Elevator pitch

21 June 2007

From a chance conversation in a lift to a worldwide content delivery network, CacheLogic's expansion has been rapid. But as Andrew Parker explains, being a global start-up presents big challenges

Andrew Parker is CTO of CacheLogic. With his two co-founders he's quickly established the company, their second successful venture, as a global provider of peer-assisted content delivery solutions [CDS] - a technology for distribution of online video, games and other multi-gigabyte content. The founders raised an initial £1.25m from Pentech Ventures and the Cambridge Gateway Fund in July 2003, followed by a further £3m round that included 3i the following year. Last year, Amadeus Capital Partners led a £10m series C round with 3i and the original investors. Along the way, CacheLogic has recruited the likes of former UUNET chief Pat Chapman-Pincher and Tony Illsley, former Telewest CEO, to head up the company's worldwide expansion.

You and your fellow co-founders of CacheLogic previously set up Zeus Technology to provide application traffic management software for web servers. What made you decide to move on?

Fundamentally, it boiled down to itchy feet. We'd been doing web servers for a number of years, we felt that we'd built the Rolls Royce product in web serving, and we wanted to do something new. We had also been through a rollercoaster ride in 2000 and 2001, working with all the major telcos that subsequently went into a slump. What we enjoyed was that early-stage atmosphere, wearing multiple hats, knowing that the company was making huge leaps forward and progress every day just because of our own energy, enthusiasm and skills. We felt that as a team we had done it before and we could do it again.

You also approached your initial fundraising as a team. Was that important to investors?

There wasn't a full story unless there was a team, and the old adage that VCs buy into a team rather than the ideas is very much true - they wanted to meet the group. For the December 2004 round, which included 3i, we actually spoke to a very small number of VCs and each founder played a different role. I was the CTO and technologist, Adam Twiss was our CEO and Bryan Amesbury was our CFO. Between the three of us we've always stuck to our respective strengths. You can talk to me at any level of depth about technology but when it comes to our numbers, that's clearly Bryan's domain.

Where did the idea to build a peer-assisted CDN come from?

We got here by a slightly convoluted route. When we left Zeus, we initially set up as a consultancy specialising in helping companies scale their Internet infrastructure and dealing with Internet application problems. One of the companies we were working with was Telewest, where we helped build a new mail platform. It was only really in a chance conversation in the lift on the way out that we found Telewest was struggling to keep up with demand for bandwidth and had no idea what was causing it. That admission gave us an opportunity to engage with it on a consultancy basis, and we found that more than half of its network capacity was being consumed by consumer filesharing - end users downloading TV and music content from the early peer-to-peer filesharing networks like Kazaa.

So we built a software and hardware combination to help it keep temporary copies of that content within its network. As peer-to-peer grew to become a more acceptable technology for the future, we decided it was time to move the company on from being a solution provider to ISPs to being a content delivery platform.

How difficult was it to get VCs to buy into your initial ideas?

The most significant challenge for the company was raising that first round of funding. We were the first company in the peer-to-peer space to raise capital and at that point the investment community was still bearing some of the bruises of the dotcom boom times. They were looking for solid businesses, good predictable revenue streams, patents, paying customers, billion-dollar addressable markets - and just about everything else you could imagine in the investor's dreamworld. I do recall various conversations where we said to potential investors that if we had all of those things in place, then we'd probably go to a bank instead.

At that point, we could actually have funded the company through organic growth, but it was felt that to address the global opportunity, we needed to have some outside investment. Even raising around £1m, there were quite a few people for whom it was too small a deal. We spoke to people like 3i then but we were just too early stage for them. In the next round, when we'd gone out and proven a market, and once revenues were coming in, that was the point when they wanted to join to provide expansion capital. 3i and Amadeus grasped our value proposition very quickly - then spent time doing due diligence and talking to our customers, who were very supportive.

You decided you had to be in several global markets from a very early stage. How did you manage that?

From a very young age, although we were based out of the UK, we also needed to operate in the US and Asia. So we set up regional offices to deal with customers and partners, but most of our R&D is still done in Cambridge. From a small company growth perspective, that was difficult because you typically consolidate your home markets first, but we had to be in all those markets in parallel.

Now we have 68 people spread across the UK, mainland Europe, north America and Asia. Just from a practical perspective, if you think about those timezones, if you want to be highly available for all those groups, you'd start at about 4am and finish at midnight. So there has to be a degree of flexibility. Whatever company meeting time you choose, you have to accept that it's going to be horribly inconvenient for at least one party.

We also have to be rigorous in making sure we communicate well. When you're a small company and 95% of your staff are in the same office, it's very easy to walk around and let people know things. There's a lot of overhearing conversations and passing on information informally. When you have people who have a time difference of eight hours and are 6,000 miles away, you have to be a lot more oriented towards documentation, e-mail communication, regular scheduled update calls, and culturally just continually reminding people that we are a global company.

Finally, when you choose staff to head up your regional operations you really do have to trust them with your life. The only way to keep a work-life balance for members of the team is to give them that trust, so the guy in California can make a decision knowing that he's got the support of the team in the UK without having to phone them all at midnight and vice versa.

On the subject of hiring, you've appointed telecoms big shots Pat Chapman-Pincher as CEO and Tony Illsley as chairman. Were you concerned about handing over control of your company?

It's one of those areas where one shouldn't confuse pride and money. Our viewpoint is that as founders, we are looking to build a successful company that is a wonderful place to work, and will ultimately benefit the shareholders and employees.

Pat was on our board as a non-exec director when we made the decision to change from a business selling devices to ISPs to building and running an operational network. We felt Pat was the ideal person to lead the company at that point. Similarly, we wanted to have a chairman who had expertise in that area, and as former chief executive of Telewest, Tony Illsley was a recommendation by 3i and Amadeus. He'd been involved in other joint investments and it was felt his skillset was closely aligned to what we required.

The company had to change from being a technology-led organisation selling to service providers as a product company, to become a service company selling a mission critical service to household name customers. We have become mission-critical and that has meant a lot of maturing in software systems, processes, operations centres, new HR requirements and so on. Pat and Tony have helped us go through that process of changing from being a small entrepreneurial start-up to being a trusted provider of key services - more of a medium-sized company.

Andrew Parker was talking to David Longworth of Webster Buchanan Research