Workday Co-CEO Argues For AI Responsible Safeguards And Why We Can’t Over Regulate New Tech

Forbes

Carl Eschenbach is co-CEO at Workday, and has been a member of the company’s board of directors since 2018.Prior to Workday, Carl was a general partner at venture capital firm Sequoia Capital since April 2016. Previously, Carl spent 14 years at VMware, Inc.—a global virtual infrastructure software provider—in various roles including president, chief operating officer, acting chief financial officer, and executive vice president of worldwide field operations. Prior to joining VMware in 2002, Carl held various sales management positions with Inktomi; 3Com Corporation; Lucent Technologies, Inc.; and EMC. Throughout his career, Carl has been an active board member for leading technology companies including Aurora Innovation, Inc.; Palo Alto Networks, Inc.; Snowflake, Inc.; UiPath, Inc.; and Zoom Video Communications, Inc. Carl also continues to stay involved with Sequoia in a venture partner capacity.Carl received an Electronics Technician diploma from DeVry University.  Workday CEO Carl Eschenbach sat down with Forbes Assistant Managing Editor Diane Brady to talk about AI and the trust gap it can create, how ti bridge those gaps, and why we can’t over-regulate AI.   0:00 Introduction 0:20 Is Davos All Doom And Gloom? 2:02 Political Distrust In 2024 3:43 AI And The Trust Divide In Businesses 4:24 Optimism In The Labor Market 5:31 Polarization In The US 6:38 A CEOs Message For Policy Makers 8:50 The Strength Of The Labor Market 10:24 Business Wading Into Political Issues  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00 (upbeat music)

00:02 - Hi everybody, I'm Diane Brady.

00:03 We're here in Davos and Carl Eschenbach,

00:05 who is the co-CEO of Workday, soon to be CEO, weeks away.

00:10 I'm gonna call you Davos man here.

00:12 Tell us what it is you-- - Oh, Diane,

00:13 thank you for that, but I'm not Davos man.

00:15 I don't know if that's good or bad,

00:17 but thank you for having me.

00:18 - Yeah, good to see you.

00:19 So tell me, what has been your impression so far?

00:23 Seems to be a little bit of a doom and gloom, Davos.

00:26 Is that fair to say? - Yeah.

00:28 I don't know if I'd say it's doom and gloom

00:29 if I'm honest, I think, you know, when I look at it,

00:32 we're very cautiously optimistic about this coming year.

00:36 When I was here last year, I would say there was a lot

00:38 of more doom and gloom than there is this year.

00:41 This year, as I've gone to events

00:43 and I was at a CEO dinner, there was a lot more optimism

00:45 about 2024 than 2023.

00:48 And we think that is the case.

00:51 When we think about the market right now, Diane,

00:53 we see a tremendous amount of momentum in our business

00:56 and we think it's gonna carry through to 2024.

00:59 And I think it's just because quite frankly,

01:01 our value proposition continues to resonate

01:04 with our customers and prospects.

01:05 - Let's dig a little deeper here.

01:07 First of all, you've got a presence here at Davos.

01:10 - Yes.

01:11 - Talk about the importance of Davos as an institution,

01:14 because it is one of those ones people look at

01:16 and they sort of think, is it like an elite gathering,

01:18 you know, at a ski resort in Switzerland?

01:21 What's the value for you being here?

01:23 - I think there's multiple points of value.

01:25 First, branding, right?

01:27 Having a storefront here on the main strip

01:30 is very important.

01:32 It shows the importance and relevance of Workday

01:34 for both customers and prospects.

01:36 I think being here and being able to get as many meetings

01:40 as you can with senior executives from both partners,

01:43 customers, and prospects in a week timeframe

01:46 is hugely valuable.

01:48 And I also think it's important for us to get out there

01:50 and talk about our agenda and talk about things like AI

01:54 and how to do it in a very responsible way.

01:56 Talk about things around trust

01:57 and why trust is so important as we move forward

02:00 with some of these new technologies.

