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WWW.CFOSTUDIO.COM
3rd Quarter 2012
Financial O cer, Chief Administrative O cer
and Treasurer at Vonage, was brought in to help
guide an operational, nancial, and reputational
turnaround at the Holmdel, NJ–based com-
pany. He was drawn to the challenge. Result:
e company’s Q1 nancials show revenue
of $215.9 million, and a er ve consecutive
quarters posting EBITDA of $40 million or bet-
ter, that measure slid slightly to $31.8 million
in Q1, as the company warned investors would
happen when it turned to investing in strategic
growth initiatives during 2012.
“ e bo om line has grown about $200
million from a negative $47 million prior to the
turnaround to $168 million in EBITDA last
year,” says Rowan. Vonage achieved a similar
$200 million improvement in net income and
free cash ow, driven by the two comprehensive
re nancings that Rowan led.
Now that the bo om line is healthy, Vonage
is working on strengthening a relatively at top
line (see sidebar, “Finding Growth During Rapid
Change”). One of the rst voice over internet
protocol (VoIP) providers, Vonage took advan-
tage of a breakthrough technology and the lack
of regulatory constraints hindering the existing
telecoms but absent in an internet environment.
But the company stumbled in the process and
almost went bankrupt. With its current growth
strategy, Vonage is looking at leveraging its
existing competencies and using its old tactic,
price disruption. “ at’s been Vonage’s heritage,”
Rowan says, using disruptive technologies like
delivering phone service over broadband to dra-
matically lower consumer costs in large existing
markets. Now the company is looking to disrupt
the major telecoms’ income from international
long distance, text messaging, and roaming with
its digital voice services.
Rowan is immensely pleased by the com-
pany’s turnaround for the obvious reasons,
but also because he believes that the primary
purpose of business is to serve society through
what he calls “responsible value creation.”
is is not the same as saying the purpose of
business is to make money. In an interview
with
Ethix
, a business magazine focusing on
technology and ethics, Rowan said, “I am not
saying that having more money is all we need
to make the world a be er place. at’s simply
not true, and to say it is would be promoting a
hollow materialism that leaves many wealthy
people aching for more.” But it is through
business
originally trade, then manufactur-
ing, inventing, and investing
that people
without goods to trade or land to farm can
earn a livable wage.
Speaking to
CFO Studio Magazine
, Rowan
says, “Business is the only institution that
creates economic value. Every other institu-
tion distributes it.” For customers, the result
is goods and services at a reasonable cost; for
employees, the result is a positive environ-
ment where they can grow their skills and
steady, healthy paychecks (see sidebar, “How
Business Serves Society”).
Defining the CFO’s Role
As a steward and a strategist, the CFO is
the individual in the company charged with
responsible value creation and telling the truth.
In order to stay focused on the main goal, “per-
forming pro tably,” Rowan suggests a test: “At
any moment of every day can I make a connec-
tion between what I’m doing in this moment
and a purpose for business that connects to my
purpose in life, which includes contributing to a
be er society?”
And in order to keep others from in at-
ing gures or failing to report negatives (for
instance, when it comes to SEC lings), a CFO
might remind the people in the nance and
legal departments who are preparing the docu-
ments that investors are making multimillion-
dollar decisions based on the accuracy of those
COVER
STORY
“
BUSINESS IS THE
ONLY INSTITUTION THAT
CREATES ECONOMIC
VALUE. EVERY OTHER
INSTITUTION
DISTRIBUTES IT.
”
Barry and his wife, Linda, left the Pacific Northwest when he
took the job at Vonage. They now live in New Jersey