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Join Vlad Shmunis, founder, chairman, and CEO of RingCentral as he discusses RingCentral’s journey from a two-person startup to a $7B market cap global enterprise communications company (NYSE:RNG) — the good, the bad, and the ugly. Vlad will highlight what defines success in each stage of the growth journey, and how to create a winning business with the right product, team, and culture. Want to see more content like this? Join us at SaaStr Annual 2020. FULL TRANSCRIPT BELOW Vlad Shumnis – Founder, Chairman and CEO @ RingCentral Jonathan Vanian – Fortune Writer Jonathan: Hi everyone. All right. Well, I finally get to live my dream of having an own show with a little table here. So hi, Vlad. So this is great, I’ve been looking forward to this. We’ve had some really cool talks, interesting talks about the gestation process, I’ve been sort of saying. For when
at the embryotic state of a product idea to a multi-billion dollar company. So I want to start right now by just giving a little background around RingCentral. What is it? What do you do and let’s just take it from there. Vlad: Right. Okay, so firstly a disclaimer, this is not my real voice. This is just my show voice, but I also have a cold. Jonathan: This is my real voice and I have a cold. Vlad: Yeah. So what is RingCentral? RingCentral is a unified communications as a service space, UCAS. So what this means is we replace traditional communications infrastructure that includes voice, video, contact centers, collaboration tools. We replace on-prem software and hardware with a pure cloud solution. It’s a very large market, it’s been historically dominated by people like Cisco, Avaya, the big guys and we are hoping to become the next big guy there by displacing and dislodging those people. Jonathan: So that’s what you describe yourself now, how did you describe yourself when you first started? I always think that’s sort of interesting because the trajectory of a start up from when it goes from beginnings to … you know. Vlad: Yeah, no, we were very clear from very early on about the kill Cisco idea- Jonathan: It seems to be a very popular idea. Vlad: … was prevalent. Not kill Cisco the whole company, we weren’t that ambitious, but I personally never understood why you need to have a hardware box, or on-prem software anyway, when you can do all of this through the cloud much more efficiently, make people more productive, much more open environment, saves the money and, yeah, improves their productivity. Jonathan: And you describe yourself as a technologist first, or a business person? Vlad: Definitely technologist. Jonathan: Technologist. Okay. Does that set the trajectory of the company a little bit differently? When the founder is a technologist versus a business leader? Vlad: Yeah, I have not been accused of being a business person. Jonathan: You’ve not been accused of that, okay. Well that’s a pejorative term for that. Well walk me through the relationship of that, because I’ve just covered a lot of start ups and it’s fascinating talking with technologists who are designing the product and I think the problems start arising when they’re trying to create the business around it. I mean this has got to be a little bit more complicated nowadays, I would imagine, than maybe … unless, shed some light, maybe there’s some similarities of when you started. Vlad: Right. Well I don’t know if it’s more complicated or less and, look, I can just talk about our journey, right? So we were a true start-up, true bootstrap. There were basically two guys, me being one of them. It was 20 years ago, we had a fairly clear idea of what we wanted to do which was, again, to kill Cisco and that’s kind of all we had. Jonathan: Did you ever make shirts? Vlad: We never made, no, we never made t-shirts. We never did, no, we never did that. What we did do from very early on is we were working with the product. I mean I know there are different schools of thought and different people get here in their different ways, in our case it was always about the product and the product started with understanding the business case, the use case, understanding the customer. In our particular line of work, in our particular industry, it was easy for me, for example, to relate first hand to customer needs because I was … the product was kind of being designed for me to use and the other few people we had, but it started with that. And then it was just a matter of, okay, make sure that it works, make sure that it scales, then very important not to forget, make sure that people buy it, that they know how to find you, you know. Jonathan: I mean it’s interesting when you … there is a lot of, especially networking companies that I’ve noticed, where you have this sort of big company out there, Cisco, so they can sort of identify yourself in relationship with that