The rise and
fall of Inktomi
Dr. Eric Brewer, Inktomi’s co-founder and professor at
the University of Berkeley, recently gave a talk about the rise
and fall of Inktomi during the Internet bubble. Below is summary
of his speech:
Inktomi started in 1995 at the University of Berkeley as a project
to build a network of workstations (NOW) as a supercomputer. It
was expected that the Internet would experience huge growth and
search engines would be the first to need giant scale servers,
thus the NOW technology would fill that need.
In February 1996, Inktomi was incorporated and utilized funds
initially from private investors and later from venture capitalists
to build their company and provide the founders with more of the
company’s equity. Inktomi partnered with Wired Magazine
to produce the search engine, HotBot. In July 1997, Inktomi obtained
Microsoft as a client for their search engine and AOL became a
client in March 1988.
At its peak, Inktomi was powering AOL, Yahoo and MSN and stocks
were priced at $241 per share, totaling $25 billion. During the
boom in paid search ads, other internet companies also used Inktomi’s
traffic server services. During this time, Inktomi was featured
in various publications and even made the front cover of Forbes.
But the Internet bubble had started to burst and Inktomi’s
clients who had borrowed money to buy traffic servers collapsed,
as well as large clients such as Exodus and Worldcom. Inktomi's
revenue dropped from $80 million to $40 million in just one quarter.
In addition to the client loss, other company investments in shopping
and wireless technologies did not yield fruitful results.
Massive layoffs in 2001 and 2002 and the removal of company divisions
did not ward off further loss.
While Inktomi provided innovations that were vital to the development
of the Internet, they have also provided a lesson to be learned
the most notable being: know your clients. Companies that borrow
money and do not generate revenue can go under quickly and take
your company right along with them.
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