Kris Canekeratne: An Extraordinary Tale of an Extraordinary Impresario
Date: Friday , February 03, 2017
In the late 90\'s, when generation one offshore IT services companies focused on Y2K remediation and maintenance, an entrepreneur focused on technology innovation by applying the principles of software platforming to accelerate time-to-market, reduce costs and improve the end consumer experience of enterprise software and services. Specifically, his view and belief was that there was a select group of software engineers in India, Sri Lanka and the US, just like himself and others he had worked with, who would rather focus on innovation as opposed to remediation and support services driving the 1st wave of the offshore IT services industry. This is an extraordinary tale of an entrepreneur who co-founded two successful companies, one of which he took public (Virtusa) while the other was acquired by Oracle (eDocs). He is Kris Canekeratne, Chairman & CEO, Virtusa Corporation, an IT consulting, outsourcing & agile software development company that is engaged in digitally transforming large service oriented industries including Banking, Financial Services & Insurance (BFSI), Healthcare & Communications and Media & High Tech. A father of two, Kris and his family play an active role in philanthropic initiatives targeted at changing the way education and healthcare function.
The Awe-inspiring Entrepreneurial Journey
Kris comes from a software engineering background. Working with many talented individuals, he has designed and developed large scale software products and enterprise systems. In his first eight years as a professional, he worked with a large multi-national corporation (MNC) and at the age of 24, he joined the founding team of a startup in NYC. \"Prior to starting Virtusa and eDocs, I led technology and operations for a small startup in NYC dedicated to building a software product platform to support enterprise document management and customer care. During this time, I would make trips to my home town in Colombo, Sri Lanka to see my parents and, on those trips, I would invariably meet software engineers who were quite talented but lacked the opportunity to work on innovation. I felt that there was an opportunity to access this select but tremendous global software development talent pool and direct it towards innovation by building software platforms to help our clients accelerate business outcomes,\" reminisces Kris. This essence became the genesis of Virtusa.
Post commencement, Virtusa experimented with helping clients build unique software platforms, distinct from building bespoke applications. The initial success with this approach proved Kris\' hypothesis that software platforms are inherently more enduring, help accelerate time-to-market, reduce overall costs and provide a better end consumer experience. \"Our idea attracted very talented software engineers and technologists and we did several things right: we established a strong innovation and engineering ethos; we built a strong presence in consumer-oriented industries that depended on technology innovation to offer differentiated consumer services; we prided ourselves on service excellence and diligently measured client delight, different from customer satisfaction; we created a high-performance culture driven by leaderboards and gamified Continuous Integration Continuous Development (gCICD); and above all, we established a culture based on a set of core values that forms the glue that bonds our 17,000+ global team members together,\" explains Kris.
As the years passed, Virtusa\'s terrific platform enabled its team members to innovate and stretch the contours of what was possible by applying themselves. The opportunity to reimagine what clients do, and transform their business, attracted the cream of technology professionals away from the mundane and rudimentary bread & butter tasks and projects that defined the offshoring industry. And the grounded Kris never misses to attribute his success to his leadership team and outstanding team members who are very strong and capable in their own right, talented and always ready to give it their best. Being a one-of-a-kind entrepreneur, Kris understands the importance of empowerment; hence he has created a strong value system that guides Virtusa in terms of decisions that must be made day-in, day-out. The team is empowered with complete autonomy without constantly having to come to a single individual or a few people to make day-to-day decisions. This has been a large part of the reason that has enabled Virtusa to grow 2-2.5 times the pace of the industry over the past 10 years. \"It would have been very difficult to grow at the pace that we have if all decisions were single threaded through a single individual. This has also gone on to define our organizational fabric which is governed and led by our core values,\" asserts Kris. Today, Kris is very enthusiastic about the dawn of the 4th Industrial Revolution and how well Virtusa is positioned to help clients embrace and extend their Digital presence.
