Blue Jeans Raises $50 Million
Blue Jeans Network announced that it secured an additional $50 million in funding. The round was led by Battery Ventures, with participation from previous investors including Accel Partners, New Enterprise Associates and Norwest Ventures Partners. The round brings its total capital raised to nearly $100 million.
Congratulations to Blue Jeans, it’s impressive what they have accomplished.
What does this mean?
Here’s my interpretation of the news.
Blue Jeans has proved the value of seamless video conferencing interoperability. The major vendors insist there isn’t a problem. Not only is there a huge, painful problem; but a solution as well.
The funding shows that despite the UC space being dominated by huge vendors, innovation opportunities exist for smaller vendors – but it takes cash.
The deal also suggests increased confidence in cloud services over premises-based solutions such as MCUs.
Lastly, Blue Jeans is in it for the long haul and won’t likely be acquired.
Blue Jeans claims to have serviced more than 2,000 business customers which expands to over 3 million participants. The company expects to stream 100 million minutes of video conferencing this year. That reflects 4x growth over last year as it reported 24 million minutes in 2012.
Cloud services shine when it comes to interoperability. If two firms have video endpoints – then connecting them should be easy. Organizations that are still trying to sort out which brand who has or what codec to use aren’t using services like Blue Jeans. The major vendors feel the best solution to interoperability hassles is more like-branded equipment.
There’s a reasonable debate regarding cloud vs. premises when it comes to video infrastructure. But the cloud has two big (and growing) advantages on its side: mobility and interoperability.
A key benefit associated with corporate infrastructure is the reduction of WAN costs and capacity. That’s why organizations buy phone systems – because a separate analog line to every desk is cost-prohibitive. However, when all the participants of a conference are remote, then the opposite happens. Organizations need to have network capacity to bring all that traffic in (and out) of the private infrastructure.
Distributed teams are the new norm.
Mobility also drives cloud. There’s two ways to look at mobility: devices and locations. Most quickly associate mobility with devices such as smartphones and tablets. Location mobility refers broadly to remote users of all kinds. Mobility, as in outside of the office, is big and getting bigger. It could be home-based users, laptops in coffee shops, or even hotel guests. In both cases, form factors and networks become a bit of a wild card. Cloud services tend to serve the users with a good mix of services that maximize productivity. Remote workers need to communicate with colleagues – and that means voice, email, IM, specific apps, and yes video – seamlessly and painlessly.
So that’s all great news. Blue Jeans has proven its model, and the forecast calls for more interoperability and more mobility. The perfect storm.
However, there is bad news too. WIth over $100 million now invested, Blue Jeans isn’t likely to get acquired. Perhaps that was the initial goal – world domination by organic growth. Or, perhaps that’s just what happened because there were no acquirers before the cash ran out. Regardless, it’s a long road ahead with few exits.
Big acquisitions do happen, but not nearly as frequently as smaller ones. They need to be fairly strategic, and usually profitable. This is not a unique problem (nor necessarily even a problem); firms like BroadSoft, Juniper, Extreme, and Vidyo have all been so successful that they also likely closed their “be acquired” door.
I would imagine that AGT, Yorktel, and especially Vidtel are quite pleased with the funding. Blue Jeans confirmed the cloud video model and became a far more expensive competitor for acquisition.
The big vendors aren’t on the bench. Cisco has integrated video into WebEx, LifeSize offers its Connections service, Vidyo has Vidyoway, and Polycom is seriously considering something. But so far, none of them have nailed cloud, interoperability, and simplicity in a single package.