02:01 - Trust is a big one.

02:02 I mean, I was, you know,

02:03 I looked at the Edelman Trust Barometer that came out

02:06 and it showed this huge disconnect

02:08 and sort of people trust business,

02:10 they don't trust government.

02:12 There's this divide between Republicans and Democrats.

02:15 What do you think of the state of trust where you sit?

02:19 - Well, so trust is the foundation of Workday.

02:21 We are absolutely somebody who focuses on our core values

02:26 and one of those values is underpinned by trust

02:29 and everything we do is around trust.

02:32 If you think about us, Diane, what we do,

02:34 we support our customers,

02:36 most mission critical and most important assets,

02:39 their people and their money.

02:40 So people have to trust us

02:42 if we're going to engage with them to support them.

02:44 - What are you hearing about trust though?

02:45 Tell me about like when you're talking to people,

02:47 when you look around, sort of, you know,

02:50 give me some sense of even as an American CEO,

02:54 what do you think the state of trust is in general

02:57 when you're looking at the business environment?

02:59 - So I think there's a bit of a trust gap

03:02 between the executives and the employees,

03:05 especially when it comes to AI.

03:08 I think both believe there's going to be a massive impact

03:11 in human productivity over time,

03:14 but as executives, they want to use it

03:16 to drive productivity gains and drive increase in margins.

03:21 The employee side are nervous.

03:23 They see the value, but it also could be impactful

03:25 to them in their position or their, you know, their job.

03:28 So there is a trust gap between executives and employee.

03:32 They trust the technology and the value of it,

03:35 but how it gets implemented

03:37 and whether it's implemented in a responsible way

03:39 is the gap in the divide of trust we need to merge.

03:42 - It's interesting because that is a big theme here.

03:44 You're a CEO yourself.

03:46 Is it a communication problem?

03:48 'Cause you do have almost the FOMO fear

03:50 missing out at the top.

03:52 You've got the fear factor among employees.

03:54 How do you bridge that gap?

03:56 - I think communication's part of it.

03:58 I think the key is how you implement it.

04:01 And you need to make sure when you're implementing it,

04:04 you're taking a very responsible, ethical, and safe approach

04:07 and to implement AI, you're going to have to leverage

04:10 third parties and partners like a workday.

04:13 So I think what's really important

04:15 is who you implement AI with has to be a trusted party

04:19 that you think will do it in a responsible way

04:21 to impact your company as a whole.

04:23 - You know, one of the things with workday,

04:24 you're on the front lines and seeing some of the early

04:27 signals with the labor markets and such.

04:30 What are you seeing?

04:32 Are you optimistic?

04:33 Are your clients optimistic for 2024?

04:36 Because it's a year of volatility at the very least.

04:39 - Yeah, I'd say they're more optimistic

04:41 and we are compared to 2023.

04:44 As I said, last year here, there was a lot of discussion.

04:47 Yeah, there was a lot of discussion.

04:49 Are we going to have a hard landing?

04:50 Are we going to have a soft landing?

04:52 Is there going to be contraction in the workforce?

04:55 While there's some question about that in 2024,

04:58 I think there's much more optimism that I've seen

05:00 in the first couple of days of being here in Davos.

05:03 And we too believe that.

05:04 We're cautiously optimistic.

05:06 We built a tremendous amount of momentum

05:08 over the last 12 months.

05:10 And we see that pushing into the next year.

05:12 And again, I think it goes back to

05:15 whether you're viewing something and you're very optimistic

05:18 or you're cautious or you're negative on the economy,

05:21 I think it comes back to the value you bring to customers.

05:24 And I think we have an incredible value proposition,

05:26 whether it's good times or bad.

05:28 And it's reflected in our performance.

05:31 - So I'm curious about something,

05:33 which is there's been a lot of conversation here

05:35 about the political environment

05:37 and this sort of polarization.

