I just read an article that said ***** grew to 100,000+ clients in 3 1/2 years.

Do these companies get that big, so fast, by buying up the smaller fish, or is it mostly through advertising? I've never seen a ***** ad. Anyone have any insight?

Steven

Aloha

well not sure how they did it
but some ways would be to have a good budget which I am sure they did

go around and buyout soem hosting compnaies and get there clients
buy a few targeted mailing lists and offer cheap deals
have things in place that work and look good (at least to the layman)

buy up a few more hosting companies
get a few press articles done and get the correct PR person for articles to be written and maybe make some partnerships along the way
and there ya go
all this takes $$$$$ though

How would you go about buying other hosting companies. Do you just start contacting them and see if they are willing to sell?

Aloha

well I would do it that way ;)
(not going to but guess ya can cold call em)
otherwise maybe they had found some midsized co that had say a 1000 customers and said ya want to sell for $$$$ almost everything has its price.
I might also look for companies that are seeming to get a lot of publicity etc... and aproach em with money merger ideas ??

If you are interested in buying another webhosting comany. There was a post by Sean of Burst on if company X has Y amount of clients then a fair price is
Z * anuall earnings. But contacting and asking if they are interested, then get some information on them such as growth rate, client size, etc.

Originally posted by MBurst
I just read an article that said ***** grew to 100,000+ clients in 3 1/2 years.
Do these companies get that big, so fast, by buying up the smaller fish, or is it mostly through advertising? I've never seen a ***** ad. Anyone have any insight?
Steven As some up here know, I’ve been working in the host industry since the mid-90’s with Hosts and Host Finders as a marketing/business consultant and with my own sites like HostBuyersGuide.com (aka WebHostMagazine.com), WebHostMkt.com and WebHostYellowPages.com, and have seen a lot of things tried. Some larger companies did indeed get huge by buying smaller companies (and in many cases suffered greatly because of it). But there is nothing wrong with buying a small company if you have the money and infrastructure. It is smart business. However, many companies, such as ***** (since you mentioned them) and Burlee did it by being consistent with their marketing dollars over the years. They have placed their ads where Web Developers look for Hosting services and they have done it consistently month after month year after year.

If a Host had a small budget they did creative things. For instance, Burlee started out very small in 1997 (2 people) and had an almost non-existent ad budget. They visited all the discussion groups and answered technical and support questions to hundreds of Web Developer questions and followed up the posts with a Burlee signature block. They went where developers were, not where Hosts hang out. Before too long, developers came to Burlee to see what they were about and started signing up. It didn’t take long for Burlee to increase their ad budget and they began advertising in the Host Finder sites. They studied their banners and traffic to see what worked and what didn’t and adjusted it. It increased their traffic and sign ups.

LinuxWebHost is another company that did this. When James Rogers started LinuxWebHost he would spend many long hours on the forums answering questions. Even if he didn’t know the answers he would find the answer and provide the developer with help. Developers started coming to LinuxWebHost because he had become an expert in their eyes.

There are a lot of successful Web Host companies doing stuff like this all the time. They are very proactive with their time and spend as much time as they can find new ways to reach developers and businesses looking for hosting services.

The key is they understand that marketing and advertising works and they did that, with a budget or without, and they did it consistently. It’s also important that they monitor the work they do all the time to see that its working.

Very few of the Hosts up here take advantage of all the opportunities to get their name out there for free, or next to nothing. Heck, even doing things like press releases and submitting them to places like Host Buyer's Guide, Host Index and Top Hosts is free and thousands of web developers will see your news! But very few of the Hosts up here do that.

We work with Hosts all the time <<EDIT>> to teach them how to do this stuff. Building to a larger company without buying smaller ones can be done with intelligent and consistent hard work.

Lot's of hard work and good marketing (some positive cash flow helps too!)

I find it funny you compared linuxwebhost.com to ***** and Burlee. Who is Linuxwebhost??? I never heard of them until you mentioned them. They are nowhere near to the level of the big host. Plus they are still in the reseller stages. They are with Alabanza.


The key is they understand that marketing and advertising works and they did that, with a budget or without, and they did it consistently.

Good point. Consistency in advertising.