company. How important is it then for start-ups to have that identifier to be like, well, this is the one company that we are setting our sights on. You get that a lot, or you get companies like, oh, we don’t have any competitors, but that seems a little wishy-washy. Vlad: No that’s great. I mean so my quick retort to we don’t have any competitors is, you probably also don’t have a market or customers either. Usually if there’s an opportunity, multiple people will see it and will go for it. I do think it’s important to understand who you are competing against and ultimately trying to displace. And granted there are some amazing successes out there that it’s maybe a little bit hard to see, okay, who did LinkedIn displace or even Facebook, you know? But it’s there and they, even for them, they were replacing offline media, right? Offline lists, but even, it’s clear that, for example, Airbnb, they’re- Jonathan: Travel. Vlad: In there. Well I mean more of the hotel business. Jonathan: Hotel business? Vlad: Hotel-ing business, right? Or Uber, the car rental business, right? Jonathan: You’ve always got to be in a category? Vlad: You have to be. I really think you have to be in the category and it’s a lot more fun if the category is meaningful. You have to be solving a real problem. Jonathan: That’s funny. When I talk to a lot of companies I feel sometimes they get really pigeon-holed when they say, “We’re part of a category.” And then I get a lot of the conversations that are like, well, this doesn’t adequately describe what we do, but there’s a reason for the category to exist. So how do you define what it is that distinguishes you when you do have to be placed into a box? Vlad: Yeah, I mean I personally tend to err on the side of being more specific rather than less specific. Again, me personally, there are all kind of different schools of thought and, again, different strokes for different folks. But to say that we’re so unique and you can’t even begin to describe us? Okay, fine, great, but I don’t think that’s something that many of us would go for or many customers. Because when you come in you have to say, look, I’m solving this problem. But by the way this was, for me personally, it was a really hard thing to go through initially. Jonathan: What was hard? Vlad: What was hard is defining, I think, your very question. What is it exactly that you guys are doing and why, okay? Like kill Cisco, good, great, we’ve got it. Now how are we going to do that as a genuine company? So to answer your question we took some iterations. We’re saying, look, we are going to start with a phone system. Maybe it’s not the sexiest thin in the world to do, but it’s an okay target because most people hate their phone systems, yeah? And you have to get that emotional sort of- Jonathan: Kill Cisco’s phone systems? Vlad: Yeah. Exactly. So you go, okay, now how are we going to do it? Well, again, in our case, well I think it resonates maybe in other industries too is, okay, so speak as emotion of it, right? We’re going to make it more user friendly. I always will ask a question, whoever it is, investor or whatever, “Do you ever use phones?” “Yeah.” “Well what do you think of them?” “We hate them.” “Good, we’re speaking the same language now. So what if you had a phone solution that you do not hate?” That’s the beginning of the pitch. Jonathan: And when you were articulating this message, tell me at what point did you feel comfortable presenting this to investors? Vlad: Look, me personally, I was really conservative. And then the sale will commence as far as the people and this was, we were multiple millions of dollars of revenue until I took the first call. Jonathan: Oh wow. Vlad: So yeah, from investors. Jonathan: Why did you want to do that? Vlad: As opposed to? Jonathan: As opposed to you have X number of customers who have bookings that indicate future growth. Vlad: You know, several reasons. One is, I mean to me it was sort of a personal thing, but maybe some people here it will resonate with and others it will not. But when you get investors in, you are giving up control to a certain degree and it’s a marriage and it’s actually a marriage that you can never dissolve. You could get a divorce, you can never get divorced from your investors or whoever is thinking of doing funding. Understand that they will never leave your life, okay? Until either you’re out of business or you get acquired or at the very least you’re IPO. In which case it’s still their choice whether they’re holding onto the stock or not, but mostly they will eventually distribute and sell. So you want to be really, really deliberate in who do you enter into this insoluble contact with. Jonathan: And so the people that you’re looking for, you wanted them to resonate with that idea that you already have this amount of money in revenue as opposed to looking for other metrics that