Since this time last year, Vonage has been drastically changing. The company has been seen making a number of recent moves in what can only be described as a total transformation, a shift from the provider’s residential/consumer roots. With the recent acquisition of Nexmo, a provider of APIs for SMS, voice, and phone functionalities, it’s clear the company is looking to boost its current standing as a business VoIP provider of cloud communications for the SMB and enterprise. Jumping on Nexmo early, Vonage is looking to leverage a robust network infrastructure to allow for far more flexible communication between customers, employees and even productivity tools to bridge the gap between what were previously proprietary islands. But how does this all fit together in the grand scheme? Surely this one acquisition isn’t the only piece of the puzzle.
To make sense of it all, we recently had the chance to speak with Alan Masarek, the current CEO of Vonage, who has been guiding the company since November 2014. Under Alan, Vonage has really begun its shift in not only offerings, but even the existing culture and mission for the company.
A Company Wide Transformation
As Alan put it in his own words:
“This transformation of the company has rippled through everything. In terms of reorganization: from business units, to a functional organization structure, to a meaningful upscale of the talent, to changing the culture of the company – we’ve been able to about double the Enterprise value of the company along the way. We’ve fundamentally changed the operating profit of the consumer [market], and that has funded all these things. We’ve seen our brand move from its roots as a residential brand to more a business brand.”
In just the second Quarter of 2016, Vonage announced reported revenue of $234 million up from a previous $222 million from the previous year ago quarter, and about 75% revenue growth for Vonage Business alone. This figure includes $8 million of Nexmo revenue, for a total of $86 million in revenue for Vonage Business. Ending seats for the were in Business were 578,000 which was up from 401,000 seats in the year ago quarter – this is a 44% increase in the number of seats hooked up to the Vonage business service. This isn’t just pocket change and collecting pennies from the sofa, there is a clear shift in Vonage’s strategy and market focus and it is evident in just this one quarter alone.
Alan explained the company has been utilizing its consumer side of the business cash flow, “to optimize its cash flows and extend” these flows, as Alan put it, in order to fund this entire transformation. But Vonage doesn’t want to simply be another enterprise VoIP or hosted PBX provider. They’re hoping to move beyond just that, and do what no other provider has before – bridge the existing gaps within Unified Communication platforms to create one single experience to work seamlessly for both the teams utilizing the software, but more important the customer who is utilizing the product.
Changing The Face of the Industry
As the cloud and communication industry develop in the next 12 to 24 months, Alan thinks “you’re going to see increasingly this marriage, or collision, between this traditional CPaaS model – the Nexmo model – and the UCaaS model,” he said. “The fact that one has been targeted on customer communications and the other has been targeted internally, on internal communications, we really think this is sort of a historical artifact that is not going to persist. It’s going to integrate into a bigger model.”
And Vonage wants to use the recent Nexmo acquisition as part of their plan to do just that – to connect these previously isolated, proprietary islands of communication and workflow. The idea is simple, why should your employees use a different service to contact each other, then another to contact customers, and then a completely separate CRM or workflow management tool as independent silos. It can add to confusion, and cut down on everyone’s favorite word – productivity. Alan envisions a different world, a connect world, a world made possible by APIs and the cloud. Alan and Vonage want to take advantage of an opportunity that others have yet to do so.
“I think the biggest thing that’s lacking [in the UCaaS industry] is the opportunity, it’s the opportunity to marry employee communications, like traditional UCaaS approach, with customer communications – which is sort of now the CpaaS approach,” Alan explained. “Previously, they were different islands of technology. Now you’ve normalized all IP communications and cloud based, and now you add the API and delivery of the communications functionality.”
Bridging The Islands
Previously, everything was based on separate technologies and left on separate islands. Now, as Alan put it, everything is normalized and we can take advantage of this technology to create bridges and a new experience we haven’t taken advantage of previously.
“It’s easy for Uber for example to embed the communications functionality into their booking service,” Alan continued. “These things are no longer islands. They speak to one another, so why in the world would you have your customer communications out there not integrated with your employee communications, it just makes no sense.”
To break it down more simply, he used an example of searching for plane tickets online. If you are on the airline’s webpage looking up information, and at some point come across an issue – question, complaint, some issue of sorts – currently, you find the airline’s 800 number, dial in and now have to start over from square one. You are the same as every other customer calling in fresh, and the agent has no previous information of your actions or information gathered online prior to the call.
“There’s no context as to why I’m calling,” Alan said. “The future will be: when I’m on that website and I have a problem, I’ll hit click to call on that website – because that website will incorporate communications functionally which will be integrated in via the [existing] IVR’s in the UCaaS solution – so it then goes to the appropriate call center agent. Then [the information] will dump directly into the CRM solution. In my view, that’s the value chain of UCaaS – that’s the promise of UCaaS.”
With increased connectivity, and less points of contact or hoops to jump through, customers will experience a new level of connection to the services and providers they choose to utilize. This layer of context applied with any support or customer service cases will allow for much greater help, and a level of personalization that just is not possible currently. Vonage is looking to pull all of the pieces together, from its existing robust network of calling functionality, with the APIs and functionality provided by Nexmo for SMS, Voice and everything else on the roadmap to create a new level of UCaaS unlike anything else in the industry.
Tracking the Progress
Now in his second year as the CEO of Vonage, we thought it appropriate – and curious – to see how Alan feels his time has been shaping up so far. We felt his words explained it best.
“I think if you ask my mother, I’m doing really, really well. I’m proud of what we have accomplished here. By next year we expect business to exceed consumer, it will be the larger piece of the business,” Alan said. “We’ve seen our brand move from its roots as a residential brand to more a business brand. I’m proud of the progress we’ve made, we’ve done ton a work in a short period of time and I think we assembled the piece parts. Going back to now, we have this seamless integration of that whole UCaaS value chain from working with the customer, back to the employee communication, back to the workflow tools all being integrated. I think that is a unique solution offering that leapfrogs the competition. So I’m proud of progress we’ve made.”
To learn more about Vonage and their offerings, head over to our Vonage Business reviews page to see what users had to say about their service, or even add your own.