TalkingHeadz with Alan Masarek, CEO of Avaya
When Avaya exited bankruptcy (late 2017), I casually remarked to a friend that Avaya and Vonage should get together. In hindsight, it was a brilliant idea, but at time it was ludicrous.
Vonage needed a CCaaS. Also, Vonage was a pure cloud-play and legacy companies are like kryptonite to cloud valuations. Besides, both companies had a market cap around $2B, so there was no natural acquirer.
Key to that fantastical partnership was Alan Masarek. I figured he could lead both companies. Masarek had several things that the Avaya CEO was lacking, such as comms experience, SaaS experience, public company CEO experience, and an MBA (from Harvard). Vonage was recently acquired for over $6B and Avaya’s market cap fell to about $130M.
That ship sailed long ago. The two companies have eliminated the potential synergies I saw. Avaya turned to RingCentral for UCaaS, and spent millions attempting to build a CCaaS. Vonage, transformed itself from consumer to business, and then expanded its voice capabilities to include CPaaS, messaging, and meetings. Once it acquired New Voice Media, it had a strong CCaaS too.
Yet, the universe has now placed Alan Masarek at the helm of Avaya. I am happy for him and for Avaya. I wish it had happened earlier, but nonetheless I think we are about to be treated to a spectacular show complete with a suspenseful ending.
Check out this podcast interview. Alan is working hard to be transparent with all stakeholders. This is his second time on TalkingHeadz – he was one of our first guests back in 2018.
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Dave Michels 0:00
Hi Welcome to Coffee. Today Evan and I will be talking with Alan Mouser equity Lu CEO at Avaya. But Evan, we are comrades in moving. You just moved what last month and I’m moving this month. You know,
Evan Kirstel 0:25
they say the most stressful things in life are number one, Death number two divorce. And number three moving I think three might be worse than death or divorce actually, it’s,
Dave Michels 0:35
it’s debatable. We’re having a hell of a move. It was already complicated. So I was moving out of storage lockers instead of out of a home. So that would make it even more complicated. But you know, what’s frustrating is we rushing out here to the east coast to close on the property on Tuesday. And then on Monday, they tell us that they can’t close until Friday. So that was kind of infuriating, because I had a moving truck on the way but then problem solved. The movie company called and said they can’t find a driver. And they’re not going to get here till next week. Anyway, so So I’m stranded in a hotel with with a dog by the way, it’s not easy traveling with the dog. We’re trying to figure out how to take
Evan Kirstel 1:13
your mood went on was worse than ours. But even our 60 days ago, we’re still there’s still boxes. We still, I mean, the dreaded boxes are just endless. And it doesn’t it doesn’t seem like technology helps much with any of this. It’s just good old fashioned schlepping. Tech is useless when it comes to moving it’s guys carrying boxes and trucks and throw away a ton of stuff before he moved through a virtually everything and I still I had maybe 1000 Watts to throw away. No, I kept the watches, but I tried to throw away or sell everything else and there’s still too much.
Dave Michels 1:49
I can’t believe how much stuff I got rid of. And I’m beginning to wonder if I made mistakes or not. But I you know, I had all my vinyl I had all my CDs. I had all my DVDs.
Evan Kirstel 2:01
I mean, really, it’s
Dave Michels 2:03
boxes of phones, boxes of phones. Now it’s unbelievable how much stuff I got rid of. And
Evan Kirstel 2:08
speaking of which I wanted to ask did you sell the phone booth? That was my my key question.
Dave Michels 2:13
The phone booth at this time is currently included in the house for sale because I cannot find a separate buyer. And it’s ironic, you know, here in New Jersey. This is the home of Bill. This is where the phone booth belongs. I mean, this is where it all began. I can’t
Evan Kirstel 2:26
believe no one wants to buy a house with a working phone booth in the backyard. I can’t imagine why that would be an off putting. But speaking of phones and phone booths, we have an really interesting guest at a via a very storied company to say the least. Let’s get to it. All right.
Talking. It is a semi monthly podcast with interviews of the top movers and shakers and enterprise communications and collaboration. Your host Dave Michaels and Evan Kirkstall, both of which offer extraordinary services including research, analysis and social media marketing. You can find them on Twitter, LinkedIn, or at talking points.com. That’s points with the Z and Evan kirkstall.com.
