Vonage CEO: Off-The-Shelf Video Tools Are 'Wholly Inadequate' To Satisfy Remote Business Comms Needs

In the current work-from-home environment, secure, embedded communications that offer an integrated experience for businesses users is the only way partners should be selling to their customers now and into the future, Vonage CEO Alan Masarek tells CRN.

Communication, Right Where You Need It

If the COVID-19 coronavirus pandemic proved anything, it’s that cloud-based communications are critical to business continuity, but not just any "off-the-shelf" solution will cut it, according to Vonage CEO Alan Masarek.

Vonage's roots are in the consumer segment with about 90 percent of its business coming from residential customers just six years ago. Masarek, who joined the company in 2014, pivoted Vonage to focus on business communications. Now, 76 percent of the carrier's business is generated by business customers and the company will most likely be divesting its consumer business completely, Masarek said. Vonage's channel business is just as healthy as its business communications segment -- the company saw bookings through partners increase 100 percent during Q2 2020.

Vonage's business segment alone represents the third-largest pure play cloud communications company in the market in terms of revenue. That means that the carrier has been busy, with the help of its partners, getting midmarket and enterprise customers up and running from their homes as the coronavirus pandemic hit.

Masarek sat down with CRN to share massive growth that Vonage has seen this year so far in video, the importance of a secure, enterprise-grade communications solution that can be embedded into existing work tools and platforms via APIs, and how the “permeant shift” in remote working and learning will present massive opportunities for partners.

Here are excerpts from the conversation.

What are the trends related to COVID-19 that are driving Vonage's business today?

There are two enormous trends that are driving cloud communications companies like ourselves tied to COVID-19. There's more remote work; people have had to virtualize the workforce and send everyone home, and there's remote delivery of services: things like telehealth, distance learning, and even remote fitness -- [virtual fitness provider] Pelaton, for example, is a Vonage customer.

What is happening is our business, which is close to $900 million in revenue base, the remote delivery of services like telehealth and the like is really being driven by our programmable communication APIs. Of the $900 million in revenue, roughly 500 is in applications and roughly 400 is APIs. Video, I find, is a really interesting way to think about both of these trends. Many people think about video as just any connection with another person or multiple people. The reality is that those off-the-shelf varieties of video are wholly inadequate to serve the needs of remotely delivered services. As an example, we power a very significant percentage of all telehealth companies with our video solutions. A doctor cannot diagnose you remotely over an off-the-shelf video solution because it would not be compliant with the privacy and security regulations that govern healthcare. What these solutions need is an embedded video solution. A doctor could look and speak to [a patient] with an off-the-shelf solution, but the doctor would not have integrated access into the medical record system or information about the patient’s health insurance carrier. We power the big telehealth companies, such as TeleDoc.com, and they need an embedded communication solution because it's just part and parcel of the integrated solution.

What is Vonage doing to help other business customers remote work during the pandemic?

We're seeing that same phenomenon for embedded solutions in all sorts of other verticals, [such as] distance learning in colleges, high schools and elementary schools. Simply having an off-the-shelf video connection, which is neither secure, nor gives schools the ability to program in an integrated solution with their curriculums or programs, isn’t working.

To address the remote work trend, we also want to make sure we can have a fully integrated experience. Maybe we want to start with video or audio or chat or other forms of over the top messaging and by virtue of controlling the whole thing, all of the products are our own, the customer can have that full omni- channel experience. Tools like Vonage Meetings enable that full omni-channel experience.

What has the growth been like in terms of usage since the start of the pandemic?

Some of the numbers have been unbelievable. In Telehealth, the March volume over February is up 727 percent. One of our customers, Doxy.me, a big leader in telemedicine solutions, reported in just one week that there was a surge of 139,000 new medical providers and 1.35 million new patients using telemedicine. The surge in usage of more doctors doing more sessions in just one week was 21 million minutes and about 169,000 video sessions each day, just to give you a sense of the scale.

Again, people think about video just as one modality synonymous with an off-the-shelf video connection. It's not, and you have to think about this embedded market. March over February, we saw video traffic from education climb 36 percent, traffic from technology companies up 287 percent, social media messaging platforms up to 271 percent. There has just been dramatic increases and what you're seeing is what I believe will be a permanent shift -- I think that’s very significant to the partner community.

Where are the big areas of opportunities for partners in the business communications and video space?

I often tell partners that we as the carrier and you as a partner, the collective health of our industry is tied to the downstream customer. It's different for many companies, but in the midst of COVID-19, there's a great sense of fear and anxiety about some of the businesses, like hospitality, restaurateurs, and travel. For the partner, the issue is that that the downstream customer is looking for help and guidance. And in this world, that is the trusted partner. I think that's why in this environment, the partner relationship has never been more important. No one wants to be sold to in this environment. People want to be helped and guided to understand that tomorrow they have to suddenly virtualize their workforce. They have to move hundreds of agents from the premises to their homes. They have to move everybody off a desk phone environment to a soft phone or mobile, and they have to maintain the same level of productivity as when they’re in the office. Help! That's why I think the partner relationship is so critical now because it's that trusted advisor that can help guide the downstream customers through what has been a massively abrupt change in the way in which we work, and I think it will be a permanent change.

Where should partners focus their long-term efforts after COVID-19?

Coming to the downstream customer with solutions that really will drive a better business outcomes is the way every good partner that I know wants to do it because no one wants to be involved in simply doing something that is very commoditized, like move their premise-based box to the cloud. Yes, we still do that a lot for customers, but that's not the way you add the greatest value to the customers. The way you that you add value to the customer is by giving them a solution that's going to drive their business. Partners want to do more of that because it helps differentiate them.

I think for partners and everybody else, [COVID-19] will accelerate the move to cloud. Prem-to-cloud has always had a benefit of cost -- if you have 5,000 employees as example, spread across 500 retail stores, I would say cloud is essential from a cost perspective. But what you're finding today is whether those 5,000 people are spread across 500 stores or sitting at home, now, cloud is essential for business continuity. The one thing I know for sure, as a public company CEO, is the audit committees of public companies are going to be incredibly focused on their management team, asking, 'What are you doing about business continuity?' Because God forbid something like this happens again. Whether it's a pandemic or a natural disaster, you better get to a solution that no longer tethers your team to a particular device or particular office. And I think that's going to be excellent for the cloud communications world and partners should lean into that.