Lifesize CEO talks life after Logitech

Craig Malloy says spin-off from Logitech will help it take on videoconferencing market and partners can cash in on new cloud-based model

Reinventing a company's product portfolio and spinning off from its parent company is a process that any tech vendor would find daunting.

On 14 January US videoconferencing vendor Lifesize, which recently switched to a cloud-based product suite, completed its separation from Logitech. But CEO Craig Malloy (pictured) told CRN the newly independent company is rejuvenated and its partners can benefit from a "more sustainable" business model.

Founded in 2003, Lifesize began life as an on-premise video collaboration player, but Malloy said the company began to notice the "market starting to fall away underneath our feet", with the advent of the cloud service model.

"So we made the very bold step of wiping away our old on-premise business and in its place [building] a cloud service collaboration platform [which] was launched in July 2014," he said. "And we have had great success, [with] more than 2,000 paying customer accounts and we've been growing very rapidly."

With this bold transition, Lifesize undertook a "painful" restructure to its business that saw its workforce go from 550 employees to 250. It also made the decision to move away from its parent company Logitech, which acquired Lifesize in 2009, as its new cloud strategy was at odds with Logitech's consumer hardware business, Malloy said.

The relaunched company is owned by venture capital backers Redpoint Ventures, Sutter Hill Ventures and Meritech Capital Partners, which provided $17.5m (£12.25m) in funding, along with Lifesize management, while Logitech retains a 30 per cent share of the firm.

"We finished those three really tough transitions and we are now independent, focused, have the right capital, the right team, the right structure and a great product solution with our cloud-based video collaboration and meeting platform," he said. "And we are ready to tackle the rapidly growing $7bn worldwide conferencing market."

Malloy said this transition to an off-premise company has "caused a huge amount of discomfort to our channel partners and in some cases opened up holes".

But he said these difficulties have now been overcome and the advantages are clear for the partners that adapt with it.

"Lifesize offers a good year-one margin on the cloud services along with discounts on the hardware and then a recurring revenue component if the reseller helps us to retain that customer," he said. "The business model is different for the resellers but I would say [the opportunity] is even bigger going forward. They are just going to need to change from being focused on systems integration into sales and marketing engines. I think it's a different model but it's more sustainable, with bigger opportunities."

He added that moving away from Logitech means Lifesize can develop products faster in the long run, but in the short term its channel strategy will remain the same.

Looking forward, Malloy said he wants Lifesize to be the leader in the cloud-based meeting platforms industry and that there is currently a huge gap in the market it is looking to exploit.