they might be interested in for a start-up? Vlad: No. I wanted … well first, look, it’s not like I wanted … lots of people who eventually we talked to told us no that we wanted, right? And, no look, what I was looking for was people who were well-established. Yes we took our time, but we did end up with Sequoia as a lead investor and managing director of Sequoia on our board. That moved the needle for us. Another investor at series A was Vinod Khosla who’s a legendary VC in his own right. So, again, in our case it kind of worked out to not rush into things, but go for the top most quality of investors. Jonathan: And so once you get that idea, once you decide to make that pack with them, what is the next sort of step? Is that the point wh en you start saying, scaling and what does that even mean? Vlad: Yeah. Excellent question. So look, again, we were, the product was out there, we were at revenue in our case. So yeah, when people give you money, the last thing they want to do is for you to not spend that money. Because sometimes they’ll also hear people going, they’re making that mistake. They’re really giving them money to scale the business. Now scaling the business means different things depending kind of where you are, what you have, but certainly in our case and I think in the majority of cases, it means scaling the team. That means lots and lots of hiring and I don’t want to say firing, we did fire anyone, but people get reshuffled, you know? Because the person that gets you from zero to a million dollars is not necessarily the one who is going to get you from 10 million to 100 million. Jonathan: I get that idea, but that’s got to be rough to do in person too. Vlad: Extremely painful. Jonathan: Right. Vlad: Extremely painful because these are friendships and these are people who stood by you and you don’t feel good about yourself. Jonathan: Yeah. I mean how much is that coming from pressure from the board to sort of do those sort of changes for the company? Or is that for, in your case, personal decisions that you have to do it for what you feel necessary for the company to go? Vlad: Yeah. Look, I mean certainly the board, they’re trying to add value, right? Jonathan: Right, right. Vlad: They’re basically saying, I have a playbook and we’ll go, yeah, hey, do you have this position filled? Do you have this? You know. In many cases the positions were not filled so that was, no, let’s go do this. And I think it was a playbook because I didn’t know you needed that position, basically. In some other cases, no, we did have … I wouldn’t say runners, who would go, this person you have here is great and he got you to where you are. Or actually you’re a good person, but is he going to scale or is he going to scale? And my retort was, for the first year, basically, well they’re the team that’s got my here so I’m going to stick with it, which I did for a year and then we kind of started turning around a little bit and saying, look, yeah, but are we growing as fast as we could be given the new reality of the ground? Vlad: So what’s the new reality? So before we were optimizing for dollars. We had a very fixed amount of dollars available to us and how do you make the dollar stretch? As that changes with funding, we raised, I don’t know, 10+ million dollars first round, that used to be a lot of money in those days, you know? And it was like, okay, rather than stretch a few dollars, how do you compress your time? So do spend the money. And it turned out the people that we had, in our case, were all very much used and conditioned to stretch the dollar. So we needed to kind of get the new mindset going. Stop stretching the dollar, start compressing the time. Jonathan: So do you think this is different because this is different point of time then? This idea of stretching the dollar, do think that’s applicable now? Or do you find if you’re even talking or mentoring the companies that they’re sort of going through these sort of ideas? Vlad: I think time is the … like I say, I’m not a huge believer that things change that much in 20 years, whatever, and no, I think it’s just a different stage in a companies life. Jonathan: Right. Vlad: The resources you have and the goals you set and the software, so … Jonathan: So what is the most challenging thing that comes across when you scale? I mean I think it’s common, I think people would have an idea, oh, you just replicate what’s successful, but that doesn’t necessarily work, right? It’s not an exponential sort of curve. I mean what are things you had overcome? Vlad: As you scale? Well it depends on what stage, yeah? So if you’re talking about specifically when the first money comes in, that stage of scaling, again it’s managing the team. And to me it’s always, it starts and ends with the people. It’s how do you transition the team, how do you not loose each and every friendship that you’ve ever