The Roman Empire had many enemies in its over 1,000-year history, but ultimately prevailed against most. That's why RingCentral CEO Vlad Shmunis is so apt to use it as a comparison.
The company is in the midst of a fierce competition for dominance in the rapidly growing cloud-based communications industry against Zoom, Microsoft and others. But despite its position as a relative underdog, Shmunis is confident the company will emerge victorious in the end.
"Don't count us out," he told Protocol. "Rome lost many battles, but never a war."
One of those early skirmishes is against Zoom. At the start of 2020, as COVID-19 swept across the globe, Zoom became more than just a company, morphing into a moniker for the need to communicate virtually amid tightening lockdowns. But as enterprises and consumers alike flocked to the videoconferencing platform, Zoom struggled to handle the increased capacity and suffered embarrassing missteps, like the revelation that a former employee helped the Chinese government suppress communications related to the deadly Tiananmen Square protests.
That is all creating an opening for rivals. Now, Zoom is rushing to try to bolster its offerings to catch up, including a rumored email application, to ensure the boom in business it got amid the pandemic turns into long-term customers.
"A lot of Zoom's success has been really served up to them in an incredible way," Rosenblatt Securities analyst Ryan Koontz said. "But I question the durability and the churn they are going to have on the other end of the pandemic."
Meanwhile, Microsoft Teams, perhaps RingCentral's most direct competitor, remains the elephant in the room with its 115 million active users. But without a broader office suite to sell clients on like Microsoft, RingCentral is poised to stand out with key partnerships that promise to place its technology in many more enterprises across the globe.
'We saw a few Zooms come and go'
For RingCentral, the pandemic served as somewhat of a culmination of the trends it had pinpointed years ago. The 21-year-old company realized that, as broadband became more ubiquitous and corporations increasingly globalized their operations, the workforce was set to be divided between those who operated remotely, employees who went into the office each day and some combination of the two.
So RingCentral, which had previously provided onsite communications tools, invested heavily in making sure its product line was ready and, in almost suspiciously perfect timing, released its own videoconferencing platform in April after years of development, right as COVID-19 paralyzed the globe. Nine months later, the company is, at least to some, in a stronger position than Zoom and slated to potentially emerge as a leader in the new ecosystem.
"We've been at this for a long time. We saw a few Zooms come and go," Shmunis said.
Part of that optimism is due to RingCentral's early execution on its long-term vision. The company struck lucrative partnerships with on-prem communication providers like Avaya and Alcatel-Lucent, ensuring that as their customers, which total hundreds of millions of users, pivot to the cloud from the old PBX (or on-premise) systems, it would be RingCentral's products they use. The company also has agreements with carriers such as AT&T and Vodafone.
On the partnership side, "no one else is at their level," Koontz said.
But not everyone is as optimistic, particularly given Zoom's explosive growth last year and the continued dominance of Microsoft. "RingCentral should be worried," Sapphire Ventures co-founder Jai Das said.
Still, as Zoom angles to compete more directly against Microsoft, Google and others, RingCentral envisions a future beyond just video or chat — a future where a unified platform can serve as the hub for work across the enterprise. RingCentral isn't alone in this strategy. Salesforce, for example, outlined a similar vision for its acquisition of Slack. But recent acquisitions by RingCentral, including its December purchase of AI-backed DeepAffects for an undisclosed sum, provide an early look at what this could actually mean for users.
Effectively the goal is to layer more "intelligence" tools on top of the core platform itself. While years away from being fully realized, it could mean that, nearly the second a call is ended, a full outline is provided to all participants. Or when a participant poses a question about something like a company's earnings, that information is immediately presented on screen.
"Everything, with permission from the participants, should be recorded and should be processed in real time and then post-processed for better accuracy," Shmunis said. And more deals are on the way to turn that into a reality. "Expect that [DeepAffects] is not our last acquisition and not our last acquisition in AI — and in conversational AI in particular," he added.
Preparing for the $10 billion jump
RingCentral is confident it has an open runway to lead in this burgeoning space.
Globally, there are roughly 500 million PBX licenses, according to Shmunis, and just under 5% of those users have transitioned to the cloud, creating a massive market potential. The growth opportunity was evident in RingCentral's results from last year, although some of it Shmunis admits was a short-term rush as companies quickly pivoted to virtual workspaces. Still, revenues in the third quarter rose 30% to $304 million.
And while several execs at the company said they don't view Zoom (or Microsoft, for that matter) as a key rival, it's hard to not think there is some competitive pressure given RingCentral's decision to release its own free videoconferencing platform, Glip.
Apart from the product line, Shmunis is gearing RingCentral up for the next phase of the battle — which includes a pivot to international markets — by overhauling his executive team. That included the departure of long-term chief operating officer Dave Sipes, who left in June and was recently appointed CEO of 8x8. Shmunis tapped former Microsoft executive Anand Eswaran to replace him.
Sipes helped take RingCentral from "$10 million to $1 billion, which is amazing. The vast majority of businesses never get anywhere close … [but] now we need a management team that is familiar with running $10 billion companies," Shmunis said. "Where we want to go is multiple products, completely global [with] meaningful partnerships."
RingCentral also poached from Microsoft to hire chief digital officer Matthew Bishop and tapped Rajeev Singh Rathore to lead partnerships in South Asia, among other hires. Those executives and others will be key as the company looks to solve the question of how to make businesses and individuals collaborate and communicate better in the new reality of hybrid work.
"I don't think we've cracked that problem. All we've done is put a TV screen in front of us," Eswaran told Protocol. "Zoom became a cultural icon, but the market is just getting started. It is a huge market and we feel really good."
