A Long Conversation With Jeff Ray

This afternoon I sat down with SolidWorks CEO Jeff Ray and spoke to him about wide range of things including his childhood, working at IBM and running SolidWorks. Jeff let me in on some behind the scenes action on SolidWorks on the Cloud and how exactly that came about. He also gave some cryptic information on Direct Modeling in the “New” SolidWorks. If you are a SolidWorks customer, I think you will find this conversation very interesting.

Deelip: Tell me something about your childhood, education and time before you started working.

Jeff: I was raised in a way that is a little untraditional. My father was in the military. He was a pilot in the US air force and then became a navigator and finally an electronics warfare officer. So we moved around a lot. I went to twelve different schools before I got out of high school. Thanks to the military enviroment that I grew up in, as a child I learned a lot about the incredibly bonds that are built among people. I grew up during the Cold War and there wasn’t the open access to news like how we have it today. I had friends whose fathers got shot down and it was never reported. They just didn’t come home. We never really knew if Dad was going to come back or not. This does kind of shape you a little bit. It changes your priorities. It teaches you not to sweat the small stuff. For me, it meant that I wanted to surround myself with people who have the same values that I had and held themselves up to an extremely high standard because that’s just he way it is in the military. There’s really not a lot of room for sloppiness or laziness when lives are on the line. The concept of teamwork was very much a part of what I grew up along with the concept of self sacrifice as well. For me it meant that I just wanted to find a job one day that would give me that chance. Coming out of high school I was lucky enough to be hired by IBM. I had spent a summer as an intern while I was in college. I was in pre-med at that time and after a summer at IBM I realized that this is a lot more fun than memorizing Latin. So I switched.

Deelip: When was this?

Jeff: In 1977 I got a BS in Ecnomics and a minor in Finance. I was going to change over to Computer Science and the IBM recruitment team told me, “Don’t worry about that. We’ll teach you all you need to know about technology“. But I liked Math so I followed the Bachelor of Science route which was much more Math intensive. I had a great career there.

Deelip: How long did you work at IBM?

Jeff: I worked at IBM for 17 years. I worked primarily in Sales positions. But I was also in a Finance position. I ran CreditCorp operations in the MidWest. I was ExecAssistant to a group Vice President. A variety of different things. After IBM I went to work for a couple of different technology companies after which I had an opportunity to land at SolidWorks. I joined SolidWorks in 2003 as the COO working with John McEleney and then when he retired I took his place in 2007.

Deelip: So how was it working for John McEleney?

Jeff: It was a blast. He was and still is a very generous person with his time and assistance. He is one of those rare executives that has absolutely no ego at all and truly understands the concept of the servant leader. I mean the ideal leader is one who literally serves his people.

Deelip: Usualy the thing with new CEO’s is that when they take charge they do something to make a statement, like shuffle people around, announce new stuff or a new vision. Did you do something like that as well?

Jeff: I didn’t need to make a statement because John had decided a while earlier that he was on a time frame to move on to the next phase of his life. In fact, at that time he was looking at becoming a High School Math teacher.

Deelip: When he was CEO of SolidWorks?

Jeff: Yes, he just loves Math and loves teaching. That was his long term aspiration. Of course, as it turns out, he is running a startup right now. But I fully believe that one day he will go back to school and be a teacher. And he will be a great one. So anyways, when I came in he was preparing me for the job. So there wasn’t a need for some massive changes after I took over. That being said, there were some issues that we were facing at that time. Some challenges that we had to address. I think we were most notably at risk in terms of our long term product strategy. We had been working so hard executing the strategy that we had laid out in the nineties that we weren’t investing the time and energy into looking at where we need to be 10 to 15 years from now. And that is something that our team took on.

Deelip: I guess that also the time when DS got in touch with SolidWorks to work on the cloud stuff.

Jeff: Not really. For a while we were following parallel paths without knowing it. Of course, I was sharing with Bernard my ideas and concerns. But when we launched our project for the future we didn’t launch it by saying “Let’s move to the cloud“. What we said was “Let’s kill SolidWorks the way SolidWorks has killed some other companies“. Now SolidWorks didn’t go into business to kill companies. They went into business to serve user needs. And it just so happenned that some companies couldn’t compete or took a different direction. But my fear was that someone was out there getting ready to do to us what we had done to others. That there were a group of people working in someone’s living room, which is pretty much how Jon Hirschtick and other people started SolidWorks, who were not encumbered by any intertia, momentum, install base, commitment to share holders or anything. They had total freedom like a startup truly does. And they were not bound by the constraints of the technologies that we were using. And so we pulled a small team of R&D people together and told them “We were basically going to spin you out. You are a startup and your job is to kill SolidWorks. Go start a business that uses the technologies available today that solves the csutomer’s problems. The only thing we are going to tell you is that you cannot leave this space.

