Whats the biggest mistake you have made while starting up your web hosting company?

Ours was paying 1500 dollars for advertising on postcards and movie theatres and getting a return of ... VERY little. :( haha
( awhile back )

Taking out loans to buy servers. I'm still paying loans on servers I bought 2 years ago, yet I bought 3 new servers this summer with cash.

I just need to bite the bullet, and pay the loans off, that will elimiate a nice monthly expense. But that money can be much better used buying new equipment, or advertising...

Originally posted by Utaria-Aaron
Taking out loans to buy servers. I'm still paying loans on servers I bought 2 years ago, yet I bought 3 new servers this summer with cash.

I just need to bite the bullet, and pay the loans off, that will elimiate a nice monthly expense. But that money can be much better used buying new equipment, or advertising...

How much was the loan for? if you dont mind me asking, and what were the specs of the servers back then?

I am thinking of getting a loan for servers etc...

Also remove free from your sig, it's pricing info.

Originally posted by VolkNet
Whats the biggest mistake you have made while starting up your web hosting company? ModernBill.

modern bill was one of the best moves I made. So I guess it is in the eye of the beholder.

Originally posted by stokes_83
modern bill was one of the best moves I made. So I guess it is in the eye of the beholder.

Same here - but whats your biggest mistake?

My biggest mistake is paying setup fee for two servers. This just become ridiculous when you didn't own the hardware by the end of the term.

Originally posted by stokes_83
modern bill was one of the best moves I made. So I guess it is in the eye of the beholder.

same here :) despite support was very low but I think it is better than others.

Perldesk is my second mistake I have done so far.

Originally posted by Mark L
How much was the loan for? if you dont mind me asking, and what were the specs of the servers back then?

I am thinking of getting a loan for servers etc...



The loan was $3500 for 3 identical servers:

2.4ghz P4
1gb Ram
dual 40gb HD's w/hardware raid 1
1U Chassis
CD-Rom drive
Dual 10/100 NIC's

The biggest mistake I ever made (we're talking back in 1983) was thinking small. Overly obsessed with micro-management. Trying to wear too many hats. Trying to save money by doing everything myself.

There are certainly many stories of successful businesses in which someone does everything, and slowly grows into being able to hire staff. Yet one of the most difficult things for a business owner to grasp is that delegation of duties can be very effective.

The fact of the matter is that if you are able to entrust quality employees with the production end, and you concentrate on management/growth/expansion, you are way ahead of the game far sooner in your overall game plan.

Vito

Vito- That is something that I am learning very quickly as we speak. This past month or so, business has just taken off like a rocket. I feel this is in part A) having a real, physical office. B) having employees.

Having an office lends to more confidence in the business (both for myself, and my clients). And having employees frees me from the stress of day-to-day activities, while allowing the business to be able to generate more revenue. (Instead of billing $90/hr for just myself, I can bill $90/hr for myself, and my employees, and pay the employees $20/hr).

Glad to hear you saw the light, Aaron. :agree:

Enjoy the exponential growth. :D

Vito

Heh, Offering An Unlimited Plan. :P

Hmm...What else...To cheap prices (think we initially had $1.00/month plans). No help desk/billing software.

Went out for a while. Regrouped. Came back in about 3 years ago with everything right. Technicaully, it should be. It was my scond time.

~Fred T

Not getting in to hosting sooner. (I started out in computers & design, added dialup access, then purchased a hosting company)

and

Radio Advertisements. I spent a few thousand that I had made off of a big sale and it was a big waste of money. I hardly noticed a return on it.

My biggest mistake is partnering with a good friend...had a lot of problems...and wasted a lot of money.

Finally, I decided to close that business and started Worria.

Colocating with John Ellis, can't really remember his name. Long story short down a couple thousand in equipment. Some lessons are better learned from the mistakes of others.

Leasing servers was one of our worst moves, should have moved to colo when I left our own office lines.

I agree with what Vito said.

The other thing is wasting my close to $800 on Deskpro, which is practically abandonware at this point. What a waste of money.

The biggest mistake I've ever made was when I started with an unlimited reseller package and offered 500 GB monthly transfer for €15.00/month. Thank God nobody used that much. After a few weeks I realised what I did. :crazy:

Well... I did a few more big mistakes, but I'm glad that they didn't affect my clients. We'll always learn from our own mistakes. :)

Our's was definitely stealing another web hosts tables for their plans. We used our plans, but their table design, second was reselling hosting, it was an awkward conversation when we were approached if we were resellers. Third was our initial tempalte for the site, it was very poorly designed. That's about it.

