Fastly: Proof That Software Is Eating the World
In tech, everything old becomes new again at some point. For example, centralized computing through a mainframe terminal in 1970 is, today, strikingly similar to delivering apps to a browser via the cloud.
We haven't always enjoyed mainframe-like speed and reliability on the web. In 1999, the web was slowing, even as it was growing. Too many users competing for too few servers and too few resources on which to route traffic via the (ahem) "Information Superhighway" led to digital collisions that could keep websites from loading for minutes at a time. Akamai Technologies (NASDAQ: AKAM) was born to solve that problem and dominates the niche to this day. But thanks to Fastly (NYSE: FSLY), which only went public on May 16, that could be changing.
Finding (and founding) passion
More on Fastly's disruptive potential in a minute. First, let's talk about its similarities with Akamai. Both companies and others like them provide what are called content delivery networks (CDNs). Think of them as a second internet where systems and software work in concert to bring static and dynamic website content and apps closer to the users consuming it. The closer the content, the faster the delivery.
Second, Akamai and Fastly have magnetic and deeply appealing founding stories.
MIT professor and current CEO Dr. Tom Leighton and the late Danny Lewin (an MIT grad student who worked closely with Leighton before succumbing during the Sept. 2001 attacks on New York's World Trade Center) founded Akamai in 1998 after vowing to find a mathematical way to dramatically improve the speed of the internet. Their algorithms and theories helped give birth to the original CDN architecture. Accordingly, they deserve at least partial credit for making the web the commerce machine it is today.
Fastly is the brainchild of Swedish developer Artur Bergman, who helped found the Velocity tech conference in 2008 before founding Fastly three years later on the premise that if you build the right infrastructure (using ultra-fast solid-state drives, primarily), orchestrated with good open-source tools (the Varnish web accelerator), you could at least rival and maybe beat other CDNs running less efficiently.
Server-driven versus software-driven
In this way, I think of Bergman, Lewin, and Leighton as kindred spirits but with fundamentally different takes on how to build and optimize a CDN. Fastly's focus is open-source software; Akamai's approach has been server-driven with the computers controlled and optimized via software at the company's Network Operators Centers (NOC). (In its earlier days, Akamai would report its server count as a reflection of the company's ability to bring content closer to people.)
The differences between Akamai and Fastly become more stark, in my opinion, in the buyer and users of these differing CDNs. Akamai's scale and history appeals to chief information officers and chief information security officers, while Fastly, in Bergman's words, was "developed for developers, by developers."
Being that I'm a business-focused investor and analyst by trade, I decided to test Bergman's claim with the developers who run our SiteOps here at Fool.com. Is Fastly really that much of a developer-friendly platform? All three I talked to said yes.
Even better, they say, is Fastly has built tools that make the developer-familiar language and features of Varnish -- the open-source code base and web accelerator upon which Fastly was built -- easier to work with tools for quickly comparing changes, rolling back mistakes, and performing common actions without writing any code at all. As you might imagine, that's a brilliant nod to developers who've wasted hours pouring over lines of code to find the misplaced character that's breaking the system.
The Foolish bottom line
I can't stress enough how important this is. Unless you've already built a dominant global franchise and you're able to afford Akamai's lineup of add-ons and tuck-in services, managing and tuning the CDN is going to be a developer's job. Fastly's understanding of and catering to developers on their terms to optimize the web and app experience all the way down to the roots is a HUGE advantage.
As history has shown over and over and over again -- most recently with MongoDB -- it's the developers who dictate where the budget is spent and how value is created. In the content-delivery business, their money is on Fastly. My advice is to join them and invest in this recent IPO.
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Tim Beyers owns shares of MongoDB. The Motley Fool owns shares of and recommends MongoDB. The Motley Fool has a disclosure policy.
