Not many people get a chance to be a CEO once—never mind twice in their lives. Craig Malloy not only has been a CEO multiple times, but he has led the same company across two different eras.
He started Lifesize, an Austin, Texas-based enterprise video and audio conferencing company, in 2003 and lead it through significant growth throughout the 2000s. In 2009, he sold the company to Logitech for a cool $405 million and stayed on a few years until leaving at the end of 2011.
He wasn’t gone long and returned in 2014 to run the company again. But in the short time he was gone, Lifesize found itself unprepared to take advantage of the tech industry’s shift from expensive servers to the public cloud. The company had to reinvent itself on the fly. A little time later, Logitech decided to get out of the enterprise tech game and sold Lifesize back to Malloy.
“We completely restructured the company, reinvented the product solution, bought ourselves back from Logitech all in the span of about 24 months,” says Malloy. To make matters worse, he had the tough task of trimming the company from 550 employees to 250 as it transitioned into an entirely new business model. “I feel like I started the company two times. I feel like I’ve been with the company twice because it’s such a different business now.”
The company is up to 325 employees and is back on the upswing, having especially found a niche in the international video conferencing market. Chief Executive spoke to Malloy about what he learned from his first stint with the company, how the company stands out in a crowded market and more. Below are excerpts from this conversation.
What did you learn from the first time as CEO of Lifesize that you are adjusting the second go around?
As the founder of Lifesize version one, I think it gave me the credibility and the permission to make the drastic changes that we made in 2014 and 2015. [At that critical juncture] I had so much experience in this market and could see very clearly what I thought needed to be done. I knew there was little time to waste. I think I was able to rally the troops because of my seven years of being CEO the first go around.
But it feels like a very different company. We’ve turned over almost the entire executive team, brought in almost all new second level managers. Of the 325, there’s maybe there’s less than a hundred people that made the full transition in the company.
One of the things I learned was technology transitions are brutal and very few companies make the leap from being a leader in one generation [of technology] to being a leader in the next significant generation. And you just look at any technology market and there are always new leaders coming in. And a lot of the [legacy] companies…they don’t make it. They just don’t have the momentum. Their existing business was good enough and they didn’t switch over in time. And if you just look at the radical and difficult transformation that we went through, the gut-wrenching transformation we went through…it’s a very difficult thing to do. We felt like we had no choice. One thing I learned in the dark days of that transformation is you can’t give up. You get out of bed, come in and every day you’re going to make a little bit of progress. It’s been good to see how that’s turned out. We’ve got a great foundation to go forward.
How do you stand out in a crowded video conferencing market?
It’s crowded, it’s busy. What we focus on is serving professional business customers. Our target market—where we do best—are companies that have 100 employees to 5,000 employees and more. Now we are moving upstream and serving companies that have multiple distributed physical locations. The more global those locations, the better off we can serve you. If you’re a 10-person startup in New York City or San Francisco and everybody is working from home and writing code and there’s no physical location, you’re probably not a good customer for Lifesize.
I mean video conferencing spans everything from what we offer to the multiparty video calling app that my teenage daughter uses called Houseparty. You’ve got 10 of her friends on a video call. It runs the gamut but our customers are not going to run their business on Houseparty. The market is so big and so underpenetrated there’s just so much white space that by focusing on what we do well and continue to add to our enterprise class features and capabilities, we really only compete against a couple of people for the vast majority of our deals.
How do you compete for talent in a town like Austin, which has a growing, competitive tech scene?
I’ve been in Austin 25 years. There’s a lot more tech talent here than when I started, but there’s a lot more companies vying for it as well. Not only with the local, homegrown companies, but Amazon’s got a big facility here. Oracle’s got a big facility here. Facebook has a big facility. Google has a tower downtown. Apple just announced they will have a big campus here. So it’s challenging. It’s not as competitive as the Bay Area, but then again nothing is.
What we find is people who move to Austin often move here because of lifestyle considerations. So what you find here in Austin is that people tend to stick with their companies a little longer. There’s not the constant churn that you’d see in a place like Silicon Valley. We’ve recently opened a new development center in Raleigh, North Carolina. We’re trying to find, trying to find locations where there’s a good supply of tech talent, but not a huge demand. Austin is a medium-sized market. It’s a pretty good supply, but there’s also strong demand. There are other markets—Dallas, San Diego, Raleigh—that have a pretty good supply and less demand.