Unless you’re a fan of the IT industry, you’ve probably never heard of the titular character from this inspiring tale. The name Fred Luddy may not ring as familiar to you as Bill Gates or Steve Jobs, but the 63-year-old founder is rapidly approaching their level of wealth and prestige.
Luddy’s company, ServiceNow, is America’s hottest IT-services company. It’s so successful that it holds its own 18,000-attendee conference, Knowledge, in Las Vegas every year. More impressive than this billion-dollar business, however, is the story of how its incredible founder got his start.
The Rust Belt
Fred’s humble beginning starts in the Midwest, an area of the country that experienced deindustrialization and therefore economic decline in the 1980s. Fred’s family lived in New Castle, Indiana, a medium-sized town whose working-class residents were just trying to get by.
Fred’s father was an accountant; his mother, a Catholic-school teacher. Between the two of them, they taught him valuable lessons about the nature of hard work and optimism. Fred, by his own admission, wasn’t exactly enthusiastic about doing schoolwork as a child.
Regardless of how woefully average he was in school, Fred was fascinated by machines. If he could get his hands on a machine or an electronic device, he would go out of his way to take it apart and examine it. By the time he was 17, he had secured himself a job as a gofer at the local American Standard factory.
It was while working at 17 American Standard, that he first saw an HP computer being installed. The new device was too much of a novelty for him not to get excited over and he begged his superiors to allow him to use it. Over the next 10 days, he proceeded to use programming guides to teach himself all the computer programming he could muster. He was hooked.
Not long after that, Fred discovered how computer software could be used to help make people’s jobs easier. Using his newfound computer programming skills, he wrote an order-entry program for the company clerk. That way, the clerk didn’t have to constantly type up folding-door order forms. It went from being a tedious daily activity to a streamlined function of his job.
Fred glorified in the moment. He felt that the experience of giving someone a piece of technology to make their life easier, to let them do something they never thought possible, was the most rewarding experience he could imagine. He went on to attend Indiana University but found that much like high school, college was not his forte.
In fact, the only thing that Fred did while at Indiana University, besides going to class of course, was to spend every second of his free time programming. Eventually, he dropped out and headed to Silicon Valley, where he approached the Amdahl Corp., an early IBM competitor. They made high-end mainframe-computers and he wanted to do so as well.
He worked there for years, doing what he loved until eventually, the $35 million personal fortune he’d amassed in the IT business vanished overnight. His previous company became embroiled in serious accounting fraud. Before he knew it, he was completely broke.
Broke and Busted
This was about fourteen years ago. Fred was broke, middle-aged, and had to start over. Luckily for him, he’d always been pretty adept at the IT game and even in this age of rapidly advancing technology, he had the knack. Within a year, Fred was running ServiceNow as a one-man shop out of his home.
In 2005, it wasn’t easy for ServiceNow to raise funds in the wake of the accounting fraud that had taken down Fred’s other company. Still, Fred was persistent and his work was quite good. Within a few months, they had totaled $11 million in capital. They soon got their first contract with WagerWorks, an offshore gambling site, and the company took off.
What exactly did Fred’s new IT business do? Well, ServiceNow’s fledgling product allowed for employees to quickly and easily manage IT requests. It was designed as an internal workflow system that beats out much older software, even these 13 years later. Indeed, if the billions of dollars the company is worth today are any indication, the program did what Fred said it would.
Slow and Steady
Growth happened slowly, which was not surprising. Technology was growing by leaps and bounds in the 2000s and the larger tech giants were doing most of the innovation. Nevertheless, a few million in revenue in the first years steadied ServiceNow’s upward climb. They hired a few dozen employees and soon enough, Fred was well on his way to success, again.
Fred thought about his other company and the mistakes that had led it to ruin in the first place. Though he wasn’t directly at fault, he decided that he needed someone more qualified to run ServiceNow. He put his ego aside and stepped down as CEO, eventually putting Dutchman Frank Slootman in charge. Slootman was an uncompromising, no-nonsense executive, perfect for running his company.
More Than Before
Right away, Slootman focused on building up ServiceNow’s sales force. He also wanted to tailor the product to be larger, able to handle high-profile and high-paying customers like Johnson & Johnson. He transformed the company into a well-oiled machine.
Despite not being CEO, Fred is always around and as current CEO John Donahoe says, remains a constant source of invaluable advice in regards to new direction. Fred maintains an influence by dispensing advice, focusing on the value and importance of the product the company provides.
Hated His Job
The 63-year-old billionaire has an understandably new perspective on the situation after 13 years. He admits that losing the money was the best thing to ever happen to him. He didn’t mope, he didn’t try to reclaim a job he openly admits he hated, instead, he pressed forward. “I really hated my job,” Fred told Forbes in a recent interview.
At the last Knowledge conference, Fred spent his time glad-handing with adoring fans. Aspiring programmers and entrepreneurs lined up to appreciate his presence and his innovations. “When all of these people are happy to see you, honestly you feel like a rock star,” Fred explained.
Keep it Simple
Today, Fred spends much of his time at his beachfront home in Del Mar, California. Otherwise, he is at ServiceNow’s fairly modest Santa Clara headquarters. When compared to the immense corporate megastructures that make up Facebook and Apple, ServiceNow seems almost chintzy. And as such, with a quaint sense of pride, the company hasn’t forgotten its roots.
When he’s not spending time playing tennis or hanging with his 10-year-old son, Fred’s working on his next big project: making U.S. health care more affordable and efficient. Considering how difficult it’s been for two presidents, it sounds like a pretty tall order. Nevertheless, Fred is confident that he can at least do something to help.
Today, ServiceNow is worth a modest $30 billion market cap. The Santa Clara-based company has even ranked No.1 on the 2018 Forbes Most Innovative Companies list. The company has also scaled up some, sporting more than 600 employees and over 4,000 customers, with 850 of those customers on the Forbes Global 2000 list of the world’s biggest public firms.