A Series of Forbes Insights Profiles of Thought Leaders Changing the Business Landscape: Vladimir Shmunis, Founder and CEO, RingCentral.
The unified communications software and services space remains a growth category as companies of all sizes move their on premises telephone service to the cloud. The global market is expected to reach $143 billion by 2024 according to Grand View Research.
Vladimir Shmunis is well aware of those statistics. He’s the founder and CEO of RingCentral and he’s been at this for a while.
“We are the largest UCaaS pure-play provider in the world today. We'll do close to $500 million in revenues this year. We are on record with the investment community that we are targeting to reach $1 billion revenue in three years – by 2020. So we think we are within a major disruption that is global in nature. This disruption is irreversible. Namely, the fact that business communications solutions are leaving the traditional way of being on-premise to moving into the cloud,” says Shmunis.
The publicly-traded, Belmont, CA-headquartered company positions itself as provider of cloud unified communications and collaboration solutions that are more flexible and cost-effective than legacy on-premise systems for today’s mobile and distributed workforces. RingCentral allows modern workers to be connected anywhere and on any device through voice, video, team messaging, collaboration, SMS, conferencing, online meetings, contact center, and fax. The company counts some 350,000 organizations worldwide as customers.
RingCentral is the second go around with business communications solutions for Shmunis. “Both were done mostly out of ignorance (laughing). And the ignorance part was – and I'm only half-joking here – is I never understood and I don't understand to this day why communication products needs to be done in a) using a hardware box and b) in a closed-ended manner. So to me from day one, and in my case day one goes back about 25 years, the part that didn't compute for me personally was why can't I have a software system which is running on conventional computing devices and that empowers people to communicate the way that they want as opposed to the way that the system wants?”
In fact, Shmunis started a company called Ring Zero Systems 25 years ago to set out to do just that long before the Cloud existed. “My background is by the way technical – software engineering – so I, at that time, had no business background whatsoever which was matched by my lack of funds. So the only thing we had to rely on was technology itself.” Nonetheless, the company became the number one supplier of desktop communication software to the PC OEM channel.
The software would come pre-bundled on the system and was one of the early players in voice-enabled PCs. “We built a nice little franchise on that. We shipped tens of millions of units through the OEM channel,” says Shmunis. He later sold that company to Motorola in '98 for an undisclosed sum, but purported to be somewhere in the teen millions. But Shmunis felt the time was right to sell for other reasons.
The Price of PCs were dropping precipitously from the hay days of $3,000 to $5,000 models to hundreds of dollars. The margins were shrinking and along with it Ring Zero’s revenue potential. “I saw the writing on the wall. Motorola was a customer at the time and we had good relations. They had their ideas what to do so we ended up doing the deal and it worked out for everyone,” says Shmunis.
In 1999, he took what he learned from the Ring Zero experience, started anew with RingCentral, but with a new recurring revenue, subscription model where he felt he was better in control of his destiny.
“The idea was to do recurrent revenue. Sure, go through the channel, but most importantly go straight to the end user.” He had a little bit more money from the sale, but was still writing checks to float the business as the dot com bubble burst.
Yet the business continued to grow organically and it wasn’t until 2006 that the company took on institutional funding from Sequoia and Khosler Ventures with $12 million in funding that serve to accelerate RingCentral’s growth. The company went from $5 million to close to $500 million in sales in eleven years.
Shmunis is used to making his own way in the world. He was born in the Ukraine when it was part of the old Soviet Union. His parents immigrated to the U.S. in the seventies and wound up in San Francisco. Vlad and his younger sister went to public high schools in the city and he later graduated from San Francisco State University with a degree in computer science, followed by his master’s degree from the same school. He began working as an engineer out of school at a small startup in Silicon Valley. “I fairly quickly figured out that as far as a software developer I was okay. I wouldn't say world class. But I was pretty good at understanding what customers wanted and what engineers could feasibly deliver and moved into the technical management ranks fairly early in life.”
After working for a few years in a corporate setting, he realized he didn’t envision a future for himself there. “I really didn't see myself as part of the traditional corporate world at that time. So my next best thing to do would be work on my own. I like things to move faster and I don't have a lot of patience for politics and corporate bull,” says Shmunis. Far from the stereotyped care-free, Silicon Valley start-up entrepreneur, Shmunis was 30 then when he left the corporate world to start Ring Zero and already had a family to support. “I explained it to my wife, if I'm going to be unhappy anyway let me be unhappy with myself as opposed to with my boss.”
“Once we started gaining traction and the product started taking shape and customers started lining up that's where we go ‘okay well maybe it wasn't such a bad decision’.”
Hard to disagree. As of this writing, Ring Central's stock price is up 70% year-to-date and Synergy Research Group has recognized RingCentral as the #1 worldwide market share leader in both revenue and subscriber seats for Unified Communications as a Service (UCaaS).
