 Live from Las Vegas, Nevada. It's theCUBE. Covering Knowledge 15, brought to you by ServiceNow. Okay, hello everyone. We are live for day two of coverage. This is theCUBE, our flagship program. We go out to the events and extract the signal from the noise. We're here live in ServiceNow's Knowledge 15, hashtag No15. You want to join the conversation. We have a back channel live chat on CrowdChat, new application, which I'm excited to show the guys from ServiceNow because they love good software. So go to CrowdChat.net slash No15 and see the conversation, ask questions, join our virtual social experience, and we'll be happy to address that with you. We're day two coverage. Live in Las Vegas out of three full days. Yesterday was a great day. We had Frank Slutman up, CEO opening up the day, really laying down and clarifying the future of ServiceNow. Certainly they took a bath on the stock last week on their earnings, still throwing off a lot of cash, great platform business, great stock buying opportunity as Dave and I were speculating. And ended the day with John Cleese, famous actor, writer, comedian, who we had some fun. We tried to bring a little bit of John Stewart, a little bit of Jimmy Fallon. I'm John Furrier with Dave Vellante. Dave, what did you think about yesterday? Your laptop working? You got a little water here. Parts of my laptop are working. I've lost my return key and my M. So what did you think of John Cleese? Okay, the holy grail of our program yesterday. He was great. I mean, we had a nice little bit going on there. All ad-lib just for the record, folks. He was not pissed. He was totally happy at a great time, but it was all ad-lib. He challenged us on theCUBE and... Well, it was great seeing him afterwards. We were nervous. I mean, he's a pro. We couldn't even hold a candle to his performance, Dave. It was great seeing him afterwards. He came up to us. I yelled, hey, Mr. Cleese, he came up and high-fiving us, smiling, laughing. It was great. Smart guy. What did you think of the interview? Very opinionated. I thought the interview was great. I mean, it was weird, but it was great. Top guest, top guest of six years. He's put on a great show. We had about 50 people behind us all watching, so it was really a lot of fun. Again, but let's get back to the event here, day two. Well, another top guest coming up today is Fred Luddy. I think you're really going to enjoy interviewing him. You heard him on the keynote, John. He was talking about the new development platform, the new UI, the new mobile app. He was geeking out on all the technologies. A lot of things that you're very familiar with, borrowing from real-time geolocation, leveraging the camera in the mobile app. A lot of technologies borrowed from Facebook and Twitter and that whole real-time crowd, a lot of stuff that CrowdChat uses. I know you talk about it all the time, AngularJS and all these kind of things that. Dave, people don't understand our new CrowdChat application. Go to CrowdChat.net, poke around, look at the live one. But what you'll notice on that app is 100% asynchronous. We use cutting-edge technologies like Bootstrap. We use AngularJS and our new crowd pages coming out. We have Node, Java on the back end for analytics, really a cross-section of all the different languages, but Node, Bootstrap, Angular, these are the technologies that truly make it asynchronous. Facebook, by the way, is not asynchronous. You've got to load the page. Having asynchronous communications moves from web sockets days of web browser to fully available data, real-time. So near real-time is the Holy Grail today and basically instant is going to be the future. That's the state of the art today in software development. That's what ServiceNow is showing on the stage. And again, a lot of it resonated because I hear you talking about it all the time. And I see it, I see the green dot, I see the presence, I see the real-time nature. And that's really what today's modern apps are all about. And we'll talk about that today in detail. What's under the hood for ServiceNow? And again, I can reiterate what a great software platform ServiceNow has. I am super impressed. The people here are passionate about what they do, Dave. And I say, you know, we're going to get with Fred. I hear the founder's story. The chief product officer and all his folks because what they're building is the future generation. Frank Slutman is a world-class CEO. We heard the story of how he was hired. You know, Fred Lutty said in his keynote, I wake up every day and I want to write code. I don't want to be the CEO. They hire Frank Slutman, built a great business, but not only do they have great business fundamentals and how they're executing their business plan, Dave, they have a great product leadership team. The founder stays around. Every successful company that I talk to and I can highlight, you look at them. You name them all. The ones that are the really sustainable companies, Dave. The founder stays around. This is a lesson that the top VCs in Silicon Valley and around the world are now paying attention to is, do not boot the founders out of the company. Mark Andreessen with Andreessen Horowitz, absolutely adamant, founder-friendly means, growth and