 I'm John Furrier, the founder of SiliconANGLE.com. This is theCUBE, SiliconANGLE.tv's flagship telecast. We go out to the events and extract the signal from the noise. CEOs, entrepreneurs, analysts, marketing people, developers, whoever has the signal, we want to extract that, share that with you. And we have a special guest today, Frank Slutman, who's the CEO of ServiceNow. Again, I'm John Furrier, I'm joined by co-host. I'm Dave Vellante, wikibon.org. Frank, last time we saw you were up on the stage. You had these glasses on, the hat. I remember that. Elwood, so welcome to theCUBE, first time on. Thank you. A bit to many VM worlds, I'm sure. Little different angle now. ServiceNow, very exciting, just went public, solving a big problem, and added again. Yes, absolutely. Tell us, how do you feel? That's interesting, a lot of people ask me, how did you end up in an application software type of category, you spend all this time in storage. In reality, I spent most of my life being in application development and testing and system management, so this is actually close to my wheel, our storage is actually a pretty good diversion for me, career-wise. So ServiceNow, relatively, not a household name, but solving that problem where really there's no system of record for IT, what IT activities are doing, whether it's finance, whether it's application portfolio, project portfolio, you guys are sort of attacking that whole nut with a software as a service model. I mean, there used to be a lot of point tools to do that, and you guys seem to be having a lot of success bringing that all to the cloud. Yeah, the irony is that you look at all the corporate functions, you know, finance, sales, marketing, HR, IT sort of ranks last or near last in terms of management sophistication, right, compared to the other functional areas, because the most IT organizations have to show for themselves is they help this management system for their workflow, right, and how they keep track of what's running in their operation. And that service model is typical of infrastructure providers, right? You see it, you know, with telcos, like AT&T, you see it with power utilities like PG&E, they're infrastructure providers first, and the service model is not particularly compelling, right? So what we've tried to do is really, you know, take IT from a DMV-style service model, stand in the line, waiting to be helped to one of the small.amazon.com where I help myself, it's intuitive, it's online, it's productive, it's where I want to go to make requests, as well as receive service. So you're selling primarily to the IT organization, who do you sell to in the IT? Is it the CIO? Is it the project management office? Is it all the above? Yeah, so service management is a very well-defined center of responsibility in IT organizations, so there's always a group of people who is in charge of that discipline, they're easy to find, but CIOs are always involved. And the reason is, these are very high-profile system rollouts, because everybody in IT is an actor or participant in the workflow, as well as the broader employee population, the enterprise, touchy systems. So you better believe that people are sensitive about this being a successful project rollout. It looks more like an ERP system than it does an infrastructure type system. Yeah, without the ERP complexity of installation. Yes, it's a mixed metaphor. Yeah, you can be careful with that one. But so you're roughly a $150 million company, if you annualize it, you have a nice market value. I think we've guided to about 235 just this year. Okay, great, that's okay. I want to make sure that our investors don't get confused by the comments. Now I'm looking backwards here, sorry about that, yeah. So 235, which is why your market cap is about 3.6 billion, I think. We had about 98% growth in buildings in the last quarter, so the high growth, obviously, is what drives. What's driving that? So how big is the business that you guys play in? What's your tan? So we think that the tan just for the narrow definition around IT service management is a multi-billion dollar opportunity because of the nature of these IT workflows, we're also expanding into the IT operations management area, right? And this is where HP lives and BMC and IBM and CA with these very large open view, Tivoli, in the center. Systems management, network management. Because the workflows between service and system management are all becoming integrated. They used to be separate spheres, 90 more. And that's an enormous market. IDC thinks it's about a 13, $14 billion market and then you have the platform as a service opportunity because our customers have just gone wild building all kinds of bespoke applications on our platform just because they could. So you're kind of betting on the intersection of systems management and IT operations management. And the platform. Yeah, okay, and it's kind of jump ball, really, with the dynamic of the cloud coming in, isn't it? In terms of the competitive scenario? It's interesting because we look in other SaaS categories like HR or marketing. You see a whole host of players. You look in our category, the only breakout play there has been service now and we are predominantly compete against legacy vendors and the people that I just mentioned, so. You've got some experience doing that. Frank. I want to ask you about, obviously, the discipline side of the market. You guys are a public company, so yeah, you're out there, it's all exposed. And then talk about some of the product directions because yesterday they were really showcasing the vision within VMware, old way, new way, access, apps, infrastructure. You know the classic, old way, new way, modern era, we've been calling it. In your world, you're actually replacing some pretty old stuff. I mean, I remember back in the late 80s, really 90s health desks, people with headsets on and homegrown software developers have quit. So you a lot of have this legacy kind of mindset. So first question is, is that true? Is there still that much baggage in that services business from an infrastructure standpoint? And the second part of the question is, what's the new stuff that's really disrupting the market? So in the new way, what is the key features that's happening in the services industry? So, you know, I already started to allude to it, right? So you want to evolve that service model from that help that centric, you know, DNF style of service experience to one that's online looks more consumer style, you know, the way we've learned from Apple and Yahoo and Google and people like that, help yourself, right? If you have a problem at home with your Apple TV, are you really going to try and call