After watching an online NetSeminar entitled : "Hosting Reality Check: What You Can’t Afford to Ignore" with Verio, it brought some reality to the term big fish little fish. Gathered from their broadcast, their plans range from around $20/m virtual accounts to $1,200/m dedicated servers and with over 400,000 clients, that's $8,000,000+/m. Holy Cow! :eek:

I've seen them mentioned here several times, but don't think I've ever seen one of their representatives here. I'm curious if there are any representatives of any companies even close to that kind of income represented here or even in the 6 figures/m category.

I'm also curious as to how companies in that range became so successful. How did they start? Where are they getting their customers? Are they successful because of a specific target market or niche? Rigerous sales? Specific support requirements, whether it be staff, hardware, or software? I've heard several people here mention support, but I would assume one needs a constant flow of sales to have customers to even support.

Are we all just little fish in the sea here? How does one survive in a sea of big fish? Sure, we can probably scrape along month by month just making enough to pay the bills, but how does a company truely become successful and go somewhere with the company?

Working the hosting business and growing for 3-5 years, can a six figure income be expected? Thats what i'd like to know.





___---Pluto---___

Originally posted by plutophobia
Working the hosting business and growing for 3-5 years, can a six figure income be expected? Thats what i'd like to know.





___---Pluto---___

Sure it can. I won't mention names of the companies here, but there are several on this board that are big, but obviously no where near the size of Verio.

I think a lot that has to do with it is time. Not to say that if you start now that in 5 years you'll be as successful as Verio, because the market 5 years ago allowed Verio to bring in a good number of customers, and at much higher rates than now. My assumption is that Verio doesn't sign up as many customers now, as they did "back in the day", but they still have customers paying the high demand prices that they signed up with in 97-00, and also have a recognized brand to big corporations that probably end up paying the 1,200+/month for servers.

Zak

All excellent questions to ponder.

I would speculate to say that some of the success of Verio has to do with their time to market.

Each company, product and or service has a critical mass. First to market usually feels the most impact of that product or service if they have done their homework and can handle the growth.

Not everyone likes a "wal-mart" hoster. Some people want to know that there are people behind the phone numbers and the emails giving them a personalized treatment that makes them feel like they are the number one customer on your list.

I've never seen a posting from a rep from the larger hosting companies on here, as they are not going after the "technical guru's" that post on these sites. They are after the customer that wants as web site but doesn't know what they need or really how much they should be paying for it.

So my reponse is go local and see if you can't develop a customer base within your own community that recognizes your "brand" before you branch out and become a "global" provider. Trend your prices and your product/service to the local industry and offer incentives and packages that fit the needs of people in your neighborhood.

Make sure you build a business plan that really makes you think about why you're in this business and don't get frustrated when people scoff at your prices because there is always going to be another "wal-mart" hoster who thinks that $8 mill a year comes from overselling and hoping for the best.

IMO

I was going through their hardware specs on Verio's dedicated servers and they really didn't even impress me that much. Using the FreeBSD as an example, the best spec on it is the RAID 1+0 and tape backup, but the rest, such as a Pentium III processor, 128MB RAM, 8 GB disk space, 50 GB data transfer, etc are actually below the norm for even here. And they're charging $800/m to for a managed server with those specs? Are companies that concerned with backup that they would sacrifice performance? Heck, I have a RAID 1+0 PC at home with a faster processor, more RAM and disk space than that. Why haven't these servers been updated? Is the Brand name such that they can slack on hardware? I don't even see mention of a control panel or hardly any of the features associated with one. It's not until I drill down to virual accounts where I see some of this. And $50 for a 300MB/10GB basic webhosting virtual account? :eek:

Maybe it IS a timing issue. Maybe it's something else? Maybe it's the illusion that price = quality? Maybe I need to dig farther.

Originally posted by Alex042
After watching an online NetSeminar entitled : "Hosting Reality Check: What You Can’t Afford to Ignore" with Verio, it brought some reality to the term big fish little fish. Gathered from their broadcast, their plans range from around $20/m virtual accounts to $1,200/m dedicated servers and with over 400,000 clients, that's $8,000,000+/m. Holy Cow! :eek:

This is great... assuming those numbers are true, it goes to show all the RackShack zombies that frequent these forums: RackShack is nothing in this industry when you compare to the giants.