I really can't think of anything that I'd class as the "biggest mistake". There were lots of mistakes, yes, no doubt about that, but I learned quickly from them, and pushed on.

Although, maybe the biggest mistake was my refusal to invest X% of revenue into advertising. Word of Mouth growth was nice, so I saw no need to spend $$ on promotion, and always argued that slow organic growth was preferable in the hosting business.

That line of thought could have been wrong, but the goal was to slowly build out the business, whilst not crashing, like so many hosts did before. I saw hosts that grew too fast, as being more likely to collapse, and I was content to take things nice and steady, rather than chase growth.

Bob - that's exactly what I did too...and I think it worked out well for us.

My biggest mistake? I have two, actually. The first was trying to develop software that was already there (control panel and billing solution) - thinking that I knew better what I needed than the companies that did that for a living.

The second was providing too much support and not figuring out the long-term ramifications of that. For instance, when we had a few dozen customers...I had no problem troubleshooting 3rd party scripts, installing all the custom configs and thingamabobs and tweaking servers so that customers could run their flakey software on our servers. I also had no problem giving out my home phone number and cell number to $2 a month customers. At one point, I sat down and looked at how much it was going to cost to continue to provide these services, once I could no longer do everything myself, and found out that I would be broke within about a year. I had to reassess and tell customers that we would no longer fix their broken scripts for free and that we were only offering phone support for dedicated server customers. The backlash was awful...because customers saw that as a sign that our customer service was slipping. Anyway, we worked through that and came out better for it, I think.

The other big mistake I made was not hiring a professional accountant. A couple of years ago the "budget" accounting firm (some guy and his wife in a run-down house) ran off with quite a bit of our money, hadn't paid the bills they were supposed to and took all of our accounting records (tax, bookeeping, etc.) with them. It was a nightmare and the closest I came to going bankrupt. Lesson learned...check references and don't pick service providers based on cheap pricing! Okay...that's three! :D

--Tina

Originally posted by AH-Tina

My biggest mistake? I have two, actually. The first was trying to develop software that was already there (control panel and billing solution) - thinking that I knew better what I needed than the companies that did that for a living.


I made that mistake. Dunno if it is my biggest though ;)

I think one of my biggest mistakes is biting off more than I can chew. I get some great idea, start working on it and post a release date then realize it will take a lot longer to finish than I originally guessed.

My biggest mistake was not to implement a logical exit strategy. While I was in the hosting industry, my only goal was to grow sales. I did not realize how important an exit strategy could be and that it could have potentially made my business worth more than I could ever expect.

1. Starting with self dedicated server, instead of reseller hosting
2. Going with wrong hosting company, that cost us some $$ overpay and a lot of headache due to the their billing issues(don't want to mention this company)

Originally posted by Eric Lim
My biggest mistake was not to implement a logical exit strategy. While I was in the hosting industry, my only goal was to grow sales. I did not realize how important an exit strategy could be and that it could have potentially made my business worth more than I could ever expect.

Pardon me for sounding "noobish" but what do you mean by an exit strategy?

Originally posted by VolkNet
Pardon me for sounding "noobish" but what do you mean by an exit strategy?
Probably a strategy in case if he goes out of business. I'm not sure.

An exit strategy can be used in many circumstances, not just going out of business. In my case, I was able to design a film that was profitable, but wasn't so attractive to investors that wanted to buy it. The business itself generated sales and customers, but without me actively involving, the business is worthless. I built the business with intention to resell when the right time has come, but I didn't implement a structure that appealed to my investors. In other word, the company wouldn't make any money if I was sick and had to stay in hospitals for several weeks.

Take an example. Two brothers founded a company that offered services such as carpet cleaning, etc. They didn't hire any employees and therefore, they did most of the company work. Very soon, they generated more than 5 million profit each year. A big corporation saw the oppoturnity and created a similiar subdivision to offer the same service. They hired employees, equipments, computer systems, etc to run the business. However, they only managed to generate around 2 million profit each year. So the CEO decided to put the subdivision on sales, the average investors were willing to pay 4 times more than the profit they made each year. So, the business was bought in around 8 millions. Now, the two brothers thought, by average, they could sell their business for 20 millions. So they tried, but the offer was far less than what they expected.


I thought this website had some pretty good reading on planning your exit strategy earlier before you even start operating your business.

http://isp-planet.com/business/exit_planning.html

Originally posted by VolkNet
Pardon me for sounding "noobish" but what do you mean by an exit strategy?

The best business plans start with an Exit Strategy. (IE, how are you going to exit the business).

Do you plan on growing the business so you can have your kids take over, and have it become a family owned empire?

Do you plan on growing it to sell within 5 years for a couple million dollars?

Do you plan on Incorporating and going public, and retiring off the IPO?

Do you plan on being bought out or merging with a larger company?


Every business has it's end, whether it is to become a public company and become a perpetual corporate machine, or be sold/merged with another company etc. How you define your exit strategy determines how you grow your business.

How can you write a business "plan" if you don't know to what end you are planning?

Originally posted by Utaria-Aaron
. . . Do you plan on growing it to sell within 5 years for a couple million dollars?
As the years go by, web hosts are worth less and less and less and less. Soon hosts will have to pay someone to take the business of their hands. :D

This being due to falling pricing, and the massive influx of web hosts setting up shop. To get multiple millions of $$$ for your business, you'd have to have a rock solid brand, and own most if not all of your dc and noc hardware etc.

Interland sold off their dedicated server arm (http://www.webhostingtalk.com/showthread.php?s=&threadid=441395), with 8,300 servers are other equipment, for 14 Million dollars. Consider that somewhat of a benchmark, when valuing your own business.

Bob - True, web hosts are worth about as far as you can throw them now. However, having an exit strategy is very much a good thing in any business. Web hosting or otherwise.

Heck, I'm sure there are plenty of hosts now who got into hosting to make it to the 300 customer mark, just to sell to another hosting company for inflated values. Then go out and start up another host and do it again.


Personally, my goal is to have my business running itself within 5 years. I already have someone taking care of the technical side, and soon I'll have people doing the web development aspect, leaving me with sales/support. I'm pretty confident I can build a sales staff and a support staff within 5 years (if not 3).

Mine was-
I trusted my admin more than needed, I lost 2clients already.
He did not give me WHM / and cpanel for my customers. He kept this under this control. And now he suddenly is not available ,
my emails to him bouncing back, his official email id doen not exist.

I dont have direct control over my clients. I am still struggling to
set things straight with all customers.
I think i have lost all my data. Worst of all i dont have the sql backups (latest ) as he had disabled the sql backups from his end.

My official forum is down for 2weeks now. :(

Lesson learnt- Discuss with your host all the details of the pack
before signing up. And preferably do all conversation via emails
rather than chat windows.

Originally posted by AH-Tina
The second was providing too much support and not figuring out the long-term ramifications of that. For instance, when we had a few dozen customers...I had no problem troubleshooting 3rd party scripts, installing all the custom configs and thingamabobs and tweaking servers so that customers could run their flakey software on our servers. I also had no problem giving out my home phone number and cell number to $2 a month customers. At one point, I sat down and looked at how much it was going to cost to continue to provide these services, once I could no longer do everything myself, and found out that I would be broke within about a year. I had to reassess and tell customers that we would no longer fix their broken scripts for free and that we were only offering phone support for dedicated server customers. The backlash was awful...because customers saw that as a sign that our customer service was slipping. Anyway, we worked through that and came out better for it, I think.

The other big mistake I made was not hiring a professional accountant. A couple of years ago the "budget" accounting firm (some guy and his wife in a run-down house) ran off with quite a bit of our money, hadn't paid the bills they were supposed to and took all of our accounting records (tax, bookeeping, etc.) with them. It was a nightmare and the closest I came to going bankrupt. Lesson learned...check references and don't pick service providers based on cheap pricing! Okay...that's three! :D

--Tina
I wish i had read ur thread earlier.
I am of helping nature, and go out of the way to help anyone who needs help.
I helped a few guys to setup forums, coding, n modding for them, and businesses which they
knew nothing about , when it started. Basically I did everything for them. Then later when they learnt slowly from me, they chucked me out of their company/forum , made me a regular member. Not that it means too much now. but it hurts.

Then I gave webspace 500mb, and bought a domain name for supposedly a friend, whom i knew on chat. He used the server, made me do everything for him, installing forums, customizing his site etc, and kept dilly dalling for >1month when it came to paying.
And finally when it came to paying, he refused to pay.
So I had to bring down his site and put the domain name for sale.

