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Survival Instinct
September 01, 2006
Akamai Technologies lost its cofounder on 9/11 and was on the verge of imploding during the dot-com bust. Five years later, the company is the undisputed leader in making the Web go faster.
By Julia Chang
In the corner of an outdoor office courtyard next to a grassy knoll grows an unassuming sapling that easily blends in with the other trees surrounding it. But upon closer inspection, this tree is different; at its roots lays a plaque that reads: "In memory of our founder, leader and friend, Danny Lewin, May 14, 1970 to September 11, 2001."
Lewin was aboard American Airlines flight 11, the plane that crashed into the north tower of the World Trade Center on Sept. 11, 2001. He was a high-tech executive who, according to the 9/11 Commission, may have used his training as a former Israeli military officer to try to stop the hijackers. The tree, however, is more than just a tribute: It represents the growth of Akamai Technologies, the Internet-services company in Cambridge, Mass., that Lewin cofounded with Tom Leighton, a professor at the Massachusetts Institute of Technology where Lewin went to graduate school. Akamai is also a green but growing entity with roots in Lewin; namely, his and Leighton's belief that the problem of Web congestion could be solved with applied mathematics and algorithms.
That idea has paid off: Last year, the eight-year-old company recorded revenue of $283.1 million, up 35 percent over 2004, and second-quarter 2006 revenues reached just over $100 million, a 56 percent increase from second-quarter 2005. At any given moment, Akamai's network handles 10 percent to 20 percent of all Web traffic through some 20,000 servers in 71 countries, and its enviable client list includes the likes of Yahoo!, Apple and IBM—a résumé that would have been hard to imagine five years earlier. On top of losing its charismatic cofounder, Akamai was on the verge of falling victim to the tech bubble burst when its dot-com-darling customers fell apart. At the time, observers predicted the company wasn't far behind.
"Frankly, at that point, a lot of people had given up on us," says President and CEO Paul Sagan, who has been with the company from its startup days. "As I talked to investors—those who even cared to talk to us—they said, 'Why are you guys working so hard?' " But according to Sagan, Akamai was already on the road to building a lasting business. In 2000, even as its stock price dipped into the single digits from a $110 per-share IPO in 1999, it had begun a more deliberate focus on permanent-economy, enterprise customers, rather than working with startups that would be gone in a digital heartbeat. Perhaps the greatest motivation to prove its staying power, however, was to fulfill Lewin's ideas on the future of conducting business on the Web. "I think Danny's death made us more determined to say, 'Not so fast. Don't count us out,' " Sagan says.
SURVIVING LOSS
On Sept. 11, 2001, Sagan, then only president, was the top executive at the home office. Employees knew immediately that Lewin had been on one of the hijacked flights; he made the Boston-to-Los Angeles trip often, and he had been on the phone with an employee prior to departure. With then CEO George Conrades stuck at an investor conference in California, it was up to Sagan to address employees and customers who had heard rumors about Lewin, a well-known figure in the high-tech community who had a direct relationship with many clients.
But concerned calls weren't the only ones the company fielded that day. It was also getting instant requests from customers wanting to be "Akamaized." After the attacks, Akamai's network traffic went through the roof as people searched for information and news. And companies wanted to offload their Web demand to Akamai's distributed network, which acts as an Internet traffic cop of sorts, sending data out from its vast server network using algorithms that plot the fastest and closest online path to the end user. "We had a lot of customers who wanted to use more of our services, and a bunch of people who weren't our customers saying, 'You know, we were thinking about buying. Could we buy this minute?' " Sagan says.
That day, major news sites for CNN, The Washington Post, MSNBC and ABC all used Akamai's network. "It ironically proved Danny's vision that the Internet would become a primary source of news and information for people, and what we did would become critical to that," he says. "I think to some extent, that helped people get through the shock for a couple of days. Because we knew what Danny would have done is say, 'Get back to work.' I think a lot of people just put their head down and did what they needed to do."
