A Series of Forbes Insights Profiles of Thought Leaders Changing the Business Landscape: Dr. Tom Leighton, Co-Founder and CEO, Akamai...
“We’re in a pretty exciting place right now. There are major forces shaping the Web and we’re in a position to help enable really good things to happen,” says Tom Leighton the one-time MIT professor, now CEO of the $1.5 billion sales, $9.52 billion market cap Akamai. Leighton is referring to the market forces that work in Akamai’s favor to drive better, faster, cheaper delivery of content, especially video, in ultra HD over IP networks. The company positions itself as the leading provider of cloud services for helping enterprises provide secure, high-performing user experiences on any device, anywhere, but is perhaps best known as a CDN (Content Delivery Network).
“The vast majority of video is still consumed in the traditional way, over satellite or cable networks, with very little over IP. That is changing and is going to change dramatically in the future. New formats coming out – 4K and then 8K behind it – offer exciting and significant quality improvements. That’s going to result in tremendous increases in traffic and the capacity and the capabilities aren’t there for it yet. Network capacity has actually been upgraded, not only here but in many countries around the world. But the question is: How do you get the content to the last mile? (to the customer). That’s an area that was the thesis for creating the company back in 1998. "Now we’re developing a whole new generation of delivery technology to help enable that to be cost-effective,” says Leighton.
Akamai tends to get lumped together by the Street with Cloud service providers like Amazon, Rackspace and even VMware. In fact, Forbes recently identified Akamai as one of the best performing Cloud Service companies . Yet the company defies such a simple pigeon hole. In the complex world of internet infrastructure and software, Akamai has its roots as a CDN, but has greatly expanded its Cloud and Security offerings. It both competes with and partners with Telcos, Cloud Services like Amazon, infrastructure companies like Cisco, for which it recently announced a deal to include Akamai software inside their next generation routers.
As Leighton concedes, “we’re a bit of an odd duck. We place our software – often on our servers – everywhere we can, in thousands of places around the world. We have our physical servers sitting in 700 cities. We’re inside the infrastructure of 1,200 networks. No other company does that. People think of cloud companies as maybe having a few, or a few dozen, data centers. We’re in all the data centers, but we’re in thousands of other locations too, because the worst place in the world to serve your content from is a data center. It’s the most expensive, it’s the target for the attacker, and it’s the most congested. We place our servers out at the edges of the Internet where you can’t buy co-location. Plus we’ve got our software today on 40 million clients and user machines, and on top of that physical infrastructure we've built our own virtual Internet, using our own routing and communications protocols,” says Leighton.
Think of Akamai as a technology enabler. “I think it’s a very exciting future. We want to enable everyone to go home and watch an ultra-high-def video over IP. We want it so that when you click on those things, it is instant. We want it to be secure. We have a very fast-growing security business. People don’t think of us as a security company, but we’re really the only entity out there that stopped the big attacks. And we use that same platform that can distribute all the content at extremely high volume and speed, to deflect all the bad content at extremely high volume without sacrificing speed,” continues Leighton.
Leighton’s journey to the CEO role at a multi-billion dollar enterprise was anything but conventional. “It was a long and unlikely journey. I had zero business experience and, I think, probably zero business knowledge, at MIT. I was definitely in the ivory tower and loving it. I was interested in computer science problems and mathematics related to computer science. But even within the CS area, I would write papers with theorems and proofs of theorems – not code. It was always more about mathematics. I really didn’t have any desire to go into business or to even start a company. But I did have a strong interest in technology and in trying to make a difference in the world and solve problems,” says Leighton.
Leighton grew up in Arlington, Virginia. His dad was in the Navy. Tom was always attracted to math. “My dad’s not a mathematician, but somewhere the genes were there, because it was natural. I wanted to be a math researcher. I went to Princeton as an undergrad and then MIT for grad school to work on my PhD and to teach. I liked teaching. It’s a very rewarding experience. It all started to change when I started working on problems related to the Internet. And I started that in ’95, and Tim Berners-Lee (the founder of the World Wide Web) was down the hall. He had the Web Consortium group and I ran the algorithms group. We’d be talking and I’d be looking for problems that sounded practical so I could try to get funding for my group from the government (that’s what professors do),” says Leighton.