I've seen them mentioned here several times, but don't think I've ever seen one of their representatives here. I'm curious if there are any representatives of any companies even close to that kind of income represented here or even in the 6 figures/m category.

I sincerely doubt it... Probably the biggest company in terms of shared clients here would be Pair... but I doubt they will be telling you how much they make, and I sincerely doubt it's 8 million a month... As for 6 figures, yes. RackShack probably does more revenue then anyone here, and they have to be at the 7 digit/month mark for revenue.

I'm also curious as to how companies in that range became so successful.

I'm no where near as big as your asking, but I have a pretty good idea:

How did they start?
One of two ways: with a lot of money or they've been doing it well for a long time. Or both...

Where are they getting their customers?
Hmm... with Ventures Online for example, a lot of people moved to then from USUSA when they went to the crapper... Daniel and Paul started VO with a couple of others, and saw HUGE growth because of it. (NOTE: This is all a conclusion I've made myself, I could be wrong here).

Are they successful because of a specific target market or niche?
Some probably did... but I'd guess the majority just offered a REALLY good service and word of mouth made the business spread out.

Rigerous sales? Specific support requirements, whether it be staff, hardware, or software?

I've heard several people here mention support, but I would assume one needs a constant flow of sales to have customers to even support.

Don't assume :)... treat every customer like they are spending a million a month, and word of mouth will do 10 times what sales, hardware or software will do.

Are we all just little fish in the sea here? How does one survive in a sea of big fish? Sure, we can probably scrape along month by month just making enough to pay the bills, but how does a company truely become successful and go somewhere with the company?

First of all, start local. Local businesses, especially in non-technology driven cities would jump on the opportunity to get a website... it's just that nobody's offered it yet. The Internet market is full of 14-year-old "Owners" that know as much about pricing and hosting as I do about brain surgery. Unless you like to make pennies on every client, you need to stand out amongst the rest. The best way to do that, is making clients happy and working on your local market.

Maybe it IS a timing issue. Maybe it's something else? Maybe it's the illusion that price = quality? Maybe I need to dig farther.

It's the same reason Joe Blow buys Nike when the quality is litterly 1/2 of a Port Authority or Atlas t-shirt. It's all in a name for Verio... starting out, set your prices competitivly with your local competition... then continually increase them when neccesary... but don't lower them, there's no reason to cut prices to make sales.
No matter what RackShack does, I'd still rather have 3 clients and make more money that RS does with 10... but then again when you pay your techs $8.00/hour, you can afford to be a bottom-feeder.

Well, maybe they've discovered that users don't care about all the feautures of the CP's and that only the tech heads do.

If you want the mass consumer market, maybe the key is to provide the information, only put it under the high level benefits of what you have to offer.

A basic consumer is not going to know, or even really care about ALL the features of cPanel, or Ensim they want YOU to know it all and YOU need to charge them for the pleasure of knowing it all.

Keep in mind, I'm not saying all consumers are this way, some are and some just want their web site to run no matter what it costs. Others like you and me want to know all the "techno" gadgets we can get.

The larger companies like Verio, make people feel safe when ordering a $50 300Mb/10Gb virtual account. They can, because of that wonderful "word of mouth" thing. Other people recommend them and so on and so forth to the point where it most cases it does not matter the cost as long as the benefit of their friend's advice is solid.

Price does not always equal quality. Do a search for "free hosting" on this forum, then go look up where it's being hosted and start poking around there. You'll find a lot of scary things in those closets.

Keep digging. :smash:

Lets take a look at iPowerWeb's figures:

Over 128,000 customers
Each paying $7.95/month
128,000 x 7.95= $1,017,600/month (minus server bills and employess of course)

Anyone here making that kind of money???