So now the domain is for sale
http://www.neighborsandfriendsunited.org/

Lessons learnt :

Business first, then friendship.
Dont trust when doing business
Let everything be on paper.

Dont cry over spilled milk.... keep going. . . life goes on.

Regards

James

in business... nothing is worth anything if not on paper.

very true indeed...

Though you gotta be extremely careful if you plan on reducing the level of support. True that it might be a great way to cut cost, but don't forget it certainly is one of the reasons which brought you to where you are right now.

I have made plenty of small mistakes, everybody does, but we all learn as well. I have said so many times in the last few months, that if we could jump back in time and start all over again with the planning, I would do it totally different. I see that as a good sign though, as it shows I'm learning.

I suppose my biggest mistake started a couple of years ago (although I didn't know it then), and finally brought itself from the woodwork in May this year. Some of you may remember it quite well.

A couple of years ago, all that mattered to me, was to develop a hosting company that at least broke even, just so I could touch the surface to see if it was for me. There isn't much wrong with that, as long as you don't compromise your customers experience. Back then I thought that money was everything, so I found a dirt cheap reseller account to use. It could have been far worse, this was with a company that had a number of decent reviews on here, and I had spoken with the owner on a number of occasions, so, I felt confident I was getting a good deal, not only in cost, but in service as well. That company was Vespacious, I have no shame in naming them.

I had them register my domain name for me, me being me at the time, didn't think anything of it when they told me there was no client control panel to allow me to manage it, or that they had entered the wrong address and phone number when they registered the domain. I just let it ride, thinking nothing would go wrong.

The server was fine, it ran as good as could be expected from what I now know was a host with a pretty poor setup.

After a couple of weeks, Vespacious started charging me ridiculous amounts of money, just for simple level 2 support. Apparently, they were having to pay their admin's this cost, so they had to charge me, and no, my monthly price didn't cover this.

Well, I got out of there ASAP. Eventually having another WHT member save me by providing me the best reseller account I have had, and going that extra mile, even helping me get quite a decent percentage of the money back from Vespacious. You know who you are. ;)

Well, 2 years passed, and I was just about to go on to better things, when.... the domain name that Vespacious had registered for me, expired. I didn't receive any notification of this, as the email address on record for the domain was not mine, and yes, I admit, I was quite an idiot to forgot about it expiring, I'm just used to receiving a 60 day notification, I got complacent, and I have no qualms in admitting that, as again, it was something I learnt from.

Although most details on the whois information were incorrect, the first and last name were mine, so, I was the owner on paper. Well, it got worse. Somebody, who I can only assume was the owner of Vespacious, (who had by this time done a runner), because he had access to his domain reseller control panel, changed the name on the whois record, which in effect, left me with no ownership.

The nameservers that 95% of my clients were using, were attached to this domain, the worst case scenario would have been these nameservers been deleted by whoever had access to that domain's settings.

I had countless phone calls, emails, PM's, and faxes of my passport to RegisterFly, the registrar, but it took several months for RegisterFly to give me ownership of the domain. This was a result of a little incompetence on their part, and a few email issues at either end.

To top all this off, I was now caught up in the DotCanada nightmare. The domain expired just as DotCanada's data centre switched off the Callisto server, which I happened to be using. What timing eh?

I didn't lose a single customer due to all that, as in the few months proceeding these events, I had finally learnt a few things, and I managed to keep all customers fully updated, and they were all very understanding.

My advice is to never have anybody register a domain name for you. I have a few customers who have asked me to register their domain, and I have done, knowing I'll do anything within my power to look after it.

My worst business decision? Not decisive enough

Originally posted by Equentity - Jamie
A couple of years ago, all that mattered to me, was to develop a hosting company that at least broke even, just so I could touch the surface to see if it was for me.

:emlaugh: Thats how we were too. Now we love it.

Great story equentity-Jamie.

1. Not using a client billing manager for 2 years.
2. Not acting quickly enough on potential deals for new services/product lines.
3. Creating websites that weren't easily updatable.

My biggest mistake (and I'm still paying for it) is not having good billing software. I've been doing things manually and have gotten behind.

Invest in a good billing solution from the very beginning. This is easier said than done because god knows I've tried quite a few (ModernBill, PerlBill, etc.).

My biggest mistake was to start a hosting business

It took my life !!!

Originally posted by Datacenter1
My biggest mistake was to start a hosting business

It took my life !!!
And for me, it gave back my life. :)

Originally posted by Datacenter1
My biggest mistake was to start a hosting business

It took my life !!!

how so?

