Being a purist is often not practical in business. But if the career path of former WebEx CEO and co-founder, Subrah Iyar, is anything to go by, then it is holding fast to personal convictions that makes all the difference. When Subrah began to conceptualize WebEx with his partner Min Zhu in late 1996, he didn’t start out aiming to change the world or rake in the millions. He simply wanted an efficient solution that he could use to do business without having to travel constantly. With his persistence, imagination, and inherent technical and business acumen, he ended up creating the world’s most-used web-conferencing brand, WebEx, eclipsing industry giants like Microsoft, and being the inadvertent architect of the Software-as-a-Service (SaaS) model.
What’s more, he achieved this in the heady days of the dotcom bubble, choosing to bootstrap his way up, despite the fact that venture funding was available to anyone who only had to ask. Above all, Subrah was steadfast in his belief in building the company through a self-directed journey where he was free to ideate and experiment as he wished, thus allowing him to enjoy the entire entrepreneurial experience instead of rushing through it! His foresight is what, many believe, helped WebEx to not only overcome the ensuing technology bubble-burst, but also adjust to the wildly fluctuating American markets, and survive (and thrive!) post its IPO.
WebEx was eventually sold to Cisco in 2007 for an astounding $3.2 billion, but not before setting a precedent that a stand-alone collaborative service company could also be a high growth business. And that success could be achieved while striking out on your own path, however contrarian it may be to the wisdom of the times.
At AnuPartha, we were captivated by Subrah’s story of the road less-traveled. We sat down with him to understand how the mind of this visionary works, how he manages to have one foot in the future, while remaining rooted in the present – be it at the start of his career at Intel and Apple, and even now, in his latest venture as co-founder and CEO of the on-demand, mobile collaboration app, Moxtra.
Subrah didn’t start off being an entrepreneur. He began his career at Intel, where he intended to interview for an engineering position but due to last minute circumstances, was interviewed by the Marketing VP. And thus quite by accident, or as some would say, serendipity, Subrah found himself involved with technical marketing. “The idea of coming out with products, creating revenue and working with early customers is what I did from the beginning”, says he. Not long after, he evolved into a sales position as well.
As it turned out, Subrah’s first sales deal itself was a massive $3 million, three times his yearly quota! He ruefully says “I regretted agreeing to a low number. I blew it out of the water as I always came up with ways to conceptualize something new!” Financially, he did far better than he had ever anticipated but, more importantly, he realized that there was no excitement and sense of achievement in doing the same thing over and over again, simply to make more money. What he loved was understanding the needs of the customer and monetizing it to create a solution of value. He was ready to move on after six solid years at Intel.
Subrah spent the next five years at Apple where he was instrumental in creating the first proprietary OS licensing business in the Newton Group. It was the age of the wireless network and mobile, and an exciting chapter for him as Apple, like Intel, was working on technology that was way ahead of its time. Even though Newton crashed, it was a “fun, learning experience” for Subrah and it was here he realized an important lesson – that getting the form-factor right was very critical for a new technology to take off.
Between 1994-1996, Subrah continued to dabble in cutting-edge innovation working with Teleos Research and Quarterdeck. In 1996, Quarterdeck acquired Future Labs whose founder was the tenacious and ambitious Min Zhu, who was already working on a net meeting/conferencing product. Subrah and Min Zhu struck a chord early on as they realized that they had complimentary skills and a shared passion for disruptive technology.
The crux of Subrah’s 50:50 partnership with Min Zhu was simple – Min Zhu was the technical mastermind who would make the software, and Subrah’s exceptional skills of communication, conceptualization and understanding the customer’s needs, saw him fulfill the sales end of the business. As he saw it, his role was to define the ‘form factor’ which would get users to eventually adopt the technology Min was developing. What Subrah respected about this partnership was that each individual was responsible for his part of the business, and did not require any micro-management. Subrah acknowledges, “Min Zhu was a very proud and thorough person. He never wanted his engineers to be free or lazy and in-between projects, he kept tweaking, he kept building and we kept selling!”
