In 2006, consumers listened to more songs and watched more video over the Web than ever before. Even e-commerce transactions, particularly online holiday shopping, registered an increase, as did the rapid expansion of user generated content on the Web.
One big winner that is cashing in on this trend is Akamai (Nasdaq: AKAM) — the company that helps speed up the secure delivery of content through its global network of servers. “We do not believe that consumer appetite for rich media applications or robust e-commerce will level off any time soon,” says President and CEO Paul Sagan.
Sagan’s view bespeaks conviction if broadband proliferation is anything to go by. While Forrester Research estimates the total number of broadband users in the U.S. to grow 42 percent by 2010, PricewaterhouseCoopers believes that broadband adoption will grow by 80 percent globally. For Akamai, this translates into an opportunity to not only hold on to its present position, but given its size and the robust nature of the market, roar well beyond its present stature.
Consider this: Every time you download something from the Web, you literally add value to Akamai. Last year, the company’s revenue grew more than 50 percent. It registered revenue of $428.7 million with net income of $154 million.
Says Sagan, “2006 was a banner year for Akamai.” Strong demand from online media and entertainment customers helped the company beat its own expectations. “We were completely surprised by the strength of the business. We’ve been the beneficiary of the growing proliferation of broadband in both the consumer and enterprise segments.”
Akamai, which means clever and cool in Hawaiian, has been true to its name. Conceived by MIT brainiacs in 1995 and founded in 1998 [see panel], the company developed algorithms to streamline Internet content routing, aiming to end the “World Wide Wait.” Today Akamai owns the world’s largest system for Web delivery, with over 22,000 servers in 70 countries handling 10-20 percent of Internet traffic. Akamai’s customers include 29 of the top 30 media and entertainment companies, most of the top social networking web sites, and more than half of the top 50 U.S. Internet retailers. These companies are going overboard in adding video downloads, social networks, and interactive games, each of which hog considerable bandwidth.
Powering the Web
With more and more people taking to social networking and online audio / video downloads, big websites like Yahoo! are witnessing massive amounts of traffic. It causes servers to clog and connections to slow to a crawl. This has given rise to a new frustration: that of finding ways to sidestep network congestion as against the erstwhile frustration of generating appeal on the web. In the minds of most big web site publishers, the smartest thing in the world would be a solution that accelerates the limited speed of current network technology.
Akamai, based in Cambridge, MA employs complex math equations and thousands of scattered servers to ship packets of data efficiently and faster to Web surfers.
To understand Akamai’s role, consider how the Internet works today. It comprises a staggering 15,000 different networks. That’s double the number of networks that were operating in the late ‘90s, and all of them must interact for the ‘Net to function smoothly. If all iTunes customers were sent to Apple’s servers in California, the servers would soon be overwhelmed with requests. So Akamai distributes iTunes’ songs, videos, podcasting, and audio-book catalogs to its network of more than 22,000 servers, which are placed on the premises of Internet service providers and other network operators across 70 countries. (Most are happy to host Akamai’s servers without charge, to help their own nets run smoothly). Algorithms direct each customer to the Akamai server that can best handle their request. Usually, it’s right in the same community.
Akamai’s system decides within milliseconds, the fastest route to deliver each request for Web content to an individual surfer. To do that, Akamai continually tracks Internet traffic from nearly 1,000 networks where it has servers located. Rather than funneling all this information to a central point of control and risking a meltdown at the center that would knock out the entire system, the decision-making authority is distributed across all of the company’s systems.
The Internet wouldn’t be the same without Akamai’s ability to store and deliver content and applications for its customers. For some web sites, especially those powered by user communities, a few seconds of transmission speed can be crucial. In 2005, for example, social networking site Friendster was overwhelmed as customers had to wait seemingly forever for pages, some with hundreds of photos, to load. It turned to Akamai, and by March 2006, Friendster’s response time was slashed from 9.4 seconds to 3.4.
According to leading analysts, Akamai now controls well over half the content distribution market. What you see at the company’s premises is an enormous sense of optimism and momentum. This translates into challenging tasks that its engineers constantly dabble with.
In a vulnerable environment like the Internet, Akamai too has to be one step ahead, which represents enough challenge for even the smartest of engineers. Nearly 140 employees at Akamai’s Center in Bangalore are excited by the challenges that lie ahead. The Engineering Department is excited that the software they write gets deployed across Akamai’s 22,000 servers worldwide. The mission critical assignments they engage in ensures that they are constantly challenged.
Sanjay Singh, Managing Director of Akamai India enjoys talking to the engineers about Akamai’s technology. Having spent several years at Akamai’s headquarters, he knows what its takes to make his employees ‘Akamaized’.
At Akamai, the entire concept of career progression is defined around empowering the employees to be the master of their destiny. The company has instituted a Career Progression Planning (CPP) framework to enable its workforce to develop leadership skills and technical competencies. “The CPP enables employees to plan and track their short and long term career aspirations. It’s also an important tool for continuous learning, professional and personal growth. This has helped us in creating a highly motivated workforce,” says Arun Kunnathodi, Manager-Human Resources.
What’s unique to Akamai India is its ability and eagerness to give employees an opportunity to work on challenging assignments. If an employee demonstrates his/her readiness to step up and take on a new challenge, say for a business role, the opportunity is given. “Approximately 15 to 20 percent of our workforce has moved from their previous profile to something different and exciting in the last year,” notes Singh.
Akamai lays emphasis on providing self-development tools and a knowledge base to its employees in order to transform them, and in turn transform the organization. To begin with, every new recruit at Akamai is presented with a copy of the Jim Collins’ ‘Good to Great’. The idea is, the employee not only strives for excellence in his career but also plays a key role in the success of the organization.
Creating an Akamaized work culture has enabled engineers to not only understand their work environment but also become aware of the customer’s business. For instance, the Engineering team felt that some of the customer facing tools could be reengineered. They leveraged new technologies such as AJAX to recreate the tools in order to provide better user interface. “From an engineering perspective, we give the breath and flexibility to our employees to identify business gaps and reshape some of the processes,” says Singh.
Singh isn’t comfortable discussing the India angle. “We have integrated so heavily with our overall company that for us, Bangalore is no different from either Cambridge or San Mateo,” he notes. “We instill in our engineers that their performance has to be at par with global talent pool. The Akamai India culture is highly integrated and collaborative where functions and geographies merge to achieve the overall vision of the organization.”
The challenge for Singh was to get the India center to gain the same technical competency as the headquarters. It wasn’t easy. “Over the last one year, we have invested heavily on knowledge management and training,” he notes. Concepts like Akamai Academy, a global e-learning platform, which enables engineers to take up online courses at their convenience, were born.
Also, in the last one-year there were several people from the U.S. who visited the Bangalore site to train the engineers. A larger number of engineering folks from Bangalore went to the U.S. as well, to learn different skill sets. It is this cross-pollination that enabled the India center to increase the envelope of technical work that gets executed here.
Creation of New Roles
As the India center gained competencies, newer roles were created. For example, today product management also gets executed from Bangalore. “Here you get to drive your own products. I, for example, got a chance to work in the high-tech product management. Very few companies in India provide this kind of opportunity, which allows one to utilize engineering and management capabilities together. The reward for working for a global leader in this space is an additional lure,” says Tarun Bangari, product manager responsible for Akamai’s digital rights management product.
For Singh, working at Akamai is like mastering the art of changing tires of a moving bus.
As content providers bring more of their media assets online, the Akamai platform has to constantly evolve. Over the years, the platform has moved from caching to live or on demand streaming to dynamic content and Web application acceleration, helping companies reach their global user base. This calls for several novel next-generation initiatives. “This new paradigm is paving the way for the next generation of multinationals,” says Singh.
With current traffic of 1.5 petabytes per day and 100 billion hits per day and over 50+ million streams, there is no way the momentum at Akamai can be brought to a stand still!
The Akamai Story
Before there was an Akamai, there were research problems—lots of them. Nearly 15 years ago, Tim Berners-Lee, architect of the World Wide Web, walked down a hallway at MIT and asked math professor Tom Leighton to think about solutions for the future—and now familiar—Internet issues: bottlenecks that form when users flood to a particular site, often along a single Internet supply line. Leighton’s team generated algorithms (and publications and advanced degrees) while figuring out the fastest means to move information from one place to another.
Akamai got its start in the MIT 50K competition, and took off when some big name clients decided to give the company a trial run. Apple and Microsoft recognized the importance of Akamai’s Internet optimization strategy: distributing servers and routing software to the “edge” of the Internet, or end users, rather than centralizing services. Akamai survived the stock market “bubble” and collapse, and now serves a diverse global market. Co-founder Leighton currently serves as Chief Scientist at Akamai.