The $100M CDN Club

The $100M CDN Club is the most exclusive CDN Club in the world, and the only way in is to raise $100M or close to it. Not even CloudFlare who plans on going IPO in 2017 at a multi- billion dollar valuation is in the Club. The club members are Fastly, Aryaka Networks and Instart Logic, in that order. Back in the day while working for a few CDNs, one question that was Top of Mind for many folks working within the industry was “what is the impact to the competitive landscape when one company raises a vast amount of cash or completes a significant transaction such as an acquisition.”

Total Raised

  • Fastly – $129M
  • Aryaka Networks – $97M
  • Instart Logic – $95M

This is a difficult question to answer, and there are no right or wrong answers, however, we’ll give it a shot here. In any tech sector, when one company engages in a significant transaction of any kind, it usually ripples throughout the sector, sometimes leading to consolidation. In the CDN industry, there is a two fold impact. The first impact is the competitor psychology; thus when one of your competitors raises a big round, the response is usually “wow, how is that going to impact us” and then it’s back to business as usual. The macro-level impact is more interesting, and usually takes the form of a lot of small little improvements taking place over time that eventually adds up to something big down the line.   

For example, for the CDN that raised money, their sales organization has new bragging rights that can be used in competitive situations to further validate, and prove that their business model is superior to the competition. Next, the CDN can quantify how the funds will be used, in order to alter the psychology of the prospect; for example, “we are going to double the number of PoPs from 25 to 50 in eight months, and double our workforce from 150 to 300 in twelve months. Does that tactic work? Absolutely, every little piece of good news is enough to tilt a prospect win in one direction.

Next, teams such as Product Management and R&D can be expanded, and feature-sets / product suites can become actual lines of business with a team behind it. Whereas live streaming was once sold by everyone and supported by a stretched-out sales overlay team, may now become its own dedicated group, stacked with subject matter experts. For a smaller CDN, this can definitely help in competing in the big deals against the likes of Akamai and Level 3.

The same applies to security or any other feature set. A security team focused on selling CDN services with a security twist to it can alter the win/loss ratio in its favor by having a dedicated team with subject matter experts on it. Eventually, all these small improvements made possible by big wads of cash add up over time to create a more potent competitor, thus altering the macro-level competitive landscape.

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