Entrepreneurs Need Ideas, Model, Strategy, People

The explosion of the internet in the 1990s is one of at least four seismic social shifts George Conrades, ’71, executive chairman of Akamai Technologies, has witnessed during his lifetime, Conrades said. The other three are the birth of rock ‘n’ roll in the 1950s, the widespread introduction of the computer in the 1960s, and perhaps social networking in the 2000s, he said as part of his afternoon keynote address at the 9th Annual Entrepreneurship and Venture Capital Conference, presented by the Entrepreneurship, Venture Capital & Private Equity Group and The Polsky Center for Entrepreneurship, at Gleacher Center November 16.

“These shifts generated enormous opportunities for entrepreneurs,” Conrades said. “Each was characterized by the fact that the kids got it and the parents didn’t. In the United States, the number of venture capital investments in internet-related companies was zero in 1994, rising to about 4,500 investments worth about $80 billion in 2000. Investment dropped in the dot-com bust but we’re seeing it heat up again.”

Among plentiful bad ideas and worse business models in the 1990s, Conrades discovered Akamai, “one of the greatest ideas and opportunities of a lifetime,” he said. From his experience with the unique company, Conrades learned the importance of three factors in any entrepreneurial experience: belief in the idea, business model and strategy, and attracting the “best and the brightest” people with an open, argumentative culture, he said.

“In Akamai’s case, it is a very differentiating idea,” Conrades said. “Ours is making the internet feasible for immersive electronic commerce and rich interactive audio-visual exchange. Akamai’s founders are tremendously intelligent people who had a vision of what Akamai would be today and beyond. Their pitch was that the Internet was a very nasty place and always will be for the increasingly rich content associated with commerce and video. And it will only get worse as more and more networks join.”

Akamai’s business model provides enormous scalability and low capital expenditures by choosing a recurring revenue service based on software embedded in highly distributed, low-cost servers in other people’s networks, he said. The company’s strategy complements the model by creating a “virtuous circle” or network effect, Conrades said.

“This makes it even harder to catch us,” he said. “We call it customers, network, and technology. The idea is to go after high-valued enterprises who see the Internet as mission-critical and then get them under a 12-month or greater contract, so they are ours, if you will. Our proposition is so attractive to ISPs that many of them embed our servers in their capital-intensive networks for free, keeping our costs low.”

The Entrepreneurship, Venture Capital & Private Equity Group invited Conrades to speak because of his broad background in entrepreneurialism, management and venture capital, said second-year student Elizabeth Kim, co-chair of the student-led group. “Everything we’ve learned in the classroom were things he saw and experienced in his tenure as an entrepreneur,” Kim said. “For most of the students, it’s really valuable to have someone so experienced come to us and say the things we’re learning in the classroom take place in the real world and have actual value.”

- Phil Rockrohr