Dave Michels 3:08
That’s que ir S T E L. Today we have with us Alan mashreq, the current and new CEO of Avaya. Welcome, Alan.
Alan Masarek 3:18
Thanks, Dave. I appreciate it. Good to see it. And I see you, Evan as well.
Evan Kirstel 3:22
Good to hear you.
Dave Michels 3:23
It’s great to have you. I know you’re so busy with everything going on in your new role and take the time to meet with us. We got some good questions for you. But before we get to that, I want to just welcome you back to the world of enterprise communications. I always felt that we had a special relationship. Although it seems that since you’ve returned to enterprise communications, it seems everyone thinks you had a special relationship with him. So I’m a little jealous about that. But it’s got to be great to be back in enterprise communications. Any thoughts on what’s how it feels?
Alan Masarek 3:50
Now honestly, I’m actually thrilled to be back the same token, the two years I was on the beach was terrific. So I recommend that highly. But it’s nice to sort of be back in the firefight. And in an industry that, you know, I obviously you know, well, nice to see you and nice to see all my other sort of former colleagues and all of whom been really gracious and sort of welcomed me back.
Evan Kirstel 4:13
Fantastic to have you and clearly we’re here to talk about you and Avaya. But before we do let’s talk about Vonage for a bit. Do you feel your experience at Vonage and your journey that’s applicable to what you’re doing now in Avaya?
Alan Masarek 4:28
I do. It’s interesting. It’s one of the reasons that I was so attracted to Avaya. So first of all, I was attracted to Avaya, sort of from within the industry but outside the company. So why while I was at Vonage, I always looked over at Avaya and thought that the opportunity here was pretty profound. And if you reflect back on the transformation advantage, really it’s centered around two things. One was it was a whole All technology shift now, we actually obviously moved from a b2c orientation to b2b. But we had to build the whole stack in order to be a viable enterprise communications player. We built much of that organically and we did some inorganically as well. The other side of the transformation, there was a complete, I would call it cultural revitalization of the company. So when I looked at Avaya, I felt that there’s a lot of opportunity in the move to drive the move to cloud based technology on the one hand, as well as the opportunity for a revitalization of the culture. Interestingly, abayas acid base is actually a far better place to start from than we had at Vonage. So you have a massive technology underpinning 90,000 customers truly global, a massive partner ecosystem, a very large revenue base and then a brand which is almost iconic and known specifically for enterprise communications.
Dave Michels 6:08
It’s interesting both vana Jan Avaya kind of had iconic brands and in one sector that might be going through transformation. Curious on your reaction. As you know Vonage was recently acquired by Ericsson. Curious on when you first heard that Ericsson might be acquiring Vonage, what was your first thoughts on that?
Alan Masarek 6:27
Well, look, I thought it was a great outcome for Vonage shareholders. And being one I was pleased. It’ll be interesting to see what Erickson does with those sets of assets. I know that they were most interested in the seapass business based on what I’ve read and seen. I know that Ericsson is trying to sort of move themself as an organization and kind of anchoring some of those moves on transactions like Vonage, so I wish them well. You know, it is interesting that the market timing sometimes is just better to be lucky than good. Sometimes. So the deal was announced in November and right after that, sort of the market all around us just fell away.
Dave Michels 7:14
It continues to fall away. It’s not
Alan Masarek 7:16
exactly so but that really I mean, but in particular, the high growth, enterprise communication companies. So the valuations have come down all around us yet, you know, you had that peg at $21 a share and it ultimately closed. It was a great exit.
Evan Kirstel 7:34
It was in such a fantastically interesting journey advantage in so many ways. But now at Avaya, there’s a lot of pressure to transform. What does that actually mean it what do you feel, perhaps that needs to change?
