Patrick Moorhead & Daniel Newman talk with Rowan Trollope, Five9 CEO for a Six Five INSIDER! We talk about how the industry is changing and what that means to the Zoom deal, the future with non-Zoom UC players, and the future of UC technology.
Watch our interview with Rowan Trollope here:
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Disclaimer: The Six Five Insiders Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.
Daniel Newman: Hey, everybody. Welcome to another edition of The Six Five Podcast. It’s an interview series, Insider Edition, Mr. Patrick Moorhead, excited to be here. We’ve got a really special guest. I might be broadcasting from overseas, but in my heart, it is 4:10 p.m., we are excited about today’s pod. How are you doing buddy?
Patrick Moorhead: Doing great. And sometimes people call Austin a different country. So, not technically, but virtually it is. Keep Austin weird. But no, I am super, super excited about our chat today. And I don’t like to keep it a secret, so I put it on the share on, right down there.
Daniel Newman: Why did you do that? I was kind of like all busy in my brain. I was setting it up so that we would have this big splashy moment. This show on the Six Five, the Insider Edition and the Six Five Summit, we have had some of the world’s most influential CEOs and business leaders have joined us. We’re excited to have another one today. Mr. Rowan Trollope from Five9. Now, before we bring him into the room, Pat, we got to do the business. So real quickly just to remind everybody out there. This show is for information and entertainment purposes only. And while we do talk with and about publicly traded companies, please do not take anything that we say as investment advice, but we are very excited to have Mr. Rowan Trollope join the show. So pat, without further ado, Rowan, welcome to the show. How are you doing?
Rowan Trollope: Dan, Pat. Good to see you guys. Thanks for having me on.
Patrick Moorhead: Yeah, I was going to say, you got to be getting sick of us analysts. You had the CX Summit and gosh, I saw you today and the second Q&A, but know we analysts really appreciate the access that you provide us because it gives us better insights to talk to all of your customers and potential customers out there. So thank you.
Rowan Trollope: Absolutely. Thanks for having me on. It’s an honor.
Daniel Newman: Yeah. We’re excited to have you Rowan and Pat and I have both had the benefit of talking to you for years now, it feels like a really long time. And you were leading the business over at Cisco, in the collaboration business. And pretty much from the time I opened the doors of our firm, Futurum, we were working with Cisco on the collab side. So we worked with you and you and Pat were working together.
And it’s been pretty awesome to watch the history. You did a great job leading that group. And then I wouldn’t say I was surprised, but I was really excited when I saw you join Five9, and then just the last few weeks, some big news has come out of Five9.
You’re going to be joining the Zoom family, which is not a secret. So I feel like I can just jump right into that, but I just want to have you spend a minute, talk a little bit about that journey. Talk a little bit about kind of how you got to this role as CEO of Five9, and sort of just that little bit of a pathway that’s really led to you to this point where you’re at today.
Rowan Trollope: Well, it’s been actually pretty consistently trying to do the same thing. When I came to Cisco, I was trying to achieve improving the experience that we had as employees in terms of communicating with each other. And I remember really well driving down the freeway here in California, it’s where I live, not Texas or wherever you are Dan, but an undisclosed location.
Daniel Newman: Munich.
Rowan Trollope: And this was sort of post iPhone is what really opened my eyes was like, well, here I can like swipe and tap and contact all my friends and do all this amazing stuff across all these channels, text and messaging and phone and everything. And when I come into the office, I have like an IP phone with an LCD screen. It was just the tools we had been given as employees to engage with our other employees were just terrible back then.
And I saw Cisco as sort of doing something really special back then, which was bringing video. So my passion at that point was really video, that’s what really turned me on to the Cisco opportunity and they had WebEx, but more importantly, they also had hardware. They had their, what was formerly Tanberg hardware and you put those two things together and that’s something that I think you could do in a really special way. And then if you fast forward to Five9, it’s really the same idea of like improving the experience. When you call a business, I’d say it made really big improvements in how we communicate as employees. How we communicate as a business to our customers is really, still feels like it’s in the dark ages for many businesses. And Five9 is a company that was sort of leading the charge on that front. So it was kind of really right in line with what gets me out of bed every morning. And that’s just being excited about creating these great communication experiences.
Patrick Moorhead: Yeah, I’ll admit I had a lot of fun. When you were at Cisco, your last product launch, it was a wheelbarrow of old equipment that you dumped on the stage and it made a huge impact. And Rowan, my background is product management and product marketing. I was like, that’s a person who loves what they do, but anyways, you’re at Five9. And all admit until you joined Five9, I didn’t actually know what Five9 was, but it’s super interesting company. And the industry is changing so much as we speak. And COVID-19 accelerated that years and years and years. And what seems like the industry really is honed in on seamless enterprise communications, regardless of where they are happening. But the question is, what does this mean for the pending deal with Zoom and how do you see the industry changing?
