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PBX as SaaS: RingCentral CEO Vlad Shmunis (Part 7)

Posted on Tuesday, Feb 3rd 2009

SM: In 2006 you decided to take VC money. Why then?

VS: Our business got pretty big, relatively speaking. I am not an insider in that area, but we started getting calls from tier 1 VCs. I was never interested in just doing the rounds, but I figured if folks like that wanted to court us then I should listen.

I figured I am only going to live once. I had already done it completely on my own once. I wanted to build a world-class enterprise. I felt it would be good to get access to additional dollars.

SM: How has life changed since the venture financing, and what have you been able to accomplish because of it?

VS: It has been a very positive experience. Before I was living month to month, so a huge piece of my time was cash flow management. My margin for error was nil, so I could never really experiment. VC money lets you open up a little bit. We were also finally able to assemble a team. Having major VCs name behind the company is a huge stamp of approval, and everyone wants to be a part of it.

SM: I am assuming you still maintain a large piece of the company because of all the work you did prior.

VS: Not large enough! Joking aside, I do still have a large portion and on a day-to-day basis I still run the thing.

SM: How large is your customer base now?

VS: We have announced 50,000 but that was a while ago. We have substantially more than that. It is a very respectable number now.

SM: What is your strategy going forward? You have a nice start, but there is plenty of market left to penetrate.

VS: Our numbers are only in the US right now. We have a lot to grow. We are going to stay with what we know works. We will maintain the direct-to-customer business model. We will push the envelope, but not to the point it gets crazy.

SM: Today, what is a very specific definition of what you are selling to customers?

VS: Generically it is a business-in-a-box idea. If you are doing a small business you need a phone, a fax, and an email address. We provide image. We sell you a business identity. You get a phone number with features and functions that are only available with a fairly expensive box, and one that you cannot configure yourself. When you dial the number, you get a dial-by-directory option, music on hold, announcements on hold, and everything that says “this is a professional business” versus someone answering on his cell phone. We sell a complete set of functions that includes internet fax. We sell a virtual PBX. We can deliver a multifunction business phone system for $10 a month.

SM: That is perfect. Across the board, that is the beauty of the SaaS industry because these elite functionalities are being democratized.

VS: We will stay with SaaS as best as we can. We now have more resources and better name recognition. I now run into people who are customers all the time. I was booking a snowboarding trip, and the other person told me he was a customer. I think that is cool.

As we get better established, partnership opportunities open up. People are taking notice. Carriers are a natural partner. We have just announced a partnership with British Telecom for a service they call BTU Ring Central in the UK.

SM: Can you partner with other channels as well?

VS: We can partner with anyone; there is no requirement for carriers. I just think that carriers offer the easiest way to get to market. They have huge footprints. What makes us appealing for them is that they are a whale; they swallow so much they don’t know what they have in their mouth. They are not good at marketing to small business. We have the small business angle, which allows them to differentiate a small business service from a consumer service and we get to leverage their relationships.

SM: This has been a superb story.

This segment is part 7 in the series : PBX as SaaS: RingCentral CEO Vlad Shmunis
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Great story. Congrats to RingCentral on all their success.

Jason M. Lemkin Thursday, February 5, 2009 at 12:36 PM PT