Alan Masarek 7:48
Well, the key thing is, Avaya has to focus forward on its cloud based technology, dead stop. So I have set the North Star of the development organization precisely on that. Now we have an enormous base of frequently very, very large customers globally, in our premise architected solutions, mid market and enterprise across UC and CC. So we have a really interesting opportunity that others just don’t have. And it’s one of the things that makes me so excited. So in the premise world, for the ability to sell premise architected solutions, we have very little competition, most of exited that in favor of jumping into cloud. But there are certain geographies of the world or customer segments, sometimes critical care hospitals or financial services, or what have you, in huge deployments where that premise architecture is still very important to them. So there is current sales going on that are active and highly profitable to us, for which there is very little competition. Then you have this enormous base of customers who are on some form of cloud journey. These very large customers frequently are not ready to sort of jump at the snap of their fingers to a true multitalented cloud solution. Yet, they want to have some journey. And so we have created a strategy labeled innovation without disruption. The notion is, okay, Mrs. Customer, you’ve got bullet proof, voice technology, the plumbings there, you do not want to rip it out. But what you want is over the top functionality, so that you can innovate without disrupting underneath, and that is resonating really, really well with customers who want to go down a cloud journey at their pace, the easiest example is, as particularly context center customers want to go digital, not just voice, but they don’t want to rip out the voice plumbing underneath. So the ability to go over the top with digital functionality to that existing base is that innovation without disruption. What’s so unique about it is there is no competition to that, because by definition, going to a competitor is a rip and replace. Then the third motion is going fully to our public cloud solutions, our public seek as solution, and our public UCAS solution ACO, so we’ve got it kind of all across the value spectrum. And as long as we focus on that, I think we’re going to be able to restore ourselves to a growth picture, which clearly has been elusive to this company for a number of years.
Dave Michels 11:02
So it sounds like you’ve got a bag of tricks at Avaya that you’re ready to work with. That’s different than you had advantage of Vonage, you were very acquisitive. And I have to say you were always ahead of the market, you grabbed Nexmo back when nobody thought you can see pas went together at all now it became kind of a trend. That was just one acquisition. But you also did you unify early, that was your integration strategy framework, you did newvoicemedia, for your integrated CCAP as you did TalkBox, for your video, you bought an AI assets from over, you seem to know where the market was gonna need before most of the industry figured that out. So it doesn’t sound like you are sounds like now you’re pretty content with what’s in the biolabs.
Alan Masarek 11:42
I don’t know if I’m completely content but where I think the market is going. And I don’t think this is any news to anyone. But when we talk well let me back up. Remember, you know, for years, I’ve been talking in opposition to what I always refer to as the alphabet soup of C CAS and UCaaS and C pas being these distinct hardened silos. I don’t believe that. And I think communication companies that limit themselves just to that will ultimately be commoditized. If you’re a communications company, you’ve got to think beyond the modality. And you’ve got to think, in my opinion, to how you are the core to improving customer experience for our downstream customers. The strength of where we drive forward on contact center on seek as what I like about that, as I view that as the kind of the heart, lung and liver of the customer experience. So I always try to simplify things. So virtually every customer has the following motion in order to drive their customer experience. So they have their BD RS and SDRs are calling on prospects, some of those prospects are turned into qualified opportunities. Salespeople then get involved turning some of those into customers, customers come inbound in a typical contact center motion. And account managers go outbound to, you know, work on adoption, upgrade, and renewal. All of those interactions are increasingly omni channel, all of those interactions need to be captured. So you have that one version of the truth. That’s where it’s going, in my opinion. And so what I’m so excited about what we have here is the core of that the heart, lung, and liver, if the if you will think of it as the routing engine is really a C cast type or a cc type of functionality. I believe that agent and employee are merging together. So the you know, the years past when you had a distinct set of agents who never needed to speak to employees, that’s no longer the case. And that whole customer journey I just described transcends agents or employees, they all have to be on a common system. So what I’m excited about is you bring those together, you see and see see precisely what I did advantage. And you do that you introduce the C pas side as really simply the way in which it’s architected so that the solution is programmable and extensible. That’s what we’re doing. And I think that’s the successful way to drive a communications company. We have those assets in spades here. So I’m excited about the ability to deploy that.
Dave Michels 14:33
I had liver last night.
Alan Masarek 14:37
Nice. Well said.
Dave Michels 14:41
One last question on Vonage. One last question. Sure. What have you been doing since Vonage? You mentioned earlier that you’ve been on the beach. Last I heard you were gonna be a spec leader. Good move. Not doing that, by the way. Well, so what have you been up to?