Rowan Trollope: You have to take both sides of this and it’s one spectrum, but today they’re somewhat separate. So you have a communications platform for employees to talk with other employees, which is now of course in the pandemic, Zoom has really become the de facto standard for that. But all of the collaboration tools that are all about employee experience and employee communications, that’s kind of where Zoom plays today. My company plays on the other side of it, right?
Five9 plays on businesses talking to their customers. But one of the longer-term views here is look ultimately what you want is a single communications platform that connects you end to end from your employees all the way out to your customers and does that in an incredible and delightful way. And that’s not something that anyone has really stitched together all those pieces, right? Cisco back in the day, famously and made a lot of money by selling a full suite of communications tools to enable companies to do that. But in the cloud era, no one has assembled all the pieces and at least nobody at scale. And so here, what you’re doing is you’re taking just from a business perspective, you’re taking two market leaders, they’re playing in three really big TAMs, right meetings and UC and contact center. And I think that that combination is going to be really magical.
Patrick Moorhead: It’s interesting in so many areas, there is this notion of connecting the front office to the back office. And I know this isn’t ERP and CX, but when you’re connecting your employees with the front office, meaning your customers, magical things do happen.
Rowan Trollope: Absolutely. And we saw this, you mentioned it in the pandemic, but what happened in the pandemic. It obviously propelled video conferencing into the limelight. Thank God. Like that was something that I think many of us wanted to see happen for many years, right? We were the early adopters and now it’s finally hit mainstream. In the contact center we started to see a similar effect in the sense that when businesses could no longer be physical with their customers, they had to rely on the contact center as the only front door for their business. To enable us to contact or come to your business, that contact center is a front door. And so we got thrust into a much more critical position in the mind of business owners. Whereas I think previously contact center was the armpit of the company, it was like often in the middle of nowhere and like nobody paid attention to it or wanted to know about it. It was only, you would know about it when things weren’t going well.
And I think now it’s been thrust into a position where it’s like, hey, if you want to engage with your customers and you’re a digital business, which every company needs to be, you’re going to have to have an incredible contact center. So it’s just become that much more important.
Daniel Newman: No, we’ve definitely seen the seismic shift in the way contact center is being looked at. Obviously there are sort of the continuum or the old guard, new guard of very on-prem based contact centers. And of course, Five9 was built and born to kind of disrupt a clear opportunity. It goes back to kind of what you talked about with the office experiences that were so underwhelming and all the technology that was available. And I think that’s kind of the same thing here. Is a lot of companies have had that philosophy for a long time now, what works, it’s good enough, people can get ahold of us.
And as I kind of watched the industry, I’m watching these converging forces. It’s not only about putting in the cloud. It’s not only about adding video and streamlining communications. It’s also about tying in CDP. You got to get all that data. You got to get that unstructured data, that structured data, you got to bring it all together. And that’s why we’re seeing a whole lot of transformation going on and different approaches, right. And we’ll talk a little more about that later. I got a question here. Don’t worry.
Patrick Moorhead: Get to the question, man.
Daniel Newman: I can’t, I got to set this up. Give me a second. So obviously we’re seeing Microsoft going vertical. I asked you a question that I thought was really great, that you’re a CEO round table about sort of the approaches of Microsoft and Salesforce. And of course the Zoom approach of acquiring Five9. Everybody seems to be approaching this differently. So the industry is clearly doing things to try to approach this seamless enterprise communication across the board. So talk about this Zoom deal for us. What does the Zoom deal do to make Five9 better, to make customer experience better, and what is the kind of the future roadmap for its integrations, et cetera?
Rowan Trollope: Well, I think Zoom through the pandemic has pole vaulted into the leadership position in the collaboration industry overall, just from a revenue perspective, perhaps accepting Microsoft, I don’t know what their revenues are. But they’re certainly in the number one or vying for the number one spot at this point. And so the opportunity is that … And both Eric and I kind of see the world in a similar way, which is you want to create incredible software that has super high quality and delivers a great experience. So he’s been doing that on the Zoom side of it. It’s no accident, Zoom emerged as this sort of global standard over the period of the pandemic. And it really comes down to great software, great company that’s behind it, but great software and great engineering talent. So we get to have a very significant synergy as we put the two companies together.
Number one, given the scale of Zoom. Zoom is a much bigger company. We measure our traffic in billions of minutes. I think they measured in trillions literally. So we have this opportunity to leverage the scale of the Zoom platform and to leverage the scale of the Zoom organization. And we’ve been moving further and further up market, which has been just a critical part of our strategy. This is really going to accelerate that. And I think what this does for both companies is it lets us both together access a buyer and a market segment that wasn’t accessible before to the cloud vendors. And that is the company who is existing on a five, on a Cisco or on a Avaya base with integrated end to end UC contact center and sometimes meetings platform. Avaya doesn’t have that, but certainly UC and contact center.
