Looking to be inspired? On this week's Walker Webcast, Walker & Dunlop's CEO, Willy Walker, spoke with Workday Co-Founder and Co-CEO Aneel Bhusri about his career journey, the technology and software industries, and the advice he shares most frequently.
Willy Walker is chairman and chief executive officer of Walker & Dunlop. Under Mr. Walker’s leadership, Walker & Dunlop has grown from a small, family-owned business to become one of the largest commercial real estate finance companies in the United States. Walker & Dunlop is listed on the New York Stock Exchange and in its first seven years as a public company has seen its shares appreciate 547%.
Aneel Bhusri is co-founder and co-CEO at Workday. He is also a member of the company's board of directors, and served as chairman of the board from January 2012 until May 2014.
Aneel has been a leader, product visionary, and innovator in the enterprise software industry for more than 20 years. Before co-founding Workday in 2005, Aneel held a number of leadership positions at PeopleSoft, including vice chairman of the board and senior vice president responsible for product strategy, business development and marketing. In addition to his role at Workday, Aneel is an advisory partner at Greylock, a leading venture capital firm that he has been associated with since 1999, and he is a member of the Board of Trustees at Stanford University. He also serves on the board of directors of the Workday Foundation and of the Memorial Sloan Kettering Cancer Center. Aneel previously served on the board of directors of several other companies, including Intel, Pure Storage and Okta.
Aneel holds a Master of Business Administration degree from Stanford University and a bachelor’s degree in electrical engineering and economics from Brown University. He is a Crown Fellow at the Aspen Institute.
If you have any comments or questions, please reach out to your main Walker & Dunlop point of contact. We are all available to answer questions and provide assistance. Additionally, if you have topics you would like covered during one of our future webcasts, we would be happy to take your suggestions.
Willy Walker: Thanks Susan and good afternoon to people on the East Coast and good morning to everybody else. I know it's good morning to you Aneel. Great to have you with me.
It's a real pleasure to have Aneel on the walker webcast today beyond being one of the most visionary and successful entrepreneurs in Silicon Valley. Aneel is also known as one of the truly great guys you'll ever meet. He is clearly one of the nicest, if not the nicest Silicon Valley executive, you will ever meet and his talents and passion for making Workday an incredible company, are only matched by his love for his family, golf, and a good glass of wine or a plate of pancakes with his longtime business partner Dave Duffield.
So, Aneel, let's back up to the real beginning, you were born in New Jersey, your dad worked at Bell Labs; talk for a moment about being the son of an electrical engineer at Bell Labs and how your father impacted your education and career path.
Aneel Bhusri: Well, first of all, it's great to be with you. Willy, and thanks for that nice introduction. So, you know, my dad's one of my heroes. Unfortunately, we lost him a few years ago. But he got me on the path of math and science. My mom was an artist, so she got me on the path of Liberal Arts and so I felt very lucky to have both influences in my life. When I went to college, I was really set to be an engineer and graduated electrical engineering degree, but I always knew I wasn't as smart as my dad. I mean, he was a chief scientist, and so I thought maybe I should try my hand at business too, and so, that led me down the path of trying to combine engineering with business.
Willy Walker: So, your first job was at Burger King.
Aneel Bhusri: Yeah
Willy Walker: Talk for a moment about working at Burger King, flipping burgers and what that taught you about business.
Aneel Bhusri: I will try to talk for less than, less than a minute. First thing I would say is I couldn't eat at Burger King for about five years after working there. I think it's a wonderful restaurant, but just watching how the food gets prepared and being around the grease all day was an interesting experience. And you know what I saw, for the first time was the importance of a good manager. We actually had a good manager at that Burger King location. And how that individual kept everybody on the same page and motivated. The next summer I got a job teaching tennis. So, I was a tennis player and that was more enjoyable and frankly, I liked being outside. So that was a good experience to work at Burger King very grounding.
Willy Walker: So you went to Brown and you just mentioned you focused on electrical engineering as well as electronics, but you also played tennis for a year. Was the end of your tennis career your decision or your coach's decision?
Aneel Bhusri: I think it was a mutual decision. I played varsity as a freshman, then they brought in a really strong class of recruits and I took a year off. I was having too much fun in college, and then I played again in my junior year, but I was on the JV team. So I definitely went backwards. I had a great experience abroad. I love playing tennis, but they brought in a much stronger class than, than the team I was part of, and so I was relegated to junior varsity.
Willy Walker: So you got out of Brown and you went to Wall Street and as you previously said with your dad being such a talented engineer you sort of added the business side to it. You didn't last long in Wall Street. What did you either like or dislike about spending time on wall Street?
Aneel Bhusri: I was at Morgan Stanley for three years and to this day, I'm very loyal to Morgan Stanley, I would call it “the CO”. Built great relationships and friendships, learned a ton. Learned really about not just about business and the, you know, the Financial nature of how all businesses run, but also got a lot of experience interacting with CEOs and CFOs that you normally wouldn't get at 22. And you know when I went there, my mom was worried because the movie Wall Street had just come out and she said, “you're not going to go be an insider trader, are you”?
Willy Walker: You’re going to be Bud Fox? You’re going to be the next Bud Fox.
Aneel Bhusri: And I assured her I was on the investment banking side. You know, I might have stayed there, I really had a great experience, but the area that I asked to cover and ended up covering was the tech sector, and back in 1988 it was not where all the investment bankers wanted to go. It was a tiny little group; Microsoft was about $100 million revenue company. I remember meeting Bill Gates and taking him to an elevator and him telling me he designed the elevator protocols for which elevator comes up and down because the elevators at Morgan Stanley were too slow. And clearly, we're not using his algorithms. Anyways, that experience working with those tech companies made me fall in love with early stage tech companies and entrepreneurs. I just wanted to get to know them and be part of something like that.