Alan Masarek 14:55
First of all, in all seriousness, I’m super grateful for the two years that at all when I left I I told everybody I had this bucket list item that I wanted to do, which I wanted to do for forever, and I rode my bicycle across America. So that was a terrific experience, and took me a long time to train for it. So I did that. And Maverick this time last year, I was, I don’t know where the hell I was, I probably was in Wisconsin, or something I was working my way across. But also, it was wonderful family time, and just opportunities to sort of really reconnect on a personal level, you know, and then I obviously stayed involved investing and actually did get involved with this back and joined a couple public boards and did a whole bunch of philanthropic stuff that my wife and set up a foundation, all sorts of, we’ve been very busy with that. So all of that I sort of reflect back with a great sense of gratitude, about being able to sort of do those couple of years. But I’m somebody that I’ve got a lot of energy and a lot of passion. And this was, it’s interesting, you know, each time in the communication space, you would see sort of a CEO gig was out there, I kind of get the call from one of the big recruiting firms. And this is the one I wanted to do, because I’ve always had this interest that the opportunity for future success was really here. And I actually think better than our recent past performance. So I was always sort of, you know, excited to take on the challenge.
Evan Kirstel 16:13
Fantastic. So tell us about how that process works, if you would, I mean, from the outside in and looked like it happened very quickly. What was the courtship like?
Alan Masarek 16:22
You know, kind of typical? Yeah, it was one of the main executive recruiting firms was involved with it. I was contacted, I think in early May. The funny story about it, this particular search firm had reached out to me and another CEO gig public company, and I said, Well, I’m not interested in that. I’m interested in Avaya. I said it to him, Oh, he laughed. And he said, he goes, I just got the sign engagement letter an hour ago, because I had heard through somebody else, that this search was underway. So okay, that’s the way it started. And you know, then, you know, you go through the typical discussions with the board and all that. And the situation was going along, sort of in normal course. And then obviously, the board shared with me where we had this pending miss in the June quarter. And so that obviously was a wrinkle in it. But I made a decision ultimately, that to be announced when the Miss for the quarter was announced, because I thought it was very important that when the company had to make this announcement of a miss in the June quarter that they had sort of somebody on the other side to catch it, you know, to sort of catch the knock on effects of it. And even in hindsight now is the right decision.
Dave Michels 17:32
Yeah, then it was a pretty routine process. I got the call, I think, an hour before I told him, I wasn’t interested. Yeah.
Evan Kirstel 17:41
Yeah. I also heard you mentioned you want to turn a vi into a destination employer. And I’m not sure what that means. But I remember at Vonage the headquarters down in New Jersey was just a fantastic environment, the culture the people the energy was really fun. I liked the car room. It was it was five fun to visit. Even more fun to work at, I think but so what makes a company a destination employer and what has to change at Avaya for that to happen.
Alan Masarek 18:11
So when we got to Vonage, we created an ambition I refer to this as an ambition that I partner with my CHR o to execute, which was turn us into a destination place to work, DP TW. So we speak about this all the time. And we’re bringing that same thing here. What ultimately being a DPT W means is that you create an environment where the most talented in your industry want to work are seeking you out. And again candidly, when I arrived at Vonage, it was not a destination place to work, because I don’t think it had the culture that encouraged the attracting the greatest talent in the industry. And in my view, that meant it was hierarchical. It was political, slow moving, not innovative. Elements of that exist here as well. And I don’t think the most talented folks want that environment. And so under that ambition of destination place to work, we created three core pillars, rewards and recognition, culture and growth and development. Under each of those, there were several sub initiatives. Just as one example part of culture is physical workspace. So what you saw when you visited the headquarters at Vonage in the early years before we did the cleanup to the office, I used to say our office could make a hospital look warm. So we had some work to do. But that was just one element of culture. And the punchline of this and I could talk about this for a long time because I think it’s so incredibly important is that if you You look, in order for an ambition to be achieved, obviously, you have to be able to measure it, you know, it’s the old thing, you can’t manage it unless you measure it. And so we measured it very tightly. So if you looked at all the sort of attributes of creating a healthy workplaces, they were going up into the right the way you’d like to see them, meaning voluntary, termination was down, regrettable attrition was down, engagement surveys were up. internal referral, very, very important. Tell your best friend to come work here was up Glass Door rankings were up. And these were up in spite of doing so many cuts that we had to do as we moved away from the legacy business in residential, to the enterprise communications business. So that opportunity to move forward exists here as well. It’s about tone being set at the top, it’s about leadership throughout the organization, it’s about rewarding merit moving quickly, you know, again, go back to the things that I found Vonage was not and then what you want it to become. So you want it to be innovative, agile, bottoms up decision making less hierarchical squeezed politics out of the organization. That’s where people want to work, in my view, that’s the way you turn something into a destination place to work.
