Akamai: A $11 Billion Tech Giant Started by a Team of MIT Students

Akamai is the leading content delivery network (CDN) and services provider for security solutions and media and software delivery, based out of Cambridge, MA.

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Founded in 1998, the company was a result of a problem identified at the Massachusetts Institute of Technology regarding Internet congestion. MIT Professor of Applied Mathematics Tom Leighton, a renowned expert on parallel algorithms and architecture, proposed that the issue be solved by applied mathematics and algorithms. He worked alongside computer science and mathematics student Danny Lewin to create mathematical algorithms that could intelligently route and replicate content over a large network of distributed serves.

Leighton and Lewin incorporated Akamai alongside Jonathan Seelig, a student at the Sloan School, and Randall Kaplan. Most of the tech provider’s early employees were students who had worked on the project at MIT. As Akamai added on Internet professionals, the company benefited from a rapid growth rate and delivered its first live traffic in February 1999 (a pixel buried in the Disney site). Some of the firm’s other early customers include ESPN and Yahoo!.

Co-founder Tom Leighton now heads Akamai as its Chief Executive Officer (CEO). The company hit the public market in 1999 at an initial public offering price of $26 per share.

After jumping 1.4% in intra-day trading on Tuesday, AKAM stock is up 8.1% in after-hours trading at $63.67 per share, after posting better-than-expected earnings results for the most recent fourth quarter.

The Internet bandwidth provider posted revenue for the three months ended December up 8% over the same period last year to $663 million along with earnings per share (EPS) of $0.69. The Street was forecasting EPS of $0.64 on $649 million in sales.

The solid beat and raise Q4 was attributed to a 17% jump in the software company’s “Web division.” Chief Executive Officer Tom Leighton also highlighted security technology sales up 32%, adding that “media traffic on Akamai’s platform grew faster than published growth rates for Internet traffic as a whole.”