had? In my particular case it was a close knit group and the company employed both my wife and my mother. Jonathan: Oh wow. Vlad: I actually had to fire them both. Jonathan: You fired your wife and your mother? Vlad: Well the wife left, went herself, but my mother, I had to fire her, yeah. Actually it was bad. She’s still- Jonathan: Can you explain that? That’s a very- Vlad: It’s impossible to explain. Yeah, no, look, she wasn’t scaling. Jonathan: What did your mom do? Vlad: She was a bookkeeper for the company. Jonathan: She was a bookkeeper? So you needed- Vlad: And I needed a CFO. Jonathan: You needed a CFO, okay, got you. Wow. Did she ever meet your board members too? Vlad’s mum has to go. I mean that’s just a- Vlad: No, believe me, that was discussed. That got a lot of airplay. Jonathan: Okay. Wow. Okay. So you literally went from a family ran business in some ways to something a little bit different. Okay, so what were the stages of investment rounds that you took? What do you think was the most challenging round for you as a company? That was crucial to get to the next level, to get to IPO. Vlad: Well look, we had A, B, C, D and E, so five rounds, right? So the first one was, in the way I was new to this, number one and you don’t have … because all we see is we all talk to each other, right? So once we had Sequoia and Khosla in, we had these references people could call them, so that was fine. But the first one was, yeah, I mean, who are you and why should we invest in you? Jonathan: It’s a symbolic, putting you on the map in some ways? Vlad: Yeah. That’s a real good way to put it. Jonathan: Right. Vlad: Really good way. But look, I’ll tell you, everyone … but then it gets into variation and, look, we went through, and this was an infamous meeting that Sequoia had in 2008 where they got all of their portfolio CEOs in one room, so myself included, and said, okay guys, whatever you money you have you have and you will never get another dollar because the world is done and the economy is over and you’d better make that money last. Jonathan: And that was true for a year, right? Vlad: That was true for a number of years. Now it seems like ancient history, but that is what happened. Again, in that particular case, I know many people just downsized a lot. We did not. We just stayed the course, but we did and do have a recurrent revenue model, we had predictable revenues, we weren’t maybe hiring as fast as we would have otherwise, but we never had to lay off. Jonathan: Did you ever get advice during the downturn to like, hey, raise money now so you have stuff in the bank? Vlad: Yeah. I mean sure, sure. During the downturn and especially during, as you were coming out, I was always of the opinion you don’t want to run out of gas, but you don’t want to fuel the plane up to heavy too. Because remember, the more money you take- Jonathan: The less, when you’ve got a company, right, the less comes out? Vlad: The less of the company you’re going to own. That was, and also the expectations were higher. Jonathan: Is there a safe number of investors you should take? Or a good rule of thumb that maybe people can learn from? Just for how much you’re willing to give and take. Vlad: We did five rounds, 12 million dollars each. Jonathan: Five rounds, 12 million dollars each. Vlad: So I don’t know. How much to give up, that’s really case specific. I don’t know. I surely would, sitting here now, would have liked to give up less than we did, but I know many people who do a lot more and that’s fine too. I think in the end it’s about the result. Did you get, again, my example, enough gas in the tank to get you from point A to point B? Do remember about point B. In the end it’s, you need to get to point B. Jonathan: So when you’re leading up to doing an IPO, when do you start projecting for that? When is the time that you start crunching the numbers to say, okay, we’ve got to start really taking serious thought at this now. Vlad: We’re always about crunching the numbers. The company is analytical in nature and, again, there’s recurrent revenue so there is a small set of fairly well understood metrics. Your bookings, recurrent revenue, retention, gross retention, net retention, things like that, that people have been looking at for a long time. But it’s a completely different standard and level of scrutiny as a public company. And this is one of the advices that we got from investors which was spot on, was why did you guys run like a public company before you were public? And I was- Jonathan: And what did they mean by running like a- Vlad: Exactly. That’s what I said. That sounds really good, what do you mean, you know? So run like a public company means have full predictability certainly through the year, but have a multi-year plan and see how you’re tracking against that. Because what’s happening, I don’t know how many people here are public or close to public, being public, whatever, what I can tell you is that public markets, unlike your investors, I make these corny analogies like marriage, whatever, but it’s kind of like family. In that they’re in your court and in the end founders are hard to come by and they’ll support you. Public markets are very, very different. With public markets they’re completely unforgiving, you cannot miss a quarter, knock on wood. This is not wood, whatever, but we’ve been public for 21 quarters now, five plus years, we haven’t missed one so hopefully … Jonathan: Did you have to do any sort of big steps hiring wise? I mean usually I’ve noticed once a start-up hires a new CFO, you can sort of guess, okay, and within a year that’s what they’re thinking about doing. It’s like you bring in this person who starts streamlining the business. Did you do any concrete steps like that? Vlad: Well we did have to hire a new CFO. Jonathan: To replace your mother, right? Vlad: Well that was years later. Look, it’s a very close community, right? All of investors talk to each other, all the banks talk to each other. Jonathan: Right. Vlad: We’ve never, there’s no way you can keep a secret, right? So people know that the company is talking to the banks and they expect something will happen. And I personally know of a couple of cases like that, if for whatever reason it doesn’t happen, the company’s broken. So if you engage with that path towards the IPO, you’ve got to be damn sure that- Jonathan: You’re ready to roll. Vlad: … you get that, yeah. Jonathan: So one of the things that we were talking about a little bit prior to this too was also the idea of who you’re taking on in, you didn’t have anyone from a public company or something on your board C, right? It was all DCs? Vlad: Yeah. Well we did have one person who was … but that was later, so they left. It was, yeah, and he wasn’t an investor, he was just, we specifically wanted to bring in somebody with public company experience and this particular person was a very high level manager at AT&T for a while. Jonathan: At AT&T, which makes sense. With maybe the sort of expertise you want. How important is that, then? Of bringing someone with that sort of public company experience into navigating the start-up? Vlad: Look, I’m of the school that you can never have enough friends, you can never have enough advice, good advice, so yeah, I say it’s important. I mean, how do I know? I wasn’t born running a public company, none of my friends ever did. Traditionally VC is of that experience, so we very much do want to have somebody who’s been there before. That’s been our thing to do almost from day one. Always get people who’ve seen the road at least a few steps ahead of you. Jonathan: Right. Do you still have that, I mean now that you are a public company, who would be examples of people that would steer your company now? Because I would assume you’re not done scaling, I would assume scaling doesn’t really end. Vlad: Well we have the president of Google on our board, so yes, there are larger companies out there and there are people we still can learn from, lots of people like that. So yeah, look, it’s actually what you say, we are certainly notable, we’re trying to get people with differentiated experiences, number one, and also people ideally who come from larger companies. So our board, we’re a public company, so public information, we have ex-CFO of Intuit. 50 billion dollar, maybe 60 as of now, billion dollar market cap company. Ex-CFO of Yahoo! was our heyday. So we are trying to go for the very, very top talent from major brands. Jonathan: What’s one thing you learned running a public company that you wish you had known when you were a start-up? Vlad: One of the things when you get a public company is that I wish I would have known. It’s a plethora, I don’t even know where to begin. Look, it’s a journey. I think be prepared and embrace change, I would say. Understand that whatever it is, don’t think that as a start-up, just because you have this neat idea, maybe a friend’s saying that it is the coolest dating app ever that you are doing, nothing wrong with that market segment, but understand that there are many steps along this way and that getting, again from point A which is you’ve started, to point B, maybe it’s IPO, maybe the company gets, you sell the company, there will be many steps along the way and be prepared to change the company, change yourself as you go. Jonathan: And which way did the company change for you? Just an example of one change, a big change. Vlad: Like I used to know everybody by name and I don’t remember every location that we have. It’s just the scale of it. Jonathan: Right, right. Vlad: Look, sure, but maybe a more serious answer is, everybody has to be a generalist in a small company and in a larger company most people are specialists. And it’s a different