New Dawn, new Workday: Carl Eschenbach to lead next chapter

Carl Eschenbach and Aneel Bhusri, Workday

Carl Eschenbach, the former VMware executive and venture capitalist, is the new co-CEO at Workday and plans to assume full control next year. After more than 18 years at the helm, Aneel Bhusri, the co-founder of the company, will transition into a product-focused role leaving Eschenbach in sole charge.

During an interview at Workday’s San Francisco office, Eschenbach told me: “I am humbled and honored by the opportunity to work alongside Aneel and our workmates across this amazing company.” And, on a recent earnings call, he proclaimed: “I’m truly energized by Workday’s unique opportunity to be one of the largest and most profitable software companies in the world.”

Eschenbach is considered to be one of the most accomplished operators in the software industry. Although he never took the CEO role at VMWare, its revenues soared to $7bn under his influence while his time at Sequoia Capital provided a unique lens into the characteristics of high-growth cloud companies like Snowflake, UiPath and Zoom.

Carl is one of the most talented operating executives in the software industry – Workday is very lucky to have him.

Some may argue that an unproven CEO at the top of a cloud ERP company is a gamble. Anyone who meets Eschenbach will soon have that concern quashed – he brings the scale and commercial mentality that Workday has needed for some time. While there has never been a doubt about Workday products, its glacial journey towards profitability has always posed questions and Eschenbach’s appointment will provide the impetus, experience and answers to that conundrum.

He is a former wrestling champion and a big sports fan with a winner’s mentality that will sharpen Workday’s go-to-market strategy and refine its competitive edge. During our interview he was thoughtful, composed and calm – there was a modest tone that I wasn’t expecting from a venture capitalist and a rapport with Bhusri that demonstrated a strong friendship built on mutual trust.

When I asked Bhusri why now was the time to step down from the CEO role and place Eschenbach in charge, his answer was humble and frank. “Workday needs a better CEO,” he told me. “This is a new chapter and Carl is one of, if not, the most talented operating executives in the software industry – Workday is very lucky to have him.”

Born out of adversity

Workday was founded by Dave Duffield and Bhusri in 2005. Duffield is a legendary software entrepreneur and Bhusri was an understudy in the formative years of the relationship. After a bruising encounter with their previous business, the two long-time friends decided to try and build a new kind of business applications company. The idea was simple: take everything they had learned at PeopleSoft, use what happened with Oracle as motivation, mimic Salesforce’s SaaS model and ensure that every employee, product or partner associated with the brand put people and customers at the center. That simple recipe created the foundation for a company that has become the default choice for many of the world’s biggest enterprises and is admired and respected across the industry.

Duffield said: “When Aneel and I met over pancakes at a diner to talk about our futures, we both knew we wanted to continue working together. Aneel knew that cloud computing, patterned off Salesforce, was the next big technology trend and we both agreed that our new company’s core values would be the same as our former company’s – because they worked.”

Workday flourished under the PeopleSoft mantra by adopting a completely different approach to that which was taken by most other software firms. While many of its early successes can be attributed to Duffield’s reputation and the goodwill previously banked with global facilitators like Deloitte and Accenture, the longevity of its esteem is largely down to Bhusri’s principles and style: a style that, still to this day, places the company’s human capital above all else.

“Workday was founded on all the good qualities that influenced PeopleSoft’s growth and success: core values that inspired a strong culture, a good sense of humor, widespread enthusiasm for innovation and deploying leading technology, and quite simply, an honest and transparent approach to doing business,” said Duffield.

In order to appreciate why these principles are so important, it’s essential to understand what happened with PeopleSoft and why that experience left such a mark. The acquisition by Oracle remains one of the most bitterly contested corporate deals in history. Duffield’s vision and philosophy was diametrically opposed to the way Larry Ellison and Oracle operated. There was absolutely no synergy between the corporate cultures and most PeopleSoft employees were fiercely opposed to a deal. A long and acrimonious battle ensued but ultimately Ellison won-out when PeopleSoft’s corporate structure and a failed U.S. Department of Justice suit ultimately prevented Duffield from blocking the deal.

Duffield not only lost control of PeopleSoft, he also had to contend with intense feelings of liability for the employees and customers who got caught in the crossfire. He knew Oracle was going to swallow 17 years of hard work and, in the immediate aftermath, Ellison slashed more than half of PeopleSoft’s workforce – confirming Duffield’s fears at a stroke.

Duffield described the events as “disheartening”, but the perverse truth is Larry Ellison did Dave Duffield and Aneel Bhusri a big favor. If it had not been for Oracle’s sledgehammer tactics, we may never have gotten to see what two passionate visionaries could achieve when they had a point to prove.