Just as a reality check as of 1999 before it was acquired by Nippon Telegraph Verio's revenues were $258 million, net loss $92 million. 1999 was probably a better year for hosting industry than 2002-2003 so it is doubtful that it has gotten better for Verio. Another big name, Interland August 2002 fiscal year end revenues 101.7 mil net loss 11.3 mil. Now let's take a noname Rackshack that was mentioned here. Sometime ago in the hosting tech magazine, that was consequently purchased by RS, there was an article about them. Among other things it mentioned that RS had 13000 servers and a net profit margin of 13%. Well just doing rough math here. 13000 serversX150 a server average price gives you $23.4 mil a year at 13% net profit margin that's 3 mil net profit. More than Verio or Interland can show. So the point is not to grab the most of market share and make gazzilion dollars a day in gross profit but to run your business in such a way that at the end of the day you have money in your bank account instead of relying on bank's line of credit :)

Originally posted by Alex042
I was going through their hardware specs on Verio's dedicated servers and they really didn't even impress me that much. Using the FreeBSD as an example, the best spec on it is the RAID 1+0 and tape backup, but the rest, such as a Pentium III processor, 128MB RAM, 8 GB disk space, 50 GB data transfer, etc are actually below the norm for even here. And they're charging $800/m to for a managed server with those specs? Are companies that concerned with backup that they would sacrifice performance? Heck, I have a RAID 1+0 PC at home with a faster processor, more RAM and disk space than that. Why haven't these servers been updated? Is the Brand name such that they can slack on hardware? I don't even see mention of a control panel or hardly any of the features associated with one. It's not until I drill down to virual accounts where I see some of this. And $50 for a 300MB/10GB basic webhosting virtual account? :eek:

Maybe it IS a timing issue. Maybe it's something else? Maybe it's the illusion that price = quality? Maybe I need to dig farther.
Specs do not matter as much to business clients. They want to know if the hardware is sufficient for their site, if the backups are in place, and they are usually happy. They are not looking for the latest CPU/RAM combo.

Same goes for the Control Panel. I think maybe a handful of our clients have even heard of cpanel, plesk, ensim, etc... They just use what is given to them, and as long as it is functional and easy to use, they are happy.

For shared hosting around $50 a month, it can be done by the "little guys" too. Our prices are just a tad under Verio's, and we seem to be doing fine.

Now how do they do it? Well, as mentioned before, they were first to market (or close to it). We were pretty close to first in market as well, so I guess we took advantage of it. They target businesses, both small and large. That is what we do. They contact businesses that just registered a domain name. They have us beat there cause we do not (Not a large enough sales force for us). They have a great reputation, and that carries a lot of weight for them as clients recommend them to their associates (This is the key one for all hosts to grab onto).

Can you put up a shingle today as a new host, charge $50+ a month for shared hosting, and with a Rackshack box be successful? Odds are you won't. But if you build your business based on slow growth, exceptional service, and use local businesses and an image of business hosting, you can do it, although it will be slow without huge capital to market and sell.

- John C.

Originally posted by papaj
Lets take a look at iPowerWeb's figures:

Over 128,000 customers
Each paying $7.95/month
128,000 x 7.95= $1,017,600/month (minus server bills and employess of course)

Anyone here making that kind of money???

Wrong. Do a serch here. They are not that big. Sure they are bigger then most, but they feed you a bunch of sh** on their real size.

Originally posted by plutophobia
Working the hosting business and growing for 3-5 years, can a six figure income be expected? Thats what i'd like to know.
Yes. :)

Wrong. Do a serch here. They are not that big. Sure they are bigger then most, but they feed you a bunch of sh** on their real size.

Do they really? How so? What have you heard?

Working the hosting business and growing for 3-5 years, can a six figure income be expected? Thats what i'd like to know.

Yes.


Do they really? How so? What have you heard?

Ipowerweb bought out a free host and that counts for a significant part of their numbers so back out a large chunck of revenue.

:)

Originally posted by Alex042
Is the Brand name such that they can slack on hardware?


The brand name is important imo..

Not the hardware.


I bought 2 T Shirts yesterday.

They were plain and would be $5-$10 @ Wal Mart..

They dont feel of any quality and most likely arent..

The bill was over $80 for just those 2 shirts

:bawling: