Business Times - 18 Apr 2009
Keeper of the flame
Akamai CEO Paul Sagan talks about the company's troubles and triumphs after the death of co-founder Danny Lewin in the 9/11 attacks. By Kenneth James
PAUL Sagan is a man on a mission.
As president, and now CEO, of Akamai Technologies Inc, he has guided the Web firm through dramatic highs and wrenching lows. At its lowest point the company's inspirational co-founder, Daniel 'Danny' Lewin, was killed by the 9/11 hijackers. And in a double body-blow the dotcom bubble burst, taking out many of the firm's clients and sending its own share price crashing.
Today Akamai is stronger than it has ever been. It registered double-digit growth for 2008 despite the global slowdown. And with its computers delivering some 20 per cent of the world's Internet content, the firm is realising its audacious vision of transforming the Web through the ingenious use of mathematics.
Akamai celebrates its 10th anniversary this year and Paul Sagan, still boyish-looking at 49, is in Singapore on a global tour of Akamai's offices. 'Visiting all these offices has been a deliberate part of this 10-year anniversary journey,' he tells BT in a wide-ranging interview at Akamai's Singapore premises. 'I want to go around and shake every employee's hand and say thank you for being part of these 10 years.'
It was Paul Sagan who led his bruised compatriots out of the ashes of that traumatic period after 9/11. But the impetus for that comeback was Danny Lewin, Mr Sagan says. He relives the period that is seared in his memory.
'I didn't want to (talk about this) for many, many years,' he muses. 'But I started to about two years ago, because I thought it was an important story to tell, so that people didn't forget.'
On Sept 11, 2001, 31-year-old Danny Lewin was on board the American Airlines plane that smashed into the North Tower of the World Trade Center. Evidence collected by the 9/11 Commission, including a radio call by a flight attendant, indicate that he was stabbed while fighting off the hijackers.
Mr Sagan notes sombrely: 'He was probably the first person to die on 9/11 because he tried to stop the hijacking, and it turned out he was the only non-hijacker in Business Class and the hijackers killed him... He had a wife and two children - a tremendous personal tragedy.'
For the company, his death was 'a really enormous hit', Mr Sagan says. 'He had a spirit that was unlike anything I've seen in any human being - full of life, the most competitive person I've ever met or seen. So he really defined the culture and inspired people.
'And so we had a choice, which was, either, the company can't go on without him; or, we had to succeed for him.'
During meetings of the senior executives it became clear that no one wanted to quit.
'We said 'This company has a huge idea. How could we stop?' It wouldn't be a good testament to Danny's memory if we just said 'Okay, we give up, we've been defeated.' We'd be letting the bad guys win.'
Their resolve was sorely tested with the dotcom bust. The share price, which had hit a stratospheric peak of US$345 following the company's IPO, went into freefall. By late 2002 it had crashed to a low of 56 cents.
Mr Sagan notes wryly: 'I actually thought both numbers were off. When the stock went to US$345, that was literally on New Year's Eve 1999. I never believed the company was worth, at the time, US$30 billion. But that's what the market said at that crazy time.
'On the other hand, when in the crash it went down to 56 cents, and we had more debt than cash so effectively the value of the company was zero ... I also knew it was worth a whole lot more than that.'
Still, the fall-off in business from its dotcom clients meant that the company had to take drastic measures just to stay alive. 'We had to make huge cuts in the company, which was very painful. We had to lay off two-thirds of the company - we went from 1,500 employees to 500. That's a horrible thing to have to do, to lay off that many people.
'So we doubled our efforts. Most of the senior team basically worked for little or no salary, for a couple of years, voluntarily. We just said, we're going to make the company as successful as we always thought (it could be) ... and we don't really care what anybody says.
'And then all of a sudden the investors were saying, 'Oh, you've got a great business. Guaranteed success.' Well, that wasn't the story they were telling us for a couple of years!
'And then the Internet grew like mad. More businesses actually embraced it after the dotcom bubble burst than before. There was more entertainment online, more advertising, more B to B (business to business) activity, far more e-commerce those few years. The economy got better, and suddenly it was like wind at our backs, just filled our sails. And we started to grow and grow.'
Crucially, there was a shared belief in the vision of the founders to keep them going through the difficult years. A vision that was born in the labs of the Massachusetts Institute of Technology (MIT), as Mr Sagan points out.
'I was consulting Internet companies and a venture capitalist I knew asked me if I would look at a deal they were looking at. Some mathematicians at MIT were going to spin out this company on the crazy idea that they could control the performance of the Internet through mathematics. And their idea was that they would apply (math) to make popular websites more reliable. And my background had been launching popular websites at Time Warner ... so I started hanging out in (Akamai co-founder) Tom Leighton's lab.
'And I was struck by a couple of things. Tom may be the smartest person I have ever met in my life. He is a mathematician off the charts. And Danny was a pretty close second. But they had a kind of entrepreneurial spark and zeal, which was unusual. And they were very practical about taking their technology and trying to make the Internet work better as a business.
'And then one other thing ... they'd already built a system and they could demonstrate that it really worked.'
