Azuki, Led by Wu-Lynch Clan, Looks to Go Big in Mobile TV Market
Television is in the air these days—quite literally, as more people are watching video on mobile devices via wireless networks. The Boston area is also abuzz with the news that Aereo, the IAC-backed Internet TV startup, is bringing its streaming service to the area in May.
But another video-tech company that starts with “A” is getting my attention today. That would be Azuki Systems, based in Acton, MA. Azuki makes software that helps content providers deliver video specifically to tablets and smartphones. The technology includes optimization for different screens and networks, as well as digital rights management. The 45-person company has raised about $35 million in venture capital, led by Sigma Partners and Kepha Partners, since its founding in 2007-2008.
Azuki may have been ahead of its time, but the Internet and mobile TV sector seems to be booming now. Earlier this month, wireless giant Ericsson bought Microsoft’s Mediaroom business, which makes Internet TV software for phone companies. (Microsoft remains in the TV market with Xbox.) To some, the move signals near-term consolidation in the industry, as well as ramped-up competition in video delivery between a few big players like Ericsson and Cisco Systems.
Meanwhile, Azuki has just made a big change at the top. Its co-founder and former chairman, Cheng Wu (pictured at left), has taken over the CEO post as of earlier this month, replacing John Clancy. And Chris Lynch, the networking and big-data executive-turned-VC, has become chairman of the company. Lynch is a partner at Atlas Venture and made an angel investment in Azuki several years ago; Atlas is not an investor in Azuki.
“We’re at a juncture where the market is moving forward quite quickly,” Wu says. “At this pivotal time, you can imagine there are a lot of tactical movements—if you do it right, you could be very successful.” He adds that bringing in Lynch as chairman will help the company execute quickly. They know each other’s moves, so they can “divide and conquer,” Wu says.
Wu and Lynch have a distinguished history of working together (just call them the Wu-Lynch Clan). They met in 1997 at ArrowPoint Communications, where Wu was CEO and Lynch was running sales and marketing and, in his words, “giving Cheng grey hair.”
The company went public and then was acquired in 2000 for $5.7 billion in stock by Cisco, where Wu and Lynch stayed for two years. The pair moved on to Acopia Networks, a file virtualization startup founded by Wu and led by CEO Lynch, which they sold to F5 Networks in 2007 for $210 million in cash.
When Lynch (at left) joined database-analytics firm Vertica Systems as CEO in 2010, he brought Wu onto the company’s board of directors. “He helped me shape a vision that was really about database as a service in the cloud,” Lynch says. The result? A Hewlett-Packard acquisition for about $300 million in 2011.
Either these guys have a time machine in their basement, or they just know how to read technology industries. Despite being very early with ArrowPoint in Web trafficking technology and Azuki in mobile Internet video, these companies have managed to survive until the market timing was right.
The Azuki experience is “kind of consistent with Cheng’s track record of understanding how markets will change over time,” Lynch says. “This was software to optimize content delivery on mobile devices and smartphones before they even existed.”
Of course, it remains to be seen what the endgame will be for Azuki. You might guess that the company will be snapped up by a bigger player eager to strengthen its technology portfolio in mobile video delivery—whether it’s a telecom firm, a network operator, or a cable company competing with Netflix, Hulu, and Amazon. But the startup is prepared to grow on its own and survive for the long haul.
“Azuki has a play by itself, and a play with” other companies, Wu says. Meanwhile, “We need to be thoughtful about our trajectory” is all Lynch will say.
Indeed, the change in leadership and chemistry suggests that trajectory could be dramatic for the startup—one way or another.
Working together over time, Lynch says, “people learn to win. And they learn to lose, or accept losing. We’ve had such great fortune.” Just like in sports, he says, the best teams aren’t necessarily made up of the best individual athletes, but rather people who are best at working together.
To that end, it sounds like Wu is a technology specialist by training and a business generalist by experience. And Lynch has strong business instincts and the ability to pull out technical details to figure out what matters and what doesn’t. Plus, they have an unspoken bond over time. “Cheng is 63, and I was born in ’63,” Lynch quips.
Lynch seems like he’s being brought in to help maximize whatever opportunity Azuki sees before it. And it’s all being driven by the convergence of online video capabilities and the massive adoption of mobile devices.
“I had no idea this revolution was coming,” Lynch says. “But 3 billion smartphones can’t be wrong,”