Why ServiceNow built a startup inside itself to take on AI-native rivals

For two years, ServiceNow’s challengers have built businesses around frustrations with its software. Their pitch centers on two complaints: Implementations take too long, and employees increasingly expect help inside tools they already use rather than through a separate portal. The IT service management startup Serval, which says it intends to replace ServiceNow, rode that argument to a $1 billion valuation last December, raising $75 million in a funding round led by Sequoia Capital. Anas Biad, a Sequoia partner, made a comparison ServiceNow would probably prefer not to hear. The last time the venture capital firm saw customer feedback that strong, he said, was when it backed ServiceNow itself 16 years earlier. Marc Benioff, CEO of Salesforce, has also questioned how broadly ServiceNow can reach. He has pointed out that ServiceNow automates work for roughly 9,000 companies, while Slack—owned by Salesforce—already sits inside a million. That gives Salesforce a distribution advantage. It can introduce a service desk through an existing customer relationship, making the competition partly about who reaches the buyer first. ServiceNow aims to address these complaints, and is introduci…