I recently had the opportunity to join a candid and insightful conversation between Zeus Kerravala, Principal Analyst of ZK Research and Vlad Shmunis, Executive Chairman and Founder of RingCentral. During this compelling discussion, Vlad revealed landmark highlights of his 24-year career as CEO of RingCentral, shared deep insights about his pioneering vision, and discussed what’s next for the company. Keep reading to see how Vlad evolved one simple idea into a $2 billion+ company, how he navigated the hurdles and opportunities, and why he feels now is the right time to welcome a newly-appointed CEO, Tarek Robbiati.
Watch the full interview
ZK: Vlad, it’s a pleasure to be here with you today. Firstly, congratulations on a fantastic run and tenure as CEO. You are the only CEO this company has ever had, in fact 24 years in the making. The company has gone through some tremendous growth, and you literally took the company from nothing to $2 Billion. I want to start off by discussing your recent announcement of stepping down as CEO of RingCentral and transitioning to a different role within the company. Why now?
VS: Firstly, welcome back to RingCentral, Zeus. It’s always great to see you, and thank you for your compliments. We’ve had a great run over the past 24 years, and we continue to have a great run. With respect to your question regarding me stepping down, I actually do not view it as stepping down.
ZK: Then perhaps, stepping aside?
VS: (chuckle) Actually I do not view it as stepping down nor stepping aside. I am simply changing my focus from the corporate governance side of the business, over to what I really love doing – which is technology and innovation. So now I can free up cycles to do what I love and have more time to innovate.
The decision here has been to bring in a super high-end, a super proven operator – someone who knows how to run multi-billion dollar businesses, and has a track record of running them successfully, and running them efficiently.
If you listen to everything we have been talking about, and more importantly what Tarek, our new CEO is talking about, it comes down to this. It’s not about growth, it’s not about profitability. It is about profitable growth. You have to have both. Given our highly positive interactions and experiences with Tarek since he joined our board, and given his track record at HPE, Sprint, Telstra (where he was actually the CEO of the spin-off of Telstra) – all added up to be powerful influencers in the decision-making process. Tarek is a high-end, world-class large CAP operator. As a business at $2.2 billion and growing, the board and I felt we could really benefit from Tarek’s talent.
So again, to answer your question, I’m really not going anywhere (chuckle). I’m simply allowing myself to concentrate more on technology, innovation, and product.
ZK: Speaking of innovation, tell us more about what opportunities you are seeing for RingCentral?
VS: There is a new wave of innovation coming and we’ve been talking about it openly for quite some time. Clearly, there is generative AI, which is the next big mega trend. We truly feel that there is a new opportunity to participate in this next true wave of innovation. The world is being completely re-defined. There are implications that AI has for person-to-person interactions – UCaas. It has huge implications for consumer-to-brand interactions – CCaaS. CPaaS is not that far behind. So it’s important to make all this new technology available as a platform.
We see multiple potential applications of AI across our entire portfolio. We have just introduced our very own contact center product, which is going to be AI-driven and AI-centric. And then of course there is AI for phone. As you know, our AI is driven by RingSense, which is our own conversation intelligence platform that will infuse AI across our portfolio.
We have also just completed our acquisition of Hopin, which is a major platform for hybrid events. We are absolutely planning to rejuvenate our video portfolio and integrate Hopin into our platform and ecosystem.
ZK: Going back to the interesting thing you said, which Tarek Robbiati also highlights, about profitable growth. That is one interesting aspect of this industry which has changed. Even from the time of IPO, up until the Covid era, all the focus was on growth at any cost. But it seems like today, Wall Street is especially rewarding profitable growth, which is a change from the trend we see.