Dave Michels 21:28
It’s unfortunate that you had to go right into round of right sizing because it seems to be a little bit in conflict with what you’re describing. But I know it was necessary. I think your goal was to cut $230 million from the business. Where are you on that cost cutting? And how is that changing in impacting
Alan Masarek 21:46
Avaya. So we have completed that turn $50 million of cost cuts, and we issued an 8k To that effect, September 6. So the company announced a 225 to 250 reduction as of July 28th, the same afternoon, I was announced. We reiterated that when we did the public earnings announcement on August 9, and then we completed it on September 6, what we said to the in all our public communications is that we wanted to get them done as quickly as we could. Anything that was actionable in quarter, this is our fiscal q4, we would do those that are not actual in quarter because of let’s say Europe as an example, you have, you know, statutory restrictions with notice periods or garden leave or things like that, that we would accrue them in our fiscal at the end of September. And they would be actioned as quickly as possible, just simply because the statutory limitations and all that restructuring, spend severance and things like that would basically be done by the end of the second quarter. So that’s still the case. And we also said that, in all likelihood, there may be cost reductions in excess of the 250. And as we get, you know, our arms around that will publicly disclose that as well. Good to
Evan Kirstel 23:16
know. And so Alan, you’ve been in via for almost two months, I think. How would you describe your tenure so far?
Alan Masarek 23:23
Well, I think we’re making great progress. There is a ton to do. And I come back to the two main things that I want to focus on, which is the product transformation to cloud and this cultural revitalization, much of which is this organizational clarity, and by the way that reductions help that clarity. Now, we all know that we have the financial upset, that came about as a result of the magnitude of the June quarter Miss requiring a restatement requiring a pre announcement, which we did on July 28. And that has triggered a bunch of financial upset because we had just completed a $600 million refinancing on July 12. And so the lender reaction of how in the world can you do this financing on the 12th of July and 16 days later now announced a big miss. So that has created sort of a cascading effect where because we now until we get this settlement with the lenders done or not paying off the near term maturity is not due till June. That then triggers our auditors to say well, then you’d have a going concern qualification and because the Board of Directors through the audit committee initiated investigations given the magnitude of the mess which is a very smart appropriate step for of corporate governance to do, you know our auditors saying, well, we’re not going to issue the queue until the investigations are completed. So you have this swirl that happens around those events. And so what I’ve tried to do is focus the organization on getting this financial upset behind us. While concurrently working hard on the product, side, and the cultural revitalization, the product side, the third or fourth week I was here, my senior team and I, we went to our one of our major engineering centres in Galway, Ireland, and spent the week they are because I wanted to sort of deep dive all things product. And I have to say, I came away from their confidence inspired, much more work to be done, make no mistake, but generally confidence inspired on where our public seek as solution is, we’re creating a remember I said before tone is set at the top. So one of the key things we’re doing is, you know, I speak all the time about being open, honest, direct and transparent. I do that throughout my life and in companies I’m involved with. So there’s an element of that on the product, which is transparency about roadmaps. So what we have said to partners, customers, prospects, everyone that we will begin to publish our roadmaps in a transparent manner, where we are committing whatever we commit to, let’s say, in a quarter, let’s say we’re gonna do 10 features, we’re going to hit it and you’re going to come to rely on us, as we become that reliable supplier, quarter after quarter, and go back to what our customers are looking to us for. They want innovation. They also the beauty is they want that innovation without without the disruption. So we’re in this unique position to bring that to our customers. And we’re everything is not done. So be it. We’ll tell our customers, here’s what’s done. Now, here’s what’s coming and when. And the expectation is that we’re going to be that reliable supplier, we’re going to restore trust about our innovation. So they can rely on us. And therefore we can put a stop to attrition.
Dave Michels 27:18
I want to ask you about all these meetings you’re having because you mentioned Galway, I know you’re doing a lot of meetings in New York City of I still associate with Basking Ridge, New Jersey, I think Kevin Kennedy moved it to the headquarters to San Jose, California. And then Jim Jericho moved back to the east coast to rally North Carolina. Where is headquarters? Where are you working?
