Gupta is brutal in his method of operation—a method he preaches to entrepreneurs. “The fundamentals of making profits are to increase revenues while lowering costs—everyday. Increasing revenues or lowering costs in staggered models will not help. Be brutal about your resource management—if you can’t do this, be prepared for the worst.”
In 1999, when the dotcom fever was at its pitch, and the markets were flush with funds, Gupta and his two partners founded Speedera. “We all come from website-building careers, where we found that the product-based approach to content delivery had some inherent problems, leading to increased costs, time and server space. We moved on to develop a service-based system, where a customer can simply plug in, use our service and pay for only that much...quite like electricity or water,” explains Gupta.
“Rather than reinvent the wheel one-at-a-time with each of these companies, where they remained unhappy with the problems, we decided to form a system that would offer an outsourced, service-based load-balancing platform,” says Gupta. “That was the genesis. Nothing like that existed before. Akamai came from a “cache”-ing system. We offered the first service-based load balancing system, which involved mapping the Internet in real time—addressing latency, packet loss, and link-to-link failures—literally a traffic manager on the internet.” Before Speedera, companies with multiple sites would have to buy box-based solutions (servers) in different locations to host their sites. With Speedera, companies could simply plug their site into the system. Speedera’s network would detect a user’s origin and send him to the nearest node in his country, without having to suffocate the parent server in the U.S. (or any other country where the company site is hosted from). This load balancing will ease traffic to a site, yet ensure speedy content delivery to the user.
“From clients owning their own sites, we created our own sites, where clients can simply buy service and we deliver content. This is a big value-addition to site management. We also offered a new solution—if a client wanted to own their own site, we could still deliver its content. We can integrate a client network with our own network—we moved beyond simply “cache”-ing content. Thus we are able to offer dynamic content,” says Gupta.
Alumni and close mentors put up the capital and Speedera was on its way. Since its inception, the company has grown steadily, seeing new customers being added to its fold every month. “We have seen our revenue growth reach 12%, month-over-month, and if the economy had been better, we would have had better figures,” claims Gupta. While the client list reads like a Who’s Who, including names like Amazon, Double Click, Macromedia, Verizon and a host of others, Speedera has seen its share of dotcom bombs. “In the past, a sales cycle that would have spanned 6 weeks now takes close to 2 months, but we prefer this stability,” says Gupta.
Speedera’s pitch to its client is that it saves them money. As one of the top five consumers of bandwidth in the country, Speedera can offer a distinct cost advantage. Economies-of-scale are simply too huge to be ignored. “We are a dedicated CDN, whereas for most companies, it is only part of their business. Our edge network of servers placed in data centers across the world gives our client virtual access to the remotest places, faster than ever,” says Gupta. Speedera’s client base comes from corporates in the U.S., though they boast some clients worldwide. “Our major revenues come from these companies in the U.S., where the companies themselves are global in their business and, thus, their website needs,” says Gupta. Security has been a big plus with Speedera’s service, as they offer clients secure connections, with some innovations in place.
“Our growth is underlined by the fact that many clients have switched from our competition to our networks. An incredibly efficient network, cost factors and customer service have enabled us to offer a superior product or service to every client, every day,” claims Gordon Smith, vice president of marketing. “Today, what we offer is something that a customer will have to have, rather than something that he or she would like to have, which is a big difference. Our strength also comes from the fact that we have a big customer base, a very efficient network in place, a flat operation, and that we are cash-flow positive, which is rare in our business.”
“Speedera came in as a market-killer, offering the same-service-cheaper platform, where the market players were Akamai and Cable & Wireless,” says Tier1 analyst Andrew Schroepfer. “But they were quick to adopt a distribution-based operation strategy, where they took advantage of the reseller layers. In a short time, they could offer quality service with relatively low investment and infrastuctural involvement.”
While Akamai is said to own 60% of the market, Cable & Wireless about 10-15%, Speedera is estimated to own around 5-8% of the market. This would put Speedera’s estimated revenues at around $11 million. “The big plus for Speedera is that their entry was very opportune,” says Schroepfer. “Today’s new players have to offer and seek niche services, where Speedera can offer a bigger platform. Their past client list will get them a good hearing.” Schroepfer is also of the opinion that the company is reaching a critical mass and thus have a 12-month benefit ahead of them, “in which period they can consolidate their offerings.”
While the number of blue chip accounts are high, Gupta is firm about operating at less than 50% capacity. “Clients have come to us for our quality and constant efficiency. There is no point in being greedy and jeopardizing our reputation,” says Smith. Their latest client acquisition has been Satyam Infoway, where the SIFY site would now be delivered from Speedera’s network.
Gupta plans to take his team to Maui when they reach their staked claim to “be profitable in the next 90 days.” He and Smith feel that this claim-staking was not about publicity, but a goal for themselves as a company. Aloha!
