Colin Doherty is the new CEO of Fuze, a global, cloud-based unified communications platform. He is an experienced CEO, so it was interesting to hear his perspectives on how to approach a new CEO role and why understanding the company’s situation is key. He also had great advice about having the nerve to make changes sooner rather than later, focusing on all areas of the business rather than just your strengths, and why thinking you need all the answers as a CEO is a non-starter.
How did you get into technology?
Colin: I got a general business and marketing degree and then moved to London where I started working in the technology sector. What attracted me to tech is that it’s constantly changing. I didn’t want to stay in one place and become a doctor or lawyer or something that had a fixed pattern or set of drivers that didn’t change. Tech was what interested me.
When was the first time you thought “hey, maybe I can be CEO of something?”
Colin: I remember working in a very large organization. There were several challenges and problems, but no one was stepping up. The big picture didn’t make any sense to me. No one was saying, “let’s focus on these three things that we’re good at.” At that point I moved in a direction towards making decisions on the bigger picture as opposed to staying in a certain silo. That was the late 80s, four or five years after I was in London. That was the first move towards general management as opposed to a specific functional role.
When did you get your first opportunity to serve as CEO?
Colin: My first opportunity arose about 14 years ago. After working for Nortel for many years as the GM of a large business unit I moved to be CEO of a company called Mangrove Systems, which was a start-up in the carrier network space. There were three or four VCs on the board. It was a really good experience of getting out of a big company into a small company and looking at how decisions impact burn, R&D, direction, market, sales growth, focus, and things of that nature. Working with a VC board first-hand was a pretty interesting experience as well.
Were you a sales-oriented executive or did you have a more general operational background before taking the CEO role?
Colin: I started in product and moved to sales and on to general business management. The only function I didn’t come up through was R&D. I’ve been around tech my entire career and I understand it, but I’ve never been a software programmer or developer. It was more the business model, finance, sales, go-to-market, channel, financial model, M&A, partnering, etc. I try to focus a lot of my time on areas that are not my preference. I spend a lot of time looking at the R&D model, because that’s not where I came from. I would view that as tougher homework for me. It’s important to drag yourself to those areas as opposed to focusing on the things you like doing.
From the day you first started as a CEO to now, how has your management philosophy or approach changed?
Colin: I think when you start those roles you feel a tremendous amount of pressure to know everything and have all the right answers. As you evolve in these roles you realize that’s not necessarily true, and that’s why you have a team that’s working with you. I don’t believe that people work for me. I view that I work with them. I find that’s a better approach and pattern.
When you take a new job in any role, if you are honest with yourself, there’s a certain amount of insecurity that comes with that. Can you do the job? Are you going to be effective? Are people going to view that you are capable of taking the role on? That can drive some behaviors that maybe aren’t as balanced as you’d like in the early days. When you start to learn that you don’t need all the answers but you need to find the right answer as the team, that’s when you start to hit your stride as the leader of the organization in many ways.
Do you remember any particular event or problem where you had a success as CEO and you thought “hey, I feel comfortable now, I think I can do this job?”
Colin: One of the early challenges in one company was that the revenue was pretty good and the margin was great, but we had a bit of a cost problem. We had too many people, and I began to wonder if everyone is hugely effective. We ended up looking at the organization and the next 24 months and asked, “do we have the right people for that journey?” Or, had we had the right people for the prior 36 months? We had some legacy scale that didn’t make sense.
The nervousness was making a move and changing that out. We did it, and we didn’t miss a beat. There was more energy in the organization because of that. That was one of those moments where you realize okay, sometimes you have to make a change before you think you need to, as opposed to waiting for it to be obvious. That was a motivational thing. We realized that was a reasonably good call. We can make a difference here and move forward.
Do you do anything to teach your team – new executives in particular – how to work with you?
Colin: Yes, the thing I’ve always said to people I work with or who report in to me is: “Tell me what you really think, don’t tell me what you think I want to hear.” If you think something’s broken or we should be heading in a different direction, or we’re doing something that looks obtuse or odd, let’s talk about it. Let’s understand what both parties think here, and if we’ve got energy in the same direction.
When you come into an organization, as you know, you don’t necessarily have all the institutional knowledge that everybody else has. I try to listen an awful lot and draw conclusions instead of impose thoughts on a model that I don’t understand initially. I try to encourage an open dialogue, if you have a better idea than me, great, let’s do that. I don’t have a monopoly on good ideas. I’ve got a few. If you can exercise the broader machine as fast as possible, that’s always a good thing. It’s about transparency. You’ve got to have people feel comfortable sharing ideas and perspective on where the business should move and why.