Evan Kirstel 27:39
It’s in the cloud. Dave, come on.
Alan Masarek 27:41
Yeah. Well, we haven’t decided actually where headquarters will be. I’m spending a lot of time generally in with big office in Morristown, New Jersey, I’m there or I’m in New York, but I’m also elsewhere. So you know, I’ve spent the week in Ireland as an example, I’ve earlier last week, I was at our PCC conference, you know, the partner conference in Nashville, I spent the day in Durham, of the current headquarters, I’m going to Fairfax or office in the DC area tomorrow, trying to get it out there as quickly as I can. Again, part of being open, honest, direct and transparent is to be visible with everyone. And so, you know, I’ve got plans to get out to effectively all of our offices globally as quickly as I physically can. And where I can’t do it, I’m doing it through sort of broad scope video sessions. So I’ve already done for global all hands meetings, internally, where we take live questions. That’s something we didn’t do in the past. And we said, the whole thing needs to be scripted and all that no question. It’s just, you know, it’s just a completely open environment, already done for them. In the weeks that I’ve been here, too. We’re doing them on a big cadence, or an accelerated cadence. And then even like, I have felt it very, very necessary, particularly given the financial upset, to go out there and to speak about the opportunity here, which I think is a very positive opportunity. And so the communications effort is with all of our constituents, so tons of stuff internally, but also our partners. So I’ve met with one on one with all of our major partners. I’ve done where I can’t meet with others. I’ve done global kind of video squawks fully live in the four theaters of the world kind of, you know, a couple 100 partners at a crack. The PCC conference was another 160 partners on Monday and Tuesday in Nashville last week. I probably do two customer calls a day after this call. I’m you know, got in Midtown, I’ve got a presentation to a big customer. And I even prospect calls. So very, very active going out and being visible with the stakeholders of the organization, saying we’re here we’re here to stay. Our opportunity is actually quite positive. We just got to get through this financial noise. Well, ironically,
Dave Michels 29:58
I I’m actually in Morristown today as we speak, and so I vote for Morristown as the head.
Alan Masarek 30:06
I’ll be there this afternoon.
Dave Michels 30:07
Okay. So you just mentioned the partner event you just had now Vonage struggled with the reseller channel, and that’s a big part of the vias go to market, I think it was like 80% of revenue at Avaya. So what’s your strategy and message to the channel partners.
Alan Masarek 30:23
So the partners are exceptionally important to us. And that’s one of the reasons I’ve tried to get out to the partners as quickly and as often as I have, and again, is 80% of our revenue globally. partners for us are multiple forms of channel relationships. So the agent world in North America, mostly in UK, to some extent in Australia, we play there. But we work very extensively with the destes, the large bars and bars everywhere, throughout the world. So those channels of distribution are super important to us. It’s also our world, they’re even more important, because of the ongoing support they frequently provide for our customers. In these very large enterprise deployments with 1000s 10s of 1000s of seats, there are frequently levels of pro service, some we provide, but others we push back to them, because they may be better situated to do it than us. And again, the whole idea is we’re trying to take an outside in approach, what’s the best for the customer period? And, and what business is best served by the partner what business is best served by us. And I think we’re cutting that happy medium, because having a thriving partner community is essential to us. Fantastic.
Evan Kirstel 31:46
Just a side question here. When I look at CEOs joining new companies, I, I tend to see a kind of standard playbook. You know, step one is to bring a full contingent of confidence. And it’s a management level, but you haven’t done that you have a different playbook than the typical one.
Alan Masarek 32:04
Look, I think it’s only been six or seven weeks. So clearly there are evaluations being made throughout the organization, on leadership, not just those who report to me, but a level and two down, we’ll make the changes that are appropriate. And like everything we move quickly, that would be no different here. There’s a lot to absorb here. There’s a lot of changes, we’re putting through that, you know, kind of happening concurrent with those evaluations of executives. Now, we’ve already spoken publicly, that we have one open search for a CMO that’s open now chief marketing officer. So that’s underway. But we’ll make progress as we move forward.
Dave Michels 32:46
Well, I imagine you have no shortage of people offering you free advice. You’ve got a group of investors that are probably giving you advice on what to do. You’ve got former employees, you’ve got active employees, current employees, you’ve got customers and channel partners. Is there any group proving to be particularly useful in helping you figure things out?
