Ahead of its long-awaited public update, Synchronoss CEO Lurie speaks out

Glenn Lurie, CEO of Synchronoss, will host a business update call next week, but we already caught up with him to find out what’s going on at this most intriguing of companies.

We first spoke to Lurie in November of last year last year not long after he had become Synchronoss CEO. In the process of researching that interview saw that the company had both bought and sold a company – IntraLinks – in that same year, which seemed odd. So we did a bit more digging and uncovered a fairly remarkable sequence of events involving Synchronoss in the previous year or two.

At MWC earlier this year we got our first opportunity to speak to Lurie since that follow-up piece and started by asking him what that IntraLinks business was all about. “The company had decided to diversify and made the decision to buy IntraLinks for $821 million,” said Lurie. “The decision was about diversifying where they were playing and at the same time they broke off their call centre business called STI and we still have a piece of that. The idea was that the company didn’t feel they were getting the multiples they thought they deserved as a software player in the TMT space.

“Deals like that usually go really well or really badly and that one went badly. There was a massive culture clash between the organizations. The CEO of Interlinks was brought in to run all of Synchronoss and, candidly and respectfully, that just didn’t work. To the credit of the Synchronoss board, it reacted quickly and also noted that it had an asset that wasn’t necessarily growing as anticipated, not fitting in the portfolio, and ten months after buying it, sold it for just under a billion dollars.”

Once the dust had settled, one of Lurie’s first decisions was to accept $185 million of investment from Siris Capital – the private equity company that acquired IntraLinks from Synchronoss and seems to quite like the telecoms sector. This is positioned as a significant endorsement of Synchronoss now, as opposed to a year ago, which was the last time it filed any accounts.

Which brought us onto the matter of how things are going with NASDAQ, with which it is not in compliance thanks to those absent accounts. “I was personally part of a recent meeting with the NASDAQ and they saw our plans, understood the work we’re doing with our auditor, and were obviously impressed enough that they gave us the extension necessary to get it done,” said Lurie. “We can’t go public with everything yet, but we will. I’m excited to go public with the strategy, but for now all the things we can talk about – including the hiring of a number of established industry executives – are showing good progress.”

But why is it taking so long? When Interlinks came in there were some questions asked by that new leadership around what’s called ‘revenue recognition’,” said Lurie. “In the world of licenses, which is what we do, this can be very difficult in the sense that, if you get a license do you take that revenue in-quarter or over the life of the contract? And you work with your auditors to make those decisions. So once there’s a question you have to work through it with the audit committee, which in a sense put us into an audit situation. That takes a while, but once it’s done it puts us in the situation where we can start afresh.”

Another question mark we raised was around Founder and long-time CEO Steve Waldis, who didn’t seem to hit it off with the last guy he brought in to take the reins. I’ve known Steve 14 years, so we have a long-standing relationship,” said Lurie. “We did business together at AT&T since 2004, he’s a great guy to work with – very intelligent – and his reputation inside the carrier world is spectacular. Synchronoss has always been one of those incredible partners, versus just a vendor. When we (AT&T) were working with Steve Jobs, Tim Cook and the team, Steve (Jobs) did not want activation to be in the store in the original iPhone and built a separate activation inside of iTunes. Now we knew that was going to be difficult for a short period of time and our safety net for us at that time was Synchronoss.”

We concluded by asking about the longer-term strategy for Synchronoss, assuming it eventually gets things back on track, starts filing accounts, etc. Lurie sees a big role for Synchronoss, which does a lot of its business helping operators with the consumer cloud, in both IoT and 5G. On the IoT side, he feels his company can be agile and fit into the max how and when operators need them. He also feels many of the key characteristics of 5G play to Synchronoss’ strengths, not least in how it might change the nature of mobile devices.

When you start getting into 5G you get computing on the edge, you have latencies that are going to be almost real-time, you start to question how much resource needs to reside on the device,” said Lurie. “You get a true cloud backup world where now you can draw on the cloud quickly and I think that’s going to give device manufacturers flexibility to be more creative. So as things come out of the device I think we’re going to see another round of innovation.”

Since Lurie is, to the best of our knowledge, still the CEO of Synchronoss, things are already looking better than they did nine months ago. He certainly presented a clear vision of where he wants to go and the endorsement of various canny industry players, as well as the renewal of key contracts such as the Verizon one, announced today, make it easy to believe the worst is behind this enigmatic company. We will know more after the business update call.