The road to recovery wasn't going to be easy. By the middle of 2002, more than 1,000 employees were pared back to about 500. Banking on its technology, however, the firm never scaled back its network or research and development. Executives also made sure customers knew how determined they were to stay afloat, and customers returned the favor: Sagan says they only lost ones who closed shop or were in severe financial straits. "They all stood by us," he says. "In fact, I think we proved our value more than ever on 9/11… I think we became a defacto standard for many customers when we proved our mettle during that period."
NEW MARKETS, NEW APPROACHES
That didn't mean, however, that changes weren't necessary if Akamai were to stay afloat. When the company shifted its focus to selling software as a service to enterprise companies, it produced some fundamental changes to its sales strategy as well. Starting in 2002, members of the sales force were replaced or retrained to adapt to a solution-selling model. "That was an investment we did decide to make when it was still difficult for us to make investments," Sagan says. "And that proved to be a really smart bet for us."
The more consultative style meant that Akamai's sales and services team—the organization includes direct sales, technical consultants, customer support, product managers and marketers, and is 400 strong in 18 global offices—made it their job to determine not only a company's technology requirements, but also its financial stability and long-term business goals. This had a practical purpose; Akamai had to make sure prospective clients could pay the bills. But the company was also pushing a new kind of client: The so-called "customer for life" with staying power who could grow with and through Akamai. "Absolutely [during the early years] Akamai had its share of dot-coms, but we were always focused on, 'Why isn't Hilton, or FedEx, or DaimlerChrysler, or Toyota using Akamai?" says Bob Hughes, executive vice president of global sales, services and marketing.
"During the discovery phase, we did sit down with them and reviewed their long-term strategies, as well as ours," says Mark Baldwin, cofounder and president of ICM Group, a London, Ontario–based provider of technology and Web services that helps print publishers create interactive content online. Baldwin became an Akamai client last year when he realized that the spate of new clients he had acquired would create more traffic than ICM's infrastructure could have handled for Boxing Day, the Canadian holiday and major shopping period. "The light-bulb moment was when we were in the planning stages and scoping out our Boxing Day traffic," he says. "Akamai certainly took a genuine interest in our business, and we recognized and appreciated that. To do it ourselves would have been an insurmountable task." Baldwin says Akamai currently handles about 70 percent of ICM's Web traffic.
Accompanying the customer-for-life mindshift was a reorganization from a primarily geographic, territory-driven model to one aligned by industry, with a special focus on the Fortune 2000 and the top Internet businesses in the Web 250. Hughes also knew the sales force had to stay flexible and jump on new trends that would breed new opportunities, so many industry-specific sales teams were formed or beefed up based on emerging sectors. In the post-9/11 environment, for instance, Akamai discovered the public sector became an indelible part of its customer fabric, as the government sought reliability in a more volatile time. It now counts all branches of the military, the FBI, the Department of Defense and the Federal Emergency Management Agency among its clients. "The government, in the time of a natural disaster or crisis, has to be available; it has to be there. We've enjoyed a lot of success in the public sector with all the e-gov initiatives going on," and that sector is now one of Akamai's top four customer industries, Hughes says.
Perhaps just as important as aligning big-picture sales strategy during the recovery years, however, was the everyday challenge Hughes faced in motivating a sales force that was pounding the pavement during trying times. During this period, Hughes took special care to dole out recognition by regularly communicating sales successes, a practice that continues today. "We do celebrate customer wins regularly, but I would say we definitely turned up the emphasis at that time," Hughes says. "You had to keep people from gravitating toward the bad news and focus on what was going well. Salespeople want to win and be recognized for it."
COMPETING WITH CUSTOMERS
Now, winning has become a bit easier. By steadily replacing its dead dot-com customers with long-term-value, enterprise customers, Akamai is beating out other Web content-delivery service providers. It does have competitors, such as Limelight Networks and Savvis Communications, but it dwarfs them in size and scope. "With the possible exception of Google, nobody has the network that Akamai does," says Jeff Van Rhee, senior equity analyst for Craig-Hallum Capital Group, an investment-banking firm based in Minneapolis. "It's very tough to match who they are and what they have. If the demand for bandwidth continues to go the way it's been growing, then they'll probably continue to see growth like they did this last quarter." In fact, Akamai believes its biggest competition to be its own prospects, many of which are do-it-yourselfers that rely on their own servers and infrastructure. "[Akamai is] the thread in the fabric of the Internet that you don't see until it's not there," says Rod Ratliff, a Memphis-based equity research analyst with financial services firm Stanford Group. "When it comes right down to it, its biggest competition is inertia, or the internal IT manager who thinks he's got it all."
