Chapter 12: How the Great Recession Became Our Finest Hour
“2008 and 2009, we had almost a monetary collapse. That was actually a great time for cloud vendors.”
State the obvious: no one wants to hear the word “recession.”
But, clearly, we’re in a time of economic turmoil. A lot could happen. Earlier today, I read about how one large investment house declared a certain software company able to handle a recession. Accurate or not, it made me think about how the greatest recession of our time affected ServiceNow.
So, I thought now might be a good time to publish an excerpt from my forthcoming book about ServiceNow, Insurmountable Opportunity: How Code, Culture, and Customers Created a Multi-Billion Dollar Cloud Giant.
Chapter 12: How the Great Recession Became Our Finest Hour
Fred Luddy always had a way of seeing the opportunity in chaos. In 2015, looking back at the economic turmoil of 2008 and 2009, he summed it up succinctly:
“2008 and 2009, we had almost a monetary collapse. That was actually a great time for cloud vendors.”
At the time, it didn’t feel like an opportunity. It felt like a disaster. Financial markets were in freefall, major institutions were crumbling, and tech companies were bracing for the worst. Companies that had been swimming in cash were suddenly drowning in red ink. Budgets were frozen. Hiring stopped. Buying software was the last thing on anyone’s mind.
Fred put it plainly:
"Because six months earlier, you had large institutions that were swimming in cash, who are now drowning in red ink. And they were looking for real ways to save real green dollars. And the cloud just happened to be one of those."
Internally at ServiceNow, the mood was tense. There was no precedent for what was happening, no playbook to follow. Employees were staring at the numbers, watching markets crumble, wondering what it would mean for them.
Dan Greenbaum, one of the company’s early sales leaders, recalled the uncertainty vividly:
“We were always making our numbers and targets. And then, suddenly, we were asking ourselves, ‘What the f*** is going to happen now?’”
It was a moment when most companies would tighten their belts, pull back, and hope to survive. But Fred Luddy saw it differently.
Instead of retreating, he pushed forward. An employee remembers–and memory is, of course, fallible, but tone lives on–an employee remembers hearing something like this:
“Come on, f***ing snap out of it, f***ing zombies!” Fred refused to let them wallow in uncertainty. Instead, he laid out a vision: this wasn’t a time to hunker down. It was a time to thrive.
And he put his words into action. Armed with the right software for the right purpose at the right moment, ServiceNow launched an aggressive, guerrilla-style campaign to win customers from competitors. They didn’t just try to compete—they flipped the economic downturn into a competitive advantage.
The strategy was simple but powerful. The team devised a pricing model that customers in crisis couldn’t ignore:
75% of what you’re paying now for software maintenance.
25% of what your implementation would cost with your current vendor.
0% in upgrade fees.
It wasn’t just about the deal, though. ServiceNow was—is—a platform built for business efficiency. Creating ways to route, manage, and complete tasks is a natural avenue to driving the costs out of business. It was a simple concept with galactic possibilities. In an critical moment where every company was desperately trying to slash costs, this offer was irresistible. It was aggressive, it was innovative, and it worked. Greenbaum:
“We leaned in, we went after [the competition] hard. And in that period, we picked up 30 to 50 customers, just from these aggressive programs.”
It got people’s attention, that’s for sure. Fred later reflected on how well the strategy worked:
"So that was actually a very, very good time for us economically to get in, get our foot into some areas where we were being just summarily shut out six months before.”
The impact was immediate. Customers who might have been reluctant to change in normal times now had an easy off-ramp from their bloated, outdated contracts. ServiceNow wasn’t just selling software; they were offering companies a lifeline.
And as the numbers started coming in, it became clear: the gamble had paid off. Fred:
“The message there is that there are a lot of economic crises where technology really can help you get out…and so we as technologists can take advantage of those situations."
June 30, 2009: The Email That Defined a Company
At 7:43 pm on the final day of the fiscal year, Fred Luddy sat down to send an email to every employee at ServiceNow. It wasn’t just an update—it was a declaration of what they had accomplished.
Subject: What a Phenomenal Year
A year ago we put together a budget that called for the company to grow by about 90% in terms of revenue. A year ago, the DJIA was around 11,000, unemployment was hovering around 5%, Lehman Brothers and Bear Stearns were strong prospects—clearly a different economic climate than we face today.
In September, as economic conditions worsened, one of the most revered Venture Capital firms, Kleiner Perkins, admonished its investments (companies like Service-now.com) to "hunker down and hoard cash." To us, this viewpoint seemed very short-sighted and too defensive to have much value. In times like these, companies either wither and die, survive, or thrive. Given our company spirit, culture, technology, and value proposition, there was only one choice, THRIVE! And thrive we did.
Execution for this fiscal year has been nothing short of spectacular. I believe that FY09 will be one of the most defining in our already remarkable story. How well did we do? We more than doubled our size, exceeding our goal. We just finished a quarter that produced more revenue than our first two years combined.
We not only had a huge quarter, but the quarter included such well-known brands as Morgan Stanley, NYSE, Facebook, Williams Sonoma, REI, Kohler, and Swiss Re.
Each and every one of our 100 employees helped make this happen. I am personally aware of hundreds of examples where an employee went above and beyond on behalf of a customer. If I know of hundreds, doubtless there were thousands of examples.
So, as a recipient of this email, please take a few minutes to take a deep breath and be proud of your accomplishments—you should be proud to tell your families that in the most difficult economy in over 40 years, you and your colleagues made a huge difference and helped build a software company that is becoming very well known for helping transform the ITSM space in a most positive way.
Thank you all for a most incredible year!
Sincerely,
Fred
Turning Crisis Into Legacy
The Great Recession was a defining moment for many companies, but for ServiceNow, it became a turning point. While others recoiled, they took bold steps. While others waited for stability, they created their own.
By the time the dust settled, ServiceNow wasn’t just surviving—it was dominating. And the team that had once stared at the crisis with glazed eyes had become battle-hardened believers in the idea that even in the darkest economic moments, there’s an opportunity to rise.
Fred had been right. It wasn’t a time to hunker down. It was a time to thrive.
And thrive they did.