Willy Walker: So I've heard you say that the impetus for going to business school was because you wanted to go and you wanted to run something with a Brown degree and having worked at Morgan Stanley that would I think lead you to Wharton or Harvard or some other East Coast school, and you ended up packing your bags and heading west. Clearly, I didn't know that you'd been focused on the technology sector. I'm assuming that's what said, I gotta get out to Stanford. I got to get West and go see what's going on in the tech world.
Aneel Bhusri: Absolutely. Absolutely. My sister was an undergraduate at Stanford, I'd gone out a couple times and had just fallen in love with the West Coast and you know I've now been here since 1991 and I mean I love, California. It's got its sets of issues, but it's also a great place to live. Came out here and it's just in the water here, entrepreneurship is just everywhere. If I hadn't gotten into Stanford I'm not sure I would have gone to business school, cuz I really just wanted to find a way out to the west coast and Stanford ended up being that that vehicle. And during my two years I got exposed to a lot of very cool technology companies, and got even more committed to that idea of maybe not running something but being part of a startup and you know, creating something from nothing. I think that's just a, and you've done that with Walker & Dunlop. It's just fun to start from scratch and shape it the way you want it to be.
Willy Walker: So, I've heard you say that you'd actually thought that you wanted to be an investor right when you were coming out of Stanford and then all of a sudden you met Dave Duffield. Talk for a moment about meeting Dave and going to work for him at PeopleSoft, and why at that time what Dave was offering you to do seem like the right move coming out of GSB?
Aneel Bhusri: Well, I was working between summers at business school, and during my second year of business school, I was working for George Still at Norwest Venture Partners, who is one of my very close friends and mentors and he's now on the board of Workday. I had a great experience working for him, but at the end of the summer, he and I both said, you know, you should go get some real operating experience. Go work for a company. So, he was the lead investor and only investment PeopleSoft. He introduced me to Dave. Dave took me out for a beer. Dave was already a minor celebrity at the time. I was amazed that this guy would take me out for beer. Was HR and financial software and I thought, I'll do this for a couple years then I’ll go work for Apple, and 28 years later, I'm still with Dave and HR and financial software. So you never know how that plays out.
Dave basically told me go away for a couple months, and I'll figure out what to do with you, and that was the start of an amazing partnership. He's been my mentor, one of my closest friends, our relationship has changed over the years. He's now chairman and not very active in the business, but he is very active in making sure we stay true to our values and that's really what drew me to Dave in the first place. He was a nice guy in Silicon Valley. When that was not necessarily thought to be the right way to build a business. This is in the early and mid-90s. There was no Great Places to Work list at the time, but Dave had this this view that if you treated your employees well they would take care of your customers and you can have fun along the way, and we basically embraced the same exact set of values that he started at PeopleSoft and we've brought them Workday. I couldn't be more lucky to have crossed paths with Dave and we've now been together for 28 years we're 26 years apart in age. So, we're not we're not trying to be the same person, but I got very lucky. We both happen to be from Ridgewood, New Jersey.
Willy Walker: Yeah. So, other than the fact that you both came from Ridgewood, New Jersey, and you both went to Ivy League schools, but Dave didn't need an Aneel when he met you. In other words, there were plenty of talented people at Peoplesoft, there were plenty of people that he met all over the place in growing his business. What do you think it was that made it so that when he saw you, he said, I'm going to invest in Aneel? I'm going to, I'm going to give Aneel opportunities that I might not give somebody else.
Aneel Bhusri: That's a good question. No one's ever actually asked me that question. I think first and foremost, he saw somebody like minded. He saw a younger version of him, someone that had a can-do attitude. I'm known as being an optimist, and I am an optimist. Dave sees a half full glass is overflowing. And a lot of the management team at the time at PeopleSoft they had big jobs. And so when Dave came out with a new idea or a new product. the typical answer was no, or some resistance, and my answer was, yeah, I'll go dig in, let me go look at that. And so I became his outlet for his ideas, and over time, he was the product leader at PeopleSoft. Over time as the company became bigger and bigger I took over that product leadership. I think it was, we very quickly figured out, we have the same values and we had that optimism that we just, we wanted to change the world. I know that sounds corny, but if you don't think about that when you're starting a company it's not worth starting.
Willy Walker: Yeah. So, you had a number of senior roles at PeopleSoft. CEO is not one of them and you have said a number of times that when the CEO job was up that you were passed over and that you weren't ready for it. Now, they're not too many Brown undergrad Morgan Stanley, Stanford Business School graduates who don't think they can do anything on the face of the planet. Much less run a company like Peoplesoft. What was it that made you cognizant at the time that you weren't ready to run PeopleSoft?
Aneel Bhusri: You know, I had been largely a strategy and a product person in my largest organization I'd run was four or 500 people and PeopleSoft at the time was 8,000 people and I looked at it and said, ya no, they should find somebody has more experience running large organizations. I'm not sure I would know what to do. But one of the things that, I don't know if you're born being humble, but Dave is one of the most humble people I know and to this day, you know, he's been so successful, and I think he just ingrains that in all the people that that work with him. That humility, do what's right for the company. And I knew what was right for the company was not me as CEO, and so, I we welcomed in a new CEO for a period of time. I stayed on board, but then I went off to try my hand at venture capital for a while.
Willy Walker: And so, while you're out doing venture capital at Greylock. Correct?
Aneel Bhusri: Yep.
Willy Walker: Yeah, so you're at Greylock and now suddenly in comes Oracle to make a hostile bid for PeopleSoft the company that's dear to your heart and dear to Dave's heart. So, the two of you go jumping back in to both fend off Oracle, and if you will, save PeopleSoft. Talk for a moment about jumping back in with Dave. I understand also not being paid. So the two of you kind of went in, in your good graces to try and save PeopleSoft from Larry Ellison and Oracle. Talk about jumping back into what it was like.