Thus, the Akamai pitch focuses on returns, backed up by the company's ability to deliver real-time Web-traffic reporting. "Because we're in the service business, we have to prove a lasting ROI for our customer," Hughes says. "Akamai has to prove its value and reinforce its value through the customer's life with us. We will show customers what their business is like with or without Akamai." Akamai doesn't do free trials, but will at times allow prospects to try its services in exchange for a commitment to buy if Akamai meets defined success criteria. And it's usually an eye-opening experience. "We've seen customers who've said, 'We're handling traffic just fine,'" Sagan says. "But they didn't even know there was demand getting turned away. Often what we find with a customer is that they don't know yet what they don't know, but the benefit [of seeing the potential] is a pleasant surprise."
Although lost opportunities are typically associated with lost dollars on slow e-commerce sites, for Allan Van Buhler turning to Akamai was a way to nip an equally important business problem in the bud. As global vice president of marketing for ACN, a telecom services provider in Charlotte, N.C., that sells through reps in 18 countries, he knew it was important that the training and communication he provided to his reps via the Web ran without a glitch, to avoid hurting his brand with an independent sales force who isn't obligated to sell ACN's products and services. "They can sell for whomever, so our need to provide a high-quality experience to them is paramount," says Van Buhler. Prior to partnering with Akamai, ACN did its own hosting from North America, which "lended itself to delay, and was not a good user experience if you're a rep sitting in Europe," he says. Akamai's network was put to the test when ACN ran two nearly hour-long simulcasts this spring, one in North America and one in Europe, introducing real-estate mogul Donald Trump as an endorser for the company. Thousands of users logged onto the events, and much to Van Buhler's surprise, rep services agents in ACN's call centers received no calls complaining of technical glitches. With its global reach, "having our content on those servers close to the end-user is really important," Van Buhler says.
ACN's story is indicative of the next wave Akamai is riding, delivering Web content such as video and music downloads. Apple has been a customer since 1999 (which means Akamai sends you your iTunes), and some industry estimates put Akamai in control of 80 percent of the Web-content delivery services market. Shachar Oren, CEO of Neurotic Media, an Atlanta-based provider of customized music download services for entertainment companies and consumer brands, approached Akamai because of its leadership in this strong and developing market. One of Neurotic Media's main businesses is code-redemption campaigns, and it became a client based on several major projects it had in the works. "We knew our own existing pipeline, as far as bandwidth might go, would feel the heat of the campaigns," Oren says. "[Akamai was] the most scalable in partnership. We had our roadmap for growth and we needed a partner with ample resources to grow into within the next two to three years." Akamai now handles Neurotic Media's traffic once it exceeds a certain benchmark. And in the first month of going live, Oren estimates traffic was "maybe ten times higher than what I think they expected to see."
The notion of exceeding expectations sums up Akamai's story well. The company has emerged battered and bruised, but victorious, from personal tragedy and proved all the early naysayers wrong. But executives know that the still-young company can't stay content or let the success go to its head. On a wall in Sagan's office hangs a framed check from Yahoo!, a reminder of the first dollar that Akamai ever made. The most ostentatious thing about the company's offices is the Network Operations Command Center in the lobby, where engineers watch over Akamai's network from a room that is reminiscent of a broadcast news center or a NASA control room. And then there's that sapling in the courtyard, easy to miss among its larger, leafier neighbors, to honor a cofounder whose passionate presence is still felt in the corporate culture today. "The staff who was here [around 9/11] had to make a lot of tough choices…but said we're going to stay around to prove how right Danny was [about his vision]," Sagan says. "We're here now almost five years later, and we've proven that. There's a lot of satisfaction and we've done it the hard way."
Sales & Marketing Management Magazine
This article is brought to you by Sales & Marketing Management, the leading authority for executives in the sales and marketing field.
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