Alan Masarek 33:05
Well, Dave, you’re right. I have a lot of inbound unsolicited advice. And I read it all, I read it all, you know, it helps to inform. But the one thing it’s it’s sort of interesting is Evan, in answer your question earlier, which is, having been through large scale, a large scale transformation, and understanding the industry? Well, I’m in a position where I’m able to trust my gut, more than perhaps I could in the early days, definitely more than I could in the early days advantage. So I think that I appreciate the input. And I’m certainly getting a lot of it. And it’s helping to paint the picture. And by the way, the input, I always think about doing these types of things. It’s like the orchestra has to make beautiful music. The orchestra is comprised of many, many, many different forms of instruments. And so that’s how we serve our clients. You know, there’s many, many components, providing good things making great music externally in the same time. Internally, it works the same way. There’s many voices out there who are expressing opinions, all of which at the end of the day put together and it makes the orchestra work so thankful for it. Awesome.
Evan Kirstel 34:17
So we may or may not be entering a recession, the R word dreaded R word, economy, going south never helps anyone in business, but what does it mean for your goals? And is that something you’re concerned with?
Alan Masarek 34:30
I’m actually not uniquely concerned about recession. One, it’s the nature of the products that we serve, you know, telecommunications is one as horizontal as it gets, doesn’t favor one industry versus another. And it is as critical as anything else. So, you know, you can’t say I’m going to cut back on spin and therefore I’m going to have less communications infrastructure. It’s just not a variable that people have There is a odd irony that actually helps us, which is um kind of pairing stock market performance with recessionary issues, you know, the days of just a year ago and further back markets going gangbusters and COVID Not withstanding as we came through COVID. But the point is, is that high revenue, low profitability companies getting outsized equity returns, that has not been a via via has been a slow or declining growth company that generates a heck of a lot of EBIT da. But that was not what a market was rewarding. And so, in a recessionary environment where high growth without profitability is likely will continue in all likelihood not to be rewarded by the markets, someone that actually delivers, profitability and cash flow will be. So again, in an odd twist of fate, it may benefit us.
Dave Michels 36:07
We’re running out of time, but just a few more questions, I want to ask you a question I haven’t heard anyone asked you to yet. I know there’s a lot of pressure. You’ve already mentioned that for Avaya to transition more into a cloud delivered multi tenant services company. But my question is, do your customers want that? It seems like most large contact centers are rejecting Siqueiros.
Alan Masarek 36:29
Well, this goes back to it’s a great point, Dave, this goes back to the notion of innovation without disruption, which is those 10s of 1000s of customers, who are all virtually all on premise architected solutions are in some form of cloud journey. Now, some, typically, the smaller ones may pop fully to multitalented public cloud, but most don’t want to or aren’t ready to or live in geographies of the world where it’s not appropriate. But many of those, I would say the majority of those want elements that can be provided by the cloud. So the perfect example, there’s many, many others. But I always use digital as an example, I’ve got this bullet proof voice infrastructure, I don’t want to rip it out, I don’t want to go through that headache of a rip and replace. But what I want is, you know, I want my agents to be able to do chat, or social or whatever it is over the top. So the ability to provide that innovation at the pace in which you’re ready to consume it without disrupting what’s underneath. The beauty of that is we’re the only one that can do that for our customers. Anybody else, by definition is a complete rip and replace. So when I think about the motions, I go back to the three motions, we have very little competition, selling Prem architecture to our customers. And we can sell that as a subscription, or we can sell it under a perpetual license, whatever works for the customer. Very limited competition. In the innovation without disruption, There literally is no competition because a competitor is a rip and replace. And then finally, when we go out there and sell head to head, our public seek has public UCaaS solution. Well, there’s lots of competition, and we need a win that heads up against the competitors. But those are the three elements. And we’re uniquely advantaged. I think particularly in the first two.
Dave Michels 38:29
I’m with you on that. Evans, the one who’s anti Twitter.
Evan Kirstel 38:34
Yes, Elon Musk will fix it all. Let’s touch on competition at Vonage, you’re competing mostly against similar size UCaaS providers. But you know, Avaya, as as we know, serves very large global enterprise customers. And you’ve got the likes of Microsoft and Salesforce and Amazon and Google circling them Google being your alma mater. So how does the via compete against these tech giants?
Alan Masarek 38:59
Well, again, it goes back to innovation without disruption. No one can do whether it’s the list you named or the seek as companies like, you know, the the main ones that we’re so familiar with, no one can do for our customers, what we can do for our customers, because anybody else who comes in is a rip and replace, where we compete in a more sort of just a compete heads up everybody else is in new customers. You know, I want my solutions and UCaaS and NC CAS to win heads up against the competition, period end but, you know, as I go back to it, I’ve got very limited competition on selling Prem. No competition in upgrading prem to over the top. So that’s the innovation without disruption, and plenty of competition going heads up against everybody else in the net new world. Fantastic. All right. So how do we
Dave Michels 39:59
monitor For and measure your success. We’ve talked about the past few months, over the next six months, what kinds of activities or announcements should we be looking for
Alan Masarek 40:09
or expecting? Well, I think the first thing is I want to get this financial situation behind us. What does that mean? So I want to get a clean 10k filed. Now people say, Why in the world? Are you talking about the audit report, but the reality is, you know, we’re September 30, fiscal year end, we file our 10k. And in November, I want that to be a clean 10k. Because a clean 10k will mean by definition, that all this financial noise is behind us, because it’ll mean that we’ve demonstrated to our auditors that we’ve got a fully funded business plan, that we’ve got these investigations behind us, and that we’ve got global peace with our lenders. We’re working very hard on those things. And when I’ve said to all my partners, customers, prospects employees is that gives us the ability to literally turn the page on this period of financial upset and just focus on the execution the way I’ve described it. What’s the product strategy? What’s the organizational strategy? How do we create a destination place to work? We’re still focused on product and organizational, we’re just having to be distracted by this period of financial upset. But the end of November, you know, we’ll be here soon. So that’s my hope. That’s what we’re working towards.
Evan Kirstel 41:32
Fantastic. Well, Alan, thanks so much for joining us as Dave and I have known and been involved with Avaya for decades between us Dave several more decades, but it’s really fabulous to catch up and get thanks so much onboard with with the new vision and mission and that before we wrap up, I gotta ask about something you mentioned. At the beginning of the podcast, biking across America, we kind of let that just go by the wayside. So that sounds like quite an addiction to cycling. Are you gonna keep on the bike through your tenure as CEO? How do you get how often you get
Dave Michels 42:03
out for a peloton?
Alan Masarek 42:06
I have a peloton, but I’ve got that trust me. I’m long bikes. Dave long bike, my wife would say I’m very long bike. So sadly right now I haven’t. I’ve been on the bike in the last seven or eight weeks, I think twice. So this thing has been pretty all encompassing. But the bike across America was an incredible experience. And I always say, what’s so amazing about it is it took six weeks. And when in life do you have an opportunity to be so singularly focused on something for that long a period of time? It was epic. It was just brilliant. So heartily recommend it.
Evan Kirstel 42:45
Sure to get some stories and day. Maybe we could try to cross America maybe?
Dave Michels 42:49
Alan Masarek 42:51
We could do Dave can get an electric bike. What do you think?
Dave Michels 42:55
I got one right here and more.
Evan Kirstel 42:58
Okay, they will be alright. Morris. Thank
Alan Masarek 43:00
you. Thanks, everyone. All right, Bubba.
Evan Kirstel 43:04
So we had Alan on one of our first episodes ever of talking heads. And after what two plus years he’s back. So that was a really great discussion, but we’re
Dave Michels 43:14
the same role. He’s like a much bigger company now he’s you can say he’s been promoted but we’re like we’re the same what’s
Evan Kirstel 43:20
what’s what? This is like a never ending demotion. But But otherwise, our guests are continue to go onwards and upwards in their lives. And, yeah, we’re sort of stuck on Talking Heads, but such as life. I enjoy the chat. Who’s next? Who’s next on the talking heads radar?
Dave Michels 43:37
Well, that’s always going to be a mystery. Never asked me that question without giving me a few minutes to look it up. But it’ll be somebody exciting and interesting and enthralling, no doubt,
Evan Kirstel 43:49
at least the C suite because our guests are actually their movers and shakers in this space. So we’ll be waiting with bated breath. Until then, you
Unknown Speaker 44:00
may get into conversation with them gotta get out of the phone. Don’t don’t read your phone. No man
Transcribed by https://otter.ai