When Subrah first decided to dabble with the idea of online collaboration, many dismissed it. The reason was very obvious; the then industry leader, Microsoft, had just come up with its own VOIP and videoconferencing solution, NetMeeting, which was being bundled free with its Explorer browser. On the surface, to most, it seemed like a terrible idea. “They all said – ‘The barriers to entering a web communications network market are very high. Microsoft owns this game!’”
But Subrah’s motivation to enter the market was based purely on wanting to solve a problem. He found NetMeeting rigid to a point where he was unable to use it the way he wanted. Subrah describes his experience with NetMeeting as being akin to “the emperor without clothes!” He goes on to add; “Everyone said that they had heard of NetMeeting, but nobody used it.” This gave Subrah a unique insight into how the user’s mind worked. He noticed a collective ignorance about an easily available product, so he tailored his product to meet those real needs. Subrah had a vision and he knew what he wanted WebEx to be like. “I used it internally for my use, so it was sort of organically grown for myself.” he says. They stuck to their focus, and after lots of twists and turns, they finally launched the service that came to be known as WebEx in 1999.
The next step was to sell it. Considering it was at a time where Microsoft ruled the roost, they had to come up with an innovative selling strategy. Selling software to enterprises was a prohibitively expensive and drawn-out proposition for most companies, and they had to hire highly experienced sales people who could strike deals with CIOs. Subrah decided to take an entirely different path to sell WebEx, and his approach was simple and yet novel for its time. He targeted his prospective clients’ sales reps – to get them to use WebEx to demonstrate and sell their products to their customers. And in a brilliant tactical move, he packaged, and priced the WebEx solution as a service so that the sales manager could pay for it out of his own expense budget, without having to go to the CIO for approval. This was a revolutionary idea for its time, though we take it for granted today! The biggest benefit for the sales rep using WebEx was that he could dramatically cut down on his travel time and cost, while being far more productive. As Subrah puts it – “WebEx was built in such a way that I could sell our product without leaving my office, and so other people could also do the same with theirs!” This intuitive move helped WebEx gain quick acceptance among the sales reps, and by default, provided Subrah and his team with a ‘Trojan Horse’ entry strategy into large enterprise customers!
One of the biggest allures of WebEx was the fact that it was an extremely cost-effective solution, needed no installation, and did away with high costs of direct sales; thus helping Subrah make inroads into the cost-sensitive SME sector as well. “I realized that I didn’t need expensive sales people,” he adds. “I could hire less sophisticated folks while I used WebEx to run the sales and marketing part…and it worked!”
All this time, as WebEx was quickly gathering momentum, it seemed obvious that the next step would be to scale up the venture. And yet, both the founders balked at the idea, “We were unmanageable!” he confessed, with his characteristic hearty laugh and tongue-in-cheek humor.
The sheer ease and convenience of using WebEx was irresistible. It spread like wildfire! Webex went public by 2000 and generated $25 million in revenue that same year. By 2006, WebEx had generated nearly $50 million in profit on $380 million in revenue, before it was acquired by Cisco in 2007 for a whopping $3.2 billion. WebEx’s success can easily be attributed to the fact that they did not focus on market share, but on customers, and on being extremely sensitive to customer feedback. In a sense, innovation in technology led to an innovation in business model, one that was way ahead of its time. By delivering solutions in an easy-to-use way and taking risks on behalf of the consumer, they laid the foundation for the SaaS model years before Salesforce and Oracle made their millions based on it.
Subrah has never been one to look for money or the limelight. WebEx according to him was a one-off aberration! “Big companies are not my thing. WebEx had already gotten too unwieldy for me…I was not consciously looking to sell, but then companies like these can’t be sold, they get bought.” Despite the fame and the numerous ‘partner’ offers from VC firms that followed WebEx’s phenomenal success, Subrah was very clear that being an investor was not what gave him the most joy. “I realized that entrepreneurs are driven by freedom. They don’t work for anyone else even if they are penniless. I am like that too…I can work as long as I don’t feel like I am working for someone else!”
