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New Client Profile: StackPath

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About

Founded by the same folks that built SoftLayer and sold it to IBM, StackPath launched in 2016. In the window between their 2015 founding and their 2016 emergence from stealth, they had already made four acquisitions; they have since pursued several more M&A deals and now offer a composite offering of edge computing services.

The StackPath portfolio rolls up several edge-focused companies including Highwinds, MaxCDN, Cloak (formerly known as Encrypt.me), Fireblade, Server Density, and Staminus. Together these assets provide a platform offering CDN, VPN, firewall, DDoS mitigation, object storage, and monitoring services.

While it’s less common to see startups aggressively pursue a “buy” rather than “build” strategy with their portfolio, the idea was to bring these assets together and integrate them into an edge platform. The platform’s goal is to quickly and securely serve content and compute to end users around the world.

Size

The company’s network has 45 points of presence (PoP) on five continents. North America and Europe have the greatest level of geographic representation for StackPath, with more limited network coverage in South America, Australia, and Asia. While the scope of StackPath’s global presence is more limited than some of their competitors, the company has focused on a “Super PoP” strategy (i.e. having a smaller number of strategic data centers with massive compute and networking capabilities, as opposed to pursuing a higher volume of smaller points of presence.)

There are a variety of other metrics by which one can view the company’s size and maturity, be it through team size, funding obtained, deal size, revenue and growth metrics. Here’s a sampling of those metrics:

  • StackPath just completed their Series B raise, bringing their total funding to over $400M.
  • The company is headquartered in Dallas, TX. They currently employ 280 people.
  • According to Forbes.com StackPath brought in $157 million in revenue in 2017, closing the year with an annualized revenue run rate of $200 million. Since emerging from stealth in July 2016 with 30,000 customers and $150 million in investor funding.
  • Clients include major media companies such as HBO, Viacom, and Twitch.

Products

StackPath offers a variety of base services that can be bundled in various ways. Their core offerings can be be grouped as follows:

Edge Delivery – services to improve site performance and security, including products for CDN, DNS, WAF/DDoS mitigation, and edge monitoring.

Edge Compute – the ability to run workloads at edge points of presence using VMs, containers, or “serverless scripting.” Serverless scripting is built on the Chrome V8 JavaScript Engine. StackPath will support WebAssembly to allow these scripts to be written in programming languages including Go, PHP, or Rust.

Object Storage – an S3-compatible object store that can offer performance and cost savings for both edge compute and CDN services.

The StackPath portfolio is composable, but they also offer pre-designed bundles of delivery services for common use cases. They also have assembled all their individual products into a pre-integrated orchestration system called EdgeEngine.

Competitive Landscape

When StackPath launched, it set out to compete with CDNs – notably Akamai and LimeLight. Akamai may have looked untouchable at one point, but the market has moved on significantly since then. In the intervening years Cloudflare and Fastly have emerged as major platforms in their own right, both having IPO’d in 2019.

While their CDN offering tends to be StackPath’s beachhead into the enterprise, they have made considerable investments in the edge computing aspect of their platform. Edge computing is currently a much smaller market than that for CDNs for a few reasons:

  • The notion of edge computing has changed a lot in recent years. The concept of the CDN has been around for decades; Akamai, for instance, delivered its first traffic in 1999. However, the idea that users can build distributed systems at the edge is relatively newer. This nascent approach to computing means there is a smaller number of people who understand the technology and are willing to evangelize it in their organizations.
  • “Edge” is a nebulous term that can be validly used to describe both an edge data center or an oil rig in the middle of the Atlantic. These are very different use cases – content performance vs. Internet of Things, say – that are often conflated because of the term ‘edge.’ There is a lot of noise around edge computing, and clarifying what a point of presence means is prerequisite to selling the overall product portfolio.

When looking at the combined portfolio of established CDN/content delivery functionality combined with the more nascent edge compute capacity, Cloudflare is probably the closest competitor to StackPath. In recent years Cloudflare has built on its security and reliability heritage, with new security products for virtual firewalls/DDoS protection, and Cloudflare Workers for running serverless JavaScript functions.

It is also worth noting that the boundaries between cloud computing and edge computing are breaking down and being remade. Thus AWS CloudFront competes with CDN players, while those CDN or “edge providers” seek to compete with AWS. For example, StackPath is positioning its serverless functions in terms of better performance than AWS Lambda. The competition with cloud providers emerges in other ways. Just as retail businesses are wary of working with AWS, so media businesses, the heart of StackPath’s customer base, are likely to also seek alternatives and hedges to AWS as Amazon grows its own media business with Prime.

Given that StackPath has positioned itself to compete directly with a wide range of formidable competitors, it will need to invest heavily in both R&D and infrastructure in order to be competitive. Its M&A activity has been the engine for cashflow, which has enabled it to substantially grow its customer base and range of features in a very short time frame. It will be interesting to watch what functionality their future build and/or buy decisions target.

Disclosure: AWS, Cloudflare, IBM, and StackPath are RedMonk clients. Akamai, Fastly, and LimeLight are not.

This is not a commissioned piece of research from StackPath and all opinions are our own.

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