Aneel Bhusri: I think we each got paid $1 a year, was very good. They had to pay us something. So, it was $1. You know, the CEO, we brought on for the first few years, did well operationally. PeopleSoft might not have been the most operationally well run company, but it had a soul, took care of his employees, really took care of its customers. That CEO sort of changed that mix and PeopleSoft just got weaker. Companies that are taken over in hostile takeovers are usually not strong companies, and so PeopleSoft had gotten weaker. The board realized that and during this 18-month hostile takeover, they fired the CEO and asked Dave and I to go back and, you know, for me, it was honor. Dave could have asked any one of a dozen people who'd work with him over the years to go back. He asked me to go back with them and believe it or not, in the last four or five months of the hostile takeover while we're running the company, we were having a blast. We thought we were going to win and we obviously we obviously didn't win. But we learned a lot and it comes to the conclusion that there was this major technology shift which ended up being the basis of Workday, and you know PeopleSoft would have survived, PeopleSoft would have had to execute on the exact same strategy, but with a huge customer base on old technology would have been difficult to start with a clean sheet of paper turned out to be a real blessing. So after that, after that time, you know, it was, it was a tough process. It was 18 months, I got a lot of respect for Larry Ellison at Oracle, but it was hostile with a capital H. The department of justice got involved and so we were at some level both happy to be done with the process but sad to lose PeopleSoft.
Willy Walker: So when Dave has said that when you and Dave jump back in you single handedly move the PeopleSoft stock price from $15 a share to $26 a share. Now, I haven't figured that one out yet Aneel. I can't all of a sudden, just personally smooth Walker & Dunlop stock price from x to y. What did you do in that 18-month period that has Dave say that you personally moved the stock price that much?
Aneel Bhusri: I'm not sure I agree with Dave. I'll tell you what I did, but I'm not sure I agree with Dave, that the stock moved because of me. PeopleSoft no longer had a vision for the future and there's lots of things I'm not good at, but coming up with the product vision is one of the things that is core to who I am, and what I like to do. So, over a period of five weeks we basically came up with a vision for PeopleSoft in the future that was no longer just running an operational company, but having a vision that included what became the cloud, and a story of growth and innovation that that had somewhat been neglected after Dave, Dave was one of the great innovators when he stepped down as CEO that focus on innovation went with them. So just bringing back growth and innovation. What Dave did, which I think was more important, he walked the halls for a week straight, just to get the employees motivated again. They were in, not the happiest place. The previous CEO had put closed doors between the executive room and had a big, big office. David and I shared that office, we took all the doors down, we just change it back to that open culture and that was almost more symbolic than anything else we did.
Willy Walker: So Oracle wins. You and Dave leave. You take a little time off, and then you meet at a Pancake House in 2005 and you sit down on a napkin, and you write down a business plan for what is now Workday. I think that napkin is now worth $55 billion. So, could you share with all of us, what was written on that napkin that makes it worth $55 billion today?
Aneel Bhusri: Well, it's probably another napkin is that classic Silicon Valley story. I actually had five or six slides, but on the napkin, we wrote down what we wanted to be. You know what we learned during that that last period at PeopleSoft was that there was this technology transition, that was just being born. Marc Benioff who has been a great friend all along had had just created Salesforce, a few years earlier was still a very tiny company, but you could see he was onto something. So, you know, I sat down with him and said, you know, Mark, you know, how does this work? What are you doing? And we came to conclusion that someone would do it for HR and finance the world we knew well at PeopleSoft, someone would do it for this new cloud model, and so we drew up, I drew up a bunch of slides on what we would do and say, well, why not us? What, doesn’t need to be SAP, Oracle, it could be this new company. We didn't have a name for it. We called it Dave's new company for a while. Well, what we had on the napkin were the core values and what we wanted to stand for. And it was the same core values, but this time around, it was really important that we really were really embedded in the community. And so even in those early days about starting a foundation, that ended up being the Workday Foundation, but how we wanted to do things similarly to PeopleSoft and what we wanted to do differently, and a lot of it was the core values and what company we wanted to be and then we'll figure out what we're going to do.
Willy Walker: Did you know, walking out of that breakfast that you guys were going to do this in the sense of, or was it just sort of, I mean all of us have had a coffee with a friend saying oh at sometime I'd like to do that, or maybe we think about doing that. Did you walk out of that breakfast with the two of you saying we're doing this and we're going to either go raise money or we're both going to put in money or whatever the case might be, or was it a little bit more of a, of an evolution?
Aneel Bhusri: I would say that that meeting that we decided to start the company was the fourth meeting we'd had over a couple weeks, and we got increasingly committed to the idea. Dave at the time was living in Tahoe, so I drove up to see him in Tahoe, and we ate at this place called the Truckee Diner, which is now called Jax and that was always our favorite place to go to. And you know that coming out of that last meeting we knew we were going to start a company. My real, you know, I always tell the Workday employees they should be super grateful to me that I talked Dave in to one more startup. Dave was 65 at the time, and he was really debating did he have one more in him and you know, he's not active now, but he was very active in the formative years of the company, and when we ran the company, two in a box, and it was the most fun I've had ever in my career. And getting Dave to believe that he could start another company and that we would be successful, that I think that was a big part of the conversation and I made the call to leave Greylock which was a pretty cush job.
