How Krish Ramakrishnan creates successful companies as an industry “underdog”

Krish Ramakrishnan, co-founder and CEO, Blue Jeans Network Inc.

Krish Ramakrishnan isn’t a clairvoyant. He can’t actually predict the future. Yet as a serial entrepreneur, Ramakrishnan repeatedly succeeds at a feat that eludes some of the largest and well-funded businesses in the world: coming up with business ideas that transform industries.

Ramakrishnan’s most recent company, for example, provides a service that makes videoconferencing interoperable for businesses. So if you’re a Skype user, you can call somebody on Google or Cisco, and so on.

“It’s all about universal connectivity,” says Ramakrishnan, co-founder and CEO of Blue Jeans Network Inc. “If you have an iPhone and you’re only able to call other people on the iPhone, that’s not much use. And that’s what the state of videoconferencing was prior to Blue Jeans.

“All these business models said they wanted people to be attracted to their island without ever having the opportunity to be voted off the island. We made everybody get off the island.”

Seeing islands where others see market share is one of the ways Ramakrishnan creates such in-demand businesses. His previous start-up, Topspin Communications, was acquired by Cisco for $250 million in 2005. Cisco also acquired his first company, Internet Junction.

With nearly $50 million in venture funding, 100 employees and an impressive customer list —including Facebook, Groupon and Foursquare — Blue Jeans is now also on the fast track for growth.

But if Ramakrishnan isn’t a psychic, how has he been right so many times? The answer is, by looking at the obvious. One of chief reasons Blue Jeans is successful is the fact that the concept is actually, quite simple — so simple actually, that when it came out, many companies couldn’t believe there wasn’t already a business like it in the marketplace. So the question then becomes, ‘Why didn’t anyone else see it? And if they didn’t, why did he?’

Smart Business spoke with Ramakrishnan about how he identifies and pursues innovative business opportunities and why you don’t need to be an industry leader to transform an industry.

Q: How did you identify the market opportunity for Blue Jeans?

KR: I always look for trend lines in technology rather than headlines in technology. The headlines in technology are cloud computing, all of those things. But if you start a company based on the headlines, you’re shooting behind because everything is already designed. What you want to do is look at where all of these technology trends are going, and at the conversion of a couple of these trends, there might be an opportunity, a pain point, two or three years down the road that you need to solve for a customer.

Three years ago, video was in the headlines all the time because HDTV had come in. So I looked at one trend line as video was getting huge adoption. The second trend line I looked at was homes are getting broadband adoption, and in a big way. And independent of this, I was looking at demographics. There were lots of young people coming into the workforce.

So when you think about these things and say: If these trend lines intersect — they are not currently connected in any way — you’ve got the young workforce, broadband adoption and high-definition TV. If they intersect, what kinds of things could you design in the marketplace that could take advantage of these trend lines?

And I said, ‘Younger people are used to being on video. They probably want to use videoconferencing. If there’s more broadband available, they can do video from their home. And they want to be able to experience HD.’

Q: So you tapped into the idea of videoconferencing. But how did you approach it differently than companies already in the market?

KR: Videoconferencing is not used well in the workforce today, even though it’s been around. It’s very hard to use. And I said, ‘How can we make it pervasive?’ That was the question based on the trend lines. But that in and of itself doesn’t give you an opportunity. That just gives you a target to shoot at.

Then you have to figure out OK, videoconferencing. What are we going to do that’s something unique? When we looked at why everybody isn’t using videoconferencing, we found out people aren’t using it because it lacked ease of use, it lacked interoperability, and it was expensive. We said, ‘If we can solve these three things, we would have a big hit in our hands.’ And therein lies the hard work. … You can’t really solve one, because it may not be a big deal. It may be a ‘me too’ product. You need to solve all three issues to transform the industry.

Q: Once you solved those problems, how did you know your service would resonate with the marketplace?

KR: You need to get your potential customers to give you some help. It also helps — and this is true of Blue Jeans — to think like an outsider. The reason we’re successful, and this is something unique, is that we have no experience in videoconferencing.

In fact, that is the hallmark of our success. Intentionally, we did not hire anybody from the videoconferencing space at first. The first 10 employees were not from that space because we wanted to bring an outsider’s perspective.

What actually surprised us was the number one question that people asked us is, ‘What took you so long?’ And the flip side of the question was, ‘What you guys are doing is so obvious; why hasn’t anybody else done this?’ This directly relates to another one of our favorite axioms we use in our company. Einstein said you cannot solve problems with the same thinking that created it. The videoconferencing industry always saw the problem one way. That thinking is not going to help them break out of it.

So lesson No. 2 for me — and this is a piece of advice I give everybody — is don’t be afraid to go into new industries where you don’t have the actual expertise in the industry. If you have the drive and knowledge, you can get the expertise at the relevant time. But as an outsider, you actually bring a lot to the table to solving an industry’s problem.