Do you mean all the time it takes or what?

Another HUGE mistake, the BIGGEST one of all. Signing up with Paysystems.com/Revecom.com. That was a COLLOSSAL mistake!

Originally posted by Skeptical
Another HUGE mistake, the BIGGEST one of all. Signing up with Paysystems.com/Revecom.com. That was a COLLOSSAL mistake!
Actually, Paysystems worked great for me. At that time, I didn't want to process the cards myself, and Paysystem's recurring processing 98% worked. I processed more than 11,000 transactions through them, and although their system had its fair share of bugs :eek3: their weekly wire transfers were regular as clockwork, and regular cashflow is the lifeblood of every business. I can't remember them missing a wire transfer. Every Friday the $$$ would be in my account. Got to give them credit there.

I didn't get caught when they stopped serving IBA clients. I sold httpme 6mths before then, and even received 100% of my holdback funds too. That was nice. :)

However, a lot of hosts were not so lucky. :(

Biggest mistake: not having the $$ to properly start a company. It takes money to make money, not the other way around.

Originally posted by SyrusMX
Biggest mistake: not having the $$ to properly start a company. It takes money to make money, not the other way around.

I started HiyaCorp honestly with $20.

~Fred T

Originally posted by SyrusMX
Biggest mistake: not having the $$ to properly start a company. It takes money to make money, not the other way around.

That was mine too. Business is growing very slowly, but after 3 years it's still just part-time income. If I had financing 3 years ago when competition was limited, it could have been a good investment, but competition is much heavier now.

Originally posted by FredTT
I started HiyaCorp honestly with $20.

~Fred T

Then you didn't start a legit tax paying business. :emlaugh:

Originally posted by Bohica
Then you didn't start a legit tax paying business. :emlaugh:

Why do you say that? That seems like an ignorant statement.

--Tina

Heh, my biggest mistake was offering an unlimited plan *unmetered* for like £3 [Reseller] :s Luckily they dont host with us anymore :D

Originally posted by Bohica
Then you didn't start a legit tax paying business. :emlaugh:

This is not true, I started with $0 out of pocket 7 years ago and used money from my first sale to register my business name. It would have been great to have some seed money but it was not an option for me at the time.

Originally posted by Kiamori
This is not true, I started with $0 out of pocket 7 years ago and used money from my first sale to register my business name. It would have been great to have some seed money but it was not an option for me at the time.
As I said, you didn't START a legit business with that much money. A legit business STARTS when you register, so you theoretically started after your first sale (when you had more than $0).

I mainly meant you need money to file all of the paperwork. I started abnhosting with $0 and had it at $35,000 yearly profit within 9 months, but needless to say I ran it from my apartment for the first month and had no accountant, lawyer, incorporation, etc etc that every business needs. Seed money would've been nice though, I could've had abnhosting at $100,000 or more if I had $10K in the beginning to invest. :emlaugh:

Originally posted by VolkNet
how so?

Do you mean all the time it takes or what?

I'm really happy with my business but it takes almost all my time

My second biggest mistake was to offer 24/7 support when I was the only tech guy in my company we got many customers from Spain and a lot times they woke me up at 3 AM (8:00 AM in Spain)

Originally posted by Bohica
As I said, you didn't START a legit business with that much money. A legit business STARTS when you register, so you theoretically started after your first sale (when you had more than $0).

I mainly meant you need money to file all of the paperwork. I started abnhosting with $0 and had it at $35,000 yearly profit within 9 months, but needless to say I ran it from my apartment for the first month and had no accountant, lawyer, incorporation, etc etc that every business needs. Seed money would've been nice though, I could've had abnhosting at $100,000 or more if I had $10K in the beginning to invest. :emlaugh:

You only need to legally register a business name when you are operating a business not under your own name.

So you can legally start with $0. Make your first sale as "Joe Shmoe Hosting". Take that sale money, register your business name "ABC Host" and change your companies name from Joe Schmoe Hosting to ABC Host, yet be the same business.

Hmm.. biggest mistake was the time I let a few people run irc bots :-(

note to self:
IRC BOTS ARE EVIL...
Will shave head with a rambo knife if I ever let one on my servers again.

Originally posted by Utaria-Aaron
Taking out loans to buy servers. I'm still paying loans on servers I bought 2 years ago, yet I bought 3 new servers this summer with cash.