Originally posted by UmBillyCord
I find it funny you compared linuxwebhost.com to ***** and Burlee. Who is Linuxwebhost??? I never heard of them until you mentioned them. They are nowhere near to the level of the big host. Plus they are still in the reseller stages. They are with Alabanza. I was making a point about things you can do to promote your hosting company. LinuxWebHost is a perfect example for many companies up here that wonder what they are going to do next to get a customer.

LinuxWebHost was one of several successful startups for James Rogers. He didn't spend any money advertising but brought in thousands and thousands of customers by using some of the techniques I described.

You may not have heard of them and they may not be a huge host, but I think they are somewhere around 15 to 20,000 customers. That is bigger than most, and I'm sure that the money it brings in would be a nice thing for many people up here. I mentioned them because James Rogers was successful at doing the types of things I described. He later sold it and several others sites he built similarly.

What is amazing about James is that he never even used a computer until a couple of years ago. He wanted to make some money so he began a website. His host went down and he went to the newsgroups to ask what he should do and someone up there suggested he do his own hosting with an alabanza based business. He decided to do it despite a lack of knowledge. He worked hard to learn everything and tried various things to get customers. He worked 20 hours a day supporting his customers and bulding his company. Thiose that know him admire his tenacity and drive.

I don't think he is hosting anymore. He did quite well for himself.

As far as LinuxWebHost being an Alabanza based company... I don't get the point. Lots of Hosts up here are Alabanza based companies or something similar. It's no different than having a McDonald's franchise. Alabanza provides the servers while the entrpreneurs try to make a go of it. They can decide for themselves if they want to be successful or not.

It may not be what Burlee did when they bought/leased all of their own equipment and still do... but it can be effective hosting if it is done right and the customers are happy.

The subject here, in its basic form, is how to grow a hosting company to a large size. My reply pointed out that not all large hosts get there by buying other companies. Many do it from the ground up. I included LinuxWebHost at the lower end of the spectrum with maybe 20K paying customers. ***** would be at the high end with 105,00 customers. And Burlee would be somewhere in the middle.

LinuxWebHost may be at the lower end of the spectrum right now, but what it was doing is a perfect example that you can grow quite well with out a large marketing budget if you are willing to do the work, do it intelligently and do it consistently.

I am amazed at 15 - 20,000 customers. You learn something everyday.

As far as LinuxWebHost being an Alabanza based company... I don't get the point. Lots of Hosts up here are Alabanza based companies or something similar. It's no different than having a McDonald's franchise.

No, big difference. Alabanza host rely on Alabanza to support them. If a server is down, they need to get help from a company 100's of miles away. They do not host and manage their own servers, etc... That is my point. A McDonald's franchise is all you. Like running your own data center. If the fry machine goes down, Ronald McDonald doesn't fly into fix it.

My point wasn't to downgrade Alabanza resellers. It was to see how (why) you compared one company to another group like *****.

I am still amazed at 15,000 customers for LinuxWebHost. Did anyone else know that? I thought Jumpline was the biggest Alabanza customer.

Originally posted by UmBillyCord
I am amazed at 15 - 20,000 customers. You learn something everyday.... ...Did anyone else know that? I thought Jumpline was the biggest Alabanza customer.

and... A McDonald's franchise is all you. Like running your own data center. If the fry machine goes down, Ronald McDonald doesn't fly into fix it.
I can only go by what I was told by someone from their current parent company. It does seem like a lot of people, but I have no reason not to believe them.

Your point about Alabanza and McDonald's is a good one. I agree. My analogy was poor. However, resellers, no matter who they are with, are at the mercy of their parent company, even if they control their own server. When a host goes down, or decides to perform maintenance in the middle of the day on something, you get hosed.

HostMag,

Thanks for the input, I found it very informative and helpful :)

I'm off to re-think my stratagy, alter my sig and visit your site (see its works!)

Regards
Eladesor.

Originally posted by Eladesor
HostMag, Thanks for the input, I found it very informative and helpful :)
Thanks. I'm glad I could help :)

:smokin: Thanks... some really good advice here! Greatly appreciated.

Sorg

Yep, exactly what I was looking for :) Thanks

Steven

Tagging this for later.

Thanks for a good discussion. These threads are why I keep coming back to WebHosting Talk. :stickout

Thanks a bunch! Going off to the forums with my sig :)