Paul Sagan was sold. He says modestly: 'I joined just as they formed the company, but I would never want to take credit for the big idea that Tom and Danny had. It was my honour to be able to help them build a business, but it was their idea.'
Observers note that Mr Sagan's management and organising skills have been instrumental in the company's success. One calls him the heart and soul of Akamai.
Mr Sagan will have none of that. 'You know, I'm a piece of the company. I didn't mean to become CEO of the business, I tried to get other people to do the job. Got drafted. And it's worked out okay.
'No the DNA spirit is the heart and soul of the company, the attitude. I think one of the most unique aspects of our culture is that with all our successful people it is about the team. I know that sounds like a cliche, but ... we've built a culture where leadership is about what the team needs.
'I see that in (the) Singapore (employees), it is a very driven team. They want to go satisfy customers and win business, they never want to lose an account - that's very typical. And they want to solve customers' problems.
'We're a very email-based culture, get more emails a day than anyone probably should. And the most passionate of those are about customers, where we celebrate solving customer problems. It's not about how much money they pay, it's about, look at this really interesting problem I solved using technology. I think that's always driven people here. That's the kind of company this is. You ask what's the heart and soul of the company, I think it's all these people working hard in Danny's memory. I'm just privileged to be part of it. '
Looking forward, Mr Sagan sees the Internet transforming just as Akamai's founders predicted. There is a growing hunger for rich content like video on demand, which is exactly the kind of heavy-duty content that Akamai specialises in delivering more quickly and reliably than anyone else.
'Our goal has been to build a billion-dollar software company,' he notes. 'When I took over as CEO we were about US$150 million. Last quarter we were almost US$850 million. In this current environment it's going to be harder than it was. (But) Akamai will be okay. We know how to manage through adversity, we've gone through it before.
'We've done some belt-tightening last year already to trim some costs. And this time we have a lot of cash in the bank, we're growing and we're profitable. So we're not sure how long it will take; but we're gonna get there. That's our goal.
'And then we'll go beyond that, because I think we haven't seen the most exciting stuff that's come on the Internet. When you think of using the Internet to replace television, or to change the way you shop or run your business, it's a huge sea change.
'Today we deliver we think about 20 per cent of Web traffic. And all that traffic is going to keep on multiplying. You're going to have billions more people access the Internet, at higher and higher speeds. That's a business opportunity bigger than you usually find in one's lifetime.'
President and CEO,
Akamai Technologies Inc
1981 Joined WCBS-TV
1987 Named news director, the youngest in the network's history
1991 Joined Time Warner, designed and launched NY 1 cable news network
1995-97 Named president and editor, new media, Time Inc. Founded Road Runner, the world's first broadband cable modem service
1997-98 Senior advisor to World Economic Forum
Oct 1998 Joined Akamai
Apr 2005 Became CEO, Akamai
Apr 2009 Named Public Company CEO of the Year by the Massachusetts Network Communications Council
So just what makes Akamai special?
THE first successful streaming of Star Wars and The Lord of The Rings trailers on the Internet - Akamai.
The first webcast of Steve Jobs keynote - Akamai.
In 1999 these were groundbreaking because, for the first time in Internet history, large numbers of people from around the world were able to get on the Web and stream 'rich content' simultaneously and smoothly, without overloading the website. Akamai provided the technology that made this Net dream possible. But it was a tough sell because no one thought it could be done, Akamai CEO Paul Sagan recalls.
'There was a Star Wars trailer which was posted by a site, and it crashed ... and it got a lot of attention. So when we came along there was another Star Wars movie, and there was the first Lord of the Rings. And we went to the site (owners) and said 'We can handle all the video, it won't crash anymore'. I don't think they believed us, but they didn't have much to lose. Because if it didn't work they were not going to pay us. Our guarantee was, we serve faster than you can do yourself, or you don't pay! So we put up these trailers and we served hundreds of thousands, millions, of plays, and it worked just fine. It became entertainment news that the Internet worked. And we had a lot of publicity.'
What Akamai does, he explains, is bypass the congested middle part of the Internet: 'Because the Internet itself is really 15 thousand networks that interconnect, with very low-level (rules) that can't take congestion or performance into account - it's simply not written into them.
'So where Akamai comes in is we've put our servers in the 'edge networks', the ISPs. So you don't have to go across the Internet anymore to get the content ... we effectively have it in your neighbourhood. We've deployed our technology into thousands of locations and into key cities around the world. Often in multiple locations in a city. That allows us to solve that problem in the middle.'
He likens what Akamai does to a courier service in the physical world. 'If you think of shipping physical goods, it makes a lot of sense for us to all call a courier service like DHL. We all share their trucks to pick up the stuff, we share their aeroplanes to fly it. They sort it, and deliver. And they never deliver my package to the wrong place.'
And this perfectly complements Singapore's plan to build a superfast broadband network, he says. 'It's great, because that means people will want the richest content on the Internet. And a lot of that content is going to come from around the world across that unreliable Internet. And they're going to be saying, 'Hey, I'm paying for super high speed, why didn't the Internet get faster?' But by having deployed our servers here (in Singapore), right next to your super high-speed connections, your users are going to get the Internet performing better than anyone else anywhere in the world.'