05:40 Have you had a lot of questions about that

05:42 in terms of what's happening in the US right now?

05:44 - You know, not a lot, if I'm honest.

05:46 There's been some discussion around the upcoming,

05:49 you know, important year for the American,

05:53 you know, for the Americans, our election, right?

05:57 But it hasn't necessarily been polarizing.

05:59 I think it's one of those things,

06:01 it's an important year for us, this election.

06:04 The one thing I do know as a CEO and, you know,

06:07 running a company, there are certain things you can impact

06:10 and certain things you can't.

06:11 What we need to focus on and we will continue to do

06:14 is we will lean into our values,

06:16 we will lean into serving our customers,

06:18 and we will do it in the most ethical, responsible way,

06:21 and that's trustworthy.

06:22 I don't know how much we or I can impact the election,

06:27 but we're aware of it.

06:28 And whatever the outcome is, we need to accept it,

06:32 and we need to build the business plan around the economy,

06:35 despite what's happening out there in the broader market.

06:38 - There's a lot of policy makers here.

06:39 If I put on my policy maker hat,

06:42 what advice would you have to policy makers and CEOs?

06:45 What are your priorities?

06:47 - So I think the first is around AI.

06:51 And I think we have to have regulation around AI

06:55 and how it's used,

06:56 but I don't think we can over-rotate on regulation

06:59 'cause we still have to drive innovation.

07:01 We have to be very innovative, right?

07:03 That's what drives the economy forward,

07:04 especially in the technology front.

07:06 So I would just make sure that we are asking

07:10 our governments around the world,

07:12 not just in the US, even here in the EU,

07:15 to make sure that the regulations around AI

07:18 are safeguarding everybody,

07:20 and the employees, and the companies,

07:22 but don't do so much regulation that stops us

07:25 from innovating and leveraging this powerful technology.

07:28 - Can you take us from the 30,000 foot down on the ground?

07:31 What specifically would you like to see?

07:34 Because having government regulate innovation

07:37 is a tricky subject.

07:39 Are there specific areas you think the government

07:40 should be regulating right now?

07:43 What do you mean by safeguards?

07:44 What do we need that's-

07:45 - Well, I think the use cases, right, are really important.

07:50 We focus on enterprise use cases.

07:52 We don't get into the consumer use cases.

07:54 And a lot of times people are talking about AI, Diane.

07:58 It's the consumer.

07:59 In the enterprise, we wanna make sure there's safeguards

08:02 around how you use it, how you implement it,

08:04 and how we get held accountable

08:06 for doing it in a safe and trustworthy way.

08:09 Where are you getting your data from, right,

08:11 is really important.

08:12 That's an example.

08:13 That's a real life example.

08:14 We wanna safeguard how you're using the data.

08:17 We at Workday leverage the massive data set

08:20 we have of 65 million users to train our models,

08:24 to service our customers.

08:25 We're not out there using the internet to train our models,

08:29 like most people are when they talk about generative AI.

08:32 So I think regulation starts with the data,

08:34 how you're using it.

08:36 There's a lot of discussion around copyrights

08:39 out there right now, as you know.

08:40 There's a lot of people pushing on that topic.

08:43 We're very fortunate and blessed

08:45 that we have an incredible data set,

08:47 unlike anyone else out there in the market.

08:49 - Can you give us, just to end off,

08:51 some other insights from your data

08:53 from those 65 million users?

08:55 What are you, anything that's on your radar

08:57 you would put on ours in terms of some of the trends

09:00 that you're seeing?

09:01 - So I think one thing we do have insight to

09:04 is hiring trends.

09:06 And while there are some industries

09:09 that are pulling back on hiring or having some layoffs,

09:11 overall, the market's still growing.

09:14 And it's growing at a very good clip.

09:16 I think the other thing we do notice,

09:18 there's a very competitive war for talent out there.

09:20 The labor market is very challenging.

09:22 - It has been, hasn't it?

09:23 What's different?