But being an entrepreneur has its own successes and struggles. His forward thinking traits have enabled Virtusa to navigate secular changes in stride, get through economic downturns, and he has aggressively adjusted the company\'s strategy, structure and management processes to stay ahead. He adds, \"It\'s critical for entrepreneurs to understand the importance of being open minded. Having co-founded and led Virtusa for the past 20 years, we have learnt to embrace change, by working diligently to understand the drivers of change, and staying slightly ahead\". Working on a four pronged principle (focus on systems that are at the intersection of clients and consumers, rapid change driven by millennial consumer expectations, regulatory change and technology maturation), Kris strongly believes in the role that serendipity plays in the lives of entrepreneurs and companies. \"I think it is important for any entrepreneur to check, double-check and re-check without jumping in because it takes a lot of patience, unrelenting effort, and diligence - and never underestimate the role that a little good fortune plays along the way - to really excel,\" asserts Kris.
Some of the Grapples
It was not an easy decision for Kris to turn entrepreneur, leaving his cosy and high profile job. But his sturdy determination and strong support from his family led him wear two hats simultaneously - of a father and an entrepreneur. Yes, Virtusa came into being in 1996 when his first son came into the world and eDocs in 1997 when his second son was born. Despite sleepless nights and restless days and with a small pinch of luck, Kris successfully turned the table in his favour. \"When we started Virtusa, my parents were very supportive and offered me space in their home in Colombo to use as our first offshore development centre. I am fortunate to have always had the blessings of my parents and the support of my family in all my ventures,\" says Kris.
\"I was also fortunate to have had the support of all my co-founders, including my wife Tushara, during the early days. All the founders played a key role and contributed their effort and time to get Virtusa off the ground. We were blessed with a great team and a set of initial clients who provided us early opportunities to trial the benefits of software platforms\". Kris\' vision of where the IT services industry was headed and his disciplined approach of working at the nexus of clients and their consumers in large service oriented industries played a significant role in shaping the future of the firm. Unrelenting focus on simplifying and helping clients make on-premise systems better followed by transitioning clients to on-line, mobile and digital has created the opportunity for Virtusa teams to stay at the cutting-edge of technology innovation and build an organization that is better positioned than any other IT services company to lead clients through the Digital demands of the 4th Industrial Revolution.
With sheer willpower and commitment, Kris took both his ventures to great heights very early. After co-founding eDocs and building the product platform, eDocs raised venture funding in 1998. For the two eDocs co-founders to raise venture capital for the first time wasn\'t easy, he quips, \"we pitched to over 50 VCs before one finally agreed to fund eDocs, but their offer was conditional, requiring us to bring an additional VC to share the investment with them\". Post aligning another VC, eDocs raised $4 million in return for giving the VCs a 40 percent stake, setting-up a 20 percent stock-option pool and retaining 40 percent for the founders. \"We also had to give up preferential voting rights and overall control. Over the next four years, we raised a total of $80 million in VC funding for eDocs, eventually diluting the founders’ ownership to about 15 percent. We sold the company to Siebel Systems (now Oracle) in 2004 for around $175 million,\" explains Kris.
But Virtusa was bootstrapped and Kris ran it profitably for the first five years before he felt the need to go to VCs for additional funding to support growth. In September 2000, the company raised $13 million of funding for a post-money valuation of $75 million. However, this time, Kris ensured founders would have control over the company. Profitably running the company for five years, clocking around $11 million in revenue at 20 percent margin in 2000, and the association with the eDocs success attracted VCs to invest in Virtusa.
