Bandwidth’s David Morken: ‘We’re a 20-year overnight success’ as company hits $2 billion valuation mark

RALEIGH – Bandwidth’s CEO and founder David Morken can basically sum up his company’s crazy trajectory since its inception into one sentence: “We’re a 20-year overnight success.”

Back in 1999, he was a young attorney-turned-entrepreneur, fresh from serving in the Marine Corps as an advocate judge, when he founded the Raleigh-based software communications company in a “spare bedroom.”

Bandwidth CEO David Morken

For more than 18 years, he bootstrapped the company. Then in 2017, Bandwidth went public valued at around $300 million. A year later, it hit the $1 billion mark. This week, it hit the $2 billion mark.

“That’s a six-time valuation increase,” says Morken, shaking his head, while giving an interview in a side office at Bandwidth’s headquarters at NC State’s Centennial Campus last week. “It’s a new era when you have $150 million in the bank.”

Here’s the first in a three-part series where WRAL TechWire’s Chantal Allam asks him about doubling the company’s workforce, expanding into Europe, 5G, his spirituality and Bandwidth’s spinout, Republic Wireless.

Bandwidth’s shares have risen 83 percent since the beginning of the year. What’s the deal?

We’ve been fortunate to be able to do better, or as good as we said we would, and the markets have rewarded us for that. We invested our IPO proceeds appropriately in scaling and growing our development team, sales and marketing teams. We put that money to work, and we’re seeing the fruits of that.

So talk to us about that growth and expansion into Europe. How has it been?

It’s been phenomenal. Some teams quadrupled. Other teams grew by half. Overall, I think the company has approximately doubled in the last 18 months. We’re over a 700 employees, most of whom are right here in Raleigh.

This is really the season of execution and scale. Having been bootstrapped for so long, we did not put a significant amount of money into marketing, or scale our sales team very large.

So what I’m most excited about right now is actually less about what’s in the lab, and more about expansion into EU, Asia Pack for what we already do. We’re building data centers in Europe. We’ve already got a data center built out in the UK and Frankfurt. We’re almost a $2 billion company.

So you’re past becoming a unicorn (a company valued at $1 billion)?

Unicorn is a fictional beast that’s valued at a $1 billion but it shouldn’t be. We’re a mule because we’re 20 years in, stubborn and we can pull a lot of weight. (Laughs)

Are you done hiring?

We continue to hire. We’ve got a bunch of open recs. That said, doubling in 18 months is what I would call a surge, and we’re not hiring as rapidly as we did.

How have you maintained the work culture?

Everyone’s still hammering away, working together well. Everyone’s not checking their phones, worrying about the stock price, and that is a testament to a lot of the leadership here.

I spend a lot of time focused on culture. That includes things like new hire breakfasts and orientations, and getting to know absolutely everyone who joins.

We’re also not here to destroy families or health, so we do things a little bit differently. We have a 90-minute workout lunch; we have a vacation embargo. Those are cultural imperatives that I think promote who we are, even after going public.

On top of all this, you raised a secondary offering of primary investment capital of $135 million earlier this year. What are funds being used for?

Reinforcing success. We have a good critical eye to the top-line growth that we want to achieve, but also the bottom line profitability. So that capital is earmarked for use behind where we are having success on the sales desk.

Talk us through Bandwidth’s technology, and how it touches our everyday lives.

If you wake up in the morning, and say, ‘Alexa, call my mom on my smartphone.’ That’s us. If you say, ‘Google Home, call my bride on her smartphone.’ That’s us. If you dial into a video Zoom conference, that’s us.

We are Silicon Valley’s phone company for phone numbers and messaging.

So what should we be looking out for in your space?

You’ve heard of the Internet of Things. The next phase we’ve talked about is the 9-1-1 of Things. It’s a huge driver for our 9-1-1 emergency business, for sure. Big time.

It’s a service on top of the internet of things, where all these devices are connected to the network might be a sensor for appropriating emergency response.

Whether that’s a doorbell, a security camera with AI or thermostat – we’re watching creative teams build on our platform experiences that we could never have imagined.

Are you worried about the uncertainty in the global economy?

I was at an “all-hands” meeting this morning, and [that was] one of the questions that was asked of me. My answer to our colleague was: We have raised capital to reinforce success, but we do not just buy growth.

I’ve lived through ’01, ’04 (the telecom meltdown), 08’. We have cash on hand to make it through tough times, and we do not spend money as a profligate just for growth. We spend it to be profitably growing.

Rest assured, we always have a keen eye on the bottom line and burn rate. We return to profitability in 2021 with enough money in the bank to serve us well.

With 5G is coming onto the scene, how do you anticipate it will affect your business?

If mobile thrives, we thrive. We have 1500 creative teams that we support that are fostering new experiences on handsets where 5G helps with latency and video frame rates.

The mobile environment – if it is more vibrant because of 5G – our 1500 customers flourish, so we love that. But we’re one participant in that ecosystem.

Do you have any new products in the pipeline?

We’re working on things like WebRTC (Web Real-Time Communication), and it’s a very elegant way of combining audio, video and text through browsers so that, in a call center environment, if I’m the manager, and I want to see how [my employee] is doing on a call, I can actually listen in, whisper suggestions, barge into the call if I want in real time. Those kinds of call functions aren’t traditional, so WebRTC is an area that we’re excited about going to market with later this year.