James Segil, President of EdgeCast

Written by Ryan Lawler

Tuesday, September 8. 2009 at 11:00 AM EDT Post a comment

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Contentinople: Can you give an update on EdgeCast's growth over the last year?

James Segil: EdgeCast has been growing phenomenally fast, in part due to our traction in the marketplace. We've been around a while now and are getting a lot more well known, thanks to customers that we have and our performance and feature set and overall reputation, but also thanks to our sales efforts to focus on direct and indirect channels.

EdgeCast today has more than 1,000 customers, and you can see the rate at which we're growing is pretty amazing. We have over 40 reseller partners who are actively reselling our services; we have a direct sales organization that is doing an exceptional job at growing in the market.

Now EdgeCast is mentioned along with companies like Akamai and Limelight when customers are evaluating their CDN needs. And I think EdgeCast is the CDN of choice for any partner who is looking to offer CDN bundled in with or resold alongside their own services. So I think those have been the key factors behind our growth.

Contentinople: How many of those customers are through reseller channels versus direct sales? And what percentage of revenue is direct versus resale?

James Segil: What I can say is that just over half are indirect, so about 450 are direct and about 550 are indirect. What's impressive about that is that allows us to expand our reach well beyond our direct sales force, especially given the short amount of time that we've been able to achieve that.

From a revenue perspective, however, the direct business is still a larger percentage of our revenue, and that's for the obvious reason that when you're in the wholesale business, you're offering a much lower rate that the wholesaler is able to purchase at, and they're aggregating and selling a marked-up service to their customers, so we're not capturing all the value from every one of those indirect customers -- our partners are also capturing a portion of that.

But what we're able to do is reach those indirect customers with little to no marketing and sales expense. Our partners also take care of first-tier customer support as well, so it ends up being a great business for us, and also a great way to gain market share and to grow our company.

Contentinople: That was a strategic decision, for EdgeCast to go largely indirect. What was behind that, or why did you decide that was a smarter business model for you?

James Segil: It comes from two places. First, in previous companies that my partners and I started in the Web hosting and Web application space, we had seen the power of the indirect model and knew that it was a critical component in the IT services space in that there are a number of different middle men who can refer and advise and be part of the decision-making process when it comes to CDN.

We wanted to include them in the sales process. So not only did we want to have a referral relationship with folks who can bring us into opportunities, but also we wanted to spur them to resell and bundle the services themselves as it was appropriate in that Web hosting space, and in the Web services space, to offer a real complete package, or a full-service solution where a customer can go to one company like a Web-hosting company and get their Web hosting and their CDN. Or one company, like a transit provider, can offer IP transit and CDN services.

So for us, that was an obvious choice. And it's a decision that you have to make early on, because to architect the infrastructure and business processes to support both a direct and an indirect channel is something you need to give thought to at the get-go.

So we put a lot of thought into what we had to do to white-label our service, having a multi-level architecture for our control panel and for our billing process so that we could support our partners also selling to their partners and supporting their direct and indirect channels. So we had to put a lot of thought and time into development and make sure that our company can thrive in the reseller and the indirect sales model.

On the flip side, you have to keep in mind that the EdgeCast brand is built on the direct marketing that we do and it's built on the strength of our direct sales team and the direct customers that we have. We find that our partners consistently want to be with a branded leader in this space, so being just a wholesale brand would not have given us the success that I think we've enjoyed today -- we needed to be a branded leader and partners want to resell a prominent brand in this space, rather than just a generic white label that no one's ever heard of.