Episode Transcript
[00:00:00] Speaker A: Good morning. I want to talk about two elephants in the room today and a little bit on a third. The first is Workday, the second is Mark Zuckerberg's 6,500 word essay, and the third is what's going on with Galileo. So start at the beginning. Most of you who are in the ATM market saw the news. Their Workday is potentially talking to Silver Lake about going private. The stock went up by about 15 to 20% the first day. And I suppose many people are not sure what that means. But let me give you my perspectives briefly, briefly. And I have no inside information whatsoever, but I do know Workday very well. Workday's stock has been slightly ticking up for the last three to six months because it's beginning to become clear. It certainly is clear to me that Workday's AI strategy has a lot of potential. The SANA acquisition, the Paradox acquisition, the other acquisitions, and the company's announced strategies for AI are exceptionally strong.
Lots of revenue potential.
And as I talked about in the last podcast, the HCM HR market is very, very healthy. Very healthy. I talked last week or last podcast about the growth of the number of jobs in hr, the importance of hr. And even though people keep talking about new HCM platforms being reinvented with AI, it's going to take a long time before anybody does that. And most likely that will be Workday. So in some fashion. So what the PE guys tend to do is they tend to buy undervalued assets. They usually think of a software company as an asset. Silver Lake bought Qualtrics, so they've done this before. They own achievers, so they understand the market. And the price to sales ratio of Workday today is half or a third that of the AI companies. So if somebody were to buy Workday and not mess with it too much, accelerate its direction, which is already pretty strong, and help the company grow, they could double their investment in three to five or to seven years, however long their time frame is. Some PE firms have very long time frames, some don't. But Silver Lake bought Skype, for example, and others, so they have a pretty good track record of buying nascent tech and then watching it grow. This is not nascent at all. This is very different. So my guess, and I can't really guarantee that this is true, but just what I would do is I would, if I was buying a company like Workday, really do everything I can to accelerate its existing strategy to move into AI. And from all the work we're doing on HR 2030, this is a Huge opportunity to transform business, not just hr, to transform business. I can't speak to the finance part of this. I don't know workday's level of sophistication there. But in the HR domain they have a big opportunity and let's just hope that Silverlake sees it the same way
[00:02:57] Speaker B: I do and they see this as
[00:02:59] Speaker A: an upside potential, not a big cost cutting, cash generation move. Okay, so that's that and I'll keep you guys informed on my knowledge of
[00:03:08] Speaker B: this or at least perspective.
[00:03:10] Speaker A: Second comment. Mark Zuckerberg Now I've tried to work with Meta over the years. I've been in and out of there for various things and it always struck me as a company that was very chaotic in its internal operations, operations.
A lot of smart people, a lot of very savvy product strategies and technologies, but not a company with a strong direction. Rather a company that does a lot of knee jerk reactions to market opportunities and hates having competitors. They buy their competitors and they steal IP and other data from their competitors. They're now getting sued for, I don't know, $750 million they have to pay to this state of New Mexico. And there's going to be, I guess, 49 others, I would guess, for Instagram's
[00:03:55] Speaker B: and Facebook's damage to teenagers and younger.
[00:03:58] Speaker A: And that's just beginning. So that's a little bit like what happened to the tobacco companies where they denied and denied and denied and denied until finally, you know, it just hit. So and of course if you go back to the election fraud and what happened with in the UK where they leaked data, they're, they're very surreptitious and sneaky about collecting data and what they do with it and not always being honest about it. And right now Zuckerberg seems to be good friends with President Trump. So, you know, they're getting plenty of free rein to do what they want. And they were not well positioned for AI for no particular reason, just because they weren't in the enterprise businesses that AI was going after, they were in the consumer businesses. So what they're probably doing, and this is certainly what I would do, is focusing on consumer, which is really where they live and thrive. They have WhatsApp, they have, they have billions of people using their platforms and look at a way to build a highly personalized AI agent to superpower the personal experience. You get on Facebook and Instagram and soon enough, probably WhatsApp. And that is a trillion dollar opportunity for them. Now why? Because if you had an AI in your consumer life that was that powerful. And of course Google could do this too. And they probably are working on the same thing. You could use it for coaching, job searching, buying things, finding people, talking to people, learning, going to the gym, deciding what your medical issues are, getting a better night's sleep.
[00:05:32] Speaker B: You know, all this stuff that this AI could do.
[00:05:36] Speaker A: And in Zuckerberg's essay he talks about that stuff. And I don't think it's a secret. Those are things we all would love to have our AIs do for us. You know, there's this kind of crazy little tool from Google now that reads your emails. I forgot what it's called. And gives you advice on your potential future fun things to do based on your emails, which my emails don't have much fun in them, but some people's do.