“Tim was talking about congestion on the Web back in ’95 and that turned out to be the kind of problem that would be in my team’s wheelhouse because that’s an algorithms problem: How do you route stuff around in a big network so that you balance the load, and so that it gets there fast and reliably?” Tom’s team abstracted that into a theoretical framework and started developing algorithms and proving theorems.
“It would have probably stayed like that, except that one of my graduate students, Danny Lewin, who had come over from the Technion in ’96 to study at MIT – very smart fellow – got interested in winning the MIT Sloan Business School $50,000 contest. Danny was up to his neck in debt. He wanted to be a theoretical professor, but we didn’t get paid very much back then. He convinced us to enter, but we had no idea how to write a business plan. But we learned. Not that we were planning to actually form a company--it’s a pretend company that you write a business plan for, but it was a competition and we wanted to win. We got to the final round, but didn’t win,” says Leighton.
Even though Tom and Danny’s team didn't win, the VCs approached them about starting a company, but they turned the VCs down. Tom and Danny would initially spend the summer trying to get people to use the technology, trying to license it. And then one of the VCs suggested they talk to content providers. Turned out content providers were interested if Akamai’s founding members could show they could make their sites faster and save their businesses money. In order to make that happen, they had to create a company. Thus Akamai was born.
“It was a big decision for us. I liked being a professor. Danny Lewin wanted to be a professor. But we also figured it could be a chance to do something that would make a difference and that we could actually impact the Internet. We believed the Internet was going to be the revolution of our time. We decided at the end of the summer of ’98 to bite the bullet and start the company. And it was the last resort, because it’s not something that we ever thought we would do. Danny asked me if I’d be CEO, and I said, “I’m not qualified.” I asked him if he wanted to be CEO; I’d be happy to work for him. He said no. So, we decided that we wanted to go get the best CEO we possibly could – somebody who really had business experience, somebody who had contacts – because we had no contacts. We actually made a fantasy list, and while we were doing that we met Paul Sagan because he’d been hired by Battery Ventures to check us out as part of the Sloan Business Plan Competition. We liked Paul and Paul caught the bug, and so he joined us, as President. At the top of our list was George Conrades because he’d been number two at IBM,” continues Leighton.
Amazingly, through a sequence of lucky events, the fledgling company actually got the vaunted business leader to join the firm as their CEO. “The Sunday night before the actual close of our first round of funding with Battery Ventures and the money was transferred – after the signatures were done – the general partner at the second funding VC firm called me and said they were pulling out, because they didn't think it could work. "He was very sorry, but he’s pulling out! That could have been devastating. And to Battery’s credit, they didn't try to exploit it. They funded their half of the round, and we went to go get the second party. This gave us a chance to go after George, who was now at Polaris Ventures,” says Leighton.
They worked out with Polaris that they could be the other investor in the first round and George would join the board. They got to meet George. And then, after a little while, they finally seduced him into becoming the CEO in early ’99. The New CEO didn’t mind having crazy technical founders running around, and in fact, embraced it. “They (Paul and George) made us a real company and I learned a ton from both of them. George became CEO and stayed with the company as chairman of the board and has been active ever since. Then Paul stepped in as CEO and I worked really closely with both of them over the last 15 years. I spent a lot of my time in the field selling and finding out what customers need,” continues Leighton.
Tom says he would have been happy working with George and Paul forever but then, Paul decided he wanted to step down. And while Tom didn’t grow up wanting to be in business, he decided he wanted to step up and be considered for the CEO role and have a chance to really help the company move forward. One of the first things he did as CEO was he went to the Street and let it be known that the company was going to deliberately take down EBITDA margins in order to invest more in R&D, and that it may take two or three years for some of those investments to pay off. He received mixed reaction. Short-term investors were not so happy, but the long-term holders agreed and encouraged him to continue to invest in innovating for the future.
What does that future look like? “I care a lot about the company. I care about the 4,000 people we employ. I care about the customers and the technology and the chance to make a difference. I think we’re just at the beginning of continuing to make this a great company. We’d like our software to be on pretty much every device – in every home, in every branch office, in every enterprise, and ubiquitous throughout the carriers, so that we can optimize and secure the delivery of all online content and applications. It’s going to take us a lot to get there! But that’s where we’re headed. That is the mission of the company,” concludes Leighton.
Bruce H. Rogers is the co-author of the recently published book Profitable Brilliance: How Professional Service Firms Become Thought Leaders
