Customers are finding many new use cases for software, thus making the world of investments all the more fun. Douglas Leone, Partner Sequoia Capital, stopped by theCUBE at ServiceNow Knowledge 2013 day one to talk with our hosts Dave Vellante and Jeff Frick. In his visit to theCUBE, Leone discusses how the IT world has changed and start-ups are faced with the decision of going public or staying private.

The world has changed, which means that IT (whether ready or not) needed to take the cue and change too. Leone described the IT world as previously being defensive, to protect the enterprise. However, suddenly the role of the CIO has changed and IT has become much more offensively minded. ERP (Enterprise Resource Planning) for IT has blossomed as systems integrate internal and external management of information across the entire organization. From a macro level, management processes are embracing finance/accounting, manufacturing, sales and service, customer relationship management, the entire gambit of business units.

As expectations of the end user change, Leone is quick to point out that the venture industry can tend to change in lock-step with it. He describes the overall venture industry as running with the momentum of the moment. “The thing with momentum,” he says, “is that you’re always paying at the highest price as an investor.” The business of investing should be a business of latency, he argues. As an investor your investing in a product that is 10-14 months away from go-to-market and another 2-3 years from user adoption. Leone says that he and his partners at Sequoia are more interested in the long-term plays.

“There is no way we know what the next big thing is,” says Leone. The excitement is investing when the investment is one made when it isn’t momentum-driven. As for why Leone and Sequoia invested in ServiceNow, he explained it was very much a lacking-momentum investment. So why ServiceNow?

1. Founder Fred Luddy was crystal clear in what he wanted to do
2. Luddy knew exactly what his strengths and weaknesses were — and he asked those he trusted around him to help him find people to sure up “the other side”
3. ServiceNow has always told it like it is — no surprises

An interesting tidbit from the interview is Leone’s reasons from why it’s best to stay private, and how you can do more as a private versus public company. He suggests a company should stay private as long as possible and strengthen itself accordingly. Start with a “no” and then move to the “yes” if that’s what is best suited for the company. In his words, “you have control over your forecast and financials before you go public.” After, there are outside forces that influence both. There are three big reasons why Leone says a company does or should go public:

1. It is a big branding event
2. It finances the company (if you have great investments you don’t need it)
3. It provides liquidity for employees

Cash isn’t as big of a factor in Leone’s eyes, which I found very interesting. “Cash is always available,” he said — implying that if you have a good product and business, someone is always willing to throw buckets of money at you.

Two years ago, could you name the #2 SaaS solution in the world behind Salesforce? Heck, one year ago, could you? The point is, with companies like Workday and ServiceNow, the SaaS market is beefing up and there are some big players emerging.

Leone’s parting shot when asked what to expect from ServiceNow over the next year or so was pretty simple: ServiceNow will be deeply engrained throughout all of the departments of a company — not just IT service management. ServiceNow is definitely a name that can be thrown around in the #2 SaaS company conversation these days.