I’m truly energized by Workday’s unique opportunity to be one of the largest and most profitable software companies in the world.

Workday is the only global cloud ERP company

That’s a bold statement that many would argue with, but the fact is, Workday is the only major player that was born in the cloud and operates unhindered by a legacy of on-premise applications. Smaller cloud-native ERPs have emerged and the giants from Waldorf and Austin have developed significant cloud businesses off the back of their on-premise legacies. But only one company can lay a genuine claim to being cloud ERP trailblazers, and that’s Workday.

While others like Infor have developed solid cloud ERP portfolios through a series of acquisitions, and SAP and Oracle have developed huge cloud businesses by upgrading their install base, it was Duffield and Bhusri that started the cloud ERP conversation – with just a little inspiration coming via Mr Benioff.

Being the first cab off the rank has many advantages but it also poses an equal number of challenges. At the time Workday took its SaaS HCM product to market, the notion of business services via the cloud was still in its infancy. Consumer internet services had emerged much quicker and the boom had already given birth to the likes of Amazon and eBay. But, businesses were much slower to adopt the concept and after the failed hype of the application service provider industry, it was Benioff’s that broke new ground for business applications via the cloud. Salesforce was unique at the time as it was a ‘new’ company that started with a SaaS playbook instead of trying to transition to SaaS from a previous paradigm.

Workday followed suit some five years later but, even by then, the internet was still largely misunderstood and businesses were cautious about putting their applications and data into an unproven environment. To give the timeframe some context, when Duffield and Bhusri launched the first iteration of Workday Human Capital Management, Zuckerberg’s enterprise was still called ‘TheFaceBook’ and had just one employee.

While Workday is known throughout the world as an HCM company, it may surprise some to learn that it started building its Financials product just six months after it started on HR. Workday Financials was launched in August 2007 with its first customer going live soon after.

I won’t cover Workday’s rich product portfolio here. The accompanying supplement to this magazine includes analysis of Workday’s platform, Workday Extend, Workday Skills Cloud and many other facets of its offering.

Over the next 18 years, Bhusri cultivated a business with a reputation that resonates loudly within the C-suites of the world’s biggest enterprises. Workday has a footprint inside more than half of the Fortune 500, over a quarter of the Global 2000 and recently passed the milestone of its 10,000th customer. Its products and services have been built with innovation at the core, leveraging artificial intelligence and machine learning long before they were commonplace.

The combination of cloud-native products delivered by an organization that demonstrates the highest levels of customer satisfaction has created a globally admired brand that is the jewel in the ERP crown. Its financial success will be a source of great pride for Bhusri, but it was evident from the time that I spent with him that he doesn’t measure success that way. Customer satisfaction and retention are the metrics that are used to determine progress and, on that front, Workday is in an industry of one.

Eschenbach’s appointment

Having spent five years as the editor of an M&A publication, I have met enough venture capitalists to have a pretty good picture of one in my mind: Harvard, pinstriped, NYC and the Hamptons – with little empathy for people and a singular focus on value realization. Maybe my presumption is too general, but years of experience talking to and working with VCs left me with some serious questions about Sequoia’s top performer taking a role at Workday. Oracle maybe, but surely not at the company whose founder has pledged to give his fortune away and has spent nearly two decades building a business based on integrity and being a good citizen?

When I knew we needed a new leader for the next stage, there was only one name on the page and that was Carl’s.

I wanted to be wrong about my concerns so put Eschenbach under some pressure at the start of the interview by asking how he would measure success and what makes for a good leader. “15 years ago, I changed my life from focusing on success to living a life of significance,” he told me. “And what I realized is when you have a life of significance and you focus on your impact on others, what naturally happens is you get more success.”

An unexpected but reassuringly authentic answer to a challenging question. I know from speaking to many stakeholders that the decision to hire a VC had raised similar questions, but in just a few short weeks, Eschenbach appears to have answered all of them, and some.

Eschenbach continued: “It’s not just about making money. It’s about building companies. Yes, I was a venture capitalist, but 80 percent of my time was not focused on investing. It was helping companies build something that would stand the test of time. Along the way, yeah, we’ll make money and profits, but that wasn’t my primary driver.”

Bhusri described a “new energy” within the organization and extolled the impact that Eschenbach had made since taking the co-CEO role: “Carl is driving operational excellence and making every part of the business better. And it’s happened in just six weeks,” he said.

“Dave and I were always nervous about hiring someone from the outside. We didn’t want Workday to change into something that’s more like one of our competitors. But we have 100 percent alignment on values and the direction we want to go. When I knew we needed a new leader for the next stage, there was only one name on the page, and that was Carl’s.”