A rare breed indeed, Subrah is more focused on how to spend his money and time productively.
In the years that followed the famous WebEx buy out, Subrah used this time to explore several ventures but found that it was not motivating or challenging enough. “That’s why I thought I would make a movie!” he chimed, with the enthusiasm of a child. He dabbled in film production in Bollywood, but didn’t stick with it as it demanded no creative or intellectual input from his side. And Subrah has always been about learning new skills and finding new ways to conceptualize possibilities.
Subrah’s next big venture, Moxtra, again, sort of just happened! In fact, Moxtra was a confluence of various ideas from different people including his own college-going daughter that inspired him to return to his entrepreneurial roots. One of his biggest disappointments was that WebEx was out of reach for the student population due to its costs and so he says “I challenged my daughter to come up with some concepts around collaboration for a younger generation.” Around the same time, Subrah met Stanley Huang, a former WebEx colleague, who was working on next generation collaboration around mobility. Subrah says – “I kept throwing ideas at him and he kept building on it….and now $20 million and 4 years later, here I am!”
For Subrah, Moxtra is a completely different experience, and quite an appetizing challenge – a different kind of partnership and unlike with WebEx, his role here isn’t bootstrapping and getting into the details. He discloses, “I am only tapped on for things that I should be tapped on – like business models, providing a strategic vision, etc. It’s all very low maintenance.”
If there’s one thing Subrah Iyar has learnt over the years, it is about himself and his desire to be independent. That, by default, translates to a circle of independent people around him. While he admits that venture capital is critical for businesses, he knows it often comes at a cost.
He strongly believes that building a team of people who reflect the ethos of the founders makes for a harmonious culture that in turn fosters innovation. For him, it is finding the right people who are not merely driven by money, but those that feel a sense of ownership about their work. “I would rather attract people who are in it for the freedom and who are willing to go that extra mile. These people are internally driven. They want to feel like owners, and they want their views to be considered. If you inspire them, then they will give you their 110%.” He insists on involving engineers, consulting them and giving them opportunities to do cutting edge work with complete freedom, believing it goes a long way in driving innovation. The fact that he hasn’t lost a single engineer at Moxtra from the time they have been hired stands testimonial to his belief! On the flip side however, he says not everyone agrees with his approach! “My CFO has even told me that I give people so much rope that they sometimes hang themselves! But that’s just my style of management,” he says, with his typical self-deprecating chortle.
When his daughters showed interest in the business, Subrah didn’t give them the responsibility right away. Instead he made them work for it as an apprenticeship – a far cry from the traditional ‘family’ business model where the baton is typically passed on from generation to generation. Subrah says “I feel I owe it to them – to give them a balance. We have given them the foundation, but there’s no reason for taking away the reason to engage, and the joy in experiencing the high of an accomplishment.”
It is not easy to grasp the subtle genius of Subrah. He is the first to confess that he is a ‘reluctant CEO.’ He considers himself an ordinary guy, candidly confesses to his missteps and generously shares his success with his partners and colleagues. And he stands apart, in that he hasn’t let his meteoric success change who he fundamentally is and what he wants to do with his time. Indeed, his unique gift lies in developing ideas to build businesses that fulfill his eternal quest of “what can be!”
As a young boy, Subrah grew up in a film neighborhood in Mumbai and had film stars, writers and producers, for neighbors, so his dalliance with Bollywood was not entirely out of the blue. He would often wonder what it would be like to live a glamorous lifestyle. In those days, it was unthinkable for his traditional Tamilian-Brahmin upbringing to even consider this, and instead, he was told to maintain a focus on academic excellence above all else. Yet, by staying authentically himself, and employing the tools of imagination and perseverance, Subrah Iyar did end up making his own version of make-believe into a reality ….not on celluloid, but in full-blown real life!
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