How to succeed in business? For starters you should be numerate, razor-sharp, and able to cut to the quick. And judging by his track record, Bill McDermott, chief executive of
ServiceNow,
seems to have all that.
Truth be told though, his presentation doesn’t hurt either.
It may be bad form to weigh in on someone’s looks these days—or maybe it always has been—but frankly, McDermott’s are a part of his narrative. With a striking coif bordering on bouffant, smooth banter, and dark glasses, the software CEO cuts quite the image. (More on the glasses later.)
Earlier pictures of McDermott, such as the cover of his 2014 book Winners Dream, are more Kennedyesque. Indeed, note the book’s epigraph: “‘Some people see things as they are and say, why? I dream of things that never were and say, why not?’ Attributed to Robert F. Kennedy quoting George Bernard Shaw, University of Kansas 1968.” (The dust jacket has blurbs from Bono, Tony Bennett, and Jack Welch among others.)
But wait, isn’t this judging a book by its cover? Is McDermott all hat and no cattle, as Texans sometimes say? Shareholders may beg to differ.
ServiceNow, which helps companies manage digital work processes, is one of those rocket-ship Silicon Valley enterprise software companies. Founded 20 years ago, the stock, now at $688 a share, has been a tenbagger for early investor—rising more than 10 times over the past decade, not to mention 7.8 times the S&P 500. McDermott has been CEO for only the past four years, but growth hasn’t exactly been tepid during his tenure. The company forecasts 2023 revenue of $8.6 billion, up from $3.4 billion the year he took over.
“There’s only five enterprise software companies that have crossed the $10 billion mark in revenue,” McDermott tells me in a recent At Barron’s interview. “We’re on the doorstep to be one of those. We are the fastest-growing of any other large-cap enterprise software company, and are operating at ‘the rule of 55 plus.’ Which you get when you combine our free cash flow margin of 30% and our year-over-year revenue growth of 29%. They say when you’re operating at the rule of 40, you’re world class.”
Adding to McDermott’s bona fides is his time at
SAP,
the European software giant, which he joined in 2002. He became co-CEO in 2010, and ran the company solo from 2014 until 2019, the first American to do so. Here, too, revenue grew briskly, up some 87%, or $16.5 billion, to $30.8 billion. SAP’s stock climbed even more—up 212%, versus 170% for the S&P 50—perhaps anticipating a longer McDermott reign, which wasn’t to be, as he left to succeed John Donahoe at ServiceNow, who, in turn, decamped to become CEO of
Nike.
McDermott has one of those born-on-the-Fourth-of-July upbringings, replete with a Long Island address, in his case Amityville (not far from the The Amityville Horror house, he notes). McDermott’s father was a high-voltage troubleshooter for Con Edison, nicknamed “the Spider” for his ability to navigate the labyrinth of tunnels and cables under New York City. McDermott’s grandfather, Bobby, was a Hall of Fame basketball player.
Adding to the legend, young McDermott worked numerous jobs growing up, culminating in his purchase of the Amityville Country Delicatessen for $7,000 when he was in high school, funded by credit from the seller. He paid tuition for (the now defunct) Dowling College on the island when he sold the deli, and after graduating went to work at
Xerox,
Gartner, and Siebel before SAP.
A couple of salient matters: First, the investing crux. Does ServiceNow stock still have upside? “Absolutely. I believe that this is a once-in-a- generation platform,” McDermott preaches. “We’re in the midst of creating a new category. With the power of digital transformation and generative AI, we can transform businesses on an end-to-end basis. We are only getting warmed up.”
Second, what’s with McDermott and those dark shades? Is he just too cool for school? Actually, in 2015, McDermott slipped on some stairs carrying a glass of water. The glass shattered, with pieces going into his left eye, which despite surgeries, he ended up losing. Ergo the sunglasses.
I once asked McDermott if he would ever run for office. “I find it hard to believe that I would just wake up one day and say, ‘I don’t want to be a CEO anymore because I want to run around and fundraise,’” he told me. “I think it would be much more if there was a calling that brought me to the table.”
Kind of like ‘ask not what your country can do for you…ask what you can do for your country,’ right?
Write to Andy Serwer at [email protected]
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