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Making Markets EP47: Extreme Networks CEO Ed Meyercord on Driving Growth and Meeting Customer Needs

Making Markets EP47: Extreme Networks CEO Ed Meyercord on Driving Growth and Meeting Customer Needs

In this episode of Making Markets, Ed Meyercord, CEO of Extreme Networks joins host Daniel Newman for a conversation about embracing change in the “infinite enterprise” era, resilience in the face of uncertainty, cultivating a winning culture, AI’s role in shaping the future, and differentiating through customer experience.

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Transcript:

Daniel Newman: When strong culture meets strong product demand, we see great outcomes. Ed Meyercord, CEO of Extreme Networks joins the show to talk about what he’s doing to drive a culture of growth within Extreme and how the company continues to meet its customers needs while being a company people like to do business with. All this and more on this week’s Making Markets.

Announcer: This is the Making Markets Podcast brought to you by The Futurum Group. We bring you top executives from the world’s most exciting technology companies, bridging the gap between strategy, markets, innovation, and the companies featured on the show. The Making Markets Podcast is for information and entertainment purposes only. Please do not take anything reflected in this show as investment advice. Now your host, CEO of The Futurum Group, Daniel Newman.

Daniel Newman: Ed Meyercord, CEO of Extreme Networks, welcome to Making Markets.

Ed Meyercord: Daniel, thank you for having me today.

Daniel Newman: It’s great to have you on. A first time guest. I’ve been following the company for quite a long time and things have been going well over at Extreme. We’re going to talk about that a little bit, but since you are a first timer on the show, first of all, great to have you, so much going on. Give me the rundown of some of the big kind of macro trends and focus are right now for you and your team over at Extreme Networks.

Ed Meyercord: Yeah, I think… I can go all the way back to COVID and what we call the infinite enterprise, we’re in the enterprise space as you know, and everybody left the office. And so now from a tech perspective, the IT teams have to support students, patients, workers in a distributed environment outside the office, outside the campus. So it’s what we call the infinite enterprise. And so that was a huge macro trend and then a lot of people that learned from the go with it, they don’t have to come back. And so it has been interesting. I mean, clearly people are starting to come back to the office, and students are clearly going back to the classroom and patients are going back to the hospital, et cetera. But in general, there’s more of a hybrid environment today than ever before. And then in the world of networking, it just means that it’s kind of gotten more complicated and networking in general is more complicated.

And so we’ve seen… That’s one trend that I point out. The other trend that we’ve seen, Daniel, is that networking infrastructure has proven to be somewhat resilient in times… We’re contemplating recession. Are we going to be in recession or out of recession? And we do a lot of business in Germany and there they had a recession, it was only a half point drop in GDP, but the first time since World War II since that’s happened over there and it puts a bit of a shock to the buying cycles. But in general, networking infrastructure is kind of, it’s the connected tissue of all digital transformation, all business initiatives. And so we’re fortunate because our segment of tech, IT infrastructure, specifically networking has been pretty resilient.

Daniel Newman: Yeah, I like that you bring those couple of points up. Those trends that you identified, Ed, they’re specific to Extreme, but they’re actually, they set up kind of a broader conversation on what’s going on in the world. You mentioned Germany, great point. We’ve been sort of teetering on the, are we heading into a recession or are we going to have a soft landing? I’d say two or three weeks ago, even though the last time you and I spoke before actually hopping on to do this, it was like, “Oh, things are looking great.” The market was green and stocks were within a few percentage of all time highs again. And then you just see how quickly the market giveth and the market taketh away. You get a couple of shaky data points, a little uncertainty out of China, you get a couple of hawkish comments from Fed chairs and everybody goes running scared. Crypto starts falling and the growth stocks start falling and then the more stable stocks start… And then everybody thinks the world’s ending.

I can tell you, just on my own personal accord, Ed, it never feels more like it’s going to continue to rally than it does in the middle of one and it never does feel more like it’s going to go to zero when things start going down and there’s this weird rationalism that just doesn’t exist when these markets are shaping. But we do have a lot going on.

