Juniper Networks
Juniper Networks CEO Rami Rahim
- Juniper Networks CEO Rami Rahim was a Stanford graduate engineering student when he joined the networking giant as its 32nd employee. This was at the height of the dot-com boom, although some people in his life thought it was a bad idea.
- He witnessed the rise of Juniper as a "small little upstart" challenging Cisco, the "incumbent that was very big and very well-established," that eventually became a major player in the networking gear market.
- Today, Rahim is leading Juniper through a difficult transition. The rise of cloud computing has disrupted the
enterprise tech market and Juniper is exploring new market opportunities as this trend continues to evolve. - Click here for more BI Prime stories.
Joining an unknown startup was not unusual in 1997, at the height of the dot-com boom. But when Rami Rahim accepted an offer to be the 32nd employee at a "small little upstart" called Juniper Networks, he said some people thought it was a bad idea.
Juniper was building new networking equipment with which it planned to challenge Cisco, the Silicon Valley giant Rahim described as "an incumbent that was very big and very well-established."
"Let's just say people coached me against trying to take on this intense competition," Rahim told Business Insider. But he joined Juniper anyway. "It was a leap of faith."
That leap of faith paid off. Juniper turned out to be one of the most successful startups of the dot-com era. The networking company also became Rahim's professional home for the next 22 years, as he built his careers. Five years ago, employee number 32 officially became its fourth chief executive.
Today, Rahim is leading Juniper through another tricky transition - one that likely involves another leap of faith.
The company sells networking gear; the plumbing that connects a computing network within an organization and externally to the internet.
It's a tougher market these days than it used to be. With the rise of the cloud, businesses, including major corporations, are now able to set up and maintain networks in web-based platforms run by the likes of Amazon, Microsoft and Google. This has allowed them to scale back or even abandon their private data centers, which means dramatically less demand for the hardware from companies like Juniper or Cisco.
'Juniper is in a difficult spot'
Networking has also become a more competitive space, and one in which Juniper has lost share recently.
In the first quarter of 2018, Juniper was number 4 with 10.4% share in the $3.6 billion market for routers, which are used to connect a network to other networks, according to IDC. It was number 7 with 2.4% share in the $6.8 billion switch market for gear used to connect devices within a network. Both markets are dominated by Cisco, even as Juniper is slugging it out with other players, including Huawei and Hewlett Packard Enterprise.
"My sense is that Juniper is in a difficult spot," IDC President Crawford Del Prete told Business Insider.
Beyond the rise of cloud computing, networking gear makers also have had to grapple with the trend called software-defined networking, or SDN. This model allows businesses to use software to squeeze more performance and features out of even cheaper, commodity hardware, making it unnecessary for many to buy pricey, specialized networking gear. This trend is "lowering the margins in the network equipment space, even for service providers, Juniper's core customer set."
"This means that Juniper needs to lower costs in order to compete while at the same time offer value added services to customers - which means heavily investing in R&D," he said. Juniper also has a "more limited set of products" which means it doesn't have the scale of a rival like Cisco.
"My sense is that the company has been trying hard to move into higher value segments as the core networking market becomes more competitive," he said.
Focusing on a big inflection point in networking
Juniper is focused on what Rahim says is "a big inflection point" in networking, which is largely rooted in newer trends in cloud computing.
One is the hybrid cloud, in which businesses set up some of their infrastructure on a public cloud platform like Amazon Web Services or Microsoft Azure, while maintaining some of their network on their own servers and data centers. Another is multi-cloud, which, as the name suggests, involves using multiple of those cloud platforms.
For these models to work, companies need to build networks that straddle different platforms, plus private data centers. "The problem is that's easy to say but much harder to do," Rahim said.
That's that new market opportunity Juniper is focused on as it develops products aimed at the solving challenges posed by a multi-platform world. The company has struggled with revenue declines as it focused on a new strategy based on new products. Juniper has been reporting revenue declines since late 2017. In June, the company posted second quarter revenue of $1.1 billion, down 8% from the year-ago quarter.
But his team is focused on the long game, Rahim said.
"It is very important for us to play a disruptive game even if in the short term it disrupts us," he said. "From a share standpoint it might appear that Juniper is losing share because share is measured on a revenue basis, but the more important underlying trend is we're retaining our relevance."
In March, Juniper bought Mist Systems, an AI-powered networking gear maker, for $405 million. Gartner says buying Mist strengthens Juniper's position in wireless local area networking where it had previously relied on partnerships. Mist is considered a top vendor in the space - but that particular market is still dominated by Cisco's Meraki, which was itself a key acquisition, too.
He joined Juniper by accident
As CEO, Rahim can draw many lessons from his own experience as a Juniper pioneer. He was born in Lebanon and grew up in Canada where he became "enamored by technology" in the 1980s. He was a Stanford engineering graduate student during the dot-com boom of the 1990s.
He came across Juniper by accident. A recruiter called him as a reference check for his Stanford roommate who was being considered for a job at the startup. Rahim ended up being hired too.
It was a gamble for another reason. "Back then, Juniper was in stealth mode so they didn't really share that much about what they were doing," Rahim said. "They couldn't share that much, especially with a college grad who they didn't really trust that much."
Eventually, he found out Juniper's game plan: build "a brand new core router from scratch" and challenge Cisco.
"When I say from scratch, it was really from scratch," Rahim said. Building a new product wasn't the only problem. Juniper also had to convince customers to try it out -- which isn't easy, Rahim said. "At the end of the day, nobody is going to bet on an upstart in a way that says, 'I'm going to rip out my existing core network and put an entirely new network."
But enough customers did Juniper's first product, the M40 router, that it became a big hit at a time when companies were struggling to cope with intensifying network traffic from the newly unleashed World Wide Web.
"Even the most conservative buyers in the world back then were dealing with an insane amount of traffic growth and had no choice but to bet on an upstart that was trying to enter the market," Rahim said. "Quite frankly, our timing was very good."
He lived through the dot-com boom and bust
But the dot-com boom subsequently turned into a bust. That turned out to be Rahim's first major experience with market cycles which he quickly learned can be sudden and dramatic.
"There have certainly been ups and downs in my career here at Juniper," he said. "We went through the dot-com boom, then survived the dot-com bust that destroyed many companies in the valley and elsewhere."
Rahim has witnessed even more ups and downs over the past two decades, as the tech industry went through more dramatic changes. As CEO, he is also navigating the impact of the US-China trade conflict and broader economic uncertainties. There are many factors, Rahim said, that he and his team simply do not control.
"I approach with a certain amount of paranoia everything that we do," he said. "Ultimately our success will depend on our capabilities, our own execution as well as the appetite of our customers to consume."
But it's clear that Juniper will have to chart a new course and make new bold bets like the ones it took and made it successful two decades ago.
"What made us successful in the past was not going to be the thing that makes us successful in the future because of the changes that are happening around us in the industry," he said.
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