Analysts React to RingCentral’s Sudden CEO Departure

Tarek Robbiati left by mutual consent last week after little more than three months in the role

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Analysts React to RingCentral’s Sudden CEO Departure
Contact CentreNews Analysis

Published: December 20, 2023

Charlie Mitchell

Last week, Tarek Robbiati departed RingCentral by mutual agreement after less than four months at the helm.

The enterprise communications stalwart alerted customers and partners in a statement, stressing the move was unrelated to internal disagreements.

Co-founder Vlad Shumnis – who stepped down from the CEO hot seat in August to lead the company’s innovation plans – now reclaims the position.

Yet, some have suggested that Shumnis may have been tentative to relinquish the title from the get-go. Zeus Kerravala, Principal Analyst at ZK Research, is one such industry observer.

During a recent conversation with CX Today, Kerravala stated:

RingCentral is Vlad’s company, and my guess is that there was an internal power struggle, leading to the decision to go in the direction Vlad wanted.

“They seem close to being cash flow positive, and Vlad likely wants to lead them into the contact center space – so he can feel like his job is done.”

The Alternative Argument

RingCentral’s move deeper into the contact center space started last month, with the vendor’s new CCaaS platform – RingCX – becoming generally available.

Yet, piercing the skin of the space after acquiring Hopin Events, expanding RingSense, and launching RingCentral for Teams 2.0 may have been too much for the new financially-orientated CEO to handle.

After all, RingCentral called upon Robbiati for his financial nous. His charge was to captain the ship and keep it steady as Shumnis searched for gold.

“Cultural fit and style might be factors, but it’s also possible that Terek didn’t like what he saw when digging into the business’s realities,” suggested Jon Arnold, Principal of J Arnold & Associates,

Ring faces challenges in the UCaaS market, where it’s hard to make a buck right now, and everyone is competing against Teams, which might make profitability challenging.

“Tarek may have taken a longer look and thought: ‘I don’t know if I can make this work here,’ and he received a nice payday for a short run.”

That theory gathers momentum, as RingCentral indicated the move was unrelated to internal disputes.

Moreover, Robbiati may have recognized that it’s ultimately better to acknowledge the challenge and move forward than to drag on and try to make it work.

Nonetheless, the former CEO was a board member at the company before making the switch in August. Therefore, he likely had a deep understanding of the financial status quo.

Additional Perspectives from More CX Analysts

Given Robbiati’s history at RingCentral, the power struggle seems the most compelling case for his sudden departure.

“It seems virtually impossible for a new CEO to be effective if the old one is still around,” noted Rebecca Wetteman, CEO & Principal Analyst at Valoir.

That’s especially true when the old CEO is claiming the executive chairman title, overseeing everything, and perhaps creating tension about who holds the vision.

“If everything is done in the context of the founder’s vision, it raises questions about the new CEO’s role,” added Dan Miller, Lead Analyst and Founder of Opus Research.

Of course, Oracle has a similar structure, with co-founder and former CEO Larry Ellison seemingly managing a transition to Chairman of the Board and CTO well.

However, the balance is fine – and Shumnis went out of his way to emphasize that the move was in no shape or form the beginning of his retirement.

Much of that was likely to reassure investors after its stock price dropped following the initial CEO transition. But, as Michael Fauscette, Founder, CEO & Chief Analyst at Arion Research, said:

It’s tough for founders to step back, having been deeply involved in decision-making for so long. New CEOs want to go in certain directions, and frustration builds if they constantly face resistance.

Yet, RingCentral is a technology-focused business, and whoever leads technology will – ultimately – drive the company forward.

For more from the expert analysts on RingCentral, the Zoom-Five9 Acquisition Rumors, and Twilio’s changing CCaaS strategy, check out our final CX BIG News Update of 2023

 

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