thing. Generalists don’t necessarily make the best specialists, and vice versa. Jonathan: That’s interesting. So that’s sort of, that changes. That’s like who you’re hiring too. Vlad: Oh absolutely. Absolutely. Jonathan: Right. Vlad: Yeah, now we’re looking for people with very deep expertise in a fairly narrow area, okay? As before we were looking for people with jacks of all trades. Jonathan: How is, you started off with kill Cisco, that idea, is that still the same or is there now multiple, kill Cisco et cetera? Vlad: No, it’s a gift that keeps on giving. Kill Cisco is still our- Jonathan: It’s still strong, it’s still- Vlad: It’s good, yeah. It’s a good target, you know? But yeah, we’ve made a dent, they’re certainly more aware of us now and, obviously, jokes aside, it’s nothing against Cisco, right? It’s just that there is a very large market going through a seismic transformation and we’re riding that way. Jonathan: So what’s the challenge then of informing your product as the technology landscape consistently changes? Keeping relevant, keeping relevant. Vlad: Yeah. That’s a challenge, is how do you keep relevant, yeah? So we always have this playbook, it seems to be working to this day, as the playbook was, yeah we are supposedly industry experts and, sure, you have a bunch of people kind of doing the same thing for a number of years, eventually you kind of get better than average, probably. But no way, no how, certainly I’m not smart enough, is to predict how the market will really evolve without talking to customers, okay? So our playbook always started and ended with listening to the customer. And it doesn’t mean that you do everything they tell you to do. Vlad: And we went through that stage, as many start-ups do, like literally our CTO would get, he’d read all of the feedback from every customer and in our business we have tens of thousands of customers almost immediately, he would actually read all of the stuff that they write. And then he would go and implement it. And the product got to be pretty powerful but pretty complicated. To the point that, for example, I couldn’t use it anymore. And that’s, look, well that’s not maybe that great. So you do have to filter. But having that said, always, in our case anyway, keep your ear to the ground, listen to customers, try to sort the search and kind of prioritize things, but that’s, they know what needs to be done. Jonathan: Well here’s one, how do you let … you know, an early stage start-up when they’re developing products, they typically have a few stand out customers that are generally doing POCs, proofs of concepts, and how do you make sure that they don’t define the future of the company too. Vlad: Yeah, no, it’s not right, it’s not a one-legged stool, you can’t just do what customers tell you or else you just become a contractor, basically. And nothing wrong with that, but that’s not what we wanted to do. You do have to, but again that comes from taking inputs from customers, because they know what they want and need, and then combining with our ideas as far as where we see the future going given our alleged industry expertise. And you put it all together. Jonathan: Was there ever an example where you had to start informing futures of the product that were going a little contrary to what one customer maybe wanted. Vlad: All the time, all the time. Jonathan: What are some examples, maybe? I mean that’s got to be, I can only imagine what the conversations were like when you were talking with a customer. Like, we really wanted to do this and you’re like, it’s going to benefit us in the long term if we do something else. Vlad: Yeah, no. I mean we have a number of product features where the customer reaction initially was, why are you doing this? This is not something that we want. And you now put together a case, for example, when we started expanding from voice into digital channels, into text, into messaging, stuff like that. Jonathan: Right. Vlad: Video, you know? And why are you guys doing that? Well you have solutions for it. So what we thought was, that’s great, but how many apps do you want to have in your iPhone because our differentiated approach is that, yes we’ll integrate with best of class, as we do, but pieces that we can roll in, we will roll in and you know what? Feel free to use or not use, but we think that there is value added in having a closely integrated solution which does more than one thing. And in the end, people like Gartner kind of got around to that idea too and now, again, I don’t know how many people follow Gartner or what have you, but in our business they’re kind of the oracle, right? Jonathan: Yeah, no, that’s a really important- Vlad: They’re the people responsible for formulating the vision of the future. And even now they’re saying, yeah, it’s all about unification. We think we have something to do with that. Jonathan: Got