Managing the Big Idea
George Conrades, '71 (XP-28), chairman of Akamai Technologies, led the internet company's rise to prominence following his 31-year career at IBM
On October 29, 1999, at the height of the dot-com boom, Wired.com's lead story read "Akamai Steals IPO Thunder." The then-14-month-old technology company had just booked the fourth-largest IPO in history and seen its stock soar five-fold on the first day of trading. Months later, the dot-com bubble would burst. By October 2002, the stock of Cambridge, Massachusetts-based Akamai Technologies had plunged to less than a dollar and subsequently was delisted.
The man who was at the wheel through those giddy beginnings, the spectacular bust, and the painful but solid recovery that transformed Akamai into a billion-dollar company is George Conrades, '71 (XP-28). Akamai is the stunning capper to the enviable 53-year career of a man who reveled in the thrill ride of technology from early mainframes through internet start-ups to billion-dollar success. Conrades, who started out as an enthusiastic salesman at IBM in love with technology, synopsizes the entire journey in one sentence: "I'm fortunate to have lived in the world of the next big thing."
The story of Conrades and Akamai has a special poignancy because one of the company's founders, Daniel Lewin, was killed in the 9/11 terrorist attacks. Lewin's death was a shocking setback for the company; yet, the events of that day propelled the importance of the internet and Akamai's role in it—distributing content through a network of servers to make the system faster, more reliable, and more secure. Following seven years as CEO, Conrades now chairs the company, which has grown to sales of $1.58 billion and a market capitalization of nearly $11 billion and delivers approximately 30 percent of global web traffic.
YOU JUST RODE THE ROCKET
Conrades grew up in the steel town of Youngstown, Ohio, during the 1950s. He listened to Fats Domino, Little Richard, and later the Beatles and the Rolling Stones. He was going to make a career as a drummer. But there was one thing he liked even more - hot rods and motorcycles, "things that move," he recalled in an interview at Akamai's Cambridge, Massachusetts, headquarters. "There's a beauty to mechanical things."
That appreciation was nurtured at Ohio Wesleyan University, where he learned to program in the school's first computer class.
"We used an IBM 650 that was at Nationwide Insurance in Columbus, Ohio. It took my breath away," he recalled. "It was big as a room. It was black with flashing lights. The floor was shaking from that spinning magnetic memory drum. Wow!"
Conrades majored in physics and math, but was planning to join a rock band after he graduated in 1961. The head of the physics department found out and said, "No, you're not." The professor suggested he interview at a roster of up-and-coming high tech companies, including IBM. He joined Big Blue as a sales representative in Columbus, Ohio. It was a heady time.
"You just rode the rocket because businesses needed the productivity, the efficiency of the computer," he said. "The accounting machines were rapidly becoming outdated."
After he had been at IBM 10 years, Conrades moved to Chicago for a sales management position and also took over the company's fifth largest account, Sears, Roebuck & Co. The vice president at Sears wasn't impressed by just the speed of IBM's computers. "He said, 'I think you'd do better with me if you'd talk more about how your computers could help me with my business problems,'" Conrades recalled.
That complaint made Conrades realize he needed a better grounding in finance, and he enrolled in the Executive MBA Program North America at Booth. The program provided a "broad perspective of business from some of the best professors I could have found," he said. It also gave him a grounding in data-based decision making that he would use for the rest of his career.
"A friend of mine once said, 'You know, George, data is not the plural of anecdote,'" Conrades recalled. Booth drove home the necessity of finding the facts. "There's a whole set of problems that you have to solve," he said. "What do the data tell you? It could change tomorrow, but what is your best shot now?"
The MBA helped to propel Conrades's career at IBM. He spent two decades more at IBM in a range of top management positions. One highlight was moving to Tokyo to run a newly decentralized Asia Pacific operation and assuming profit and loss responsibility for the division. He rose to the title of senor vice president and member of the Corporate Management Board.
But by the late 1980s, IBM's luster was fading as it faced tough competition in all areas of its computer business. "We were not innovating as fast as others; we were the target, the big dog," Conrades recalled. He left in a shakeup of top management in 1992 and looked for a challenge in a more entrepreneurial, less corporate world.
WHAT GOES UP...