However, there was a point of time when Virtusa was on the verge of collapsing. It was nine months post raising VC funds when Kris realized that things were not that good. The company experienced a very high burn rate making it unprofitable for the first time in its history. \"I remember sitting with Tom Holler, our CFO, who now is our Chief Strategy Officer, and going over a set of plans that he had developed to take our burn rate down and reorient the company. Tom and I had to make some tough calls, take out cost, and re-establish our business. Luckily for us, we moved quickly, made changes and lived on as, perhaps, one of the very few consulting and services companies founded in the mid to late 90\'s that survived the dot com melee,\" explains Kris. He stripped away all of the high cost strategy consultants, and started the process of rebuilding Virtusa. \"I learned a great deal from this experience but had it not been for Tom identifying the situation that we were in, and our willingness to make a course correction, I doubt we\'d be here having this conversation today!\" explains Kris.
Being Kris isn\'t easy. Even at the age of 51, Kris follows a strict routine, is very disciplined and applies a lot of rigour to fitness. His day starts with at least 30-45 minutes of cardiovascular exercises every other day, and twice a week he does an hour of High Intensity Interval Training under an instructor\'s supervision. \"I tend to spend a fair amount of time making sure that I am physically and mentally prepared and in this regard I shared a terrific book with my team called \'Younger Next Year\' by Chris Crowley & Henry S. Lodge, M.D., revealing the importance of physical fitness to be at the highest levels of performance,\" states Kris.
While his mornings start before 6 AM, he doesn\'t get to bed much before midnight. Much of his days are spent either with team members at various offices or with clients and investors. \"I am fortunate to work with some exceptional people. But without a doubt, ever since we founded Virtusa, I never felt like there were so many things coming at me that I was overwhelmed or sort of cut up into a million little pieces,\" explains Kris.
Today, both his sons are in college, but growing up in concert with Virtusa and eDocs was an extraordinary experience for them as well. \"It\'s been an integral part of building these companies and raising a family simultaneously. My sons have learned greatly by watching some of the things that have happened in and around our home. As I was able to surround myself with very strong leaders, I have been able to balance the pressure of running a global business and having a family with two wonderful sons,\" explains Kris. His love for food isn\'t hidden from the world. He enjoys South Asian, Italian and Japanese cuisine and his hunger pangs are very much alive. An avid reader, Kris loves to spend his free time reading some of the world\'s best business and leadership books to learn and apply the traits to his own business. While Kris confesses to not being a Digital Native, he has a smile on his face when he says that he is a Digital Immigrant! He is obsessed with his digital devices, is a keen student of new Digital business models and the drivers of the 4th Technology Revolution. Still a techie at heart, he routinely tinkers with new business models and apps on his iPhone!
You would be surprised to know that Kris was Sri Lanka\'s No.1 ranked Under 16 Table Tennis player, and won the under 16 Junior National Golf Championship during the same year. He also was the President of the Student Union at the school he attended. \"Sports have had a very significant influence on my life. Through sports I learned very early in my life the effort and the preparation required to get to the top rung but even more importantly the significance of that elusive element, luck! Simply put, the combination of preparation, hard work and luck separates winners from those that also ran! Many of these early life lessons including the thrill of victory and the agony of defeat have helped me a great deal in my personal and professional life,\" says Kris.
Kris and his family are deeply committed to philanthropy in two primary areas - education and healthcare. He truly believes that education is the bedrock and fundamental building block for human development and growth, and hence invests in various philanthropic initiatives that target education. Kris is also involved with Healthcare institutions and contributes towards different research programs at the leading-edge of technology and medicine.
Personally, Kris enjoys building Virtusa, especially given the distinctive opportunity of helping clients envision and execute new Digital business models to excel in the era of the 4th Industrial Revolution. \"We stayed true to our vision of applying innovation at the intersection of our clients and their consumers, perfected the conceptualization and execution of software platforms and led our clients through the transition from on-premise, to on-line, to mobile and, now, to Omni Channel Digital. The 4th Industrial Revolution is upon us and looking back on our 20-year journey, we could not have written the playbook any better! Virtusa has been through the Perfect Storm and is better positioned than any other IT services firm to create new business models through digital transformation and technology innovation for our clients,\" concludes Kris. With so much to offer to the world, no doubt, Kris has the entire sky to fly.