VS: It’s a bit of a double-edged sword. You can’t just do what the street wants you to do. By and large, we have many stakeholders – our board, our employees, our investors. They all have a voice, and they should have a voice. Indeed, profitable growth is being rewarded more than just any growth. There are implications to that. Look, it’s easy to grow faster, and you may just pay a bit more, and you know you’ll get more growth. The issue is, you tend to run out of money eventually. So the key is to scale your appetite with your budget. Where we are super fortunate, in that we are hitting this cycle as a scaled-up business – at $2.2 billion, profitable, and not just profitable but seeing rapidly expanding profitability, including the most honest measure of all, which is free cash flows.
ZK: So let’s look back to 1999, when you founded the company. And I truly consider RingCentral to be a pioneer in this space, because RingCentral really legitimized Saas delivery of UcaaS, voice, and other things that historically were really hard. In this 24-year period, are there a couple of things that you remember, being seminal moments, which really put RingCentral on the map?
VS: There were a lot. So look, there were several defining moments. The first of which was in our early days when we were designing and developing our products. And the teams would tell me “we are not ready yet.” And after waiting weeks, I said, “You know what, we will never be ready.” I decided we need to start putting together what we have, package it up, and start putting it in front of the customers. And then let’s let the customer tell us if we’re ready or not. We made it clear that we are delivering a full-up phone centric B2B communications service. We knew at the time we didn’t have the full feature set, and we didn’t quite understand the full GTM of it, but we just knew it works. We got it out there, and I would say we were pretty close to being first. And we had a great run, and we were able to differentiate from the competition.
Another seminal moment in our company’s history, I would say, is when we decided to bring in outside capital. We got two of the world’s best VCs, Sequoia Capital and Khosla Ventures. We had top talent and they saw something in us. Doug Leone, one of the people who truly has the midas touch, and who became managing director of Sequoia and David Weiden of Khosla Ventures – they had faith in us and we are very thankful to both of them. Once we had the stamp of approval from these tier one VCs, hiring became easier, retention became easier, driving the business forward became easier. We grew and grew.
There was another event, probably in 2011, where we were about to go public, we had banks lined up, and I pulled that IPO. We had stability issues, and I didn’t want to take a product to market and take people’s money, until the product was stable. We stopped working on all features, and strictly focused on bugs and fixes. We put all our energy towards re-architecting and re-implementing this new architecture which, with some modifications, is still holding up till this day – with the best reliability, and the best scalability. Nobody else has been able to claim 5-9’s for several years like we have. And we continue to expand. We have expanded globally over the years – as you know, and have presence in the Americas, Europe, select locations in Asia Pacific.
And as you know, we just recently announced service in India.
ZK: The biggest compliment I can give you is this. There is a very dear CIO friend of mine who is a Down Detector fanatic. And before he makes any decision on Saas, he checks Down Detector for months! And RingCentral, by far, has the best reliability in the industry.
VS: Knock on wood! (chuckle) Indeed, we have had a beautiful run and we’ve had a few bumps. But what really differentiates us is our GSP practices. We’ve had the likes of AT&T, Vodafone, Deutsche Telecom, British Telecom, Telus, and there is a longer list. For these top Telcos to choose RingCentral says a lot. Enterprise-grade is good. But carrier-grade is best. You want to be carrier-grade. It’s a rigorous process – RFP’s, bake-off, huge stress-testing of the architecture. In the cloud, indeed we provide the best reliability. It’s been a great business decision for us, and a huge differentiator. We still have good relations with some of our incumbents, Avaya, Mitel, and it has not been done before – where a disruptor would link hands with the disrupted. But it’s been very meaningful.
ZK: Well, Vlad, it’s been a pleasure and I want to thank you for your time. And again, I don’t shy away from saying this. I do think that RingCentral has been a pioneer in this space. And you are also the first company to truly unify unified communications.
Another thing I feel you should be proud of is how you’ve changed the partnership model. You changed the dynamics of the industry, how we go to market.
So congratulations on a job well done. I look forward to seeing what Tarek Robbiati does with the company and the next wave for RingCentral. And I look forward to seeing what you continue to do on the technical side. Congratulations again!
Originally published Sep 12, 2023, updated Sep 14, 2023