I mean, look, even here in the US, it’s like we saw some great numbers out of tech earnings. We saw a couple of soft spots, PCs for instance, are still really soft, handheld devices, but infrastructure’s good. We saw Cisco recently showed some strong numbers for their year. We saw the cloud providers, slower growth, but I laugh at it because it’s, yeah, slower, but 25, 30% is still pretty good. I mean, what’s your overall feel? I joke, we’re not economists, but you are running a big public company. You must have a feel, good or bad, of how the market’s looking?

Ed Meyercord: It’s funny because a couple of weeks ago we were talking about it, it seemed like markets were just kind of cruising along. And one of the things that I look at is volatility. The VIX, the Volatility Index was the lowest it’s been in such a long time and now all of a sudden, to your point, it gets news, interest rate sensitivity and boom, volatility’s back. You’re seeing the markets move again.

But from our standpoint, you mentioned Cisco and their earnings. And look, they’re the 10-ton gorilla in our space, they’re the industry giant. But in our case, when you’re a six, 7% market share player and then you’re able to sort of eat away at market share, we like to say there’s large crumbs, because we take a little bit of market share, and that means a lot for Extreme. So we are in a fortunate position because we’re taking share, we’ve got a really attractive solution in the marketplace for all of our enterprise customers, and it really stands out for a lot of reasons relative to all the competitors in our space. And so we’re seeing a lot more opportunities, we’re winning more. And then despite some of these macro trends that we’re talking about, we’re still growing at a really healthy clip and we see that continuing in the future.

Daniel Newman: Yeah, let me use that as a pivot. I mentioned another company that had good earnings, Extreme had good earnings recently. I don’t know if I could have set that up better if I tried. But I mean give us all, give the audience a bit, give us the rundown of the recent Q4 and full year. I think you were kind of beaming when I first heard how things were going.

Ed Meyercord: Well, I mean we’re at a point now where every quarter for us it’s record revenue, record cashflow, record earnings because we’re on this growth trajectory and every quarter is higher than the last one. And so at some point it gets a little tiring to keep saying record, record, record. But the growth rate for us was a record, at 31% year-over-year growth. And that was just, for us, it was really nice to put that kind of print up on the board. And then it’s easy for us to say scoreboard, the numbers don’t lie. The numbers are audited. We’re a public company. And so that kind of growth was nice.

The other thing that happens is that we’re growing at a clip, and what we say is there’s operating leverage, just financially speaking, in our model so that when our top line is growing 31%, we’re more than doubling our earnings. And so there’s really fast velocity in terms of the earnings growth and then we’re in a very strong position from a financial perspective. And then some of the things that people don’t see, but we comment on is the fact that at a high level, but we have… We are hiring at Extreme, so we had a year of record hiring. A lot of our competitors have hiring freezes right now in the tech sector. I mean there’s just talk of layoffs, and that’s continuing, which is a sign of health. And with the success it means we’re able to reinvest in growth. And that’s a really nice trend.

The other thing is that we’re upleveling our brand in the marketplace, and so we’re winning bigger deals. We talked about the eight digit deal we have in Asia Pacific before we got on here, but our brand is moving up in the marketplace. So the other thing we announced is a record level of larger deals and we sort of look at deals over a million bucks. And so you’re seeing us play with some great names and people are surprised to hear the customers that we have. They don’t realize, they might not know our brand relative to a Cisco, relative to a HP or even Juniper to a lesser extent, but when they hear our customer brands, our brand really comes to life.

Daniel Newman: Yeah, I think that’s always been, as I see it, a very strong testimonial to the success is not… Building a brand takes a lot of time, effort, and money. And at times when you’re the market challenger, which you are and you’re gaining share in certain markets, you’re growing at a clip that is much faster than the largest competitors in most parts of your market, you’re doing a lot of things. Then it becomes choice, do we invest in channels? Do we invest in direct sales teams? Do we invest in product marketing versus brand marketing? Does a commercial at the Super Bowl help Extreme Networks at this current juncture of its lifecycle?

