Tuesday, March 12, 2013
Why The Growth Of The Internet Is Driving EdgeCast's Revenues
Story by Benjamin F. Kuo
What is it about the content delivery network market which has enabled Santa Monica-based EdgeCast to go from startup to over $100M in revenues in only a few, short years? The company--which is in the business of operating a content delivery network (CDN) to accelerate the delivery of web graphics, multimedia, applications, and more to end users--recently disclosed it more than doubled its revenues in 2012, and has grown to over 230 employees--all due to a huge amount of demand for CDN services by its customers. We caught up with James Segil, the firm's President, to hear the story behind that big growth at the company.
For those who don't know about EdgeCast, CDN services, who/what kind of clients you serve?
James Segil: EdgeCast is the fastest growing CDN in the world. We serve up four to five percent of the global Internet on our network. We have 35 POPs all over the world, in every major market, and we have more than 6,000 customers today. Those include quite a few brands you probably recognize, including Twitter, Hulu, Pinterest, EMI, Wordpress, Break.com, and a whole host of other companies. They all depend on EdgeCast to deliver content to their customers, anywhere they are, on any device. We've grown really fast. We started the company in the fall of 2006, launched in 2007, and have been offering our services to all kinds of mission critical websites since then. We caught on with the right product, at the right time. There's a frustration in the market, because the Internet doesn't work as well as it could. You need a CDN to improve the performance of your content, especially as the web is getting heavier, more complicated, and there's more rich media. Not only is the volume going up, but more people are accessing the internet, which adds complexity across the networks, whether it's via a PC connection at your office, through your iPad as you're roaming, or your iPhone. Content delivery networks are there to help improve the performance, and serve up that content more intelligently to devices, to thd network, and to users, as they consume the Internet.
There's a large market and many competitors in the CDN market, what's the difference with EdgeCast, and how it is you've been able to grow?Jame Segil: Why does the world need another CDN? I think there's a couple of things happening. One, is the businesses we service are mission critical. It's a mission critical IT service that website owners need. The Internet doesn't work right, and is broken, and without a CDN, you can't do what you need to do if you're the CTO of a large website. The other thing that helps diffentiate us, is we help our customers with costs, save them money, and allow them to get to market faster, with scale. Obviously, anyone except the largest five to ten content companies in the world, such as Google, Netflix, or Amazon, does not need to own their own CDN. Instead, they outsource to an expert like Edegcast. Where we see a lot of entrants fail, is trying to get the right balance between building and operating a high growth, highly scalable, mission critical network--while also building and operating a fast platform. Those two typically don't go together well. Software-as-a-service companies write good software, and network companies build good networks, but rarely do you find both that do that well as the same time.
There's complexity in being a CDN. What we've managed to do, is to use our background in web hosting--my partners and I have been building web hosting companies for years in the app hosting space--to run EdgeCast, in a way that is capital efficient, profitable, and highly performant. You have to be able to be disruptive to existing products and services. We offer an easy to use, accessible business model, which allows people to sign up and growth with us. I think that's what is the main foundational element of a Web 2.0 company. What you do as a cloud company is what Edgecast has brought to the CDN space. Before that, CDN was dominated by a legacy operator, which acted like a telecom. If you wanted to open a new account, it took six weeks. It's like getting your cable connected--you get an appointment at sometime in the afternoon, and they might or might not show up. It was that hard to get going with the legacy incumbent.
How are you different in your signup process?
James Segil: With Edgecast, we have single-click provisioning with our accounts. You can try before you buy, and create a test account. There's no need for professional services, you can just log in and user our automatic tools and controls, and you can enable highly functional features with just a click of the button. The development community and web developers, who tend to be our customers, like that flexibility, and the quick time to market. Plus, we perform even better than the incumbents, which is a nice combination--fast performance, equal up time and available, and features and capabilities that you can't get with the legacy incumbent--and where the price/value relationship is better. Our customers really get what they pay for, and those elements are what have made us so successful, and allowed us to grow at such a phenomenal rate.
b Speaking of revenues, based on your releases it looks like you're now well north of $100M in revenues?
James Segil: I can't confirm that, but the company is certainly doing well, and at that kind of scale.
Can't, but company certainly doing well and at those kinds of scale.
Considering those kinds of numbers and revenue, has your executive team talked about the possibility of an IPO, or what are you thoughts as continuing as a private company?
James Segil: There's a couple of things to consider with growth, around what does it take to fund a company's growth. We happen to be very profitable company, but as we look to grow, also need to explore different sources of capital. That might be debt, or public and private markets. Those are all ingredients of a long term, financing strategy for EdgeCast. We're privately funded today, with some equity from Menlo Ventures and Steamboat Ventures. We also have a great relationship with our bank, Silicon Valley Bank, which gives us access to credit to be able to conduct our business even more efficiently. At the right time, we know we can look at the public market, and that's certainly on our roadmap and game plan. But, the timing is not very specific on that, and it's really about when the company is ready, and the market is ready. Those two areas are a bit of a moving target. Really, it's just another source of capital. Of course, since we're venture backed, we do have to consider our investors, as they're looking at some point for an exit. An IPO is a great way to switch out investors, and move the VCs out and let them exit, and move to public capital as you enter a different growth stage. That's something we're definitely going to consider and look at for the longer term, but we have no specific timeline.
What's the biggest challenge for you, and what keeps you up at night?
James Segil: Finding good people is tough, really tough. It's never easy. Have I mentioned it's tough? I think that we're always looking for great people, but at Edgecast, as compared with other companies, we hire pretty slow. We've added hundreds of employees over the last couple of years, and now have more than 230 employees. We probably are not hiring as fast as we need to hire, and we have fifty open job requisitions on our website. We're looking for new, great, smart, wonderful people to join our company. But, finding those people, and making sure they're the right fit for our culture is not easy.
We're in the domain of hiring relatively technical people, gearheads. That's not necessarily the easiest employee to find. That's the number one thing that stresses me out, doing lots of recruiting, talking with candidates, and making sure the people who join us are the right fit.
Of course, the day-today things about running a network, uptime, availability, and making sure you're doing everything to protect the network are also something I think about a lot. We offer a pretty robust security shield to protect our customers from online attacks, and that's a key component of our value proposition. We protect their content and information through authentication, SSL, secure delivery, and attacks from malicious folks who might like to take down a website via denial of service, bots, and so on. We spend a lot of time thinking about and spending time on threat analysis on our network, fending off attacks on our customers, and security. That also keeps me up from time to time, trying to stay ahead of the bad guys.