Conrades formed a technology consulting firm and found just such an opportunity in the advanced research and development firm Bolt, Beranek and Newman (BBN), headquartered in Cambridge, Massachusetts. BBN developed packet switching, routers, and hardware for the ARPANET, the predecessor of today's internet. Although Conrades had spent decades in the button-down corporate culture of IBM, he thrived in the fast-paced, freewheeling world of tech start-ups. BBN was looking to commercialize its products, and Conrades led the way as CEO. "The company was made up almost entirely of PhDs," he recalled. "They were just so much fun to hang out with. If they felt that you genuinely cared about them, they taught you everything they were doing. So it wasn't such a hard job to be their CEO."
BBN became an early internet service provider, and Conrades led the sale of the company to GTE Corp. in 1997 for $616 million, or $29 a share. He headed the company for a year as president of GTE Networking. (The continuing research and development unit, BBN Technologies, is now part of Raytheon Co.)
Conrades cast his net again and found a home at Boston-based venture-capital firm Polaris Partners, which was fielding pitches from internet companies as the dot-com boom heated up. Tom Leighton, a professor of applied mathematics at MIT, and Lewin, his student at the time, had developed a way to make the internet faster and more reliable by distributing content among a network of servers located close to users. The model for Akamai (which in Hawaiian means smart or clever) uses algorithms to drive traffic to the least congested routes.
"Neither of us had experience running a company," Leighton recalled. "We had no business experience. We put together our fantasy list of CEOs, and George was at the top of the list. He had worked with a bunch of academics at BBN and turned it into a business. We were a bunch of academics, so we thought he'd understand us and could do the same thing for us."
Conrades, who at 60 had intended to start slowing down, agreed to come aboard as CEO and be "the business guy" in April 1999. Polaris provided more than $8 million in first-round financing. "Having had the BBN experience, I was in a position to say, 'Whoa, this is really a big idea,'" Conrades said.
That year, the dot-com frenzy was building to a peak and Conrades, wanting to capitalize on the buzz, took the company public. Starting with a strike price of $26, the stock soared to $145.19 in the first day of trading, then peaked at $327.63 at the end of the year. "That was too good to last," Conrades recalled. "Our market cap was bigger than General Motors on revenues of less than $4 million."
Leighton recalled that nothing in his life as an academic prepared him for what came next. Many of Akamai's early clients were small dot-coms that couldn't survive the shake- out. Akamai began losing money and the company laid off 500 employees. The management team took pay cuts. The stock plunged to a low of 67 cents in 2002. It was in danger of becoming another casualty of the internet bust.
Conrades, Leighton, and company president Paul Sagan began talking in "quarters to live," literally, how many quarters until they went broke. Leading from that demoralized position is not for the squeamish.
"People are reading your every facial expression for news of the worst," Conrades said. "You have to be positive, transparent, and enthusiastic."
He gave repeated versions of what he called his four-pronged pep talk. "First, do we still have a big idea? Second, does the technology work?" The answer to that was a resounding yes. "Third, is our business model right?" The company was still losing money, but less each quarter as Akamai successfully marketed the service to corporate clients that could pay their bills, such as Toyota Motor Corp. and FedEx Corp. "And finally, do you like the people you're working with?"
The company planned in 90-day increments. That strategy was built around operations metrics and watching cash flow, Conrades recalled. Regular and frequent management meetings produced the same questions: How many new customers? How many additional servers? How many additional software releases? How many more networks are we in? The culture that evolved, he said, was "part commando and part MIT."
Paul Schimmel, one of Conrades's fraternity brothers at Ohio Wesleyan and a professor at The Skaggs Institute for Chemical Biology at The Scripps Research Institute in California, observed that Conrades invested in Akamai stock during the company's darkest days. "That takes character and self-confidence - and demonstrates great leadership by example," he said.
The core skills that were emphasized at Booth such as listening, experimenting, and dealing with uncertainty served him well. "The smartest thing one can do is listen for discontinuities," Conrades concluded. "That doesn't fit. Why is that? What do I need to understand? Those are the critical questions that build a view of what needs to be done."
Technology demands a willingness to experiment. "You see what works, what doesn't work," he said. Decision making in an uncertain environment is always imperfect, he added. "Any decision will come with its own set of problems. You choose which set of problems you're going to solve."
By 2005, Akamai had gained sustained profitability, and Conrades turned the CEO position over to Sagan. While the company suffered a setback in the 2008 recession, it has rebounded strongly. Today, it processes more than 31 million URL hits per second on behalf of its customers and delivers more than 10 terabits per second on an average day. It is the most pervasive content delivery system in the world with nearly 150,000 servers in 87 countries.