Willy Walker: Yeah. So first of all, I hope that the Truckee Diner now called Jax's gets to use Workday for free. And, so just for a moment Aneel, I mean, you're sitting there and you put the sort of the mission statement, the core fundamentals of the company down on a napkin, there's obviously a lot more behind it. But at its heart you're saying at that time let's go take on SAP an Oracle. And while today, with as you mentioned, Salesforce with Workday, with Snowflake, with so many successful SAS companies, we all sit here today and say oh yeah, you know software as a service, got it, easily done. At that time, I mean why not take on Microsoft while you were at it. I mean, in other words like what was it, that made you and Dave think that you would have the ability from a software development standpoint, to be able to take on companies like SAP and Oracle and win?
Aneel Bhusri: So, you know, every 10 to 15 years in the application world, and in many areas of technology, there's a platform shift. Where the old platform just runs out of steam and there's a new platform that emerges and usually looks like a toy at the start It shows up in small and medium sized businesses but that technology gains momentum and steam it gets better and better over time. And then all of a sudden, it shows up in the large company. Clay Christensen wrote a great book about this, The Innovators Dilemma. That had happened with PeopleSoft. PeopleSoft disrupted a whole wave of mainframe software companies came out with what looked like a toy at the time, in the late 80s, and after looking at what Salesforce was doing we thought this technology is so disruptive to the SAP and Oracle and PeopleSoft models, both of product development product delivery, but also sales services, everything is just such a different model. It's going to be a startup that that that shakes up the market. That brings fun and excitement back to this market that the incumbents aren't going to do that. And we thought, well, might as well be us. And we had, you know, a huge huge asset in Dave. I mean, Dave at this time was a legend in terms of funding it. I did a little bit, but it was mostly Dave and Greylock and Dave At this point was already a billionaire, and he doesn't really care about money, so he put a lot of money into the into the business, and so we didn't have to worry about capital, and we were known in the world of HR and finance already and people liked us, because we took care of our employees and took care of our customers. So we got it. We had a receptive audience when we came up with this new solution. So, but the early days were hard.
Willy Walker: Yeah, I was gonna say, your first two years weren't exactly like we've got the, we created the iPhone, let's come buy it. And I've heard your story about your first contract that you got in that Flextronics actually stepped in and was your first big contract, you'd had a couple smaller ones but Flextronics was the first one. And the CIO of Flextronics saying, “we got to burn the boats” in the sense that it was such a big risk for Flextronics to move to Workday that there was this moment of just we're all in here. Can you talk about how critical Flextronics was and then also did that product launch work seamlessly with Flextronics or did you did you have to try and get some life raft back in after you'd burn the boats?
Aneel Bhusri: Well, it was, it was both the CIO and CEO that embraced Workday.
Willy Walker: Was Michael at Flextronics then or Michael Marks or was he already gone?
Aneel Bhusri: No, it was Mike McNamara who is actually now on the Workday board. He basically said, you know, I could implement SAP HR with 70 consultants and I don't really get any competitive advantage from it. Might as well try something different and I like you guys, so let's see how it goes.
They had 200,000 employees. At the time we could show how the system worked for 25,000 and so we had a lot of work to do. But he bet on us, and we knew we would get get there. And over a four-year project, and we laid it out over four years, the project went extremely well, the CIO was really supportive, the CEO was supportive. You know Flextronics end up becoming a very happy customer and then all the other big companies in the fortune 500 world. Fourtune 500 sized company said hey if it works for Flextronics, it could work for me. And that really opened up the door for us to really move into large accounts and today we have about 50% of the Fortune 500 running Workday and I'll always be grateful to Flextronics for their bet on us.
Willy Walker: So, you talked Aneel about that shift. That every 15 or 20 years there's a shift and clearly Salesforce was on it, you are on it. But you were going up against SAP, which you know I've heard you call SAP and Oracle dinosaurs. Which I also heard a wonderful quote from you, where somebody at Oracle agreed with you that they were a dinosaur. But he said, but we're a dinosaur that can fly. And your response to him was, I think they died too. But you know, SAP’s $144 billion market cap company, Oracle's $182 billion market cap company today, and we're 15 years into the Workday development and we're 20 years into Salesforce. So, they're still there.
Aneel Bhusri: Yep
Willy Walker: How does this play out. Can they figure out what you're doing and retool themselves to mimic you, or do they just continue to kind of die on the vine and you and Salesforce and snowflake and others continue to kind of chip away at them?
Aneel Bhusri: Well, I think, first of all, SAP and Oracle are very successful, formidable companies and I like to tease them. Dave and I are reverent, and we like to have fun with the competition and you know we don't mind being teased either. SAP and Oracle are going to be around for a long time. And I think our window was that for the first five years they ignored us. I think if you look back at the history, a lot of people ignored us. And that gave us an opportunity to get a huge head start on the technology.
Today Oracle's a very formidable competitor. They've made the transition to the cloud. I think actually SAP is still struggling. If you look at the market caps, their market caps, Oracle's market cap really hasn't changed that much over the last five or six years. All the creation of new market cap has been with the new company, Salesforce, I think, is now worth more than Oracle, Workday, Service Now. We saw with slack, you know, there's like a trillion dollars of market cap that’s been created while the legacy companies have pretty much stood still, but they're not going away. And so it really is just chipping away. I mean that's really what we do customer by customer, just chip away. Try to build a great product. Have our employees take care of our customers and have our customers, you know, tell other potential customers about how good Workday is. And so, and by the way, thank you for being a customer.
Willy Walker: Oh, no. We're thrilled. We launch you January 1 and it's been fantastic engaging with your team and getting us up and going on Workday. I'm extremely thankful of Sam Palmisano who is on your Board as being the link, if you will, between our two companies.