I just need to bite the bullet, and pay the loans off, that will elimiate a nice monthly expense. But that money can be much better used buying new equipment, or advertising...

From a financial perspective, paying off the loan now will serve you better than having to pay each month. Sure, that money could be used to purchase new or maintain existing equipment. In the long term, paying that off now will free you in the months ahead in order to effectively fund your business needs without worrying about that extra monthly payment. Not to mention if you have any line of credit established with your financial institution, this will eliminate debt (a loan is considered debt the moment you sign the papers) and therefore increase your credit-worthiness; something VERY worthwhile in the long term.

Originally posted by FredTT
I started HiyaCorp honestly with $20.

~Fred T

isn't $20 still money? :)

Originally posted by Bohica
As I said, you didn't START a legit business with that much money. A legit business STARTS when you register, so you theoretically started after your first sale (when you had more than $0).

I mainly meant you need money to file all of the paperwork. I started abnhosting with $0 and had it at $35,000 yearly profit within 9 months, but needless to say I ran it from my apartment for the first month and had no accountant, lawyer, incorporation, etc etc that every business needs. Seed money would've been nice though, I could've had abnhosting at $100,000 or more if I had $10K in the beginning to invest. :emlaugh:

You can register a DBA at the county clerks office here for $5...bam, you're a legit business.

--Tina

Originally posted by Datacenter1
. . . My second biggest mistake was to offer 24/7 support when I was the only tech guy in my company we got many customers from Spain and a lot times they woke me up at 3 AM (8:00 AM in Spain)
I promised 6 hour response times, but I delivered much faster than that. I had my downtown office, and had a mattress on the floor, and often slept next to the PC. I had the sound turned up, and would get woken up when an email came in.

heh. The things we do. :)

It is just to show that you care for your clients as well as your business. How many people would do what you did to start out?

Originally posted by Aussie Bob
I promised 6 hour response times, but I delivered much faster than that. I had my downtown office, and had a mattress on the floor, and often slept next to the PC. I had the sound turned up, and would get woken up when an email came in.

heh. The things we do. :)

Originally posted by Aussie Bob
I promised 6 hour response times, but I delivered much faster than that. I had my downtown office, and had a mattress on the floor, and often slept next to the PC. I had the sound turned up, and would get woken up when an email came in.

heh. The things we do. :)

I know what that's like. For the first year or so I had my computer set up in my bedroom and also woke up whenever I got an email. When the spam started getting too frequent I quit doing that and gave customers a toll free number to call in case of emergency.

I've never gotten a call in the middle of the night yet. :)

I really like all your stories, keep them coming! I really learn from them.

My mistakes include doing too much for too little pay and partnering with the wrong people.

I fall into the category of people who like to help others and am fairly good at computer stuff. So when someone comes along who needs a hand setting up a site or computer, I help out. Not smart business-wise. Like a moron, I even spent a whole month building a website for a guy who made me all sorts of promises. When I was done, he had no appreciation for it and just let it wilt and die -- he got it for free, so didn't really care.

Same with partners. I've been through two partners who all sold me on their so-called skills but when push came to shove, they were impotent. I'm really picky now and that's a lot better. You want to be my partner? You get nuttin until you meet your milestone. You miss a single milestone and you're gone. Tough but fair. I don't miss milestones.

Originally posted by Torith
It is just to show that you care for your clients as well as your business. How many people would do what you did to start out?
I thought that was the norm, but then again, maybe I'm a nutter. :D :crazy:

I thought that was the norm, but then again, maybe I'm a nutter.

You said it Bob, but there again, I haven't got to the point yet where I want to be in my own office, rather than at home, so I haven't *had* to resort to sleeping on a mattress in a downtown office. Living like your homeless to run your business, I suppose that's a new one. ;)

I'm lucky, 24 hour support is not my part of the job, so I can sleep at night.... almost. Back in the days when I was the sole employee, there were often times I couldn't sleep, I would get up, jump on the computer and check to make sure everything was working fine, I used to get the '6th sense' feeling, that something was wrong.

Originally posted by Equentity - Jamie
You said it Bob, but there again, I haven't got to the point yet where I want to be in my own office, rather than at home, so I haven't *had* to resort to sleeping on a mattress in a downtown office. Living like your homeless to run your business, I suppose that's a new one. ;)
I'm sure there are a few larger hosts now, who started off sleeping on their office floor. Dedication is not hard to come by, when folks are hungry and passionate about creating success. :)

That being said, I didn't sleep there all the time. Just sometimes. :cool:

One word.....FUTON. :D

Nothing like sleeping on a crappy futon next to racks of whirring servers. :P

--Tina

My biggest mistake like many others is partnering with the wrong people.