you. Well if you could start over again, what would you do a little bit differently? Let’s say RingCentral was starting now. Vlad: Yeah, gosh. I think money earlier. Jonathan: You would take money earlier? Vlad: I would take money earlier. Jonathan: But you prided yourself a little bit on that bootstrap position. Vlad: Yeah. Jonathan: So what would cause you to take money earlier? Vlad: Well you’re asking me sitting here now. Yeah, no, we’d be probably out faster, I mean, who knows. You don’t know. I mean it sort of worked out, but I can see us being in public markets a few years earlier potentially. Again, it’s how do you define success? We had fun along the way, so from that perspective it’s all fine, but yeah, certainly people do get a million dollars of revenue next year and it’s a nice position to be in, but there are people who got there a lot faster than we got to our million, you know? Jonathan: That’s interesting. Well I mean, so what is success to you then? How do you even define that? Vlad: Keeping your sanity and at least some of the family relations? Jonathan: Keeping it … right, right, right. Vlad: Yeah. No success is, well, success is not losing other people’s money. Success is solving customer issues. Success is making people money, again, like public markets, investors, you know. Jonathan: Yeah, you’ve got your own responsibilities. Vlad: However touched RingCentral pretty much made money on it, so I personally feel very good about it. Displacing Cisco continues to be a good driver, even personal. Jonathan: What are the benefits of going public? Because some companies just like staying private a bit because then they don’t have to deal with a lot of the pesky, dealing with analysts every quarter and such, but why is that still an ultimate goal? Vlad: You know, again, different strokes for different folks. Yeah you don’t have to deal with public investors, but by and large the vast majority you have to deal with your private investors. People who invest in you eventually want to see their money out, that means that this is a business model. That is a business model. Now they don’t want to see it out next year, necessarily, but eventually you have to show them a path. Look, for us, being public worked out. I personally think the team we have, myself included, we were comfortable in that space. Because I like level playing fields, you know? Jonathan: Yeah. Vlad: So everybody gets the same information, everything is sort of regulated enough to where if somebody asks you a question, they’re just maybe a little bit too involved or what have you, you have a perfectly valid excuse saying, look, I can’t just tell you and not tell everyone else, this is just not how we- Jonathan: Right. There’s a regulatory aspect. Vlad: … run as a company. But you can provide a lot of information so everybody has, you know? And talking to analysts is fine and, by the way, to your prior point, yes talk to customers but talking to analysts now, that’s a whole new constituency. That’s like, really, really smart people. They all make a lot of money too but maybe there is a reason for that. So we learn from that a lot. Jonathan: Their objectives are a little bit different. But in some ways I get that feeling sometimes when I talk with people in Silicon Valley. It’s just like, oh, Wall Street doesn’t understand what it takes to innovate. Vlad: I beg to differ. I say that Wall Street understands many, many things. Now obviously they don’t know your business as well as what you do. Jonathan: Right. Vlad: But they do an amazing amount of vendor checking, just understand that, they know things about our business that I have no idea how they find out. They do talk to customers. Now, in a good way. Yeah, no. Jonathan: But they’re scrutinizing it. Vlad: They’re scrutinizing the people, the research to say that, I know that there are people there, prominent people, very smart people saying, well yeah, I wish, I really don’t want this level of scrutiny, et cetera. I think a lot of it maybe comes from potentially missed expectations. So in our case it was, guys, and gals, sorry, we’re here now, point A, this is what we’re going to do, so here’s point B, here’s point C and we’re just going to get there. And you have to have a little bit of thick skin because people will look at you and they’re maybe just very polite or whatever and they would totally fully discount everything you tell them. So nobody would believe a single word you say until you prove them wrong and wrong and wrong again. And eventually they’ll come around and go, okay, well if RingCentral says they’ll do this, maybe they will do this. Jonathan: Leading up to the IPO too, did you notice a change in the way that you’re interacting with your board? I’m just curious, can you read the signals that they’re saying without necessarily telling you upfront that you guys, let’s start pushing