Blue Jeans Network has helped reshape business video communications. The company was founded in the depths of the Great Recession and grew rapidly for years before eventually encountering significant competitive headwinds. 11 years after founding, the company experienced a massive surge in demand as the COVID-19 pandemic hit, and overnight became the lifeline for many thousands of enterprise customers that depended on them. Verizon saw the opportunity and moved aggressively to acquire BlueJeans in April 2020. I’d be lying if I said I was entirely happy about it. COVID has massively accelerated the adoption of virtual communications for businesses of all types and sizes. BlueJeans (or “RedJeans” as one Valley wag christened it after the acquisition) has a bright future as a linchpin of the Modern Enterprise. But this was far from an easy ride. The company you see today has come a long way since its speculative origins, and almost blew up on the launch pad.
Blue Jeans’ founder / CEO Krish Ramakrishnan has an uncanny ability to detect fuzzy, early market signals and turn them into strategy. I first met Krish in 2001 when I recruited him to lead Topspin Communications. Topspin was originally conceived as a “Content Engine” for use in CDN’s and web publishing infrastructure, but within months of joining Krish realized the dot-com crash had pushed this market out several years. Despite such bad early news, Krish was unflappable and completely retooled the product plan around a new type of server-side switching. In the process the team invented what later became known as I/O Virtualization. Krish knew that the server giants would eventually play a decisive role in this nascent market, and ran the table landing OEM deals and strategic partnerships with IBM, HP, Dell, NEC, NetApp, Oracle and others. Soon Topspin had established itself as the critical piece of the I/O Virtualization puzzle. The company was acquired in 2005 by Cisco, who had noticed Topspin’s steady penetration of major enterprise computing grids.
The decision to sell the company was a difficult one, and I initially opposed it. But the team sensed that its Infiniband-centric ecosystem was a fragile one, and market uptake was dampened by customer concern over the future of this technology. Some of the concepts pioneered by Topspin, including the dynamic resource management capability of its VFrame software, later came to life within Cisco’s virtual data center strategy. We had clearly been just a bit ahead of our time.
Krish ran the Data Center Business Unit at Cisco for several years, and then re-joined me in 2008 as an Entrepreneur-in-Residence. He started with the big-picture notions of video communications, cloud-based infrastructure, social adoption drivers and business customers. We iterated together to fill in the blanks. Along the way we met Alagu Periyannan, a brilliant technologist with deep experience in online video and security. He and Krish were perfect complements, and together they developed a plan for a cloud-based video collaboration service with unprecedented simplicity and universal reach.
We took this plan before my partners at Accel in early 2009, but the group was uncomfortable and would not move ahead with a financing. Krish and I sat in my office together after the meeting and struggled to decode the sometimes-conflicting feedback. It was back to the drawing board! The team spent the next several months narrowing the Release 1.0 product scope and reducing capital requirements. Meanwhile, the clouds of the financial crisis were slowly clearing, boosting investor optimism. When we took “Blue Jeans Version 2” back to the partnership, we were this time successful in winning the group’s support. I ended up leading Blue Jeans’ Series A financing later in the year along with co-investor Matt Howard of Norwest.
Strategic flexibility is one of Krish’s great strengths, and there have been many twists and turns on the BlueJeans road. The company was initially conceived as an interoperability service, a “cloud-based MCU” that allowed incompatible video endpoints (ranging from free desktop software to expensive room systems) to communicate. BlueJeans emphasized its Skype compatibility, but this was thrown into chaos when Microsoft (having acquired Skype) threatened to pull our license. Alagu and the engineers executed a crash program to develop BlueJeans’ own endpoint, and successfully migrated the growing user base to this technology. Crisis averted, but a strategic bridge had been crossed: we were now in the end user application business!
Shortly after BlueJeans got started, Eric Yuan founded Zoom. His plan was aimed squarely at the end user from the start, and every aspect of his product was intended to drive user satisfaction and frictionless adoption. He employed a peer-to-peer model with negligible cost of goods, enabling a freemium strategy that drove customer acquisition. Part of Eric’s genius was precisely how he baked his go-to-market strategy directly into the product architecture itself. This was quite different from the centralized BlueJeans system, which was a brilliant way to achieve interoperability but more expensive for basic, homogeneous video chats. Zoom skillfully executed an “attack from below” straight out of The Innovator’s Dilemma, slowing BlueJeans’ growth and contributing to harmful churn.
We recognized the threat but took too long to realize that what appeared to be a sales-and-marketing problem was actually a product problem. BlueJeans was not born as an end user application company, and it took a while to develop those skills. Eventually the company closed the gap with Zoom in end user experience and implemented its own low-cost peer-to-peer architecture, all while maintaining superiority in enterprise-grade capabilities. Importantly, these capabilities include security and data privacy, areas where the competition has substantial shortcomings as the world has come to appreciate. But by this time, Zoom had lapped us. BlueJeans had become a very substantial company in its own right but was playing for second place.
I have learned a lot through this experience, especially from the founders Krish and Alagu, two of the finest human beings I have had the honor of working with. It will be exciting to see how far they go from here, with a market tailwind at their backs and the resources of Verizon in their hands.