I know you're a product guy, if you will. And when you were at PeopleSoft and when you came back into PeopleSoft you just said that was sort of the area that you looked at of charting out where we're going to go. But I've listened to many of your interviews and you don't talk about a $55 billion market cap. You don't talk about the coolest and greatest product. You don't talk about the technology being so much more cutting edge than anybody else out there. You talk about the people at Workday. You talk about the fact that Workday is the #7 Best Place to Work on Fortune magazine's list. And there seems to be this recurring theme with both you and Dave as it relates to kind of do what's right by employees and the employees are going to do right by you. Talk a moment about that Aneel because as you said previously, that's a little unique for Silicon Valley companies.
Aneel Bhusri: Yeah. You know what, I think, more Silicon Valley companies are embracing being a great place to work. My friend, Marc Benioff, I think was number one list and we were number five this past year. I think we're number seven the previous year.
Willy Walker: Sorry, sorry, sorry I tried to do a lot of research here, but I missed you by two. I'll give you back the two. You'll be three next year if you keep moving up.
Aneel Bhusri: Yeah, your research is amazing, but that one, I know that number every year by heart. I think a lot of companies, I think Mark was number one, and actually Chuck Robbins of Cisco, a customer and a friend, was number one on the list. Salesforce is in the top five, one of our competitors Utmost, not Utmost, Kronos is also high on that list. They bought Ultimate. So tech companies are beginning to get the fact that, if you have motivated employees, and you take care of their employees, and you're transparent with them, that they will innovate for you. They will take care of customers for you that you just basically unleash them. You got to create guardrails, but you unleash them and a happy employee is just a lot more productive than an unhappy employee. I've never seen a company with happy customers and unhappy employees. I've just never seen that combination, right. I mean it's the two usually go hand in hand. So, we have this set of values that starts with employees as number one, customers is number two, we like to have fun, that's three, integrity four, we do everything in a transparent and honest way, five innovate, and profitability is the last one. It's not really core value, it just pays for it. And the way we drive the company as we reward against those core values. We reward someone when they have a particular instance of showcasing innovation. Or somebody that created a fun experience for employees or customers. I mean, if you don't single out and make symbolic events out of that, then the values are just words. So, we really try to reward against those core values.
Willy Walker: So, inside of Workday which group is larger, Aneel, your software development group or your data science group?
Aneel Bhusri: Software Development Group by a wide margin. We're all just getting going as an industry on data science. But it's probably the fastest growing group we have in our development organization.
Willy Walker: So I want to go there. So if you will, talk for a moment about the difference between software development and data science and why right now there is so much effort going towards data science.
Aneel Bhusri: Well you know software development has been around for a long time. And we've got a great set of tools, whether it's Java or you know, some of these newer languages. Great databases, you mentioned snowflake. MongoDB. There's all these great technologies and so software development, there's a lot of software developers out there. Now 20 years into this cloud revolution you have massive amounts of data. And the question is, well what do you do with all that data other than just, you know, report against what happened. Turns out this data can be very valuable to predict what might happen in the future and tools have emerged from any of the leading providers like Microsoft and Google and Amazon that actually help you look at massive amounts of data in a short amount of time and make predictions. So everybody here, everybody in the business world, would love to have a sense of what's going to happen in the future as opposed to just looking backwards and tell everybody, you know, here's what happened. More valuable to know what's going to happen. And that's really the power of data science.
Data scientists differ than programmers. They have similar mindsets, but data scientists really are applied math majors. You know when you hire programmers they're typically coming from a computer science program at a university or maybe not university but their computer science programmers. In the case of data scientists, they're typically mathematicians and they're comfortable analyzing large amounts of data and looking for patterns in that data. And just to take a minute, there's a great book that I recommend everybody read about data science. It's called Prediction Machines. It's written by three professors at the University of Toronto. And what it does is highlight the positive relationship that machines and humans can have. Machines aren't going to replace people. Machines are good at some things, humans are going to most other things, and it really highlights how the two will work together going forward.
Willy Walker: So for a moment. Give an example of how data science is helping users of Workday look ahead.
Aneel Bhusri: So one example is his career path. So, for a large company, or for a company that's been around for a while, it has lots of data. You can look at a successful employee as they go through the organization role by role and you can see what paths worked, what didn't work. So you know, you have up and coming star in your organization. The system will recommend the next job you should take based on all the people that came before. It'll make a prediction that this would be a next great job move for you on your career path because you know, eight out of 10 times it led to somebody getting promoted even further, or develop a certain skill set that made him made him more valuable to the company. That is something a human could do. It would take them years to sift through all that data. The machine can do it, you know, in seconds. And that's really the power. The machine will make a prediction and the human will then, who sees that data, will say, Do I want to take advantage of this prediction. They will use their judgment to make a decision based on that, on that prediction from the machine. And that's, that's where it's powerful.
You know, it's not one of the more popular ones, but we have a feature that some customers turn on that audit expense reports. The system will find anomalies in expense reports and see who might not be completely honest on their expense report. We don't use that at Workday, but a lot of a lot of companies like that feature. I still want to believe in trust, but it does work. And then another area is automating the audit itself. Where so much of audits are highlighting the exceptions and then the auditors figure out how to make a decision, applying judgment against that exception. With machine learning the system can do the entire audit and then the auditors make a decision on the most important things on those exceptions, not the mundane.
Willy Walker: So does it matter. So on the HR side of things. I know I think right now there are 20 new employees inside of corporations that use Workday on the HR side and if my stats off on that, correct me.
Aneel Bhusri: 45
Willy Walker: Sorry, it's an old stat okay so 45 million. So there are 45 million people. If you're giving our HR department at Walker & Dunlop insights as it relates to career pathing, are you using just W&D data out of our thousand employees? Or, are you going out and using that 45 million user base to sit there and say, Susie Johnson is at this stage in her career and based off of a Suzy Johnson of a much bigger pool than just Walker & Dunlop, we're recommending this?
Aneel Bhusri: Both and it's really your choice. So we have an information services agreement that if a customer signs we will aggregate the data, on a completely anonymized basis, and share the results back to our customers. We can even do it for simple things like compensation surveys. It's always your data. We never look at the data. But if you want to get the benefit of the pool data, then we have to be able to use your data anonymously to aggregate it. And so some companies are large enough where they say, you know, Walmart has two and a half million employees. I don't think they're going to get a lot of benefit from sharing data with others because they have a big enough pool. But most companies, I'd probably say at this point 40 50% of our customers now sign that agreement. We don't make any money off of that, we give back the results for free, but it just makes the predictions better the more data you have, and that's the simple thing about data science. The more data you have, the better the prediction.
Willy Walker: Aneel, when I hear you talk about accounting for instance and talking about being able to find the variances, if you will, and taking a lot of that work out of KPMG and Ian wise hands. I sit there immediately and say, oh, wow, that's a bad day for KPMG and Ian. Why? Because Workday is taking a lot of work that they bill for away from them. And yet, I then go back to something like LinkedIn and when LinkedIn started to gain momentum a lot of people sort of said Russell Reynolds and the other high-end search firms, Korn Ferry, are all going to just kind of wither away because LinkedIn is going to take over the search business. And interestingly, those high-end search firms have actually just gotten bigger and bigger because people are going to them for the higher touch executive search. But then some of the, you know, if we're looking for an entry level employee at Walker & Dunlop, we won't use a headhunter, we'll just go to LinkedIn and use the tools there. Talk for a moment about, if you will, that bifurcation between the technology and the services firms and whether it is all kind of value add or whether there is a loser in all of this. As you go and expand, for instance, into the accounting space.
Aneel Bhusri: Well, so I think that if technology is use with an ethical construct and using a way that is always thinking about how to make humans better, not replace humans, it can be really valuable. I mean technology at the end the day is not good or evil, it's how you use that technology. And we have a chief ethics officer that makes sure that we use it in ways that are only helpful to our customers. In the case of that audit, the audit firms have all embraced the way we're doing it. It just takes out a lot of the manual work and allows them to focus on higher level work, and the auditors instead of just going through a mundane audit, work on the exceptions and they end up doing consulting agreements around and higher-level business because they now have more resources, on frankly more strategic projects. And that's happened across the board. It basically frees up people to do more strategic work rather than just data aggregation because computers are just much better than humans at data aggregation.
Willy Walker: So, I've heard you give a number of speeches to budding entrepreneurs, MBA students who want to go out and start their own businesses, etc. And you’ve gone back to kind of two pieces of advice and I'd love to hear your thoughts on them. The first one is, do it with a friend. And yours and Dave's relationship over 28 years is clearly an incredible example of two people who found partners, have respected each other throughout, and built incredible value for yourselves as well as your shareholders. But there are also a couple examples that come to mind, whether it be maybe a Facebook or a Microsoft or an apple, or a couple other partnerships that didn't exactly end up with, you know, best friends 28 years later, Isn't doing something with a friend fraught with challenges?
Aneel Bhusri: You know, it can be. But you're right I mean they're good stories and bad stories. I would say though on Apple. I don't think Steve Jobs would have become Steve Jobs without Steve Wozniak. You know he needed that engineer with them and if you have the right co-founder, and your skill sets are complimentary, and in the case of David and myself, our skill sets are very complimentary. One plus one is a lot greater than two. And I mean, as you know, the CEO job can be a lonely job. To have someone who is there with you from day one is really valuable. And two brains working on difficult problems is really valuable. And so I wouldn't think about doing it any other way. But it works both ways. For me, I think it's always better to have a co-founder. I just think it's always good to bounce ideas off of somebody who's in the same boat with you. You know, if you start bouncing ideas or your fears with the employees, they'll start freaking out. Maybe our founder/CEO doesn't know what he's doing, or she's doing. When you have the relationship I have with Dave, we would just work through all the issues together and present a unified front to our employees and you know it's worked really well. And so much so that I just took on a new co-CEO just a few months ago, just because I like having that idea of a real business partner.
Willy Walker: You mentioned Steve Jobs there and that he wouldn't have been who he was, without Wozniak. Do you think he would have been who he was without having gotten kicked out of Apple and then coming back? And I asked that because you know you were at PeopleSoft, left PeopleSoft to go into the venture space and then came back and then started Workday so you have somewhat of a unique experience of having been on a certain trajectory and then for a number of different reasons gotten off of it. But clearly you coming back with a fresh slate at that time in your career is what created the incredible value at Workday, and it just as you raise Jobs and him leaving Apple and then coming back, I think it's fair to say that Apple wouldn't have become the Apple it was had Steve not left and started Next and then come back into the organization. Would you recommend that for highly talented executives mid-career? Just sort of step back and take a fresh look at everything.
Aneel Bhusri: Yeah. Well, first of all, I don't know, Steve Jobs might still have become Steve Jobs but he had to find somebody like Steve Wozniak. He was such an amazing entrepreneur and visionary and thinker, not just across one discipline but so many disciplines. It's hard to know what made Steve Jobs so great the second time around. I do think starting next and becoming a true software expert was part of it. But if you remember, he was also the person that really funded and was the chairman of Pixar, right. I mean at one point he was the chairman of Pixar and the CEO of Apple. I mean, it's just remarkable what he did in two completely different fields. He just saw these trends in a way that very few people do. I think when you get to do it a second time around you learn from what you did wrong the first time around. And I think when he came back to Apple, I know this because I've got some friends on the Apple management team. He decided he was going to have an absolutely world class management team and really focus his efforts on the product. And so I think he approached management in a very different way. When he came back to Apple and built just an amazing management team. That turned Apple into the great company that it is today. I don't think he had that the first time around. And I'd be candid to say PeopleSoft had a great founding team, but as that founding team retired, we never got to the levels, we didn't go through succession planning rapidly enough, this time around, at Workday we're on our third or fourth iteration of our succession plans. You've got to keep adding to your talent as the company gets bigger. But what Steve did with coming back to Apple, cutting the deal with Microsoft, running Pixar at the same time, I mean, I don't think we'll ever see that in our lifetimes.
Willy Walker: Yeah. So then the other advice that you give budding entrepreneurs is solve a problem that matters. And my question to you is, how do you know what a problem that matters is?
Aneel Bhusri: Well I can't speak to the consumer world. I really an enterprise person. I think if you want to solve a problem that matters in the B2B setting, go talk to customers. We didn't write a single line of code at Workday until we really understood what problems customers were having with the old systems and how we could build something so much dramatically better to solve those problems. So we really had to get that first, you know, that first level insight from the customers that would ultimately become our customers. A customer can’t always tell you what they want you to build, but they can tell you all the issues that they have with the current system. And then it's upon you to figure out what you want to build. And for us, HR in particular touches all employees in an organization. And, you know, as you mentioned, we have 45 million people using the system. We got to do that right. We want to make every workplace, not just the Workday workplace, a better workplace. And so that was a really important part of the mission; make businesses or help businesses run better.
Willy Walker: So Workday’s obviously been a huge success, but in your role at Greylock and as a as an advisor to Greylock, you've seen lots and lots of other investments and you've made lots of other investments. What's the best non-Workday investment you've done?
Aneel Bhusri: That I've done. I was there when my partner Dave Z invested in Facebook and LinkedIn. That's probably the ones I was the managing partners. I like to take a little credit for that. But Dave Z is one of my classmates and very close friends from business school. So when I was at Greylock I also had a had a very close friend I work with and he's still there he was. He's an amazing investor. For me, my best one probably was a company called Data Domain and the CEO of Data Domain is now the CEO Snowflake. It was in 2003, as a company that EMC ended up buying for, I think, $3 or $4 billion, but we invested in it at a $15 million valuation and I was a CEO for the first two years, just had a blast. Single best investment on behalf of Greylock that I did was actually Workday, but I can't really count that one.
Willy Walker: And I've heard you talk about David Z before as being truly one of the great minds in Silicon Valley. What do you think it is that makes David such an incredible investor?
Aneel Bhusri: You know he has this gift for pattern recognition, in particular for consumer internet companies, that you can't teach. When I think about machine learning and you know how machines can process massive amounts of data and draw conclusions or pattern from it, Dave happens have one of those brains that can do that. He just has an intuitive feel for whether it's Facebook or LinkedIn or Next Door. He was a big advocate for Greylock investing in Airbnb. He just sees patterns and will pick the right ones to invest in. I mean, he also is a great reader of people. He’s a wonderful human being himself. Very philanthropic. But he gets people and so much of what makes a great startup are the entrepreneurs and he’s a good reader of people that way.
Willy Walker: I was just, I did a thing this morning with David Rubenstein of the Carlyle Group and in one of his interviews with Arnie Sorensen and Chris Nessetta of Marriott and Hilton, respectively. Three years after Airbnb had gotten funding from Greylock and others he asked them as the first question at the Economic Club of Washington, are you concerned about Airbnb. And Chris Nessetta’s response was no I don't see Airbnb coming and hurting either Arnie or me. I said you know look, any CEO is going to come back with that kind of a response on a three year old startup company. But I noted that Airbnb’s market cap today is significantly higher than both Marriott and Hilton combined. It's just unbelievable. It’s sort of back to your comment about Workday and the fact that for the first five years Oracle and SAP sort of looked beyond you all as a potential competitor and then all of a sudden woke up one day and said, whoa, hang on a second, we just lost a major contract to Workday and this might actually be something real.
Aneel Bhusri: You're absolutely right. And that's why I always come back to Clay Christensen's Innovators Dilemma. I think it's a great book for startups to read because they understand how big companies are vulnerable. And now that Workday is a, you know, pretty sizable company, I read it to make sure that we don't get disrupted by somebody pulling the same moves that we did to, you know, disrupt the market with new technology. I think it's the way of the world. Two thirds of the Fortune 500 companies, I think, are gone in the last hundred years. It's just this idea that you're going to be replaced by the next great ideas. It's just the way capitalism in our industries work. And so, you never know where it's going to come from right. I mean look at what the social networking companies have done to traditional media. That to me is sad, but that's the reality of what happened. You got to always pay attention to those little ones right from the start.
Willy Walker: So you've joined the giving pledge Aneel. I guess first one is, who asked you to join it? And then have you thought about giving your money to someone like the Gates Foundation, where your kind of collaborating with others? Or is your philanthropy going to be more bespoke?
Aneel Bhusri: On the second piece. Still sorting that out right now. Right now, it’s pretty much tailored to today's time. You know Covid’s been really difficult on many people and the number one issue in this country right now, beyond Covid, is actually food insecurity. So that's something that's really important to us, in particular for disadvantaged youth and so we've done a lot with Steph Curry's charity, either in play, but across the country that's been our number one. And as we get out of the pandemic, you'll probably be more focused on education. I'm a big fan of Stan Druckenmiller and what he's done with Harlem Children's Zone, we've been involved there. [unintelligible] is an amazing program that both Workday and my wife and I are involved with. Great place to create opportunities for folks that don't have all the right opportunities? So right now, it's really been about, it was originally about youth, getting them a good education and then workforce development. Today because of what's happening with Covid, it's switched over to food insecurity. And I'm embarrassed to say the person asked me to sign it was Bill Gates.
Willy Walker: You and David Rubenstein have that in common then, because when I was talking to David earlier today Gates came to his office and invited him to join the giving pledge. So that's nice, starting at the top.
