Six years ago, Jim Benson was ready for a change. At the time he was working at Hewlett-Packard, where he had moved up over the years to become CFO of HP’s Americas Technology Solutions Group, a $14 billion unit. But California was not the place where he ultimately wanted to be.
“I’m an East Coast guy,” says the 48-year-old Benson, who earned two business degrees at Massachusetts colleges. He wanted to work for a fast-growing company in New England “that was not a startup, that had enough scale that it mattered, and that needed someone who could help grow the business.” In September 2009 he found such a company: Akamai Technologies, headquartered in Cambridge, Massachusetts. “It was just a good match,” says Benson, who became CFO in 2012.
An $860 million company when Benson started, Akamai took in revenue of $1.96 billion in 2014 (up 24% year-over-year) by delivering, optimizing, and securing online content and applications for many of the web’s largest users — media and entertainment companies, banks, e-commerce sites, social media sites, government agencies, and more. At any given time, Akamai’s content delivery network handles between 15% and 30% of all Internet traffic, accounting for more than 2 trillion deliveries a day.
Given the continuing growth of Internet traffic — Cisco Systems estimates that global web traffic will grow at a compound annual growth rate of 23% from 2014 to 2019 — Akamai’s own growth prospects seem solid. But that growth may not be as profitable as before, as the company builds its network to handle the increased traffic, largely video.
Recently, Benson spoke with CFO about Akamai’s businesses and his role in growing the company. An edited version of the interview follows.
Many people have never heard of Akamai, even though millions around the world use its services every day. Can you briefly describe what the company does?
We’ve been characterized as “the WD-40 of the Internet.” We like to say that we make the Internet fast, reliable, and secure. If you’ve ever shopped online, if you’ve ever downloaded music, if you’ve ever watched a web video, if you’ve ever connected to work remotely — more than likely, you probably used Akamai services. A very large percentage of the world’s leading brands use our services.
In very simple terms, we have built an overlay network on top of the Internet. We have servers very close to where end-users are and to where the content is that they are looking for, and we route past congestion points to deliver that content to consumers orisci businesses in an expeditious manner.
How does Akamai make money?
We have multiple businesses. One is our media delivery business, which we sell to large media companies, gaming companies, software companies—any company that needs to have a lot of traffic served, whether it’s serving videos, software or gaming downloads, images on a social media site, and so on. We get paid on a traffic-based model; we charge a price per megabit served. Media delivery was the core of our business in the early days, and now it is a little less than 50% of our business.
Our next-biggest business does website and web application acceleration. We have proprietary algorithms that allow us to serve web content at a very rapid pace. We usually charge users a monthly fee per website or web application.
Our fastest-growing business is our security business. Four years ago its revenue was in the single millions; now it’s north of $200 million. We stop denial of service attacks at the “edge” of our network and keep the bad guys from bringing a web application or a data center down. Everything we do is in the cloud, and as more and more application workloads and content moves into cloud-based environments, it plays to our strengths.
The last area is a new, emerging business. We want to provide an end-to-end solution for customers looking for acceleration behind the corporate firewall, between a data center and branch offices. We believe that is a huge market opportunity.
Meanwhile, Internet traffic continues to explode, with video accounting for the lion’s share — and taking share from cable providers.
We believe there’s going to be a wave of more premium content moving online, as people change their viewing habits. Some people will cut the cord with cable TV, others will augment it with “over-the-top” subscriptions. And when people are sitting in their living rooms watching television, very often they are concurrently on a tablet, on a laptop, or on their phone, accessing content online. So we expect a continuing acceleration of traffic growth.
That should accelerate your revenue growth, then.
Basically, we have set an ambition — it’s not a financial target — that we aspire to be a $5 billion company by 2020. That means the company needs to grow on average at about a 17% compound annual growth rate. Looking at our businesses, we believe that we have more than enough market opportunity to grow the company to $5 billion by 2020, even well north of that. It’s going to come from continued innovation in media, it’s going to take continued go-to-market execution in selling website and web application acceleration, and getting more and more traction with security and some of the new emerging businesses. Our challenge is going to be one that you like to have, which is to continue to execute.
How have you helped the company grow as CFO?
When I came on board, the goal was to grow and scale the finance team, because the company had grown. Five years ago, finance was largely a back-office function. But we had moved to more of a divisional and geography structure that required finance to step up and play a more active role in guiding the business. So we built out a much more operational, business-finance-oriented support model. We put that foundation in place and we’ve been building off that since; we’ve made good progress. The businesses we’re in have finance leaders, and we have geography finance leaders as well.
Today I spend most of my time with the leadership team making sure that we’re making the right investments to drive both near-term growth and longer-term growth in newer, emerging areas of the business. We’ve been investing at a little faster pace than revenue growth; we were very clear with the investor community that we were doing this, that it was purposeful.
How important are acquisitions to your growth strategy?
We are active shoppers and disciplined buyers. We’ve done quite a few acquisitions, and we’ll continue to be active there. It could be technology tuck-ins that on their own are not that interesting, because they’re small, but when leveraged on Akamai’s platform are very interesting. We took on a convertible bond about two years ago, so the company has substantial strategic firepower to do M&A. We are in a rapidly evolving industry, so having a good, strong balance sheet enables us to capitalize on opportunities quickly.
In building your finance team, what do you look for in a new hire?
It varies by area. If I’m trying to hire someone in the business-finance realm, I’m looking for someone who understands the business first and applies finance second, not someone who applies finance first and struggles with understanding the business. You can’t be a good finance leader if you don’t understand the business. You can find people who can pull together spreadsheets, but it’s hard to find people who can not just interpret the numbers, but also drive discussions, decisions, and actions. That is a rare breed.
Also, culture and fit are very important. Akamai is not very hierarchical, it is a company that is really collaborative. So you need someone who is able to operate in a fast-paced environment without necessarily all the structure — and, quite frankly, all the answers.
What do you like best about your job? What makes you want to get out of bed in the morning?
The thing I like most — and it might sound corny — is that I’ve never worked with as smart a group of people as I have here. It’s a very intellectually stimulating company. I’ll get challenged by engineers on finance-related areas, and I enjoy that. But you need to make sure that you bring your “A” game.