The great pull-forward: Dialpad rides the work-from-anywhere wave
More and more companies post-pandemic are going to be a bit like startups, with lots of white board space and couches for socializing, and little in the way of traditional cubicles, says Dialpad CEO Craig Walker.
Like many Silicon Valley executives, Craig Walker is a believer in the great pull-forward.
"This inevitable move to the cloud, that ten-year adoption ramp, is accelerated by eight years," Walker, chief executive of ten-year-old Dialpad, said in an interview recently with ZDNet via video.
The interview was carried out not via Zoom but via Walker's company's own program, UberConference, a business-friendly alternative that plugs into other business tools, such as cloud-based telephones.
Uberconference is part of a portfolio that ten-year-old Dialpad has been assembling through both internal development and acquisitions. With $250 million in funding, including a Series E round of venture earlier this year, the company is armed to go after more-established competitors such as Five9 and RingCentral.
Like those companies, Walker is in the business of selling an entire communications suite of tools that reside in the cloud. Those tools are obviously newly relevant as people are spending less and less time in a centralized, physical office space.
The pandemic, said Walker, made every company re-assess ever having a regular office.
"I have not spoken to one CEO who's saying, 'We are going back to the way it was,'" said Walker.
"Let's say you have 10% of your team that is remote, your platform needs to support that," he explained. "There are going to be so many more conference rooms where people are not in the office."
"My bet is, every conference room in every company now becomes video-enabled -- there are going to be so many meetings where people are not physically present."
To hear Walker tell it, this moment was made for Dialpad. The company, Walker contends, was "always probably the most natively built" for people to work anywhere, since it was a phone system that wasn't tied to phones. The company had trademarked the phrase "work from anywhere" back in 2015.
The lockdown that went into effect in early March of 2020 in California was a moment for Dialpad. "As CEO, you go through this initial shock of horde cash, pull bank lines, increase lines of credit," said Walker from his home, surrounded by portraits of great leaders -- Frederick Douglass, Abraham Lincoln, Jack Kennedy.
It was soon apparent, said Walker, that what was happening was that the world was moving in the direction of the semi-nomadic systems that he and his teammates had been crafting for years.
"45 to 60 days later, people have rallied to continue to work, and Dialpad-type products were part of that solution," said Walker.
Walker's bet is that the pivot lasts, so that the "pull-forward" means that a lot more companies are going to look like startups, right down to the way they lease office space.
WeWork is a partner of Dialpad's and also a customer, and Walker is in the process of signing many leases with WeWork. "Our leases are going to look a lot different than they looked before," he explained.
"We anticipate we are going to use a lot more WeWork going forward, but the leases are going to be smaller, we are going to have more of them, and we are going to treat them more like a clubhouse, less like a place where we expect you sit down and toil away at."
The new vision for the office sounds like a kind of accelerated version of the San Francisco startup office culture South of Market Street: All ping pong tables, no cubicles. (Dialpad used to have an actual headquarters, in San Francisco, not far from the financial district on California Street, but has since let go of that and now uses WeWork space in the city.)
The office, in Walker's view, becomes a "white board place with a bunch of couches, where you arm wrestle, and socialize, and get to know each other, and go out for drinks and socialize," he said. "But the day-to-day work, we really expect you mostly get done at home."
The recruiting future, he is convinced, will also take into account the need for work flexibility.
"It's going to be tough to recruit if you say, 'The good news is, if you join my company, you're going to be in downtown Manhattan all day, everyday,'" quips Walker.
"I can't imagine a company that wants to succeed being able to pull that off."
Championing the startup culture as the zeitgeist is an interesting personal pivot for a seasoned Valley insider. Walker, 55, began his career as an M&A lawyer, helping firms such as Cisco Systems do deal after deal to acquire young networking startups. Over many different jobs, he has seen his Valley commute expand from half an hour to one and a half hours, each way.
After he sold a previous startup, GrandCentral Communications, to Google in 2007, Walker was for a time the product manager for Google Voice and related products before leaving to found Dialpad. Now he's done with car time, as far as he's concerned.
"I'm never going back," he said of the endless trek. "I did that for nineteen years, think how much wasted time that was!"
It is a grind, he noted, sitting in front of a camera having video meetings all day. On the other hand, "When I walk into the kitchen at 5:31, man, that's a good life."
The obvious question for a serial entrepreneur, and an M&A lawyer, is whether Dialpad is a company that can stand alone. The company has "a ton of money in the bank," he notes, and while he won't disclose the run rate of revenue, save that it crossed over $100 million last year, he allows that, "We are really happy with it, we are growing at a really great clip."
"We're super-efficient," he added. "We spent less than $100 million to get to a hundred-million run-rate," he noted, far less than some more highly capitalized startups.
From Walker's perch, the company's software has been the way to acquire startups such as TalkIQ and Highfive that had a piece of the puzzle but not the whole solution, similar to what Cisco did. "It's fine to focus on this piece, but you'd do a lot better if it was part of a platform" is his philosophy of M&A.
Having put together the pieces, including Uberconference, "Now we have this platform that does everything -- contact center, phone, video -- all in one unified app, all with real time AI across all of it," he said.
Large partnerships are enhancing the way Dialpad goes to market, including a deal with T-Mobile US, which has 4,000 sales reps who can push the product as part of its "Work from anywhere" offering.
The movement for each company to be a startup means that even larger enterprises are moving into the zone of Dialpad, he believes.
"What COVID did was it basically made all of those legacy companies now need to support the things these modern companies support," he explained.
For a small company that simply wanted a PBX replacement, "Dialpad wasn't the answer," said Walker.
"Now that they're all saying, 'I need to support my workers at home,' that fits our sweet spot, so those companies now start looking more like our target customer.
Of competitors such as RingCentral and Five9, Walker is willing to dish only a little bit. RingCentral had no video product of its own, just what it resold from Zoom. And it didn't have AI across its product line, and for contact center software, RingCentral is re-selling InContact.
"They have a lot more engineers and they still can't do a third of what we do, and they don't have any real-time AI," he said. Dialpad is "a materially better, more modern platform."
As for Five9, "If your frame of reference is an Avaya contact center, Five9 looks pretty modern," he said. "If your frame of reference is I want something a little more modern that coaches my agents in real time, alerts my supervisor, etc., then we are going to be your answer."
Walker asserts Dialpad is taking deals from both of them.
In the next breath, he is willing to let those companies be the past. Things don't generally get too acrimonious in Valley culture. Dialpad shares offices in one location with the Five9 folks, he notes.
"I love Rowan, I like the guys working there," he said, referring to Five9 CEO Rowan Trollope. "They are all great companies, I don't have a whole lot bad to say about them other than they were Gen 1, they are a legacy platform, and we are coming after them," said Walker.
Regardless of taking share, the pie, said Walker, is large enough for many companies. "The business phone system and the call center, these are massive markets, worth over $100 billion" annually, he observed. The fact that many people are still using what has been de rigueur in offices, such as a Nortel desk set, is "madness," he said.
"I think it makes everyone sit up and realize the future of work is a big opportunity."
And so, the big question -- the $1.2 billion question, if you will, which is roughly the post-money valuation of Dialpad after this last E round -- is when Dialpad will go public.
Going public is always the goal when one founds a company, he noted. Going public is a step toward being a larger enterprise. Dialpad, for all its ambition, is still a small startup, with six hundred employees, albeit growing quickly. "It's definitely something I'm thinking about quite a bit."
"I'll give the political answer," he said. "When the time is right."
Walker's job, he said, is to make sure that things are in line, to get the company "capable of going public." That involves making sure that Dialpad can show the right metrics, including "good economics, good margins, good growth, and good churn." It also means having public company audits done, and "a lot of mechanics around controls and procedures in place."
"I think we're very close to being very capable to go public," he offered.
Regardless of the timing of going public, he is energized by the context in which Dialpad is competing, with a sense that the zeitgeist is in the company's favor.
"The market opportunity is so attractive," said Walker. "This is an amazing time to be enabling the work-from anywhere economy."