you for this. I think that’d be sort of beneficial for anyone here. Vlad: Well first time we brought up the IPO thing, I don’t know about reading signals, but one of the board members said, “Hell no, over my dead body.” Jonathan: Why? Vlad: So that was a signal. No, because we weren’t ready. In his opinion we weren’t ready and he was right, we weren’t ready. No, again, we took it in a positive way. We said, okay, well we can discuss dead bodies, that can be arranged too, but tell me more. Well you guys don’t have this, you don’t have that, you don’t have that. Okay, fine. So let’s go. So what does it mean? Okay, let’s be getting more talent in, let’s be getting controllers, let’s be getting CFOs, you know? Let’s be, in our case we were pivoting or expanding from an SMB oriented business towards an enterprise, let’s show some traction in that direction before we really commit to it. Because, again, a lot of it is just setting expectations and not letting people down. Vlad: So having said all of this, the board has turned. With one exception everyone on our board joined when we were already a public company, early investors, again there was one exception, rolled off. Jonathan: Right, got you. And how’s the relationship changed with them over the years now? Vlad: With which people? Jonathan: Yeah, with the people who you remain in contact with? Or who are still conjoined? Vlad: Well we made people a lot of money, so it’s generally okay. Jonathan: So it’s generally, everyone’s going to be happy when that happens. Vlad: Those are generally the conversations. They do complain about selling out early, which is what I also don’t … Jonathan: What advice do you have for people here? As far as, let’s say, at a stage of you getting a company off the ground, what have you got to do right now to … I mean I’m just looking at the people that you sort of know and it seems like you’ve networked a lot, what advice do you have for people getting out here and getting themselves known in a very tight knit community? Vlad: So how to get them known? Jonathan: Yeah, just how to get in front of us, because it does seem from when we talked earlier that series A is a very symbolic gesture. How do you get in front of people? Vlad: Well, look, so understand that whatever you do and say will be recorded and amplified and if you say something, there are no secrets in this valley. Everybody knows everybody and the one thing, and then I don’t want to sound like a Sunday school teacher here, but the one thing that you have one of and if it’s broken it’s not repairable is your reputation in the end. So if you come across as somebody that people can trust over time, then good things will happen. And at least in my case, before I could even suggest to people or ask for their trust, I wanted to see maybe proof points. Which, again, kind of led to maybe our first round being a little bit later than it could have been. But yeah, that’s advice. Vlad: The other thing is there is something to be said about people coming to you as opposed to you going out with a hand outstretched. Get enough of a following with your customers or whatever the constituency is to where you’re a little bit well-known, to where people will be calling you. Jonathan: Right. Vlad: Hey, you know, have you considered an investment? Jonathan: So that’s like the stage, that’s a good metric for any company is when you start seeing that people are coming to you. Vlad: Yeah. I think so. Jonathan: Towards us. Yeah, that’s fascinating. What’s been some of the most important advice you’ve learned from your board members during your journey as a company? What have they given to you? Vlad: Well we touched on some of this already, so don’t be full married to your team. I mean that’s a real hard one, that’s a really, really hard one and- Jonathan: Yeah that’s rough. You have to even build a culture like that, knowing that people might be in there. Vlad: Well it’s hard, yeah. I don’t think, look, I think that what you need to do is be honest with yourself, be honest with your people, be clear about why you’re doing something and it’s still very hard, you know, but I think that is one. And the other one is understand that the reason that people get involved with you, at least in this day and age, Silicon Valley, you know, expectations are sky high. Companies, they’re talking about unicorns but the unicorns is the billion dollar market gap which is not that big anymore. There are many people with 10+ billion dollar market gaps as a private company. It’s not just Uber or Airbnb. Jonathan: No, the list goes on. Vlad: Okay? So understand that people, at this point, have very, very high expectations. And hopefully you’re there to deliver those. Jonathan: Okay. Well very good. We are out of time. Thank you everyone, and thank you Vlad. Yeah. Vlad: Thank you. 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