5 questions with Vlad Shmunis

Last month, VC-backed RingCentral, a cloud-based business phone system provider, announced results of a new survey of customers on the changing nature of how and where we work.

Among other findings, the survey found that only 15% percent of small and mid-sized businesses currently have an office set up where all employees work from the same location. On the flip side, about 40% of the businesses polled have virtual office setups.

RingCentral CEO Vlad Shmunis says that the survey reveals a definite shift from the traditional onsite centralized work force to a virtual distributed office model.

The Russian-born Shmunis previously founded RingZero Systems in 1992 to sell desktop telecommunications software. RingZero shipped 25 million units worldwide before it was acquired by Motorola in 1998. A year later, Shmunis spun out part of the business to form RingCentral and has since raised about $24 million in VC funding from Sequoia Capital, DAG Ventures and Khosla Ventures.

PE Week Managing Editor Alastair Goldfisher talked to Shmunis recently about his company and the importance of the recent survey.

Q: Do you plan to raise more capital?

A: We are fortunate to be in a business that has great demand for our services and we continue to grow rapidly. We have deployed the capital effectively and do not have any immediate necessity to raise more capital.

Q: What advice do you have for other startups raising capital right now?

A: Capital is more expensive now than a few years back, so the ability to generate revenue and eventually profit has gotten even more important than before. There are always going to be examples of companies that succeeded without initially having a good idea on how to generate a profit, but there are substantially more failures of startups that followed that path. So my basic advice is to prove your business case first, and get the capital that you need once you’re ready to scale the business.

Q: What types of changes or trends to business communications are you seeing?

A: The most important trend we see is that no matter the size of the business, the decline of a traditional centralized single office is accelerating. Our survey data showed that nearly half the employees spent more than three quarters of their time working outside of a physical, centralized office environment.

At the same time, nearly 80% of businesses want to give the impression that their employees are in the office when receiving or making business phone calls outside of the office. This underscores the fact that professional communications are critical to business owners, but traditional on-premise phone systems are not designed to meet the needs of a distributed work force.

Q: What’s the driving trend of the virtual office?

A: Mobile phones and broadband Internet are what’s driving rapid adoption of virtual office environments. But the economic downturn has also been a factor as businesses want to lower their real estate and fixed overhead costs without losing the productivity of their employees.

Q: How are you different than Google Voice?

A: Google Voice is designed for individual consumers and gives them the ability to have one phone number that can be forwarded to their existing mobile or home phone. Google Voice does not replace your underlying phone service.

At RingCentral, we deliver a cloud-based business phone system for the modern mobile and distributed business world. As use of fixed line phones decrease rapidly, cloud-based business phone systems is rapidly becoming the norm.

Businesses need all their employees to connect with multiple extensions and multiple voice mail boxes to be associated with various departments, like sales, billing or support. RingCentral can work with all types of existing fixed-line and mobile phones, as well as be used as a core “first-line” service by our business customers.