Aneel Bhusri: And I would just say, you know, Bill puts on these seminars for people that signed the giving pledge to educate all of us on the work that the Gates Foundation is doing. He's just not changing world with what he's doing, he's bringing a whole bunch of people along. I mean, he's a remarkable human being. And given how busy he is, if I ever have a question on philanthropy, he'll get back to me within a day. This is so important to him. I thought after I signed it, I'd have a hard time, you know, connecting with them. It hasn't turned out to be the case at all.
Willy Walker: And so beyond food, which is obviously a very pressing issue in the pandemic, we've also had a year with a lot of social justice issues. And I know that Workday is signed on to the Management Leadership for Tomorrow (MLT) work that's going on doing audits of diversity and equality inside of the company. Can you talk for a moment about that?
Aneel Bhusri: Yeah, you know, as social justice really came to the forefront after George Floyd's death/murder, whatever you want to call it, we really thought long and hard. How does Workday make the world a better place? And as it relates to legal reform no one's gonna listen to Workday. That's not the world we play in. But the biggest place where we could have an impact is actually creating economic opportunity. And the thought is that creating economic opportunity would really address many of the social justice challenges. And so we embraced MLT, we'd already been working with Europe. And what we're trying to do when we have our own programs called Opportunity on Ramps, where we try to create work paths for people that maybe are veterans. People that don't have college educations. Caregivers that have been out of the workplace for a long time. People that are usually forgotten. Create career paths for them to get into a productive well paying job and we've recruited other companies to do that. And I think this focus on economic opportunity is really what's key going forward.
Internally since where the HR system of record for Workday and for everybody else we know our diversity data really well and we decided to publish it. Not proud of it. Of our global employees 3% are black. We do slightly better with lot next employees. But if you don't publish it and talk about it you can't really measure it and improve on it. We are just encouraging all of our customers to share their data and to figure out how they're going to get better at it. And so we actually came up with the vibe index, which is in the software again. Free to you. A feature you can turn on. Value Inclusion, Belonging, and Equity™ and it's a measurement to get a sense of how your employees are thinking about those topics. And you can see how you're doing and improve over time. You also benchmark yourself against other companies. I think it's at a moment in time where, given that we're an HR software provider for so much of the fortune 500 companies like Walker & Dunlop, I think we have 3200 customers now. I feel like it's our responsibility to help these companies all be better. And, you know, along the way, Workday as well.
Willy Walker: Very much so. I take my hat off to you on that and we're thrilled to be working with you on supporting MLT and all of those efforts.
So the final area before we call it a day, and I thank you for your time, which is Golf. You love golf. How fun is it to have Phil Mickelson as your spokesperson? And I gotta ask you, have you ever asked Phil to caddie for you?
Aneel Bhusri: I haven't asked him to caddie for me. We have a great group of players. We got Phil, Brandt Snedeker, Matthew Fitzpatrick, Matt Kuchar, and Davis Love. And on the female side we've got Casey Danielson and Lauren Kim. We've got a great group. It actually works out really well for business. It's a place where, if I'm trying to get in front of, or spend time with, another potential customer asking him to play golf with Phil is usually a winning invitation. So let me know if you ever want to do that. He’s remarkable. I mean, just as come back to your question, Phil is remarkable. I haven't asked him to caddie for me, but I did play in the at AT&T with him and his group and he is a savant. He's an artist. He sees shots that even other players just are blown away by, you know, and he's been doing it for so long. What I love about Phil, he’s got a huge heart. He does a lot for the community. He does a lot for Workday. He doesn't ever say, me and Workday. He always uses the word we. So how are we gonna win this customer? How are we going to go into that market? And he rolls up his sleeves and he helps us with customer stuff and sales stuff. I mean, he's remarkable yeah, he's remarkable guy. And then at 50 to play the way he does. He gave me short game tips. That's probably one of the highlights. And he's got the best short game in probably the history of golf. Can’t say it worked, but…
Willy Walker: I was just gonna say. I hope it helped. Those types of things don't typically…
Aneel Bhusri: It’s not his fault, it's the pupil. I'm a decent, not great golfer, and I can't do the things. He said, just do it this way. I was like Phil, nobody on the planet can do that other than you.
Willy Walker: I was actually thinking about the fact that you and KPMG being his two major sponsors, maybe, and I actually hadn't thought about the part about your auditing piece of the software, but maybe you and KPMG just merge and then you take over his entire body.
Aneel Bhusri: A good partner of ours, but I like our business. I think they like their business. But, you know, the great thing is we're really good partners with each other. So we can do events together with Phil.
Willy Walker: Yeah, that's fantastic. Well Aneel, I am extremely appreciative of your time today. It's been a pleasure spending time and hearing your insights about the, not only the career that you've led, but also the company that you founded and how innovative you're being right now as it relates to software and I would reiterate Walker & Dunlop’s real excitement to get on to the Workday platform and start working together, going forward. So thank you and happy holidays to you and your family and I look forward to seeing you sometime soon either out in Silicon Valley or up in Sun Valley.
Aneel Bhusri: Well, same to Willy. All the best. I hope everybody on the call is staying safe and healthy and I hope everybody has a great holiday season and really hope to see you sometime soon in person.
Willy Walker: I look forward to it. Thank you very much Aneel, take care.
Thanks, everybody. I'm taking the next couple weeks off of the Walker Webcast. Back early in January, with Dr. Peter Linneman to go through his quarterly update on the economy and on the commercial real estate industry. That webcast, the last two we've had with Peter have been some of our most watched, so I look forward to seeing everybody early in the new year to talk through what ended up 2020 and what we're going to look at in 2021. So thanks everyone. Happy Holidays and Aneel again, thanks very much.
Aneel Bhusri: Thank you Willy.