Smallest mistake is marketing but hey I go after a specific client type so it's not that bad.

Why do people feel the need to partner?

I don't think they feel the need to do so, Tina, but it is more of a case of a friend coming along and been in your face, about partnering. I've been in a partnership, it failed, because we rushed things. I'm now in another partnership, with two others, who I know for a fact I work well with.

To be honest, this partnership came about for a good reason, we all had different skills. One of us is a fantastic designer and an average developer with hardly any web hosting experience, the other is a fantastic developer, an average designer and is average when it comes to web hosting experience, then there's me, average in both designing and developing, but more experience in the Web hosting industry than the other two.

I believe you went it alone with your previous hosting company, and your current, am I correct? If so, I really admire you for that. Having two partners beside me, to converse with about new ideas, means most of our final decisions are good ones, because there were three of us, all able to look at the idea from different perspectives. I'll confidently say, that if I went at it alone, many of my decisions would not be half as good as what they are with a three way partnership. You, on the other hand, and the others who have succeeded by themselves, have that gift to be able to make good decisions by yourself, and are able to tell recognise and tell yourself that the idea you came up with at 2am last night is a load of rubbish.

Well, that came out a lot more long winded than I anticipated. :emlaugh:

Originally posted by AH-Tina
Why do people feel the need to partner?
There's definate advantages in having partners, as well as being disadvantages. There were times when I was building httpme, that I wanted partners - to share the load - get amongst a free exchange of ideas and energy etc. You can do things in a partnership that you just couldn't do, when you're the sole owner.

I've been in a business partnership before (in the building industry) and it was a great experience. It's like being married, where we spent more time together, than we both did with our respective wives. There were some wonderful times of collaberation and almost unlimited energy/optimism, and there were also some bad times.

I thought very long and hard about seeking some partners for my current hosting venture, but decided against it. I've gotten too used to the absolute freedom of being the sole owner, to ever work as a partner. I'm not sure that's a good thing, or a bad thing. :o

My current downfall is my 'niceness' or 'shyness' towards seeking new business, and billing current business.

I'm really just starting to learn what it takes to confidently say "I charge $XX for this service". I still feel sheepish about asking people for money for the services I render. But after a few weeks of eating 1 meal a day because it's all I can afford, I'm quickly learning.

I'm also suprised (pleasantly) that my clients are happily paying me what I'm charging. I'm very glad I made the switch to targetting local businesses. Not only do they pay more, but they refer more business :)

Originally posted by Aussie Bob
As the years go by, web hosts are worth less and less and less and less. Soon hosts will have to pay someone to take the business of their hands. :D

This being due to falling pricing, and the massive influx of web hosts setting up shop. To get multiple millions of $$$ for your business, you'd have to have a rock solid brand, and own most if not all of your dc and noc hardware etc.

Interland sold off their dedicated server arm (http://www.webhostingtalk.com/showthread.php?s=&threadid=441395), with 8,300 servers are other equipment, for 14 Million dollars. Consider that somewhat of a benchmark, when valuing your own business.
Well said, Bob.

The dedicated server sector, though, is somewhat different to the shared hosting sector.

For example: A shared hosting company with 150 servers (let's say 300 customers/domains per box) is (more often than not) worth a lot more than a dedicated server provider with 1500 servers. I'd say it's probably a 1:20 ratio, but this is only based on my own experience in the same scenario.

In shared hosting, a single server can quite easily bring in $3000 per month, whereas a dedicated server is usually only going to bring in around $300-$1000. This is, of course, not including costs and expenses.

To use Interland as an example: If those 8000+ servers were full of shared hosting clients, then I think the purchase price would have had at least one extra "0".

As for the actual question raised by the topic-starter:
I'd say that my biggest mistake was hiring exclusively from within a circle of my long-time friends. In the short term, this turned out great. In the long term however it made the hunt for new employees almost impossible, once my closest friends were already on board.

Simon

In shared hosting, a single server can quite easily bring in $3000 per month, whereas a dedicated server is usually only going to bring in around $300-$1000. This is, of course, not including costs and expenses.

A very good point, Simon.

