ISPCON Keynote: Three Hosts, Three Strategies

The ISPCON webhosting keynote brought together some key players in the industry, each of whom described a different core strategy.

by Alex Goldman ISP-Planet Managing Editor [October 20, 2005]

The ISPCON Uberhost keynote panel presented three key players and one key observer. Paul Stapleton of The I$P Ho$ting Report is a key industry observer and investment banker.

Stapleton had a solo session earlier in the conference which we will write about next week on ISP-Planet. He moderated the session.

The other three participants each represented s different path to growth using a different skill set.

The developer
Warren Adelman, COO of Scottsdale, Ariz.-based The GoDaddy Group, represented the aggressive growth path to profits using a programming or technology skill set. The company (see GoDaddy Adds E-Mail Marketing) develops its technology in house and doesn't outsource.

It has made acquisitions, Adelman said, but only to acquire technology skills that it did not already have. It does not buy customers.

The marketer
Robert Marsh, CEO of Houston, Tex.-based EV1 Servers, represented organic growth using marketing as a skill set. The company has used aggressive price points to acquire a large market share. Its marketing tactics include sponsoring the local college bowl game.

Asked how the company can price at below cost, and why, Marsh replied, "we bet that prices were going down. We turned profitable in 18 months, selling dedicated servers at $99 when others were selling it at $1,000. Sun Microsystems had just bought Cobalt, and we were able to buy a truckload of product with no payments due for nine months."

Nowadays, the company's ARPU is closer to $125, because customers have been sold additional services.

Of course, success brings costs too. "The local power utility told us one year that if we increased power usage by one amp, they'd shut us down. We focused on other products for that year."

The financier
The third webhost, Mark Teolis, CTO of Vancouver, Canada-based Peer 1 Network, represented growth through acquisitions, leveraging a financial skill set. Peer1 has acquired some big names, including ServerBeach and part of Interland.

Adelman, of GoDaddy, objected to the growth by acquisition strategy, saying that it can change the culture of a company.

Teolis said that Peer1 believes in delegating responsibility. He added that his company is learning skills from the companies it has acquired.

Marsh said that EV1 buys when time to market is a key consideration, but if the prices are too high, building is also a good option.

Teolis said that at current data center prices, it's almost never necessary to build a data center because data centers are cheap to buy. He said the company buys companies that need bandwidth, and hooks them up to its infrastructure.

The conclusion
There was much more to the session, but this brief overview shows that the hosting business can support a variety of different business strategies, and that companies can do well when they know what skills they have, and also know what skills they need to acquire.

—End