And the answer to that’s probably no. So what ends up happening is yes, it’s not a Thanksgiving conversation at the dinner table to talk about Extreme Networks, but you enter the CIO office of many companies, you enter and you talk to the architects of the data centers of enterprises and governments, they’re paying attention. They’re looking at you. They’re looking at ways that, whether it’s one part or multiple parts. And so you also said something else that was really important too, and that’s that the metrics are moving the right way. Net revenue expansion, it’s a number I always look at really closely. It’s, are your customers spending more? It’s product diversity. Are they moving from one SKU to multiples SKUs? It’s the recurring types of revenue, which I’d love to hear a bit about. I’m sure you’re thinking about it if you’re not in that path.

And you even mentioned, Ed, by the way, that you’re hiring. And I can tell you we work with hundreds of big tech companies and this has not been a net additive year for most companies. So what’s driving this? What’s driving those growth numbers and adoption and hiring and all these things that you’re saying?

Ed Meyercord: Well, without getting too philosophical, I think it relates to our culture as a company, but I think we’re just hitting on some more of the topical issues. We can go there if it makes sense. But right now we are in a position in the marketplace where there’s two very large players that have most of the market share and we have a far superior solution. And it’s just in a market that is really complicated, kind of expensive and it’s going through a lot of change and networking, there’s this mass mass migration of people wanting to move up to manage from the cloud and then to take advantage of modern technology and modern cloud networking tools and then AI and ML and all these great things that we have today. And it’s nice where we’re in a position where we just have a better solution for customers.

We’re by far the simplest, easiest to deploy and manage and we have technology behind it that just makes it much easier to stand up an enterprise network to manage an enterprise network, have insights as what’s going on. And as we like to say, there are new ways, if you’re an enterprise customer out there and you’re listening, there are new ways to leverage the network to drive outcomes. If you’re not thinking about the network this way, you’re thinking about a very old mindset and the old mindset is stuck with complexity. And a lot of that is by design, by some of the largest players.

So all of a sudden we roll in here with this fresh, we have one network, one cloud, one extreme, one simple solution. We offer the most flexibility, the most choice and the best path forward for any enterprise customer. So from that standpoint, we have a great solution. And then there’s just a great… You feel good when you’re bringing value to your customers and you know it’s different, and that is really important. And then our teams are just executing on a really high level.
And the other thing, this record of hiring in Extreme, our time to fill a req has never been lower because we have more talent trying to come to extreme than ever before, and our turnover in terms of attrition has never been lower. Overall turnover, when you’re looking at a rate that’s below 9%, that’s the best in the industry. So all these things are kind of coming together with the people and the teams and the energy and then really excited about how we’re just making the lives of enterprise customers so much better and it’s playing out with wins.

Daniel Newman: So I want to dig in a little bit on culture with you, but before I do that, I just want to say my chief communications officer would be very proud of you, just the way you did that, addressing the audience. If you’re a bot… I’m being serious, the way you did that, you seem like you’ve been through some good PR coaching, Ed. Because he always says to me, when you’re on TV, he’s like, “Make sure you don’t forget that you’re talking to the host, but address the audience.” So, bravo, bravo. We-

Ed Meyercord: I want to make sure I’m answering the questions. I’m not trying to-

Daniel Newman: Absolutely. You absolutely did. But it was so good, it was maybe the best I’ve had, and I’ve had some pretty… We’ve had 65 publicly traded CEOs on the Making Market show, so a great peer group, Ed. And so that was very well done.

Ed Meyercord: Well, I appreciate that. I appreciate that.

Daniel Newman: I’ve written seven books on digital transformation, future of work and AI and my studies have basically overwhelmingly found that culture… That Peter Drucker was right, that culture eats strategy for breakfast. I deeply want him to be wrong as an analyst and analytical thinker, because I want to believe that I can out muscle with great strategies and perfect operational execution. But the truth is when you have a culture, you mentioned some of this stuff, that it kind of creates this gravity. The best people come in, the weak fall off, the weaker becomes stronger, the customers fall in love. So all these things happen. But I’m hearing this kind of as a theme in the presentation, but I’m trying to understand, what’s creating that? Because that’s really hard to do. It’s not just you smiling and being nice. You have to entrench that in every kind of bit of the enterprise’s DNA from the first time someone interacts to the thousandth customer service call during a disaster when a product’s not working.

