Why We Moved Our HQ: Q&A with ServiceNow CEO Frank Slootman
In a development that was widely expected, but not officially disclosed (until now), the cloud-based IT service provider ServiceNow (NYSE: NOW) has moved its headquarters to Santa Clara, CA, from San Diego, where the company was founded.
ServiceNow CEO Frank Slootman confirmed the move in a recent e-mail exchange with Xconomy.
The move wasn’t exactly a secret. Tom Clancy, chairman of the local industry group Software San Diego, told me he knew that ServiceNow had relocated its headquarters last year. In any event, Slootman agreed to explain his reasons for making the move. His responses to my questions have been lightly edited for readability:
Xconomy: When did you consolidate ServiceNow’s executive offices in Santa Clara?
Frank Slootman: The decision was formalized in Q4 2013.
Xconomy: Why did you move?
FS: The company grew more Northern California-centric as we expanded operations dramatically in the past 3 years. We have had a ferocious appetite for talent and we felt constrained on talent quantity, diversity, and quality in Southern California. My management team and I both had a limited history in San Diego, and we naturally gravitated to our Northern California networks for recruiting and staffing. Most of our directors also now reside in Northern California, so our board meetings had been alternating between the two sites for some time.
That said, the big success story is that the company emerged and broke out from San Diego soil. Fred Luddy, the company founder, is still at ServiceNow [as Chief Product officer], and working from our San Diego operations.
X: How big is the ServiceNow workforce now? Where are your biggest offices?
FS: We now exceed 1,900 in full-time staff. San Diego is our largest site [with 400-plus employees], followed by Santa Clara, CA; Kirkland, WA; London; and Amsterdam.
X: How is the pool of software talent lacking in San Diego?
FS: At ServiceNow, we’ve grown almost 10-fold in the past 3 years. With our hiring standards, we were starting to strain our ability to get the quantity and quality of talent in a timely manner. These days, talent doesn’t move much any more, and employers need to set up shop where the concentrations of talent are. Facebook, Google, [and others] are all doing it. Silicon Valley is an obvious [place to expand], because so much of our management team has deep roots and long history there, but we’ve also stood up brand-new sites in Seattle and Amsterdam.
X: Do you see a shortage of particular skills among software developers in San Diego?
FS: The ecosystem of relevant software companies getting started isn’t that large in San Diego. The net effect is that we’re fishing in a small pond, and companies can quickly exhaust categories of talent that are already in high demand, and not in large supply.
X: Are there any steps you can suggest that would help to strengthen the software sector in San Diego?
FS: I think you need to approach it from a position of strength. In the world of these high-flying cloud software companies, it is hard to compete with places like Silicon Valley. Facebook was founded on the East coast, but moved its operations to the Bay Area early on.
Invariably, when it comes to tech, people bring up the outlier success story of Qualcomm, but it is not clear, or at least visible to me, that Qualcomm has seeded the greater San Diego area with startups and talent as a by-product of their scale and growth in the area. In Silicon Valley, you can easily track the lineage from one successful company to another. Some companies are so large and concentrated with talent that they seed whole new technology sectors. It is essentially one beehive of talent that is constantly reconstituting itself into new generations of companies.
Finally, there is the notion of culture and values. San Diego has what I would describe as a lifestyle culture, with a strong balance of life and work. For many, this is very attractive. In the Bay Area by contrast, it is raw ambition, singular drive, and unbridled capitalism in action. People want to make it big, make a ding in the universe, and they are willing to make huge personal sacrifices. It’s not for everybody, but that mentality serves the ultra-demanding entrepreneurial culture well, regardless of one’s personal preferences.
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