the future. Specifically, obviously, we're not a consumer company, but in the enterprise.

• 42:12Pat Grady?

  Hmm. Should we jump into lightning rounds?

• 42:14Speaker 00

  Uh-oh. Let's do it.

• 42:16Speaker 02

  I'm gonna surprise you.

• 42:18Pat Grady?

  Go for it.

• 42:18Speaker 00

  Where's the lightning? Come on.

• 42:20Speaker 02

  Which of your beloved Sequoia partners do you miss the most?

• 42:24Speaker 00

  Oh, wow.

• 42:26Speaker 00

  I got it. Ready?

• 42:27Pat Grady?

  Yes.

• 42:28Speaker 00

  Emily.

• 42:29Pat Grady?

  There you go! Ah! Nailed it. Nailed it.

• 42:32Speaker 02

  Emily Fraker, I hope you're listening.

• 42:34Pat Grady?

  That's the best answer you could have possibly given, because I don't think anybody will take offense to that answer.

• 42:39Speaker 00

  Listen, I love all my partners. Uh, listen, I, as I said earlier, Sonya, I'm so grateful you gave the old operator a chance to come in, and I think some people were nervous about me coming in. But I dove in, I learned. Thank you to you two, especially, I tend to write those damn memos that I do. All right, that's enough, let me get some help. And you guys would just, I remember the red lights coming back. I'm like, damn it, I thought that was really good, until I give it to you two. Um, but I hope you saw that I came in with no ego, and came in as an apprentice, and I dove in and learned and cold-called prospect. It was like I went back 30 years of my career, bagging the phones, and I didn't think I was any different than anyone else, and hopefully you saw that.

• 43:21Pat Grady?

  It was amazing. It was an inspiration to all of us. This is a thing that I don't think people appreciate, is like, people, I think people assume that, oh, well, Carl is such an amazing operator, you plop him down in a venture capital firm, of course he's going to be successful. I don't think what people realize is the degree to which you embrace the beginner's mindset, and like, truly learn the job from scratch.

• 43:41Speaker 00

  Yeah.

• 43:42Pat Grady?

  And, and that was, that was-

• 43:43Speaker 00

  It was hard.

• 43:44Pat Grady?

  Truly inspirational to everybody.

• 43:45Speaker 00

  But I had people like you, like, and Doug, and Rue Off, and Jim, and you name all the out, every little partner's like, everyone like- I remember coming out of partner meetings and I'd say, get in this conference room. What's a Dow? What's a Mao? What's this? I'm like, what are you guys talking about, right? Then you learn it more and yeah.

• 44:03Pat Grady?

  You picked it up fast.

• 44:04Speaker 00

  It was amazing. That's why I still appreciate being around all of you. Yeah.

• 44:09Pat Grady?

  All right, next question. I think that it's safe to say you would be a consensus pick for most people's Mount Rushmore of CEOs.

• 44:17Speaker 00

  No, God, no, Pat.

• 44:18Pat Grady?

  Who is on your Mount Rushmore of CEOs? Who are the four CEOs that you really look up to in the buyer?

• 44:24Speaker 00

  Wow. One would definitely be top of mind comes Joe Tucci. Just an incredible human being, incredible leader. People will run through walls for him as I would. He was pretty special.

• 44:42Speaker 00

  I don't know, I haven't thought about that, Pat. I don't know him well, but I'm super impressed with what Satya's done. He's pretty impressive, watching him come up from the technology side and his success. I thought it's been pretty impressive. Geez, I don't want to call anyone out because then I'll miss someone.

• 45:04Pat Grady?

  You could just leave the four spot open and say, hey, you know who you are.

• 45:07Speaker 00

  Yeah, that's actually a really good question, Pat, I must admit. I don't know if I have anyone top of mind, but I really get impressed with people who find a way to to have longevity as a CEO and that are very pliable or adaptable as things change in the world, right? They find, they don't just kind of root themselves into what they were, or how they used to lead, or what they used to think. But they think about how to transform themselves, just like we talked about business transformation. How do you personally transform yourself to operate in whatever era you're in? I think people who have a long career as a CEO is something I'm always impressed with as well.

• 45:54Speaker 00

  I don't know. And the fourth one, you know, there's many. I'll use your line. There's so many of them out there. I can't even think of answering the only one.

• 46:00Pat Grady?

  Fair enough.

• 46:01Speaker 02

  Favorite AI app that you use in your personal life? What do you do with your, your wife and your kids with AI?

• 46:08Speaker 00

  No, I use, I use Gemini because it's accessible. I mean, I use ChatGPT, right? I definitely use them a lot, you know, just asking questions. Yeah, I probably, I mean, that's what I use probably more than anything else, just a generic, you know?

• 46:21Speaker 02

  I'm going to start sending you some AI songs.

• 46:24Speaker 00

  Yeah, yeah, there you go. I think my kids use some, they send me funny stuff and they're like, I'm like, what the hell are you guys doing?

• 46:32Speaker 00

  But no, I, I just use more of the, the, the business tools around AI to try to help me become more productive and get more hours in a day. Yeah.

• 46:42Pat Grady?

  For any founders who are listening, who are in the process of growing into being CEOs, if you had to pick one piece of advice to give them, what would the one piece of advice be?

• 46:53Speaker 00

  Yeah. Quite simply, um, it would be to focus on the success of others. Not focus on your success.

• 47:06Pat Grady?

  That's very well put. All right. Thank you, Carl.

• 47:08Speaker 00

  Thank you, partners, for having me.

• 47:09Speaker 02

  Thank you, Carl.

• 47:10Speaker 00

  An honor and pleasure to be here with you. Um, it's great to be inside the Sequoia building again. Thank you.

• 47:16Pat Grady?

  It's great to have you back.

• 47:17Speaker 00

  Thank you.