These days, Conrades spends time with his wife of 51 years, Patsy, a fellow Ohio Wesleyan graduate. They are the parents of five children and have 12 grandchildren. The couple met in college and reconnected by accident in a downtown Columbus, Ohio, parking lot during Conrades's first day on the job at IBM. (Conrades recalled that he wasn't aware of IBM's white-shirt-only dress code and slipped home during lunch hour to switch out his incorrect blue shirt.)
Conrades still enjoys motorcycling and goes on a thousand-mile ride through the San Juan Mountains in Colorado every year. He loves that it requires total concentration, "a constant mastery of skills. There's a certain risk-to-concentration ratio. When you're done, you just feel exhilarated."
And he is still an investor in technology. Conrades, at 75, remains almost boyish in his joy and his unflagging interest in the next big thing. ■
Photo by Chris Strong
George Conrades talks about his career riding the next big wave in technology that culminated in his tenure as CEO and later chairman at Akamai Technologies, a distributor of internet content. He says the core skills that were emphasized at Booth, such as listening, experimenting, and dealing with uncertainty, served him well. View the video »
FROM CORPORATE TITAN TO TECH ENTREPRENEUR
Goes to work for IBM as a salesman in Columbus, Ohio
Named president of IBM's Data Processing Division
Tapped to head new IBM Asia Pacific unit based in Tokyo
Named senior vice president and member of IBM Corporate Management Board
Joins BBN Corp. as president and CEO
Leads sale of BBN to GTE Corp
Named CEO of Akamai Technologies
Akamai goes public in the fourth largest IPO in history.
Akamai cofounder, Daniel Lewin, is killed in the World Trade Center terrorist attack.
Akamai lands deal to manage music file distribution for the launch of Apple's iTunes Store.
With Akamai in the black, Paul Sagan replaces Conrades as CEO; Conrades becomes executive chairman.
AKAMAI AT A GLANCE
(as of December 2013)
2013 sales: $1.58 billion
2013 net income: $293 million, $1.61 per share
Number of servers: 147,468
Number of employees: 3,908
Number of countries: 87
Daniel Lewin, the brilliant, combative mathematician behind Akamai's algorithms, traveled regularly from the company's headquarters in Cambridge, Massachusetts, to the West Coast. He had made the trip 30 times already that year on the morning he boarded American Airlines Flight 11 in Boston. A former Israeli commando and Arab speaker, Lewin was likely the first victim of the 9/11 hijackers. Two brave flight attendants in the coach cabin radioed the unfolding hijacking to authorities on the ground. At 8:19 a.m., one of them confirmed that Lewin, the passenger in 9B, had been stabbed. At 8:44 a.m., the plane slammed into the World Trade Center.
At Akamai headquarters, web traffic began to spike. Staff members checked the news and found that a plane had crashed into the World Trade Center. Moments later, it became clear that the news was catastrophic, and minutes later, that it was extremely personal. By 10 a.m., the entire office knew that Lewin was dead; everyone was frozen in shock.
The internet, however, had never had to withstand such a crush. Lewin's 1998 thesis talks about how unpredictable news can be and how, one day, the web would face an extraordinary event and need the underpinnings of his algorithms to keep it going. On September 11, staff members at Akamai went into overdrive. Their thoughts were on Lewin while they did what he would have done had he been there.
It was a tragedy and yet a time of accomplishment. Reconfigured servers kept news and government websites up and refreshed. Akamai's global traffic surged by a factor of five and the company managed more than one trillion hits and 150 million video streams. Lewin's prediction had come true, and his company did what it was built to do. ■
AND A MOVIE MOGUL, TOO
George Conrades wasn't looking to invest in Hollywood. But when his friend, the late Gil Friesen, the former president of A&M Records, told him he was producing a documentary about rock bands' backup singers and their unsung heroics, Conrades was intrigued. "Of course, as soon as I said it was a good idea, I had to reach for my wallet," he recalled.
The film, 20 Feet from Stardom, won the Academy Award for Best Documentary Feature at the 86th Academy Awards on March 2. Another Booth alumnus, Art Bilger, '77, a friend of Conrades and early investor in Akamai, also helped finance the film. 20 Feet from Stardom premiered at the Sundance Film Festival in January 2013 and went on to gross more than $5 million, making it the top-grossing documentary of the year, according to Rolling Stone magazine. It follows the careers of unheralded singers such as Darlene Love, Merry Clayton, and Lisa Fischer and features interviews with the singers they backed such as Bruce Springsteen, Mick Jagger, and Stevie Wonder.
"At concerts I've always marveled at the beautiful voices of the backup singers," Conrades said. "They often harmonize in ways that make the song for the star." ■