RealTime IT News

Q&A: Akamai Chairman and CEO George Conrades

Akamai burst on the national IT scene in 1999 with an eye-popping IPO and technology that addressed a growing problem -- slow download times.

But when the new economy convulsed two years later, the Cambridge, Mass., firm, like many of its contemporaries, was over-extended. Since then, Chairman and CEO George Conrades has walked the fine line between cost-cutting and investing in research and development.

Now, after two years of highs and two years of lows, Conrades feels that the company is entering a period of steady growth.

Conrades recently sat down with internetnews.com in his small corner office overlooking Kendall Square. His desk and shelves are filled with pictures of his children and grandchildren as well as model Harley-Davidsons (he's on the board of the motorcycle company).

In a wide ranging interview, the 40-year IT industry vet talked about the boom and bust, opportunities and competition in Akamai's sector and larger issue of the economy.

Q: What lessons did you learn from the late 1990s and how has it changed the way you manage the company?

During the Internet bubble, we had a couple of issues -- we hired too fast and we acquired too much real estate. Then the economy changed and our dot-com customers had financial problems. They had been paying with VC's money and it ran out.

We now have a much better real estate review process. And before we ever replace or add an employee we ask, "How can we do this with the same amount of budget?" We're pragmatic. Now we have a 3-year plan in place and we think more strategically.

Despite (previous mistakes), we've done a lot of things right. We pioneered the content delivery network, application delivery and now onto edge computing. Our customer focus is again on enterprises and government agencies.

Q: Even with a well-run company, customers still have to be willing to spend money. What impact has the poor economy, and the resulting erosion of customer confidence, had on Akamai during the last two years?

It's elongated the sales cycle for everyone and we don't expect that to change anytime soon. We've still been able to get in and meet with the biggest companies. From there we can make a strong case for ROI by stressing cost reduction and their need for less infrastructure. By improving performance we can increase new adoption rates and make Web operations more reliable. For example, Verizon's call center investing in using the Web for customer service because its cheaper than calls going to call centers.

Q: What effect has the dropping price of bandwidth had?

Some of the price pressure has come from the so-called bandwith glut. But we are probably one of the most significant buyers of bandwith ourselves and with that volume we get very favorable pricing.

Q: You mentioned a renewed focus on the public sector. Why is the government such an attractive customer? Which agencies are Akamai customers?

The government, both at the federal and state level, has incredible amounts of information to disseminate and they're trying to move much of it onto the Web. They are also the subject of DoS (denial-of-service) attacks and need security.

Right now we're working with the FBI, U.S. Geological Survey, FEMA, Deparment of Energy, Army and Voice of America. We're also acting with intelligence agencies, although not on anything that has to do with the personal privacy of individuals. But the governement does have a legitimate interest in understanding how the Internet is operating. Because we handle so much traffic, our center is a proxy for how the Intenret is operating, giving a snapshot of the Intenret. We sell that information to the goverment.

Q: What enterprise areas look attractive?

Financial services companies are increasingly moving their work to the Internet. For them, control is huge, and we can show the customer how the Internet is operating, how Akamai is operating on top of it and how their application is operating. We also help them make changes on the fly. As they gain greater confidence in the control we can upsell additional functionality.

Q: The content delivery network sector remains competitive, with a new company, Netli, launching recently. How does that impact your business?

(Netli) uses fetching, a minor component (of CDN). They don't concentrate on all the other things we do, but they did a nice job of making it a feature in the press. The largest competitor we have is the traditional way of doing business -- naturual customer inertia. We've had to sharpen pencils on CDN. But customers love competition, that's the way the world works. We still make money on CDN.

We take on new entrants and competiton. They may be able to do a few things for you but what if they get another customer? We have enormous scalability that we built from the beginning.

Q: Is that a testament to Daniel Lewin's foresight? (Akamai founder and CTO Daniel Lewin died in the Sept. 11 attacks.)

Yes, to him and the whole engineering team. (Lewin) knew he was some force and he'd engage you in an argument (about the best way to solve a technical problem). But if you put down the trump card he'd yell, "You're a titan!" The ideas about what (kind of infrastructure) we would require haven't changed all that much.