Ed Meyercord: Dan, you’re going right there, which is… I mean, I’m so glad you just said it because culture, it’s the sum of the 10,000 things that happen every day within your organization. It’s the behavior of every single customer call and a sales call, a tax support call, an internal team meeting. I want to tell you a story about our board. I just came back from Toronto where I was with my board this week and our board’s all bought in. But I think it starts with values and what kind of values you have, and then are you living your values? And then can you really… Are they values that you can push down to the organization so people can rally behind them?

And we have a culture of candor, which, in our minds, being real and transparency. You think about every one in the company, they’re all sitting at a different perch, so I can’t see what everyone else is seeing and they have to be comfortable sharing. Curiosity, we talk about how are we innovating in the market and you’ve got to be curious and not just with a product and technology, but also, how are we approaching partners? How should we invest our dollars? To your point about, is it in the channels, is it direct sales, definitely not with the Super Bowl advertisements. But these are questions, and then we need to be curious and then figuring it out and try creative things and then fail fast. Anyway, all these things. Owning outcomes, we are inclusive. Inclusivity for us, it’s about bringing diverse minds together, a creative mindset. It also for us, it’s about, hey, we’re not developing technology in a vacuum. We want to know about our customers and how does it affect, we want to know about channel and so we should be inclusive there.

And then it’s team sport. And team sport for us is not team sport where you always have a shoulder to cry on. It’s a team sport like, Daniel, could you imagine if you’re playing on LeBron James’ basketball team? He’s not going to be an easy teammate. He’s going to push you. He’s going to expect you to raise the game because he wants to win. And so teamwork in our culture is that.

So I know I’m doing a lot of talking here, but I’m very passionate about culture and it transcends from me all the way through the board and our employees feel it. And we just got back from board meetings in Toronto. We have wireless engineers, we have about a hundred people up in that office. Our board, we met in Toronto, we came up to the office, we had lunch. Every table saves a seat for a different board member and the board members are sitting there talking with the employees and then sharing their stories and then employees are sharing either their concerns or their…

And the board… Look, do you know a board that does that, that’s sitting there with all the employees? Every quarter we make this happen. We also, our board and our team met with partners, so we’re just completely transparent. And then we can’t manage all the messaging that’s going up to them, and so they know what’s going on and they’re involved and they’re energized and they do a better job I think now at supporting us. So it’s this vibrant energetic culture where people are just fired up and they can say what they think and that’s powerful and there’s just a lot of excitement and energy around, “Let’s go win.” And we’re coming up with some really creative ideas on how we’re really going to take market share.

Daniel Newman: And in the era of big data, ML, AI, that raw signal to leadership in the board is so important because as your company grows, and I know this even with ours, we’ve hired so many people, we’ve made four acquisitions in less than 12 months and seeing the cultures merge and being able to get that kind of raw signal and not being… And I use this word-

Ed Meyercord: At ease.

Daniel Newman: I use it in jest, but tyrannical in leadership. Like, “We’re going to do this, because…” I see with digital transformation, it’s like we did a global Salesforce deployment and it’s, there’s things you want people to do and it’s like, “They work for the company, they should just do it because I say so.” And it’s like, that is the absolute worst way to build a culture. You have to get buy-in from people. And when you build that buy-in, though, the work you get is so much better, but it’s hard. It’s push and pull. Those power bases, you want to be a legitimate power. “I’m the boss, I said so,” but that’s never a great way to build.

So I’m really excited to hear about and learn more and continue to see how this culture becomes a thing. I saw one company in storage, by the way. I don’t know if you follow Pure Storage at all, but Charlie’s been on our show a few times, Charlie Giancarlo their CEO. And they actually constantly promote the fact that they have the number one NPS score that they focus very much on the CX as a big… So I’m saying you can see things like culture and CX actually being a builder of better businesses and it’s becoming measurable because of data.