And that type of technology applied to your consumer life would be fantastic. I mean, to just give you a small example, I get up early and I go to the gym and do all sorts of things to try to stay healthy. And I use an aura ring, which I found to be very useful.
[00:06:17] Speaker B: I gave up on my Apple watch.
[00:06:19] Speaker A: And the data and the information it's capturing is just spectacular.
And it's a very early stage device. So if Meta does that, they hook it to your glasses, they start capturing your location, how fast you're walking, how much sleep you get, et cetera. It's a huge opportunity for them. But do they have the focus or the track record or the moral foundation
[00:06:45] Speaker B: to do this safely? I think I would trust Apple to do this, I would trust Google to do this, I would trust Microsoft to do this. By the way, Microsoft probably eventually will do this in the business world because we will have personal AIs in business.
That's really what the copilot is. And you'll see that in the HR 2030 framework. But I don't personally trust Meta, but that's probably where they're going.
And the reason I even bring it up on the podcast is that for the business world, we have exactly the same opportunities. When you look at the HR 2030 reference blueprint, one of the elements of it is the personal AI of each individual person in your company.
And in a company where we have clear performance objectives and there's clear boundaries as to what's personal and what's not. Not the traditional old fashioned, maybe legacy way of dealing with people is we interview them, we have meetings with them, we talk to their bosses, we survey them, stuff like that. That's how we measure and evaluate and improve the experience and the productivity tools and the business processes in our companies. But we can't get under the covers of each person. It's just too hard. And each person is held responsible for their own performance and their own behaviors. If the business AI, the personal business AI, let's assume it's the Ms. Copilot. But you know, this will be invented by somebody took your emails and your location and your meetings and your work product, which by the way is all in the Microsoft graph and periodically scanned through it and looked for your skills and looked for what was changing. That's really valuable information for the person or potentially for the manager or potentially for the company. And it would not necessarily be used for nefarious reasons. It could be used for coaching and development and decisions about who's ready to do what new job. I mean, the most important capability in business at a company level now is redeployment and reskilling of the workforce. Everything is changing. And if people can't move or don't want to move or don't know how to move from point A to point B, that holds a company back. And I, you know, I know this at the senior levels of most companies, there's lots of discussion, notes, strategy and operations and plans. But it all succeeds or fails at the individual employee level.
And if we can help our employees move to the directions that the company's trying to go. And a lot of times the employees know what they're supposed to do, but they don't know how to get there from here from their own personal situation, that's huge. But I do get very worried about the Zuckerberg view of this. And he also of course proposes public policy things that are mostly in self interest and other things. So that's my perspective on that for those of you that want to think about it over the weekend. Okay, Third thing, Galileo. I talked about this a little bit last week. We're going to be redefining what Galileo is later in September when we launch the next release. Those of you who use Galileo, and I know a lot of you do, there's more than 10,000 people using it and probably a thousand or so companies or more. The capabilities of a tool like Galileo are layered. The first I'd say generation or definition of Galileo is it was an AI agent or AI assistant for hr.
And it is spectacularly good at that. And we've benchmarked it now against Claude and OpenAI, you know, off the shelf. And it's exceptionally good for most of the tricky and difficult and Day to day, things you want to do in hr. Everything from creating behavioral interviews to evaluating skills to benchmarking salaries, all that stuff. Then we realized that in the new world, we needed to move Galileo to multiple platforms. So we've built a new version of Galileo that you can hear more about that works on all LLMs through MCP. So you can plug Galileo into whatever AI you have, and that level of intelligence is instantly available to the decisions and actions of that agent. So that could be Copilot, that could be Claude, that could be Gemini, that could be the ServiceNow stuff, SAP workday, sauna, obviously already, et cetera. And that means that Galileo can act on corporate data. So instead of giving you advice and counsel like a consultant, it can give you advice and counsel based on real data in your company. So we've, we've hooked it up to SAP, we've hooked it up to Workday, and we have a really incredible simulation of this where you can ask Galileo questions about your team or your organization or company and look at the data in your company and it'll give you three amazing perspectives, analysis and advice. By the way, that's where people analytics is going too. The third stage, so we've opened it up to that and we've built into Galileo 8 framework so that Galileo knows how to interpret the data entities from Oracle, SAP and Workday, because that data is publicly available. The third stage is that Galileo is embedded into the AI that your employees use, because your employees, regardless of their level or managerial role, have questions and things they want to look up and things they want to do and, you know, tactical stuff that they try to use the company portal for that Galileo is perfect for. So in the new model where we're now implementing Galileo on some big companies, it plugs into the copilot or it plugs into whatever AI you have. And all of a sudden everybody in the company has access to this trusted intelligence. And that leads me to the last word trust. We have been benchmarking Galileo with what we call 30 golden prompts. We have 30 detailed prompts we use to benchmark Galileo across different platforms.
And it is very surprising how much hallucination, fabrication, misattribution, and out and out. I don't know if the word lying makes sense, but just incorrect things come out of the generic LLM Frontier Labs. And that's because they don't focus on this domain like we do. And so they crowdsource all sorts of, you know, opinions and stuff when you ask them questions about management and leadership in hr.
So that's the third piece. So in a sense, we are moving into a business model for us of delivering the research that we've developed for years in a very consumable form for many, many things for your employees, for your managers, for your HR department, for your ex platforms, for your employee portals, et cetera. Now, the reason I even bring it up is most of you think of us as a research and advisory firm,
[00:13:28] Speaker A: and that's what we are.
[00:13:29] Speaker B: And so the flip side of all of this interpretation and articles and blogs and speeches and things that we do is the way we do research.
And I won't get into the details of this yet. I'll talk more about it later in the year, maybe next year. But we're also transforming how we do research.
[00:13:46] Speaker A: When you come to our conference or
[00:13:49] Speaker B: join us on the Big Reset, or
[00:13:51] Speaker A: join the GHRE as a Josh Person
[00:13:53] Speaker B: Institute certified HR person, or give us a call about your own situations, we are here to help. And those are those points of light,
[00:14:03] Speaker A: those conversations, those situations, those industry dialogues are part of our knowledge base.
[00:14:10] Speaker B: We don't, we don't obviously take any proprietary information or use your strategies in any public way, but a lot of
[00:14:17] Speaker A: what we have in our corpus is tacit knowledge from years and years of
[00:14:24] Speaker B: independent advice and counsel and advisory services.
[00:14:28] Speaker A: And so what we're going to do
[00:14:29] Speaker B: next in our business here, and you'll
[00:14:31] Speaker A: see more of this rolling out later
[00:14:33] Speaker B: this year, is find new ways for
[00:14:36] Speaker A: you to collaborate with us through AI,
[00:14:38] Speaker B: not only about AI, so that you can get better information in your industry.
And one of the ways we're doing this right now is in the area of frontline work. Now, frontline work, which I won't spend too much time on because this podcast is a little bit long, already is 72% of the workforce in the United States. It's more than 72% globally. And frontline work includes about 800 job titles. Firemen, truck drivers, nurses, retail workers, restaurant
[00:15:10] Speaker A: workers, people who work in factories, people
[00:15:13] Speaker B: who deliver things, airline flight attendants, people that work at the front desk in the airline.
[00:15:17] Speaker A: Even the pilots, in a sense, are frontline work.
And some frontline work jobs are low skilled. Some of them are high skilled.
[00:15:25] Speaker B: We have a really robust model of
[00:15:28] Speaker A: five levels or five types of frontline work that you can look at. And so what we're doing in frontline work now is we're really doing a lot of interviews and case studies and surveys about the business of Frontline and the work that we're doing that's going to be announced in October at Workday Rising, because we're doing this in partnership with them, is to explain the business of Frontline work.
[00:15:53] Speaker B: Because the business of frontline work is a very human capital centric business.
[00:15:58] Speaker A: For those of you who work in white collar jobs, you have direct access to the revenues of the companies in an indirect way. When you're in the Frontline, you are directly contributing to customer experience, customer service, customer retention and revenue. And so things like attracting, retaining, engaging, skilling, aligning, coaching. People have much higher returns on investment in Frontline than they do in traditional corporate headquarters stuff.
And most of that capability is delivered by store managers, line managers, supervisors, plant managers, not by hr.
So what we're doing in the business of Frontline is we're really taking this supply chain of value apart and showing you where the levers are. In a sense, what we're going to be doing is writing the book Irresistible all over again for Frontline.
[00:16:54] Speaker B: So if you want to hear more about this, come to the Frontline Summit at Workday.
[00:16:58] Speaker A: That's where we're going to start really
[00:16:59] Speaker B: introducing what we've been doing.
[00:17:00] Speaker A: And stay tuned for more on this.
[00:17:02] Speaker B: And if you're in a company that
[00:17:03] Speaker A: has a lot of Frontline workers, please reach out to us and we'll talk to you more individually about what this is all about, what we're doing, how we can help you, and obviously hear what's on your mind. Okay, so that's a little bit of an update for the weekend, and we'll continue with some other really cool podcasts coming in the next couple of days. Talk to you soon.