Eschenbach, therefore, is a dichotomy. He displays many of the typical VC credentials but also exhibits a much more thoughtful and reflective approach to business, and to life. He is commercially astute and well-versed in scaling cloud companies. He is fiercely competitive and not afraid of a fight. But he also shares the same values that were the foundation for Workday to thrive and that have cemented a long-standing friendship with Bhusri.

Eschenbach also brings an operational playbook that will sharpen some of Workday’s softer edges. That’s not to say that Bhusri has been complacent or lacks commercial acumen – he’s certainly no pushover. But Bhusri is a product guy at heart and always has been. His first priority has always been his employees and then his customers, and while they are exceptionally admirable qualities, Workday has reached an inflection point where it needs some optimizing if it’s going to reach its true potential.

“I hope I bring a different level of operational rigor to the company,” Eschenbach said. “And by doing that we will free-up Aneel to go back to what he’s absolutely brilliant at doing and that is driving the product and technology strategy.”

In the early days, it was Bhusri’s product genius and Duffield’s connections and reputation that created the first wave of success. In recent years, Chano Fernandez provided invaluable support to Bhusri in taking the go-to-market and partner proposition as far as he could. Now, with Eschenbach on board, Workday can return to a time when its products are being developed by one of the smartest technologists in the industry and its sales and operational strategy are being led by a proven winner. The combination could be formidable.

Duffield offered one final endorsement, stating: “Everyone in the Workday community is blessed to have Carl at the helm. Carl is personable, positive and humble, and his skills perfectly complement Aneel’s. They relate to one another personally, and as with any great partnership, they bring out the best in each other.”

The road to $10bn and beyond

All technology vendors like something to aim for and Workday has consistently highlighted $10bn in revenue as its next milestone. During our interview, I asked Eschenbach how he evaluated the opportunity and what would drive the growth needed to reach this target.

“The potential I thought Workday had is actually bigger than I expected – I can break it down into three key areas,” he said. “We have a $120bn opportunity in front of us within our existing Financials and HCM markets. Then you look at international – 75 percent of our business comes from North America and I think we have a huge opportunity to expand. Thirdly, our ecosystem is going to drive significant growth as we expand our relationships with the global partners and cloud providers.”

One of Workday’s biggest market opportunities is to sell its Financials product into its HCM customers, and given the size of most of those customers, they could be very big deals – The New York Times being just one example that went live on Workday Financials in the last quarter.

As Eschenbach noted on the most recent earnings call: “We’re going to double down even further on our Financials opportunity, both to sell into our customer base as well as into net new. We see this as a rich opportunity. We did a nice job in Q4 and we think that’s something we can do a lot more of.”

Eschenbach was also bullish on Workday’s competitive credentials and far more vocal on its ability to win ERP dollars away from its two main rivals. “Every time we win one of our legacy dinosaur competitors loses,” he told me. “Every customer that goes on a true digital transformation is going to the cloud. When that happens, we are going to get a look at it and I expect us to win our fair share. When you pitch Workday against the competition, I truly believe that we have the best platform.”

This bravado was echoed in the earnings call. Eschenbach took the majority of the questions and there was a noticeable spike in the narrative, especially when highlighting competitive wins. “Three of our new Fortune 500 wins replaced cloud solutions from our legacy ERP competitors,” he said.

This comment was significant because it emphasized wins for Workday where it replaced other cloud ERP solutions, not old on-premise tech. In the past, and despite the history, the Workday earnings call has been a relatively cordial affair without the bluster offered by some of its competitors. Although Eschenbach’s inaugural conversation with analysts followed the same orderly form, it was noticeable that he was keen to underscore Workday’s successes, especially when it came at the expense of Oracle or SAP.

Revenues for FY23 reached $6.22bn, representing a 21 percent increase over last year. More interestingly, total subscription revenue backlog was $16.45bn indicating a very strong forward-looking picture coupled with impressive current performance. Cloud backlog and remaining performance obligations are key metrics for assessing the future growth opportunity for subscription cloud companies as they provide a window into the short-term committed revenue that a vendor can expect to realize.

This healthy order book is a good indicator for future performance and Workday has returned low-20s growth rates for the last six quarters. In fact, a graph of revenue over time shows a steady and consistent climb for almost a decade. However, if that trend continued, its path to $10bn could take some time and Eschenbach’s plan to reach the new landmark is significantly more aggressive.

I’ve heard many  times that it’s hard to work with friends. I’ve found exactly the opposite.

