PBX as SaaS: RingCentral CEO Vlad Shmunis (Part 3)

SM: Did you build your business yourself, or did you take outside funding?

VS: We were not funded. We were always self-sustained. Eventually we figured out that we could reuse code we had, which let us focus on specific types of projects.

SM: So you built a library of intellectual property and grew your business from that?

VS: We re-used that library a lot. I doubt we had anything that other people did not already have as well, but it was enough to work for us.

SM: VCs hate people who have done this model; they do consulting and then bootstrap their model. It works every time.

VS: I think that success stories like this are common. I know people who did not make it doing this model, but I think it is a good way to start a business.

SM: Starting a business was a brand-new concept to you, and you made it work. A lot of people who are going to be reading your story are doing it for the first time, and they don’t know if they are doing the right thing or the wrong thing.

VS: If your readers have a question about the ‘right thing’ versus the ‘wrong thing’, then it is not the right thing. It has to be where you have a knowledge base. It is not because you are unemployable. I was highly employable. If a reader is mentally saying “maybe I need to go work for someone” then they should not be going out on their own.

SM: That is not the point. If you talk to Silicon Valley VCs, they will tell you that if you consult it will take away from the real thing you are trying to do with your company. To me that is bullshit.

VS: It takes away from their share of the company later on.

SM: That is exactly right!

VS: In my case it was really easy. I did not know there were such things as VCs. It was not distracting at all! Eventually my business got interesting from both communication and video applications. VCs actually started calling. We even had some buyout offers. As a company we had grown more sophisticated.

SM: Were they trying to buy out your consulting business?

VS: It stopped being a consulting business. In my mind I knew the business had to stop being a consulting business. I decided that when we would start approaching jobs we would do so with the notion that we had a product. This product happens to not work on a clients’ particular device, but we had a body of code developed that we could use in the form of a licensing fee.

In the video domain every chip that was shipped for a number of years came with video drivers. This included those from big companies like Trident, Cypress and others.

SM: So you became a driver company?

VS: Half of what we had was a driver company. The other part was an applications company, which actually proved to be much more strategic. It did start out as a driver company because developing drivers for a larger company is an easy way to start working for them. They generally have no idea how to do it.

We had a bit of luck and were at the right place at the right time. A new kind of chip came out that was a DSP, so it was a general purpose processor but was very fast at certain applications. People started talking about putting modern functionality on the DSP. Specifically, it was useful for communications, which was old news. Then people started integrating fax with modems.

Then a brand-new chip came out that enabled voice. We were hired to write the driver for the chip. They also wanted to have an application to develop it so they could sell it to the PC manufacturers. There were no applications existing that they could use, so they asked us to write one for them. Initially I said no because we did not know how to do that and did not have a code base to support it. They pushed back on us and told us to just write our own application. Ultimately I decided to do the project, although we had been known as a driver company by that time and I am sure some people were wondering why we took on that project.

This segment is part 3 in the series : PBX as SaaS: RingCentral CEO Vlad Shmunis
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