Q: What are the keys to succeeding as an industry outsider?

KR: You need to understand from a business perspective what some of the pitfalls are in that industry. For instance, in the videoconferencing space, most of the buying was done by IT departments. Most of the scheduling and the conferencing were done by IT departments. So you need to understand how the dynamic of that particular industry works in order to design something that can be used by everybody. You need to talk to enough people, and of course, talk to industry incumbents and get their thoughts — not necessarily their advice. When you talk to them, they’re going to validate your thought process.

Q: How has your previous business experience helped you to grow Blue Jeans?

KR: When you start a company, you are a nobody, and you have to evolve into a somebody by building credibility. So the first rule of thumb is in order to build that larger-than-life image of yourself, of your company; you have to associate with successful people that are backing you.

This could be your advisory board. It could be other entrepreneurs that have been successful — so that when people come to your website and say, ‘Oh, Blue Jeans. Who is that?’ they look at the people who are backing you and the advisers who are advising you. Then they get that perception that this company must be doing something very interesting. … That goes a long way in building an image of the company.

The second half that’s always helped me is the fact that you only know about half of the problem. You don’t know exactly whether once you finish this product whether it’s going to take off in the market.

You need to have a very flexible attitude, even in the implementation in terms of the technology and architecture, so that you can change as you develop the product. You should be willing to change based on your business plan, your product idea, the final product and how you go to market.

The third thing is to be able to make decisions with imperfect data. If you wait for all the data to make a decision, your decision will be stale, and it will be too late. You need to be comfortable making decisions with imperfect data, and then have the flexibility to modify once you go.

Q: How did you build flexibility into the Blue Jeans model?

KR: The entire Blue Jeans business model was built on the idea that we build this product, we put it on the Web, and people buy it based on credit card transactions. If you like Blue Jeans’ service, you get your credit out and you buy Blue Jeans. Lo and behold, we found out that with videoconferencing, at the end of the day, customers liked the service, but they didn’t want to spend $5,000 on a credit card.

So we had to modify and hire sales teams — which was not in the business plan — to actually go and do that, and move us away from online transactions. That’s a huge change in the business plan, but we were willing to make that decision right then and there and say, ‘We have to do it,’ rather than say, ‘This is our plan; we ought to try it.’

Remember there is a fine line between perseverance and stupidity, and you only know after the fact. You can keep trying the same thing, and if you break through, people say you are a genius. But if you keep doing the same thing and you can’t break though the wall, people say, ‘That guy is a moron.’

Q: The name ‘Blue Jeans’ is rather ambiguous. What made you choose it?

KR: People who do not think differently will always say, ‘Why did you call it Blue Jeans? It has nothing do with videoconferencing.’ But customers actually love the name. And one of the traits is once you hear the name Blue Jeans, you do not forget it. It also differentiates us from all of the videoconferencing players, because everybody starts with a V — video this, video that.

When you pick a company name, it doesn’t have to be closely tied to the technology that you’re solving today because as the company grows, you may have to pivot. You may have to go into a new market and so on. So you want a name that can be yours forever, rather than having to change it. … You want to come up with a name that can accommodate all future directions of your company. <<

How to reach: Blue Jeans Network Inc., (800) 403-9256 or www.bluejeans.com

The Ramakrishnan File

Krish Ramakrishnan
Co-founder and CEO
Blue Jeans Network

Born: Myanmar
Education: Monmouth University — M.S., Computer Science

Why consensus decision-making can work, with the right team: Once you have your team, decision-making becomes easy. My style as much as possible is to have a consensus. Try to have consensus-oriented management team, where everybody has an opinion and then we sort of come to a consensus on a particular decision that we make. But one of the things I also encourage in the company is dissent. You need to have dissent in the company. People who disagree need to feel comfortable disagreeing with their management team, with their CEO publicly, and not be chastised for it. If a company is full of people who just follow your word all the time, that’s not going to be successful company. You need people who are confident voicing their opinion. And you as a leader need to encourage that . . . That fosters a great company.

On winning over investors as an industry outsider: For the investors, it’s always going to be a challenge because they’re thinking, ‘You don’t have any experience in this industry. Why should I believe in you?’ If you have a track record of building successful business, that goes a long way. So they can see patterns of what you’ve done and they can believe in that. But beyond that, when you present a compelling business plan — this is the problem of the industry and this is how I’m going to solve it — for an average person, it should make sense. If it doesn’t make sense, you’re not on the right path. If it does make sense, the investors get excited because they see an opportunity; and more importantly, there is an emotional connection because you’re coming in as an underdog, an outsider to the industry. Everybody wants to help an underdog win.

 

 

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *