Dave Michels
Dave Michels is a Principal Analyst at TalkingPointz. His unique perspective on unified communications comes from a career involving telecommunications...
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Dave Michels | February 08, 2016 |


8x8 CEO Has a Tiger by the Tail

8x8 CEO Has a Tiger by the Tail Cloud communications is a market whose time has come. This UCaaS leader doesn't intend to let it get away from him.

Cloud communications is a market whose time has come. This UCaaS leader doesn't intend to let it get away from him.

Vik Verma became CEO of UCaaS pioneer 8x8 in 2013, having been recruited into the company a year earlier by founder and CTO Bryan Martin, likely due to a unique set of qualifications that include expertise in business transformation, collaboration, and cloud.

Since that time, 8x8 has consistently experienced double-digit quarterly growth. Late last month, the company announced third-quarter fiscal 2016 results with record revenue of $53.2 million, up 29% year over year. Verma also has overseen the acquisition of several companies (Voicenet, Quality Software, and DXI), and he has expanded 8x8 from a regional into a global service provider.

Verma's management style is hands-on and interactive, and he deeply believes in transparency. He practices management by walking around the office, including patrolling the campus two to three times a day. He regularly initiates conversation with staff of all levels, soliciting input on what the company needs to do better. He works out twice a day, and tends to vacation in places where being online isn't an option. His vacation picks have included African safaris and remote cruises.

The Harvard Business Review recently reported a link between eating and team collaboration. This wasn't news for Verma -- for years he's been championing "Eat Together Wednesdays" where management serves lunch to employees. Vik considers this to be an important means of collaborative feedback within an organization.

Vik Verma, CEO, 8x8

Verma joined 8x8 from Lockheed Martin, where he joined in 2006 with the acquisition of Savi Technology, an early provider of cloud-based managed services of which he was CEO. From 2008 till his departure in 2013, Verma served as president of strategic venture development at the company. In that position, he monetized existing programs through collaborative technology incubators and strategic partnerships. Verma also has worked at Texas Instruments and Raytheon.

Verma earned graduate degrees in engineering from the University of Michigan and Stanford University. He holds eight patents.

I checked in with Verma at his office in San Jose, Calif., and he shared his insights on a variety of topics, from industry shifts to acquisitions. The conversation went something like this:

8x8 was a pioneer in hosted telephony. How do you think the industry and 8x8 have changed over the past decade?
When we helped pioneer this industry, we were essentially the outlier where on-premises solutions and landlines dominated. Then cloud and mobile hit the scene. Cloud made a lot of sense because, ultimately, cloud is turnkey by another name. 8x8 then made its name as a one-stop shop for all global business communications needs. Our approach was always more of a suite play -- a fully integrated portfolio for voice, conferencing, collaboration, and analytics.

Business communications is not just dial tone. It includes your entire directory, presence, video conferencing, as well as chat or text, and the ability to share content and manage your contact center. Having an entire suite of products became critical. Five years ago we bought a contact center company called Contactual. In 2015, we bought an analytics/quality management company, as well as an outbound call center company in the U.K. So these allowed us to have a complete suite of products and broaden our European footprint.

We focused deploying this all on a global basis. It's a different way of doing business at the core. It requires innovation, presence, and understanding of the local regulatory environments. We also saw early on how analytics were becoming critical for business. So the 8x8 evolution looked like this: becoming a one-stop shop with a suite of cloud communications and collaboration solutions that we had the ability to deploy and support globally, and integrating powerful business analytics.

8x8 has gotten some large enterprise wins. What do you think is causing this to happen?
People are becoming increasingly comfortable that cloud, even for mission-critical applications, can drive their businesses. You are going to see an even stronger accelerating shift because cloud now represents increased business productivity. To put it in perspective, for the last quarter, which was our Q3 ending Dec. 31, 2015, we indicated that our mid market represented 50% of our service revenue. So already we are at the point where mid market is half of our service revenue.

Channel programs are an area where a lot of channel providers struggle. Can you explain your channel strategy?
We are strong proponents of the channel because the channel has a trusted agent relationship with your customer, and you want to leverage that relationship. Channel partners also have an understanding of your customers' business processes so that you are not just going out there and trying to offer one-size-fits-all. We prefer working with fewer channel partners that sell more, rather than having a massive amount of channel partners. Today, we have a handful of key channel partners.

Our channel has been growing from admittedly a small base, but with a renewed strategic focus and commitment over the last 18 months, it's now growing at more than 100% every year. It's becoming a larger part of our go-to-market strategy. In the last quarter, we closed three of our largest deals -- one of which was from the channel. The top five out of our top 10 deals came from the channel last quarter.

I remember the days when the enterprise phone bill came in multiple boxes containing call detail reports. One of the nice things about modern cloud services is they tend to be flat rate. Can you clarify why 8x8 has had a recent push into analytics?
Business phone systems today are not your business phone systems of yore. They have become the core communications platform for the company, which means any time you chat, text, call, or video conference, there is an unprecedented level of visibility into who is making a call and to whom. You can tie it into your back-office CRM, as well as your ERP system, so you know which customers are being contacted or calling in.

By having access to those operational insights and data, and then putting it in a pre-packaged form so that people have dashboards to make business decisions in real time, that's now a game changer. This is where we can take enterprise communications to the next level so that it's no longer a vanilla phone system or simply a utility, but becomes an intelligent business productivity tool.

Continue to the next page for Verma's take on the UCaaS competitive market five years out, and more


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