Interview with Bob Lento, CEO of Limelight Networks

Recently, we had the opportunity to interview Bob Lento, CEO of Limelight Networks, and he gave us the current state of affairs. We discussed several topics, including growing the business, long term planning, product roadmap, the next steps on the Akamai litigation, and the overall health of the CDN industry. The one key takeaway – Limelight Networks is on the right track, making big improvements in all facets of the business, from the backend systems to developing self-service capabilities to increasing R&D head count to reducing customer and employee churn, and so on.

The entire executive staff is new, and they bring deep perspective and insight to Limelight Networks and the industry. The results are visible, as Limelight Networks has met earnings estimates for nine quarters in a row. We give Bob Lento and his team big thanks for the interview.

Tell us about your journey in the CDN industry over the past couple of years? The journey has been a very interesting one. When I first started in January of 2013, my team looked at the overall CDN market, and we came to the understanding that CDNs are here to stay, and growth is a given, since video, application delivery and real time communications continues to grow at a rapid pace. And we’re in a great spot to see this happening, because we see a large portion of the internet traffic pass through our global network, which is 20,000+ servers strong, and has more egress capacity than a dozen pure-play startups combined.

As part of this process, we looked internally and found out that we have a strong customer base that is satisfied with our service. Of course, we are not satisfied with the status quo, and we are making every effort to improve customer service, and the customer experience. We have invested heavily in our internal systems, including billing and provisioning, and are modernizing it to be more flexible, in order to continue to meet and exceed our customer’s expectations.

After all, we do serve some of the biggest CDN customers in the world. Very few CDNs could do what we did during the World Cup, when we delivered traffic in excess of 4Tbps. Although we might not be in the headlines as some other CDNs, it doesn’t mean we’re not winning business away from them. Keep in mind we are delivering 10x the traffic on any given day compared to some of our competitors.

What does the recent verdict on the lawsuit mean to Limelight? We strongly believe that Limelight Networks did not infringe on Akamai’s patents, and we are going to continue to fight hard to prove our case. We will file an appeal, they will contest, and then we go from there. The whole process can take anywhere from weeks to years.

As you well know, the lawsuit has been going on since 2007, and we are looking forward to the day it will end. The good news is we have no debt and enough cash on our balance sheet to write a check, without disrupting ongoing business.

The case is about three main issues, and it’s possible the court might throw out one or more of them. We are confident the courts will find in our favor, but even if they don’t, it will be a big relief to get this over with, so we can focus on serving our customers. Also, keep in mind we have a strong balance sheet, and we can leverage it if need be.

Is Limelight Networks going to become $1B sales company by 2020? That would be nice, but we are realistic and I think we’ll dramatically increase our revenues over five years, but I don’t think we’ll reach $1B in annual sales. I say that because we are not trading growth for quality. We are still working on improving our network architecture, its resiliency, investing in R&D, adding features to our product line, and many more great things. Growing a healthy business takes time, and we have made tremendous progress in the last couple of years.

The new executive team has been in place for two years now, and when we first started, our goal was to understand the business and industry. Today, we fully understand the business, having learned many things along the way about our company and industry. There is such a thing as growing the business too quickly, and we could always do that by dropping prices, but that is not the objective. The objective is to focus on long term profitability, and meeting our customer’s needs. We are continuously measuring customer satisfaction, and we are very happy with the progress.

Our customers have responded well to our latest features, and platform improvements. The results are clearly visible — we have reduced customer churn, employee churn and more importantly, increased revenue per customer. My focus is on managing my existing customer relationships, who happen to be some of the largest CDN customers in the world, and only then will we be successful. If we manage our customer’s needs, the business will come.

It’s important to focus on improving shareholder confidence, and become a valuable partner to our customers. One of the initiatives we have taken is to focus on a smaller set of larger customers. So far this has been a success, and the average revenue per customer continues to increase. In the past, we would target every customer that came along, even though it might not be a good fit. This has changed, and we are dedicated to building customer partnerships where we can provide the most value.

Do you have plans on acquiring a company? In the past, we were a very acquisitive company. Over the last couple of years we put acquisitions on hold, in order to focus on the enhancing the customer experience. Now we are prepared to act on a good opportunity if we see one. The lawsuit is a little bump in the road for us, but once it’s concluded, and our stock price increases, we’ll be able to leverage our financials to help us get where we need to be revenue wise. When we look at acquisition, we first determine if we can develop the technology in-house using our R&D. If it can’t be done, then we evaluate if we can do it through a partnership. Then only, if we decide we can’t do either, we’ll consider an acquisition.

Our plans are dynamic, and our position can change quickly, if it will help us reach our revenue targets. On the bright side, we increased our head count from 520 to 563 during the first two quarters of 2015, and some of the increases took place in R&D. R&D is very important to us, and we are proud of them, because they are helping us to be more competitive.

What is the biggest challenge facing the industry? The biggest challenge facing the industry is the growing complexity in delivering content to the masses. In the past, it was much easier to deliver content, since we had fewer protocols to support, and only a limited amount of mobile device versions existed. Today, the abundance of choice is overwhelming, and delivering content from point A to point B is no longer an easy task.

Not only must our customers deliver content over more protocols, they also have to create multiple bitrates of the same file if its video, and deliver it to a large number of mobile devices from the various manufacturers. At the same time, social media is exploding, and companies like Twitter, Snapchat and Facebook require real time delivery, and instant purging. And based on our experience, the complexity will only grow — but we are ready to deliver everything to any device anywhere in the world.

Do you have plans to invest in your product portfolio? 2013 was the year of discovery. In 2014, we started building out our plans, and now we are seeing the benefit of that work. Not only are we investing in products such as instant purge and DDoS mitigation, we have plans to introduce WAF. Also, we’ve been monitoring the RAN market for a while now, and even though it’s not part of our planning today, it is something we are evaluating from a strategic standpoint.

We recently rolled out DDoS Mitigation, in order to protect customers from DDoS attacks, while delivering their content. The next logical step for us is WAF, and we’ll be introducing that shortly. When it came to evaluating our DDoS options, there were two options available. You can build it or buy it, and some competitors have done both. When we looked at DDoS Mitigation, we concluded that it would make most sense for us to become a systems integrator, and partner with a reputable vendor, like Radware.

By becoming an integrator, we have the flexibility to adapt our product line to the changing market conditions. The security marketplace is constantly evolving, and being an integrator allows us to build the skill sets in house, and potentially change course and implement a new security technology, if one arises that is best in class. We have no plans to become a standalone security company, but we do plan to provide a robust edge security suite that protects our customers, when delivering content.

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