And now you can have one company that delivers that at scale globally in the cloud, that really didn’t exist before, right? The number one in the industry does not have their own contact center. There was a handful of smaller companies that have built, I would say rudimentary things, but those folks aside, you don’t have any market leaders with the complete offer. And there is a buyer that says, look, I want to buy this complete offer. And so I think that’s what this is going to let us do for the first time, is access that part of the market that hasn’t been tapped into. And what I think it’s going to do is accelerate the transition to the cloud even further.
Daniel Newman: Yeah, I think it gives a really clear indication too, of the horizontal approach. I think the little bit of risk that both Five9 that you had and Zoom had was kind of seen as not going as horizontal when you do see what Salesforce is doing and you do see what Microsoft is doing, but yet in your individual categories, you both really stood out as best of breed. Yeah. I mean, Pat and I covered on our recent edition of Six Five, we talked about Zoom earnings. So we saw just the response to the market when Zoom went to 54% growth. And we in our minds were just both boggled, like the company’s growing 54% in a pandemic over pandemic period. This is no longer that nascent period where you’re growing over non pandemic and people are losing their marbles because you’ve hit growth that’s still astronomical at a billion dollars a quarter.
You added, I think it was like $24 billion in TAM. This tie up between the two companies taking it up to around 90 billion in TAM and now platform story becomes much more robust because what you really are now telling you is, hey, we have this platform. So maybe you’re not going to try to own everything. Maybe at some point you will, but maybe you won’t, but in the end we’re going horizontal. You’re going more vertical. You’re addressing phone, you’re dressing rooms, you’re dressing groups, meetings, web, online. It seems like this tie up has a lot of strength. And I guess I just wanted to kind of lean in just really quickly and the platform is that thing? Is it the platform? Is that what is a big part of this story about this tie up that people will need to be paying attention to?
Rowan Trollope: Absolutely. I mean, so Zoom has a global platform unrivaled in terms of quality and scale. And I think all you have to do is try to use some of the competition and you’ll see that they really don’t compare. And we’re talking about having a reliable platform that it’s hard to do, right? Because you got to check that out, what it looks like in many countries in the world and all that kind of stuff, but that’s what big companies need. They need that portably reliable platform. So we do get to sort of benefit from that as Five9, and absolutely that’s the intent to leverage that. And we also see video as being an important part of the future here. There’s many contact center use cases where you’re going to want to see, or we’re starting to see customer demand for video, where they’re saying, “Look, I want to be able to see what my customer sees.”
Every customer has multiple cameras in their pocket, and the ability to turn that front facing camera on and or back facing camera and take a picture of the damage that’s to your car or the washing machine or whatever. I think that’s beginning or get a live video stream back to a context and vision. That’s emerging as a really interesting use case. And I think there’s this new expectation and tons of new use cases around telemedicine and retail use cases where the contact center and video are really going to come together in an interesting and powerful way over the next several years. So there’s opportunity on the video side, but more importantly opportunity on the global scale of the Zoom platform.
Patrick Moorhead: Yeah. So I think the industries, if I look back even 30 years, we get into this accordion of integrate, dis-aggregation and aggregation, and I think they both serve very good purposes. I think aggregation is kind of locked in, stack top to bottom and then for growth, we create platforms that everybody can make money on and we can have best of breed. And I think we’re in that today. Love to talk to you about the future of tech. It’s funny, we haven’t really talked a whole lot of tech up to this point, but I think we should, we got a great inoculation of it during your CX Summit, which I thought was great. How do you see, or where do you see the technology in the UC space continuing to evolve? I mean, is there anything that you’re most excited about that you think is going to make the most impact to your customers?
Rowan Trollope: Yeah, absolutely. In the contact center space, you asked me about UC. I mean, I’d probably talk about both contact center and UC because they are converging in a lot of ways. And if I just go back to your question about the accordion effect and that it’s really easy to understand why that happens in the opt to cloud transition, which has been going on. All the companies that got started. If you look at them, they all had to do one thing and do it really well. Zoom did meetings, RingCentral did UC, Five9 did contact center. And in fact, none of the most successful companies tried to actually start and do all three of the UC meetings and contact center at the same time. It just doesn’t work that way. You kind of have to get really focused as a startup. So I think that’s one of the reasons you see this, but ultimately customers do drive consolidation in the market. And so you’re that force happening and I’m certainly seeing and hearing from it, from customers on that front.