sustainability. The old days of kick the founder out, don't work, ServiceNow is a great case study of a company that has grown from a seed idea, go to market, one booth at a show, get some customers, get some funding, have a great VC, build a great product, and continually to go to the next level. And I think that's the story for us today. What's the next level for ServiceNow? What is that? And you're going to see two major themes. Cloud, born in the cloud, capabilities, asynchronous real-time presence to enterprise grade. Enterprise grade means you can be born in the cloud and enterprise grade, that's the holy grail, Dave. That is the key question people ask. Can you be enterprise grade? Can you be agile? Can you have integrated stacks? Can you do stuff in real-time and do it at a speed and at a scale? That's the premise of the cloud and ServiceNow is delivering that. So let me give you my take on that. So I mean, you're talking about all the cool tech behind it and there's a whole other story here and Fred Lutty and Dave Wright took us down memory lane today, you know, sort of the history of the company and going back to the original first knowledge in San Diego, showed some pictures. That was all fine and well and good, but the fact is, the piece that I want to add to what you just said is the customer angle. I tweeted out yesterday, Frank Slutman has made a career in identifying pain points and resolving those pain points, essentially selling aspirin is what I call it. And so that's what ServiceNow is doing. They're resolving the pain points within organizations. It was interesting to note Dave Wright and Fred Lutty talked about how in 2008 when the economy was collapsing and Sequoia Capital, you remember John, put out that famous memo, you better hunker down, conserve cash and Fred Lutty showed the audience his counterpoint and basically it makes sense to me because what happened in 2008, 2009 is people said, let's start moving to the cloud more aggressively. Let's shift CAPEX to OPEX and let's try to save money and ServiceNow is one of those technologies that really was all about saving money. We kind of lived through that, John, right? We were the open source version of information and so we had tons of demand around that time for our content, ServiceNow in a whole different world saw uptick in demand and so they're really out solving customer problems, dealing with process problems. We're now seeing sort of the next wave, the next evolution of that around email and how email is used as a workflow management system and is ineffective at that. The whole forms business going to mobile and you saw today in the mobile apps, it wasn't forms oriented, it wasn't forms front and center, forms are still there but it wasn't all about the forms, it was all about the mobile experience. So they're transitioning from this sort of forms-based automation to one that's more mobile optimized. That's something we're going to talk to Fred Lutty about. I think what you're pointing out is that the highlight of, during a crisis that Fred Lutty pointed out in 08, at a critical inflection point of the company, Sequoia Capital issued out a memo to all their portfolio, a little bit of inside baseball important to note that they said, bunker down, hunker down, build a bunker, hoard your cash, service now, and this is where I love this company, right? They wrote a counter memo to their customers and the venture has said, no, no, this is the winds are shifting, we see an opportunity because their customers were going under or having financial problems, they shifted their product value proposition to saving cash, consolidation and creating an opportunity out of the crisis. And I think this is the opportunity with cloud, as you pointed out, you're seeing a transformation in workflows, you're seeing a transformation in business process that is changing the game in terms of time to value, cost structures, and then the economics, that's the promise of the cloud. So again, the companies that can take advantage of the times of the shifts and the inflection point because what's happening is the shift is happening and there's an inflection point. So I think everybody talks about, and it's so overused now, 70% of the money that IT spends is on keeping the lights on and only 30% is on innovation. I like to look at it a little differently. I like to break it down when I had my CIO consultancy with Floyer, we used to consult and try to get CIOs to think about putting their portfolio into three categories, their application portfolio and their project portfolio, running the business, growing the business and transforming the business. And I think if you think about those things, I think ServiceNow is very transformative and are helping companies run the business differently and grow the business as well. So they sort of fit into all three but they start with transformation and then change the way that people are running the business. I think that's a much more effective way to look at that whole 70-30 mix and I think ServiceNow is changing the way companies work. What do you think about ServiceNow? I see earnings were out last week. EMC reported a little bit down. VMware blew it away covering for EMC. You're seeing the big enterprise players. ServiceNow took a big knife cut on Friday but as Frank Slubin pointed out, they're in the long game and they have a platform play and they're throwing off a lot of cash. So their cash flow is amazing. Wall Street Journal has some articles about this kind of shift that we're in a bubble. Is ServiceNow built for the long haul? I want your opinion on this. Frank Slubin weighed in on his and I think the software's phenomenal. But let's talk about that. What is Wall Street not understanding about ServiceNow? Well, let's recap what happened on Friday. ServiceNow announced earnings. The stock had hit about a $12 billion valuation which is sort of the highest valuation roughly that it had hit. And people were getting used to ServiceNow continuously beating expectations. Well, they met expectations. They actually beat by a little. But they guided lower because of currency headwinds. Everybody's facing headwinds. You saw EMC missed by about 15% this week. And so all the companies in earnings releases are saying, all right, we're being more cautious because of currency fluctuations, right? The dollar's getting stronger. As a result, you're translating international currency back into fewer dollars means less earnings. So on an apples to apples basis, ServiceNow continued to blow it away. They grew 50% plus. But they guided lower. They were a little bit more conservative. So what the street did is they took about a billion dollars out of the valuation. Now, since then it's come back a little bit. It's not come back to 10 points of the loss. But I see this, John, as a very, very positive opportunity. You said that you called it a buying opportunity. I think it probably is. You know, who knows, the market's choppy and maybe companies like ServiceNow that are high-flyers, you might see them up and down, ebb and flow. But here's the point, and I think you've made this as well. They are built for the long-term, and here's why. They started out in what everybody thought was a very small TAM. They've got a $40 to $50 billion total available market that they're going after. They're just scratching the surface right now. They've got leading-ed technology. They're killing the competition. And they're growing into new places where typically these types of companies don't go. The traditional IT service management folks, where are they going? They're automating service management not only within IT, but also within HR, within finance, within legal. Anything that's service-oriented. And they're going after email. Maybe it's even bigger than a $40 or $50 billion market. So they've got a big market. They've got great tech. They've got great management. So I think there's a lot of room for this company to grow. Can they go to the collaboration space? That's going to be the question. I mean, tell them about email. Tell them about collaboration. Talk about a meeting with IBM. Talk about competing with companies like Workday. Can we talk about HR? This is interesting. Well, CRM, Salesforce, I think, is a potential big competitor down the road. I think they're on a collision course with force.com and Heroku and all those app development activities that those guys are doing. But it's early there. But I see that down the road. And to your point about Salesforce, this is why I think it's dangerous for Salesforce. This is why I think, you know, maybe we're kind of opening up the kimono here on ServiceNow because we're reading the tea leaves. But what Amazon has done for the cloud and what we're doing with CrowdChat, ServiceNow is doing for IT. Meaning they're building integrated technologies for a variety of different use cases. Quite frankly, it's enabling. So Salesforce is cobbling together a bunch of stuff. They got chatter. I got this. And when you put monolithic systems together and try to mash them together into, quote, a fake stack, that's really not going to work. So I think the challenge for the incumbent companies, like Salesforce and others, is if you cobble together technologies and don't integrate them in there for this new real-time cloud native born in the cloud mentality and have the enterprise grade, you will lose some territory. So ServiceNow is doing both of those and they could take territory very quickly. So they're humble saying, no, no, we're not competing. I know we got to go. But last thing I'll say is, as Frank says, IT are our homies. That's what Frank Slutman talks about IT. And the reason why I see that as a big advantage is IT is the one part of the organization that has purview over the entire organization. So a single CMDB within IT is very powerful. And whoever controls the data will be very interesting. So real-time having the data, having the platform will give you a lot better horizontal platform. I love what ServiceNow is doing. Again, we're going to go, this is our pep opinion, by the way, and this is not their messaging, but we will probe all the guests. Dave, we're going to kick off day two. This is our intro for day two, wall-to-wall coverage with me here all day, here in Las Vegas with ServiceNow Knowledge 15. This is theCUBE, I'm John Perot, Dave Vellante. Thanks for watching. Stay tuned in all day today. This is theCUBE, we'll be right back after this short break.