I'd say that my biggest mistake was hiring exclusively from within a circle of my long-time friends. In the short term, this turned out great. In the long term however it made the hunt for new employees almost impossible, once my closest friends were already on board.

Why was this Simon? Feel free to send an e-slap if it's obvious, it's been a very long day. :)

Originally posted by Equentity - Jamie
Why was this Simon? Feel free to send an e-slap if it's obvious, it's been a very long day. :)
The main reason is trust.

With a close friend, the trust is already there, and I know his/her capabilities already.

It is also very hard, when you're used to working exclusively with friends, to allow newer people in to that "circle". I guess that is the case in personal, and business life.


Simon

Originally posted by IHSL
. . . The dedicated server sector, though, is somewhat different to the shared hosting sector . . . To use Interland as an example: If those 8000+ servers were full of shared hosting clients, then I think the purchase price would have had at least one extra "0".
Aye, that be true. I was just using Interland's sale as an example of how far hosting valuations have slid, and how they're going to keep sliding.

Also, could you imagine the support infrastructure for 8300 servers, with shared hosting clients on them? That would be insane. :D :eek2:

Originally posted by Aussie Bob
could you imagine the support infrastructure for 8300 servers, with shared hosting clients on them? That would be insane. :D :eek2:
I must admit: Just looking at that quote makes me reach for the advil. :D

Simon

Save some advil for me too! :D :uhh:

Advil makes me itchy. :D

--Tina

Originally posted by VolkNet
Whats the biggest mistake you have made while starting up your web hosting company?

Not really starting it. :)

I've been doing various levels of hosting since '97, yet I haven't even created my own website for my business yet, and currently only charge my commercial clients (even though many of my free non-profit & personal clients have offered to pay). If I had ever pushed it from hobby to full blown business, I could probably live off it by now, versus sitting at my job managing someone else's servers and infrastructure wishing I was working on my own. Been too stuck in limbo about taking that next step to make it a real business (not legitimate, it's already legit, I mean actually take customers who aren't just word of mouth).

My biggest mistake was stopping my initial google adwords campaign. When I first started my company, I had a small amount of capital to put into the venture. My first few months on google adwords I was receiving a Cost per Acquisition of $10 per client, which is absolutely amazing for that medium.

Needless to say, I was growing much more quickly than expected, and stopped advertising to take a step back and organise the business. When I restarted 6 months later, using the same advertising methods, my CPA went up to $50 per client. (which is still not too bad...yet in comparison.....!)

I don' know whether the industry became more competitive in that period, or the demographic shifted(or became more aware of the competition), but I could never emulate those initial statistics.

Originally posted by Professor
My biggest mistake was stopping my initial google adwords campaign . . . Needless to say, I was growing much more quickly than expected, and stopped advertising to take a step back and organise the business.
Slowing things down on the new growth, so you could better focus on your business, was probably a great move. New growth is great, but they do tend to use more support, when they're settling in.

One of my mistakes was seriously overestimating the amount of tech support that each client would require. I thought if I had 250 clients, then they would need a huge amount of support. I figured they'd be contacting tech support at least once per day. From that assumption, I was only wanted to build a smallish client base, because I figured they would keep me very busy.

Turned out I was wrong. Very wrong. If memory serves me correct, I had the same staffing level for 500 clients, as I did for around 950 clients. Although there's almost double the clients there, there wasn't double the support load. It was about the same support load.

Basically I found that new clients come in, they need more attention and support, because they're new to the building. Here's where having a good FAQ or Knowledge Base is a time saver. Once they get to know their way around, you hardly hear from them. This is assuming that you are very proactive in communicating server problems/issues with your clients. The faster your communication, the less support clients will need.

Overstemating the time it would take to find clients.

Not choosing the right servers was my biggest mistake. I should have used Dual Xeons right from the start but I took Celeron 2.4s which are not suitable for a lot of hosting clients. On the other hand I didn`t know whether it would be working at all and it may have been a mistake to buy dual Xeons initially. Afterall I think I didn`t make too many mistakes.

Originally posted by Aussie Bob
Slowing things down on the new growth, so you could better focus on your business, was probably a great move. New growth is great, but they do tend to use more support, when they're settling in.



Yep, I don't doubt that for a second. And it was wise, and necessary decision. I simply feel that IF I had known that my CPA was going to increase significantly, I would have continued with the growth and attempted to take stock of my business and where I was heading, simultaneously. Of course, this is exponentially more difficult, but so is economically trying to find new clients through the web based medium.