09:24 - Yeah, I think there's always been a war for talent,

09:27 but I think as we've seen in the past,

09:29 there's a lot of competition for talent.

09:31 But I think as we move into this new realm of AI,

09:34 it only becomes that much more competitive

09:36 because everyone's fighting for this

09:38 really important talent and skill set.

09:42 And then the last thing I would say is,

09:44 we have a very good insight to this movement

09:48 to a skills-based economy.

09:50 And what we wanna focus on is,

09:52 how do we help companies, their most precious assets,

09:55 aren't the ones that are gonna go recruit and hire,

09:57 it's the ones they have today.

09:59 And we have a great insight on how to help our companies

10:03 reskill and upskill their employees

10:06 and focus on a skills-based world

10:08 as opposed to a pedigree-based world.

10:10 - No, I think that's very fair.

10:11 - And we have great insight to that

10:13 with something called Skills Cloud.

10:15 We have partners out there like Accenture

10:16 that are building on top of that platform.

10:19 We have insights to the skills that are required

10:22 to take companies to the next level

10:23 and drive productivity gains.

10:25 - Let me ask another question, Carl.

10:27 You have a place where you do get CEOs

10:29 talking about the geopolitical landscape.

10:31 Obviously, we've got the Israel-Hamas war,

10:33 we've got Ukraine, we've got other issues.

10:36 How are you finding the discussions there?

10:38 And any thoughts?

10:39 Is that something you think about?

10:41 - Again, they happen, right?

10:43 They brought up in discussion, but you know.

10:46 - It's not something that you're finding

10:48 you're discussing at all? - No, I think we need

10:49 to be aware of them.

10:50 If you're running a company, you have to have safeguards

10:53 should there be a bigger issue geopolitically

10:55 around the world.

10:56 You have to have safeguards in running the business

10:58 to make sure that indeed you can still run the business

11:02 if the economy were to pull back.

11:04 So you have to be aware of the conversations.

11:06 Listen, I don't think anyone's too excited

11:09 about some of the challenges that we're facing

11:11 in the Middle East, what's happening in the Red Sea.

11:13 There's a lot of discussion around China,

11:14 potential invasion of Taiwan.

11:16 There's a lot of discussion around

11:18 the Chinese-US relationship.

11:20 So as a CEO, I think you need to be aware of them.

11:23 I don't spend a lot of time focusing on them,

11:26 other than making sure you have safeguards in your business

11:28 that you can accelerate growth when the market's good.

11:31 And if there is a pullback, make sure you have safeguards

11:33 to protect you on the downside.

11:36 - Do you think CEOs should be speaking up

11:38 about these political or geopolitical issues?

11:41 When you think about the role of a CEO,

11:42 you're a co-CEO now, you're about to be a CEO.

11:45 What is the role in terms of, especially since business

11:49 is more trusted now than government,

11:51 according to a lot of surveys here,

11:53 how do you think about your own role

11:54 in terms of talking about these issues,

11:57 talking about the political landscape?

11:59 I'm not putting pressure on you, I'm just genuinely curious.

12:01 - Yeah, you know, if I'm honest,

12:03 if I were to personalize this,

12:05 I don't spend a lot of time out there with my own message

12:09 or a workday message about some

12:10 of these geopolitical situations.

12:13 I think we go back to the core values of the company,

12:15 focusing on our employees,

12:17 focusing on how we're servicing our customers,

12:20 focusing on this new technology boom that you're seeing

12:23 up and down the street here of AI

12:25 and how you can do it in the most responsible,

12:26 ethical, safe way. - I should mention

12:27 we're an AI house, if anybody's wondering

12:29 why it's so chaotic. - We are, it is chaotic.

12:31 - Hottest town, hottest house in town.

12:32 - But to answer your question,

12:33 I don't spend a lot of time on it.

12:35 I spend time on focusing on the things

12:37 I can impact and drive value,

12:39 and that's our customers and our employees.

Transcript

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