From a future technologies’ perspective, our vision is that the way I engage with a business should be the same way I engage with a friend, with the same level of seamlessness in terms of the digital channels and voice channel and video, I can very easily go back and forth between all of those things with a friend and that person knows me. I want to have the same experience when I interact with the business. And today it’s very disjointed, they’re silos. One system come up talks to one group of people. Another system talks about another group of people, they don’t interact well. Creating that seamless experience end to end, where it’s as easy to communicate to a business as it is to one of your friends, okay, on your phone. That’s what we’re trying to create.
Now, a big part of that is automation because we would all love to be able … as a business owner, I’d love to be able to provide that service to my customers, but I can’t, it’s too expensive, right? It’s just super costly to have a lot of people sitting around, engaging with customers. So there has to be a huge investment. And that’s what we’ve been up to recently at Five9 that we focused on at our summit, which is investing in automation technology. We’re finally at the point where technology has caught up to this problem where you have computers that can do speech recognition at human levels of accuracy, computers that can engage in conversations that are reasonable conversations. Not like talking to somebody at very low IQ, like something that’s actually a really pleasant conversation.
The technology has finally caught up to that problem, our investment in this areas in artificial intelligence and IVA and agent assist to create essentially a digital workforce and that digital workforce can engage with your customers on your behalf and alleviate the need to have people do everything, but then have those people do the things that really matter, not the rote and routine stuff that they’re stuck doing today, but the high value really interesting problems where humans are needed much more. So that’s the key area of innovation, I think right now is driving AI and automation to create a digital workforce for every company so that we can have this kind of experience I talked about earlier.
Daniel Newman: Yeah. I really liked that Rowan and it actually ties together this whole pod really nicely. And by the way, it’s a great chance to plug my book called Human/Machine. Oops, did I do that? We do that sometimes on the show, Pat and I, we accidentally do that. But no, I mean, you and I have actually had talks in the past Rowan and we’ve been looking at different companies doing really interesting things in automation, both human-in-the-loop and human-out-of-the-loop. There’s no question that investments are being made in these areas. A lot of acquisitions being quietly made, some are being very publicly made. We’ve seen a massive rise in RPA and we’ve almost seen it evolve and just a couple of years to IPA. And now it’s actually sort of being built right into these platforms where it’s no longer a set category of its own. It’s just a part of the stack. So you guys are doing a great job in terms of really showing some real initiative there. And I am really interested in sort of seeing how that develops.
Patrick Moorhead: And I have tell you one of the things Rowan, you and Five9 made voice in a way sexy again. It was funny how it seemed like the whole industry was focused on video and then it’s like, well, wait a second. You’ve got the dissatisfaction from end customers with call centers and the incredible technologies that are available in machine learning. And you connect that with, what can I actually do with it when something happens and you connect that with RPA and other types of automation to actually do something about it without having, necessarily having to have a human-in-the-loop. So I gave you a lot of credit for that.
Rowan Trollope: Well a lot of work to do, we’re still at the beginning.
Daniel Newman: Yeah. There’s no question about that. We are still early days, but it’s going to be exciting to watch. And Five9 it has been very exciting. We’re excited to see how this tie up looks, but we won’t talk anymore about it. Because we know we’re in that phase where you can only say so much, it’s like everyone knows, but you can’t talk too much about it. But it’s been an honor having your here, Rowan. And I’d love to see you join the show again in the future.
Rowan Trollope: Well thank you for the invite. It’s great to finally be on your show. I really appreciate it. And anybody who has Six Five or any other numbers in their title, they’re going to get my attention first.
Patrick Moorhead: Thanks a lot, Ron.
Daniel Newman: It’s pretty close.
Patrick Moorhead: Exactly. Take care. Well, that was fun.
Daniel Newman: That was fun. Now I love those questions. I love dancing right on that line of what these big acquisitions, we as analysts, we want to know everything, but we know there’s only so much.
Patrick Moorhead: You got so close to the line, I almost spit my coffee out. But no it was fun and it is funny. I got to tell you, I’m doing more research on voice than I think I’ve ever done before. So it’s been a great experience. So that was fun.
Daniel Newman: It’s really good to watch how you can really scale an offering and this is just an example, how you can take something and be really disruptive. And then of course, how great, we talk about chips and SaaS here, putting things in the cloud and making it easy to scale and easy to adopt. And it seems that the team over there under Rowan’s leadership has done a great job. So this will be one to watch, this will be one to bring back, Pat so yeah. Thanks again to Five9.
Patrick Moorhead: Yeah. I want to thank everybody here. And if you like what you heard, press that subscribe button and tell me on Twitter. If you disliked anything, please tell Daniel on Twitter, you know where to find him. Anyways, have a great day and thanks again to Rowan and Five9.