Apple? No, you're going to go online and you find user communities. You get to your answers 10 times faster that way than following the old models, the way you reference. There's an awful lot of that still living in the world of IT because their focus is infrastructure, not service, that's changing, right? I mean, CIOs, I read somewhere have a shelf life of about 18 months, right? There's incredible impatience and dissatisfaction with how that function is running. It's costing too much money and the service is not exactly to write home about. So people are really ready to move their service models. Well, the first answer was just hire someone else to do it. That was the outsourcing boom, right? So that still brought problems, right? Legacy. Yep. So how, is that still in play? So if the notion is okay, outsource it and then the outsources has some warts on it, that's got to be tweaked. What's the new version? Because you know, Amazon.com these new environments with mobility, instant access to information, self-service, et cetera. Is that changing it? We believe that the move to cloud computing is really going to change the role of the CIO, right? Because infrastructure is going to become something that's behind the curtain and it's becoming less of an infrastructure centric job. The CIOs and IT organizations become more service engineering organizations. People that understand workflows, people that understand how to automate workflows rather than I know how to run a database or a network or all the security dimensions and so on. Because we're just breaking as an industry. There just isn't enough competency and skill sets for everybody to be competent at the level that we need to be at IT infrastructure. It's not scaling, right? It's sort of the way telephone switching centers were in the 1950s, right? I mean it's one of those things too where the CIO tends to say, I'll get to that later. But now with big data and real-time analytics is more pressure on the service delivery side as a business driver. Are you seeing that pressure as well or is it more of we just got to fix it now, I got to do it? Well, IT organizations tend to live from one crisis to the next. They're completely event-driven. We have an outage, we're all over it trying to restore service and we sort of live that life day in and day out. But it never changes, right? So we can get ahead of this game if we start structuring the interaction model that we have with our users, how we communicate with them. I mean simple things, right? When you have an outage, it would be helpful if we were able to pull status every 20 minutes as to what we're doing and what's going on, right? But having the infrastructure be able to push data out like that, most organizations don't do that. They live pretty much in the dark. Okay, so share with our audience out there that's watching. We have a lot of IT professionals and data scientists and analyst type audiences that follow us to look at an angle with Yvonne. And some CIOs as well and some early adopters. Share with the folks out there the pitch. How bad is it that their environment and how easy is it to change it is? Give them just an order of magnitude sense of is it turn key? How do you guys roll in? What's the engagements look like? It's not as hard as it thinks. Most people might have the opinion, ah, I don't want to get just ugly. It's painful. Or is it not painful? Is it quick pop now? Is it like how fast the roll in and out of the infrastructure that you guys are delivering? These are extraordinarily sticky systems. The system that we replace. Your systems are the old systems. The old systems are. And the reason is they've been around for 10, 15 years. They're very difficult to replace. And if you look at our growth, it's certainly testament to how compelling the value proposition has been that people have said, A, the pain is becoming unbearable. And B, the view of the promised land is looking pretty good, right? So there's both an incentive to change and to move. And secondly, there's something to move towards that is compelling and inspiring. And really it's going to change my game, right? Because now we tell people to look if you're just trying to get to a snazier and more modern help desk, we're not your guy, okay? Because we don't find that a compelling vision of the world. We want to wholesale transform how you deliver service. Just take a system of stats. We were talking before you came on about your growth, tripling in size, but talk about some as a company, which is another conversation we can talk about. You have expertise in, but talk more about the customer deployments. You got some fresh funding with the IPO. You're geared up. You go out to the marketplace. What are the conversations like? What are some of the stats? And what are the conversations like with the CIO? Well, the CIOs obviously are interested first and foremost at the transformation of the service model, right? I mean, we have to get to a service experience that's more reminiscent of what people experience on the consumer side. Now, we typically have to do that that an economic equation that's very similar to what they're having right now. They're not interested in spending more. They just want to get a completely refreshed platform for similar amounts of money that they're already spending. Because we're SaaS, we're not just taking the software, not off the table, we're also taking the entire infrastructure, all the operating stuff, everything that it takes to run that environment, it becomes ours, right? It's no longer in the IT department. So that looks pretty compelling to them. How about some of the numbers in terms of uptake with customers recently? What's the growth rate? Can you share some numbers? We have about 1,200 enterprise customers. We added about 127 the last quarter. That is a huge number of customers to add. We have, most of our focus is on global 2000 enterprises. We have about 230 global 2000 enterprises and they're all who's who, names that people recognize. So the uptake has been strong. We're running very, very hard to make sure that we have the services infrastructure. Both there's people and infrastructure to be able to accommodate that. Well, I'm excited to interview you because I want to ask you more of a personal question. And although we just met for the first time here, your name's been kicked around as kind of a Maverick operational executive who knows how to scale organizations. So we're kind of living in an era where the business value focus, whether it's startups, and there's been a lot of talk about, you know, the Facebook IPO, the young kids under 30 running billion dollar market gap companies are trying to actually move from