We have a couple minutes. I want to ask you something though, and I have to ask this to you, Ed, you haven’t even barely said the word AI. And I just got to ask, is it on purpose? Is it because… Because obviously networking is critical for moving data, and so a lot of AI workloads is extreme. What’s your are you you guys doing there?

Ed Meyercord: We’re all over it. And look, we have a new analyst, Tim Horan from Oppenheimer picked us up and he’s all about, “Look at the edge, and there’s going to be an explosion.” The Edge network and the enterprise is going to be exploding. And then obviously information which has always come from humans now is going to be eclipsed by information that’s generated by technology, if you will. But it’s part of our solution, it’s part of our differentiation at Extreme, which is purpose-built AI in the network. So now inside the network we’re collecting all of this data up in the cloud. So all of our customer’s network, we have data up in the cloud so we can start doing really creative things and predicting what’s going to happen in the network.

So now before a network fails, we’re aware that it has a high probability of failure at a certain point, and now if you’re an IT manager, we’re saying, “Hey Daniel, get ready because you’re going to have an issue here,” and we’re going to resolve the issue before it happens. That’s pretty powerful, just from a… Imagine a hospital, imagine our customers in a manufacturing environment or FedEx, a big customer of ours, all the packages running through. So that’s really important.

And then the next step for us is we’re looking at what are the other tools and abstracting the network. And we think about generative AI as all of the rage now, well, we can use this in terms of, how do we support our customers, just either from information from the internet and then our own website, our own data, just how do I fix, “I have an issue.” And, “Here’s my issue.” And then we can find, you can just talk into our tool, our cloud, and you’ll get an answer back. You don’t necessarily need to have a long, lengthy discussion with a tech representative.

And then it goes even further now as we move further down the path where we start getting into customer environments, and then we can say, “Okay, what’s in your network?” And start looking at devices. Obviously security is incredibly important, but now we can get in and we can… The future is a future where you could actually talk into our cloud and say, “I’d like to configure the network to do the following things in this environment,” and then all of a sudden you get a network configuration. Now you need to go through… People always say generative AI is a great first draft, but now all of the sudden you have a configuration. And then with tools like our Fabric, you could auto deploy it across an entire network using our Fabric. So it’s exciting, it’s just… Yes, I’m trying not to just hammer that home, the buzzwords of AI, because doing it today, it’s a big part of what we’re doing, purpose-built inside the network and then how we support customers and then the use cases will only grow in the future.

And I don’t want to pre-announce, we have some exciting announcements coming up, but we will be out in front, certainly the big… We’ll be out in front of everyone really in the networking space, in the enterprise networking space on with how we’re going to leverage the new tools and new technology. And it’s all about bringing simplicity, minimizing all the complexity that’s in the network and also bringing choice. And I think it’s going to be a lot more fun for people that are owning. Again, for all of our customers out there that are running enterprise networks, I think there’s just going to be a huge amount of benefit from the new technology. And it’s not really new technology, but.

Daniel Newman: Well, I love… A lot of AI washing right now. I like that you’re taking a practical approach, but I also, I heard you say you’re going to lead them all, and that’s a disruptor story if I’ve ever heard one. So very interested Ed in watching how this progresses. I’m going to be tracking you in the business as it goes forward, and hopefully you’ll come back on the show over the next few quarters and we can talk again.

Ed Meyercord: Great. Well, Daniel, congrats on all your success. I know you’re doing really well and things are going well for you and the team, and we really appreciate the opportunity to be with you and look forward to the opportunity in the future.

Daniel Newman: Ed Meyercord, CEO of Extreme Networks, thanks for joining us on Making Markets.

Announcer: Thank you for tuning in to Making Markets. Enjoy what you heard, please subscribe to get every episode on your favorite podcast platform. You can also watch us on the web at futurumgroup.com/makingmarkets. Until next time, this is Making Markets, your Essential show for market news, analysis and commentary on today’s most innovative tech companies.

Author Information

Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.

From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.

A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.

An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.

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