How Fred Luddy Bounced Back and Built ServiceNow into a $19 Billion Tech Titan

Fred Luddy, founder of tech titan ServiceNow, wasn’t always on the path of becoming one of Silicon Valley’s most established executives. In fact, when the now 62-year-old took a hard look at his role leading his multi-billion-dollar company in 2011, he decided to hand over his position to industry vet and former CEO of Data Domain, Frank Slootman, so that he could focus on his true passion as Chief Product Officer.

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Luddy attributes his success to over 44 years ago, when he fell in love with programming.

The long-time software engineer built his first even program at age eighteen, which automated supply chain and maintenance purchasing for a business unit of American Standard. The programmer later worked on a range of projects including writing an operating system competing with IBM’s mainframe offering and a PC video conferencing and collaboration system. While Fred attended Indiana University and Sir George Williams University, he always found his part-time programming gigs more rewarding than his classroom experience.

Before ServiceNow, Luddy spent 13 years developing an asset management product at Peregrine Systems, where he served as CTO. In a series of unfortunate events circled around a major accounting scandal at the enterprise software giant in 2002, Luddy’s stake in the company amounted to zero, compared to the estimated $35 million he held just a few years earlier at age 40.

In 2003, Luddy and a team of programmers set out on a mission to build a platform which was easier to use than traditional IT software. ServiceNow’s flagship offering helps businesses diagnose and manage technical problems when glitches occur, and automate routine tasks to take the place of a human worker.

Later on in 2013, Luddy aimed to turn business users into programmers with a basic service called “ServiceNow App Creator,” which allows customers to easily write the apps that they need to work from their PC, smartphone and tablet, with no programming experience at all. Luddy’s larger vision involves a world where programmers are no longer needed to do the “mundane things” and instead are liberated to focus on opportunities with new technologies such as data analysis and building platforms that “enable real people.”

“My drive has never been about money. My drive has always been about putting a smile on someone's face because their lives got a little less painful,” Luddy told Business Insider in a 2014 interview. “The thing I'm most envious about Mark Zuckerberg and Facebook is that he has 1 billion+ happy users. I want a billion+ happy users. It's that simple and it has nothing to do with money.”

From the get-go, the company caught on big time with its cloud-based, pioneering software-as-a-service offering. ServiceNow quickly stole clients away from legacy players such as BMC Software, CA Technologies and Hewlett-Packard, as they favored ServiceNow’s SaaS business model over that of on premise software providers. Luddy says its initial customers guided the company through its high-growth, cheering it on “as the underdog fighting against something else.”

After seven years, Luddy was forced to evaluate his role as CEO and decide whether it was time to shift to a more familiar role in software development. Around that time, when Sequoia Capital partner and ServiceNow board member Doug Leone took Luddy on a tour of various Silicon Valley software companies, Luddy said he realized he did not possess the kind of skills that ServiceNow needed in a CEO, and that “he had no interest in acquiring them.”

After rejecting various buyout offers and inking at least $70 million in private equity investments from Sequoia Capital and Greylock Partners, in 2012 ServiceNow went public on the New York Stock Exchange, trading under the memorable ticker, NOW. At a price of $109.20 on July 11th, shares of the cloud computing company reflect a 343% return over the approximate five-year period. While the company is now valued at $18.88 billion, Luddy has said he measures success in more than just market cap, as ServiceNow relies on its employees and feedback from customers.

ServiceNow claims to be the fastest-growing enterprise software company, with 2016 sales up 38% to a whopping $1.4 billion. The Santa Clara, Calif.-based company plans to triple its revenue to $4 billion in three years, growing organically without any major acquisitions. Since Slootman joined as CEO, the company has moved towards more of a platform-as-a-service, providing Web-based software used by large organizations to manage HR, legal and financial services. John Donahoe, former CEO of eBay and Bain and who sits on the boards of Paypal, Intel and Nike, took over as CEO in early 2017 .

While Luddy is no longer at the helm, he continues to lead with a demeanor of humility, wit and passion. “It may sound funny,” said Luddy, “I wake up every morning, and all I want to do is write code.”