There are a couple of different philosophies when you take over as CEO. You’ve had that experience several times, so I’m curious how you think about it. Some spend a lot of time listening before they make any changes because, as you say, they lack institutional knowledge and don’t know where all the bodies are buried, etc. Others come in and start making changes immediately, because they were hired to change the way the organization is run. How do you balance those two competing ideas?
Colin: Good question. I think every business is pretty different. That’s why I find these roles fascinating, because it’s not always the same situation you inherit. Fuze is a massive, high-growth company in the tremendously attractive UCaaS (Unified Communications as a Service) space in the cloud. As you go back and look at the business models of every company, I think there are four things that are generally consistent. One is the R&D model: What’s sustaining the company? What’s innovative? How does that market work? Is it agile or waterfall? What’s the quality of the organization? That’s a huge chunk of the revenue percentage. You may be spending 18 to 25 percent on R&D. That’s a big inspection point.
Second, then you’ve got the sales/marketing/go-to-market model. What does that look like? How large is it? Is it channel? Is it direct? Is it third party? Is it distribution? Is it reseller? Is it software license? Is it a SaaS model?
The third piece is the organization, the talent, and the culture of the company. How many people do you have? Where are they? How balanced is it? What’s the experience set?
The fourth thing is what market are you in? Where do you play? Who do you compete against? What does success look like, and is the view going to be worth the climb when you get there?
These are the four consistent things that exist in any company. What I call the “heat map” is different depending on where that company is. It may be that you have a go-to-market problem in one company. It may be that you have a decent product but the market is not great in another company. That’s when you start to figure out where the pressure points are and what to focus on first in order to get the biggest change in result.
Colin: It was done for me. Steve Kokinos, who is now the executive chairman, had been the founder and CEO since 2006. He is a really, really talented guy who started a lot of companies and has been very successful. He is a big product evangelist on UCaaS cloud. The board along with Steve hired a new CFO, a new legal counsel, a new chief people officer, and a new worldwide service delivery executive. I was hired at the end of that chain about six weeks ago. I’ve inherited a good team and good model. The board is very experienced. The question now is how do we tune the operational model and scale this company for a public offering.
That’s great. Most of the time the CEO is brought in because someone thinks there’s a mess to clean up. Sounds like you got a good one this time.
Colin: Exactly. Sometimes these can be billed as turnarounds. I’ve done a couple of those. This is not a turnaround. This is a growth/scale opportunity in the truest sense. The market for Fuze is probably $40 billion total addressable market. It’s hard to pin down, but there are 400 million enterprise handsets out there in PBX land in businesses that need to be turned over. That’s a huge opportunity for us.
Speaking of the market, what trends do you see that other CEOs need to be aware of in communications?
Colin: I think the workforce has changed dramatically. If you go back 10-15 years ago everyone was punching dial pads and seven-digit dial-in codes and sitting on conference calls. There are 2.5 billion millennials in the workforce today. They never talk to anybody. They never pick the phone up. They’ll text, chat, Snapchat, Instagram. They’ll do anything but pick the phone up. So the communications message to CEOs is, your workforce has changed dramatically. Nobody has a desk phone with a four-digit extension that anyone can remember anymore. That’s the UCaaS cloud market we’re after at Fuze where people want to connect on messaging, video, audio bridges, group chat, mobile apps, desktop apps. It’s a very different world. People want to communicate in a more mobile and casual way than punching a PBX and putting in a four-digit extension code. CEOs have to be aware of the mobile, millennial nature of the workforce. It’s a 24×7 world, and making people as effective as they can be through technology is a huge asset to any business.
It’s certainly an exciting market you are in. What else do you want to share about Fuze?
Colin: As I join the company I think there is a huge move of depreciation of 15- to 20-year-old PBX systems being retired for more cloud communications like Fuze. It’s the conversion of these systems to cloud communications and methods of communications such as video and collaboration. With Fuze we can retire five to seven apps in a common enterprise and clarify the IT way forward. We make a complicated situation very simple and very usable. It’s a huge value there. The company grew 90 percent on bookings growth last year and signed about 449 new customers. We now have about 1,500 customers in 38 countries globally, and 90 percent of those have international operations. It’s a great model and huge opportunity ahead of us. Our challenge is prioritization and focus as opposed to widening the lens. There are so many things we can do but a few things we really need to execute on. It’s a really exciting market.