“I see continued opportunity in our international business, both in EMEA and in APJ,” said Eschenbach. “Today, we have only 25 percent of our revenue coming from our international operation, yet it represents more than 50 percent of our TAM. We’re also going to continue to leverage our ecosystem – our partners around the world are doing a great job, implementing our technology and driving deployment. But we’re also going to work with them to build business plans so they can help us drive net new business, not just do implementations, but help us drive new business into the base as well as net new customers overall.”

The importance of its partner ecosystem cannot be exaggerated and it will be vital to create the kind of fertile environment that global consultancies need to operate. Historically, Workday has leveraged two key relationships at a global level and a bunch of smaller boutique partners. There is also a thriving community of developers that augment the core offering through a marketplace called Workday Extend, but if Eschenbach is serious about getting to $10bn quickly, he will have to compete for resources within the GSIs and that’s not an easy task when there is already enough SAP work for every consultant on the planet.

Eschenbach reiterated the importance of partners and said: “Our partner ecosystem will be critical to our next phase of growth. We expect our partners will play an even more important role in FY 2024 as we look for them to drive an increased number of new opportunities, while we strategically shift more customer deployments to our ecosystem.”

You can read more about the Workday partner ecosystem in the accompanying supplement, A Complete Guide to Workday.


While researching for this article, I have spoken to customers, partners, employees and shareholders. Usually, those interviews present a mixed picture of an organization and my job is to find a balance between the hype and reality. However, that has not been the case with this project.

If a CEO truly believes that their most important assets are their people and their financial systems they should bet on Workday.

I always knew that Workday regarded itself as unique, but it wasn’t until I lifted the hood that I started to understand why. It has tried to deflect the tag of being an ‘ERP company’ for some time – I always assumed because it didn’t necessarily agree that HCM plus Financials equals ERP. But the truth is, Bhusri has built the perfect ERP company – he just hates the categorization because of the reputation that other ERP companies have.

During my research, words and phrases that are rarely associated with an ERP vendor were repeatedly used to describe the company and its leaders: friendship, honesty, transparency and fun were commonly expressed to paint a picture of an organization that is a true anomaly in the industry.

What struck me the most during my time with Bhusri was the level of humility that he displayed when openly discussing the areas of his business that required a different set of skills to the ones he possessed. “Dave and I did pretty well to go from zero to $6bn but I don’t know how to get to £10bn and beyond,” he said. “That’s why Carl is the right person to lead our next chapter. This is not business as usual with a new CEO. This is a new era for Workday. We have an opportunity for greatness. Our markets are huge and our penetration is still relatively low. Getting to that next level of scale, well that’s something Carl has great expertise in and nobody else in the management team does.”

Admitting that your business needs a different type of leader to navigate the next phase of its growth must be an incredibly hard realization for a founder, but Bhusri has done so with grace and modesty. “What’s really impressive about Aneel is the recognition of where he was at and having the character to make these decisions,” said Eschenbach. “When you’ve put 18 years into a company and it’s something you started, that’s not easy.”

During four hours of interviews, Bhusri consistently talked about friendship as being the foundation for Workday’s success, highlighting the longstanding comradery he has enjoyed with Dave Duffield and his other Workday colleagues. That theme continued without a blip when we discussed the relationship with Eschenbach and the rapport and chemistry between them was palpable.

“Workday is a company built on values and friendship,” said Bhusri. “At the start that was about mine and Dave’s friendship and now it continues with the friendship I have with Carl. But friendship also means the relationship we have with our employees and with our customers. I’ve heard many times that it’s hard to work with friends. I’ve found exactly the opposite.”

For the first time in four years of writing about ERP vendors, the story about culture finally makes sense. I’ve always adopted a skeptical view when I listen to tales from vendors regarding their approach to employees, customer centricity or broader ESG credentials. However, Bhusri’s first-hand explanation of what really makes a company special was authentic and believable in a way that I have not experienced before.

I have no doubt that Workday’s growth goals will be achieved under Eschenbach’s leadership. He is, after all, a consummate corporate operator blessed with a loyal customer base, market leading products and incredibly strong brand credentials. The greatest challenge he will face is preserving the foundational values that made Workday special whilst shooting for the moon (and profitability).

It’s not an impossible task and ‘wrestling’ Workday into the black will be made easier as businesses start to evaluate what is really important to them. I wouldn’t mind betting that there will be an increased premium placed on partnerships with organizations that demonstrate the kind of values that Workday is built on. As Eschenbach succinctly summarized our discussion, “If a CEO truly believes that their most important assets are their people and their financial systems, they should bet on Workday.”