Tyme for Change at Genesys


Earlier this month, Genesys announced that Tony Bates is now the CEO, but Paul Segre remains Chairman, and President Tom Eggemeier is leaving. These are significant changes. Segre has been at the helm for 12 years, and Eggemeier joined almost four years ago.

My First Reaction: Tony Bates?

I’ve never met Tony, but I was a fan back in his Skype days. He was only at Skype for 8 months before its acquisition by Microsoft. Before that he spent 14 years at Cisco. I was covering Skype closely back then, and even predicted its acquisition by Microsoft. He stood out at Microsoft and was supposedly in the running to succeed Ballmer as the CEO of Microsoft. He quit Microsoft weeks after Satya Nadella was named CEO.

After Microsoft, Tony joined GoPro just in time for its disastrous IPO. During his 2.5-year term there, GoPro went public, and the stock skyrocketed about 150% but was hovering about 75% below the IPO price when he and 200 other employees were laid off.

Tony’s only other stint as a CEO was at venture capital firm Social Capital, and that didn’t end well either. After only a year, he departed with several others in a mass exodus.

Tony seems like a nice guy. He’s savvy enough to manage the cultures of both Cisco and Microsoft, has a charming British accent, and is reputed to be fairly technical. His education and industry experience are near opposites of those of Paul Segre.

But maybe that’s what Genesys needs as the entire industry goes through a period of reinvention. Genesys has a great history, but it feels like a largely incremental company — not particularly dynamic or innovative.

My Second Reaction: Paul Had to Step Down

Another analyst shared a theory that 12 years is a long time, and Paul was ready to step down. That might be true, but the more I think about the news, the company, and what I wrote above, I come to a different conclusion.

While it’s possible Paul just wanted a change, I suspect he was strongly encouraged to step down as CEO. If it were Paul’s decision, he would announce his intent, and a CEO search would begin. Instead, we learned of his departure at the same time as the result of the completed search. Also, Tom Eggemeier would be a logical successor as CEO or at least remain as President for continuity — if continuity was an objective. Nope, Tony is the change agent. And, Tom, like Tony at Microsoft in the role of the runner-up, must leave.

So why the ouster? Let’s speculate …

Suddenly, cloud is all that matters — at least to investors — and the Genesys transition from premises-based to cloud appears to be going slowly. It acquired ININ’s PureCloud back in 2016, years ahead of Cisco acquiring Broadsoft (and Transera) and Avaya acquiring Spoken. Genesys remains relevant, particularly in premises-based solutions, along with Avaya and Cisco. But PureCloud has since lost its first-mover advantage.

There’s also been tremendous M&A activity in the cloud contact center arena. RingCentral made two CCaaS acquisitions last year, and Vonage made one. 8×8 a few years earlier. Genesys was previously highly acquisitive. Yet after ININ in 2016 came Altocloud … and that’s it (that we know of). Perhaps the leadership change is due to missed acquisitions.  

Another theory is the board is moving closer to an IPO and figured a higher-profile executive like Tony might be necessary.

Moving Forward …

Whatever the reasoning, it will be interesting to see what Tony does with Genesys. The timing is great for me in that I will get to meet him in just a few weeks at Xperience19. (#CX18 had a better/shorter hashtag.)

The timing, though, is tricky for Tony. CCaaS is in a pressure cooker unlike anything Tony has experienced before. Five9’s stock is up about 56% in a year. Talkdesk became a unicorn last year. RingCentral’s stock has gone up about 154% in the past year, and it made two contact center acquisitions. Also last year, Vonage acquired European leader New Voice Media and now has all the pieces to make a highly customizable offer. Amazon is building momentum with a totally different approach, and Twilio is poised to break out.

The two biggest topics at Enterprise Connect 2019 were CCaaS and video — and there’s more overlap between the two than many realize. For example, Vidyo is the primary video partner for PureEngage. But Vidyo was acquired last week by Enghouse — a competitor to Genesys. With PureCloud, Genesys uses Jitsi open source for video (acquired by 8×8 last year).

Under the company’s new leadership, I expect innovation will turn up and bravado will turn down. Genesys often has made bold, unsubstantiated claims such as claiming that PureCloud is growing faster than Zoom and Slack, that Genesys converted more than 700 Avaya customers, and that its three disparate products share 30% common infrastructure. There is simply no way of knowing if any of this is true or meaningful, and such tactics are usually in lieu of real news.  

Check out this well-done CEO handoff video:

I like the energy, and they cover a lot in less than three minutes — though I can’t help but doubt Tony’s sincerity when he says, “For me personally, Genesys is really my dream company. It’s the company I’ve been waiting for my whole life.” This is hard to believe coming from someone that closed an $8.5B acquisition in 2011 and was subsequently considered for the CEO role at Microsoft. I wonder if Nadella is upset he didn’t get the offer to head Genesys.

Whatever develops, Genesys is about to become much more interesting. Excitement seems to follow Tony. I understand and appreciate that shakeups are sometimes necessary, though it’s a shame when valuable experience walks out the door. Hopefully, Paul stays on as Chairman for a while — but I doubt it.

Dave Michels