Site acceleration developer Cotendo Inc. is a small, but ambitious Israeli start-up that wants to challenge Akamai Technologies Inc. (Nasdaq: AKAM), which dominates the market. A few weeks ago, Cotendo completed a $17 million financing round from previous strategic investors Juniper Networks Inc. (Nasdaq: JNPR) and Citrix Systems Inc. (Nasdaq: CTXS) and venture capital funds Benchmark Capital, Sequoia Capital, and Tenaya Capital. With tens of millions of dollars in annual sales, and after hiring scores of employees for its development center at Kfar Netter, the company is forging ahead.
"We're the descendants of Commtouch Software Ltd. (Nasdaq: CTCH; TASE: CTCH) founders Gideon Mantel and Nahum Sharfman, and it's important for us to preserve this DNA. Cotendo was founded by three former Commtouch executives - Udi Trugman, David Drai, and me," Cotendo CEO Ronni Zehavi told "Globes".
In 2008, the three men came to Haim Sadger with an idea, and two weeks later they obtained a provisional contract and $3 million, solely on the basis of their presentation. "We create the Internet's glue," says Zehavi. "We lead, manage, and streamline the transmission of content in order to improve the user experience, while increasing the publisher's profits. We work with e-commerce sites, social networks, and content sites."
"Globes": Do you intend to surpass Akamai, since you were there first?
Zehavi: "Akamai really arrived with a buzz 12 years ago and changed the market, but a few things have changed since then, and it didn’t change its business model.
"Akamai has thousands of servers scattered around the world, and it's obvious that a company like us cannot set up such an infrastructure alone. That's why we decided to to build a special pump that would render redundant the dispersion of servers and which would present better performance than the current architecture.
"The second challenge was to preserve functionality. We saw 150 customers before we wrote a single line of code. We target the e-commerce, content, and mobile world. Today, we sell a black box with much better performance than the products of Akamai and its rivals."
Cotendo currently has 350 paying customers. In response to the rising numbers, Akamai filed a patent infringement suit against the company a few months ago.
Are you worried about the lawsuit?
"No. Akamai is known as a serial suer, and for us this is proof that our product worries it. We believe that, within 2-3 years, the market will change and we want to be there with the right technology and right partners."
Cotendo has a long line of partners, including AT&T Inc. (NYSE: T) and China Net Center. Zehavi says that it also has joint development agreement and fertile technological dialogue with Google Inc. (Nasdaq: GOOG).
What are your future plans, and will a partner write a check to acquire you?
"We're not a company that will disappear. We've developed an infrastructure, not a feature. We're here to create a great and profitable company. The market will only grow, and we'll grow with it. I estimate tens of millions of dollars in revenue as the smart devices world expands. Internet use from smartphones will surpass use from PCs, and the handling of content will be different because the mobile infrastructure will be different. Companies who want buyers to use their e-commerce sites will have to provide fast and easy-to-use access.
Published by Globes [online], Israel business news - www.globes-online.com - on August 9, 2011
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