You can go your own way
You can call it another lonely day
You can go your own way…
Go your own way!
On October 1, 2019, Nuance - one of the legendary players in the voice and AI ecosystem - spun off its automotive function into a separate, standalone company.
Cerence was born.
The market was so enthusiastic about this that the newborn company’s stock fell over 15% in the first 24 hours of trading.
Not exactly a warm welcome.
October 1 marked the first full year since Cerence had become its own company.
Cerence’s stock price tripled over the last year:
What’s even more remarkable is that Nuance’s stock price doubled over the same period of time, even in the absence of its most high-powered division:
Where there was one giant in the voice / AI landscape, now there are two.
CEO Paul Ricci, who cultivated the company’s strength in the automotive sector, retired in early 2018, clearing the deck for new leadership to take over.
That new leadership was Mark Benjamin, bringing a lengthy and distinguished career in technology with him as he took over as Nuance’s CEO.
Benjamin’s quote, from the press release announcing his arrival:
I am appreciative to the Board and am honored for the opportunity to lead this tremendous organization of innovative, talented and driven professionals.
I am excited to join Nuance at this important moment in the Company’s history and am eager to work closely with the team.
As I look ahead, I am confident that the Nuance team will continue to deliver important innovations for our customers and lead this dynamic field while creating meaningful value for our shareholders.
At the time of Cerence’s spinoff, the combined valuation of Nuance and Cerence was approximately 5 billion dollars.
Now, they share a combined valuation of roughly 12 billion dollars.
Meaningful shareholder value, indeed.
Prior to the spinoff, Nuance’s business had focused on four key areas:
Automotive was the highest growth business unit for the company, as well as the highest margin business unit for the company.
The problem was that a sense of stagnation had set in within Nuance, which had contributed significantly to the CEO change.
New CEO Mark Benjamin had been part of corporate restructuring before, where the act of selling off certain business units, and spinning off others, had unleashed latent potential within the parts of the company that remained.
In early 2019, Nuance announced the sale of its imaging division to Kofax, in an important preceding move which then allowed the company to turn its attention to what needed to be done to optimize the remaining business units.
Which, in turn, led to the decision to spin off Cerence, and leave healthcare and enterprise as the remaining focuses of Nuance.
The rest, as they say, is history.
Two-thirds of Cerence’s executive team came from Nuance, while the remaining one-third was hired from outside.
The vision for the company moving forward is simple: maintain growth, either through continued innovation, or seizing opportunities to expand either into new areas or new geographies.
At Cerence’s core is the ability for its voice/AI to intermediate between other voice assistants, such as Alexa, Google Assistant, and Siri, while also negotiating between cultures, languages, and more.
It’s about as valuable of a core competency in this space as you could dream up.
I couldn’t even write this VIP letter without there being a new Cerence win to include, from the time I started, to the time it was done.
Sometimes it pays to go your own way.
Tell me why
Everything turned around
Everything's waiting for you
Over 20,000 executives and technologists wake up to This Week In Voice VIP. Join them.
The music from This Week In Voice VIP appears on a custom Spotify playlist, which you can enjoy anytime.
This Week In Voice, Season 5, premieres Thursday October 15, featuring Daniela Braga (CEO, DefinedCrowd), Nils Lenke (VP Apps, Cerence), and Derek Roberti (VP Technology, North America, Cognigy). Will be a great way to kick off the new season.
Two free webinars coming up, both of which I will moderate and both are presented by DefinedCrowd (featuring a number of our other friends!) - click banners to register.
The Voice of Money is now a free event as well, with full jam-packed program posted.