Deelip: You mean they could not move into something like AEC. They had to stick to MCAD.

Jeff: Correct. We have shipped 1.3 million licenses. But there are still a lot more users out there that are not using our products. So we literally pulled them out and put them in a different building. We put them into a giant incubator site for startups about 5 miles from the office. One of our board members is a venture capitalist and the team had to start presenting to him on their ideas. He treated them like a how a venture capitalist treats someone coming in and saying, “I think I have a cool idea“. They would come up with ideas and he would often tear them apart. Or they would tell him that they would have their first prototype in the X number of months and he would tell them, “You are kidding yourselves. No one will fund that“. So what they came up with was the attractiveness of the online platforms. They already had the list of customer’s needs that had not been served by us or by anyone else. So they went out and looked for technologies, applications, products and markets. The first thing we noticed was that the online gaming market had a lot of the attributes of what we needed. So they ended up buying a whole lot of video games and scattered them all throughout their site. They had big gaming rooms and they went ahead and played World Of Warcraft and do the whole online gaming thing. They developed a whole series of metaphors for what they wanted to build as the next generation platform.

Deelip: How large was this team? And who was heading it?

Jeff: Less than 20 people. At that time they were still reporting to Austin. It was very much like a raw startup. They didn’t have enough people. They didn’t have enough money. They didn’t have all the fancy systems.

Deelip: And parallel to this DS was trying to do the same thing.

Jeff: Yes, and as we started to sit down and talk about things we realized that we were solving the same needs because there is not that much difference in the customers we serve when it comes to design engineers. So that’s when we said, “Let’s start working together“. And we then split up the work.

Deelip: So you are basically saying that you are going to kill SolidWorks, the product as we know it.

Jeff: Yes. But we are not the one who will be killing it. The marketplace will ultimately decide. And that’s what is so much fun about this. When we start shipping the technology in a couple of years time customers are going to have choices. Up until that point when we start shipping the product we don’t really offer them any choices. You can have any flavor as long as you run it on Windows. And by the way, here is the litany of hardware requirements that you need if you really want to optimize your performance. To be able to remove those barriers is liberating. And then the market will decide. The customers will decide when to move and how to move. And that’s the way it should be.

Deelip: So is SolidWorks going to be a lite version of CATIA?

Jeff: No. SolidWorks will not be a lite version of CATIA. The market is not looking for a lite version of CATIA.

Deelip: I ask because one of the applications you showed at SolidWorks World was titled SolidWorks V6. I know that V6 is a platform. But I guess that is what got people thinking.

Jeff: Yes, V6 is not a product. It’s a platform and we have fully embraced the V6 platform. That’s why I stood on stage and said that we are going to use the ENOVIA PLM because that to me is the right online platform. The benefit of that is that now we don’t have two different R&D teams with a big giant Chinese wall between them doing their own things. Now we have an extended team working with pockets of expertise working on the various big or small chunks that need to be done.

Deelip: There is a marked difference between they way SolidWorks and DS are approaching this concept of taking CAD to the Cloud and the way others are doing. In fact, the only other company that has really come out with something is Autodesk. They are not looking at taking CAD itself to the Cloud. But rather taking the stuff around CAD like simulation, rendering, etc. PTC is pointing itself in an opposite direction. They are saying that their customers are not asking for it and that the concept of taking CAD to the Cloud is a solution without a problem. Do you thinking PTC is committing the same mistake for the second time? I mean the first time they thought that there wasn’t a market for a MCAD system on Windows. And then SolidWorks came along.

Jeff: Well, I don’t know and I don’t worry a lot about it. To me what really counts is that in the next 3 to 5 years engineers are going to have two different and legitimate choices. How can that be bad? Do you really want to go shopping for a car and they all look the same, sound the same, perform the same and cost about the same? To me this is going to be very exciting. Some of us will get it right and some of us will miss it. And we’ll let the market decide.

Deelip: What do you make of the recent announcement from PTC regarding killing the Pro/ENGINEER brand?

Jeff: I can’t offer any value judgments on it but I do think it shows a high degree of courage. It’s not easy for anyone who has built a successful sustainable business to do something like that. And let me tell you, there are no people on this planet more loyal than Engineers and Designers. Once you have their trust its an awesome relationship. I just think it took a heck a lot of courage to do what they did. It’s just not a name. People’s lives are defined by that.

