Leading through Adversity
February 18, 2010
Running Time: 0:51:00 About the Lecture
Few companies have endured such hardship, or risen to such heights in a brief span of time as Akamai Technologies. Paul Sagan tells how he became the CEO of this young firm, and helped it survive and then flourish despite “unimaginable adversity.”
Brought up in a Chicago newspaper family, Sagan trained for a life in journalism. He cut his teeth as a broadcast news producer and executive in the 1980s, and in the 1990s. He helped launch New York 1, a cable news network pioneering digital video technology, and later, an interactive TV project in Orlando that featured video on demand and customized newscasts. Over the years, says Sagan, he picked up critical lessons on running a business: Don’t count on the permanence of any customer, job, or venture. He also “glimpsed the digital future,” realizing that if “you married the interactivity and openness of the web with the bandwidth available from cable…you could change the way the internet worked.”
In 1997, Sagan met a group of MIT computer scientists, including Tom Leighton and Danny Lewin, who had the “crazy, big idea” of applying mathematics to improve internet performance. Businesses frustrated with breakdowns of fragile central servers could rely instead on a network of servers coordinated by sophisticated software. It was “air traffic control” for internet packets and routing. Venture capital money poured in, and Akamai Technologies was born in 1998, with Sagan as chief operating officer. But all was not well: While “everyone wanted a piece” of Akamai, the company was hemorrhaging funds. Then in early 2001, the internet economy burst, and Akamai’s customers vanished.
“We were feeling sorry for ourselves,” says Sagan, who recalls laying off 2/3rds of the employees. “Then the unthinkable happened:” Danny Lewin died in the crash of Flight 11 on September 11th. “Few believed a business, especially ours, could survive a blow like that.” Sagan was determined to shepherd the company through the twin disasters of economic collapse, and the loss of Danny Lewin, the “driving force” of Akamai’s culture.
He slowly rebuilt the customer base, focusing on selling services to larger corporations that promised greater stability. Some clients “turned out to be real businesses,” such as Yahoo and Amazon. The year 2003 saw Akamai’s first positive cash flow, and the first profits came a year later. As he closes the books on 2009, Sagan proudly cites revenues approaching $900 million. He’s unshaken in his conviction that the “internet is the biggest business idea of our generation.” Akamai, says Sagan, “will hopefully face a little bit less adversity” in its second decade.
NB: From 45:43 to 46:40, there is a loss of audio.