Akamai Joins the S&P 500—the Inside Story
As the stock market opens today, home-grown Internet-backbone company Akamai will join the S&P 500, taking the slot previously held by joint-replacement manufacturer Biomet. Joining the bellwether index is quite an achievement, especially in Akamai’s case. The company was an original dotcom high-flyer that suffered some staggering blows before making it to this point. We thought it would be fun to ping the firm and a few of its founders for their thoughts—and to see how this came about. Was there a long lobbying campaign? Gala parties? Tears of joy?
It’s July, so it was hard to track people down. The first three contacts (including two founders) we called or e-mailed were out of town. We did find someone in investor relations, who laughed and told us: “The CEO sent around an e-mail announcing it, that it’s a great thing. But no parties.”
When we finally did get an official response to our query, we learned that the company didn’t even know the S&P move was afoot. Here’s the full response:
“It’s a great honor to be added to the S&P 500, especially for a company that once worried about whether it might be de-listed after the dot-com bubble burst and at the height of the tech recession when many of our clients were going bankrupt. Being selected for the S&P 500 was also a surprise to us. We found out about it by reading a press release on the wires, and in typical Akamai fashion we didn’t stop for a party. Instead, we just went back to work focused on making the Internet a more reliable and secure place for our clients.”
Well, if they won’t toast themselves, we will. Well done, Akamai.
9:57 am: I’m updating this post because I just got a call from Jonathan Seelig, one of Akamai’s founders. Jonathan is managing director of Globespan Capital Partners in Boston. He, too, was taken by surprise by the news—learning of it from someone he knew who was sitting a few rows behind him on a plane out of Los Angeles. “I looked at him with a total blank stare,” Seelig says. “I had no idea.”
That being said, the Akamai co-founder is very pleased. “It’s clearly a great achievement. It’s great to get recognized in that way,” he says. “It validates that the market is valuing the company we built, and that the company will continue to be important in the industry in the longer term. It’s something I certainly am very proud of.” Seelig also says that the core original vision of building intelligence and technology around the Internet to better harness its power continues to be a very powerful business model.
He is not surprised, though, at the low-key response inside Akamai: the reaction of public markets has never been the firm’s focus. When the company went public in October 1999, the investment bankers brought in cake and champagne to celebrate. Seelig and others watched the stock on a screen for a while, he relates. “We had a piece of cake and went back to whatever meetings we were in.”