Deelip: Would it be fair to say that this new SolidWorks that you are going to come up in the next couple of years is going to have direct modeling capabilities like how it is implemented in other MCAD systems?

Jeff: It will have direct modeling. But it will not be it the way people are doing it today because we are not constrained with Windows.

Deelip: What has Direct Modeling got to do with Windows?

Jeff: You’ll see. That’s all I will say. (smiles)

Deelip: Where do you see SolidWorks 5 years from now?

Jeff: I think there is a large community of people that is not served by us. Just like how in 95 people didn’t know about the SolidWorks community that we have today. If you go back in time and tell people, “Here is a 4000 dollar product and we are going to sell a million of them“, you’d be laughed out of the room. I think this will be the same thing. The platform shift breaks down barriers and it makes technology available to people who didn’t think they could have it before. So there’s going to be a lot more customers. But I can’t tell you who they are because I don’t see them today. We are not calling on them today, much like the vendors in 95 weren’t calling the Windows users either.

Deelip: So you are saying that this new SolidWorks is going to expand the market.

Jeff: Absolutely. Everytime there is a disruption that removes barriers, be it pricing, techology, whatever it may be, you open up your doors to a whole new set of users, a whole new community. Its been proven over and over again.

Deelip: So coming back to Direct Modeling, I guess you are not going to add it to SolidWorks in its present state.

Jeff: You will see us continue to enhance Instant3D. There a lot of things that we can do there and we will continue to do that. The way Direct Modeling is done now is all sexy and nice to demo. But it is a hammer in search of a nail. Our customer’s spend over 70% of their time using SolidWorks. And if you are going to really be respectful of their time, you will need to do the hard research to understand what it is that they are doing and what gets in their way. And its often humbling to realize just how many problems you have created for your users just by the way you have chosen to present your technology.

Deelip: Will this new SolidWorks be based on the V6 PLM backbone.

Jeff: Yes, the online platform will be based on the ENOVIA V6 technology.

Deelip: So just like how CATIA V6 does not have a native file format, I guess the new SolidWorks won’t have one either.

Jeff: I don’t want to comment on that because I don’t want to limit the team in what they are doing. I could make a statement that I feel confortable with today and the team could walk in 6 months from now and say, “Opps! We learned something“. And by the way, around this time last year we had a big debate in the company to decide whether we should show what we did at SolidWorks World 2010. There were two camps. One was of the opinion that we should not show techology that we were not going to ship in the upcoming release. They said, “Why do you want to stir the pot and confuse people?“. The other camp thought that now was the time to do it. They said, “Lets step out of the bridge and set fire to it“. No turning back.

Deelip: So in which camp were you?

Jeff: What did you see on stage? (laughs) But we have no regrets. Our business is doing extremely well. We’ve had our best third quarter in the history of the company. This announcement did not disrupt the business. If anything, it gave customers the comfort that the money they were investing was well spent. I remember one customer from Israel telling me, “I don’t want to look stupid 5 years from now because of the commitment that I’ve made to you today. Now I feel comfortable because I know where you are going“.

Deelip: So at SolidWorks World 2011 are you going to continue with the messaging?

Jeff: No, we’ll show Connect which is a personal data sharing web based V6 technology. This is the first step of online and its serves a market right now that isn’t being served. 85% of the CAD users out there today do not have a PDM system and we think that this is a nice point of entry. We’ll be shipping it in the first quarter. And obviously we’ll be showing SolidWorks 2012 as well. And I think that’s enough.

Deelip: So the next time you bring up SolidWorks on the Cloud, it will actually be working.

Jeff: Yes, people will be able to use it. We have already made our stand and people already know where we are going.

Deelip: Is there anything else that you want to add?

Jeff: Well, this is an incredible time and is the most fun I’ve every had. I can’t believe that I get to work with the people I do and meet the customers I meet. I was on the phone last week with one of our employees in Pennsylvania talking about the miners that were rescued in Chile. That equipment was designed in SolidWorks. Even the drill bit was designed in SolidWorks. In fact, the bit failed during the operation and they had to redesign it on the fly in SolidWorks. Three days later they had the new bit on site in Chile. Those things just blow me away. We simply provide the tools. But to see the way people use them is like having the greatest job in the world. That couple with having the luxury be being very clear of where we are headed for the long term. We are not going to be a one hit wonder. We are not going to bet the business on one platform and just keep milking it. This is a team that has the courage to say, “Lets continue to look at other platforms and serve more people“. Its amazing to get that opportunity. And finally, it amazing to get through a horrible economy and not lay anyone off. And not one of our resellers went out of business. And that means a lot.