hype to real scale and Paul Moritz made a comment yesterday kind of dissing Facebook in terms of the value proposition relative to say, you know, VMware. But the question I want to ask you is, what's your success model for scaling an organization? And for the younger executives out there and for people who don't know you, just share us on the camera. What's your philosophy as the repeatable sales, lower cost, leverage model? I mean, it's a variety of different kind of ingredients. What's the Frank Sluteman formula for success in scaling, bringing a product to market and growing it? Well, the first order of business, you know, for a startup venture of any sort is growth. I find that, you know, a lot of people come out of business school and they're trying to balance growth and profitability. That mentality makes no sense to me, right? It's economics before accounting. Accounting becomes the bastardization of economics. We run, you know, our ventures on cash, on booking. These are economic concepts, not accounting constructs, right? People are trying to show profit prematurely when they can invest that money to grow. I mean, we tripled our headcount over the last year. We got very far over our skis. You know, we're burning a hole in our cash piles, but we're very clear with investors that, look, we are still increasing our productivity per head. Why wouldn't we apply the resources to grow this franchise? Growth expands, our multiples expands valuation. That's what everybody is in the business for. So to sort of summarize, you know, on your question, most people hold back on growth and they don't really know why. They're not all out trying to direct growth. And the reason that growth is so important, you need to be a breakout player. Nobody wants to be the in-between player that's neither fishing or foul and doesn't become a dominant entity in the space that it wants to be in. And have the financing and the dry powder behind you, and you were a venture capitalist like Greylock, which knows a thing or two about investing. So that's also an important part, right? Well, that's why I said you manage some cash and you manage some bookings value. Those are the economics of the business, essentially. And you've been lucky enough to have some really good financiers behind you, trust you, who get the concept and that's key. I'm sure you have the right partners. When we went public, we also explained to investors, look, this is what we're trying to do and this is what we need you to buy into, otherwise, buy somebody else's stock. How does the going public affect, you know, the perception amongst the CIOs? I mean, you chose to list on the NYSE, we had them on earlier this week, but how has that affected the brand perception? Yeah, that was the whole reason for us to go public, right? We didn't need the cash liquidity, obviously it's good for employees and investors. But an IPO is fundamentally a branding event. You know, I used the analogy, we went from playing on Saturday to playing on Sunday. You know, all of a sudden, you know, you're transparent. You know, all the fud that gets spread, you know, about you by competition, people can now punch you up on Yahoo and see what the truth is around your balance sheet. You know, how good your last quarter was, it's been, the IPO was tremendous for us from a branding standpoint. Yeah, and you've been known to have a reputation of really getting the product, or in this case, the service right and then really getting aggressive on the sales side. Can you talk about what you've done on the sales side? I know you've aggressively hired and... Yeah, we, you know, as I said, we tripled our headcount. We went from three sales regions to 12 inside one year. We spread out all over Europe. And at the end of the day, this is a ground war. You need an army to fight it. This is not Facebook. We cannot sign up a million people in a week. It is a business that runs over the ground. So you cannot scale and drive growth of a business unless you have the people to run it. And you're selling belly to belly, is that right? Absolutely, we're going through the front door up the elevator. Okay, we're getting the hook here. We're getting the hook, but I have two quick final questions. One is just put a plug out there for servicesangle.com. That's Silicon Angles separate publication we launched last year. Thanks to EMC for helping us sponsor that, but really dedicating to the new era of services. And there is some disruption. We're excited to cover you guys. So I just wanted to say go check out services angle. So Frank, I want to ask you two questions. One, what's the big disruption in the services business that most people aren't getting right now? The general man in tech on the street, not the insider inside the ropes. So that's the first question. The second question, what's your goals for the year for the business? Well, the interesting thing about the services business is how it's one of these areas that is sort of the least automated, right? It runs on the concept of institutional knowledge, phone conversations, informal communications, email, and the frontier in service management is that those become software automated structured processes. That is not just happening in IT. Table sticks. It's happening everywhere, right? Whether you want to request food from a hotel. I mean, you're at a Virgin America, right? You now request from your seat something. And that's just an example of how. That's the trend. There's no debate about that. That's how it's going to go, right? So services is going to become really, I call it a service fabric, right? It is essentially how these processes get conducted. So we're super excited because our platform sits right in the middle of that trend. And we're going to try and make that trend happen. It's a leverage platform. To the economics are fantastic. There's no real customization to your product. Exactly. So good margins. Exactly. And it's much more scalable and it disintermediates all the manual effort that goes into these processes. Okay, so now I know you're a public CEO and everything now so you really can't be as wild as you could if you were private. But what's the outlook for your personal goals for the year? Well, we've given guidance to Margaret one quarter out in four years. Check with your favorite analysts. Okay, growth is on the horizon. Congratulations, Frank. It's been great to have your leadership in theCUBE. Thank you. First-time Cuban, great to have you. This is silkenangle.com. theCUBE will be right back with our next guest, Cynthia Stoddard from NetApp. CIO, another CIO. We're going to get into the trenches and hear about the IT transformation again. So we'll be right back.