Knowledge19 - ServiceNow CEO Donahoe hints that he’s not interested in selling

Profile picture for user ddpreez By Derek du Preez May 9, 2019
John Donahoe said that it’s not the aspiration of ServiceNow as a company to “be hot and get sold”. Instead, it’s building for the long term and focusing on purpose.

John Donahoe

It’s been a busy week at ServiceNow’s annual user event in Las Vegas, where the company shared how it’s continuing to make “the world of work, work better for people” by digitising workflows, introducing automated processes, focusing on mobile experiences and carving a niche for itself as the platform that can unify a multi-platform cloud strategy.

However, aside from a whole host of conversations with ServiceNow executives, including CEO John Donahoe and Chief Talent Officer Pat Wadors, and a number of customer discussions, one topic that kept getting brought up at Knowledge19 is whether to not ServiceNow will be acquired.

It’s not the first time this has happened - it’s something that comes up time and again at ServiceNow events. It’s hardly surprising, given that ServiceNow is probably the second largest pure-play SaaS vendor in the market and is experiencing high growth. There has been a lot of speculation this year in the press about whether ServiceNow is a good prospect for a number of companies, particularly Google Cloud Platform. I’ll admit that I too have thought that it could be a good fit for Thomas Kurian’s plans at GCP. However, what’s good for GCP, may not be good for ServiceNow.

During a Q&A with media this week, ServiceNow CEO John Donahoe hinted that it’s not in the company’s plans to sell up to another vendor. In fact, Donahoe was quite explicit that he and the company are focusing on long-term growth, with the aim of being an enterprise software giant - one with purpose.

Now, we can’t take this as gospel, given that there’s a number of stakeholders and factors to be considered in whether or not ServiceNow looks at any offers from another vendor (of which, may I add, are pure speculation at this point). But what I will say is that every single time this has been brought up at a ServiceNow event with the leadership team, whether that’s with Donahoe, or previous CEO Frank Slootman, the message has always been the same - the focus is long-term growth and ambition, over a quick sale.

Eyeing $1 trillion

Donahoe, responding to a question, said that ServiceNow has three priorities. Firstly, investment in innovation. Secondly, to build for the long term. Thirdly, to stay customer friendly.

I’ll quote his answer in full, leaving readers to make their own judgement. However, it seems like a pretty unequivocal response to me. Note that Donahoe suggested he’d like ServiceNow’s market capitalisation to reach the heights of Amazon or Google, and he seems to be taking cues from the consumer world (which is unsurprising given he was previously CEO of eBay). Donahoe said:

“Investment in innovation is the number one investment priority. In the consumer world, those companies continue to innovate. And in our world we will continue to innovate, push the edge of what can be done.

“Two - there are whole host of other things around, what’s our aspiration? A lot of technology companies, the aspiration is to be hot and get sold. Move on to the next gig. That’s not the aspiration of our company. The aspiration of our founder, Fred Luddy, was to build for the long term. He could have sold this company multiple times. Our aspiration is to become an Amazon, a Paypal, a Google, of enterprise software. Those companies are very purpose driven. We are very purpose driven.

“We want to make the world of work, work better for people. If you ask why our employees are here, I bet a large number will say they connect with the purpose of the company. Yes, it’s nice to be in a high growth company, but they connect with our purpose. A strong sense of purpose is the key to attracting and retaining talent.

“Then, number three, is that all of those companies stayed very customer friendly. We need to continue to stay customer friendly. That hasn’t always happened in the enterprise software world. That means making your products easier to use. That means making our pricing easier to understand. That means assuring our people continue to be hungry and humble, which is one of our core values.”

Donahoe finished by saying that if ServiceNow gets those three things right, it will experience continued strong growth, where he said that he wants to be talking about: “When will we pass the trillion dollar market cap?”.

My take

I’ve been following ServiceNow for years and I’ve always thought that the company held significant value beyond ITSM. That took a while to be realised, but has been helped hugely by Donahoe coming on board. The conversations ServiceNow now has are way more strategic and value add than they were 5 years ago. I think if the company can really cement its proposition and continues to invest in the right areas of the platform, focusing on the experience of end users and hiding complexity, then I think Donahoe could be justified in his response.