This story appeared in the July/August 2004 issue of Web Host Industry Review magazine. Click here to subscribe for free.
August 25, 2004 -- (WEB HOST INDUSTRY
REVIEW) -- By day, George Roberts is a systems analyst for a Fortune
500 company. By night, he is the chief executive, chief geek and head
janitor at Interjuncture (interjuncture.com), a one-man Web hosting firm serving 40 customers and 150 Web sites.
In the offline world, Roberts is what
you'd call a regular guy. He likes computers, has a wife and two kids
and a swarm of pets — a dog and two cats. In the hosting arena, he is a
part of a growing group of individuals that are joining Web designers
in one of the hottest trends in Web hosting.
Roberts occupies a range of expertise,
investment and time that many hosting customers already occupy. Many of
them Web designers and hobbyists, these users may be involved in
managing several hosting accounts and, more importantly, may already be
doing the work of a Web hosting provider.
This growing segment of advanced Web
hosting customers is a potential goldmine for larger hosting firms,
which already have the relationships, already provide all the back-end
services and need only to help these customers make the potentially
lucrative transition into becoming Web hosting resellers.
The unique selling proposition of this micro-hosting reseller set—lots
of hand-holding.
"Because I am a one-man show I am hands on and talk to customers a lot," said Roberts. "With me, you go straight to the top."
Roberts doesn't advertise his services.
All he does by way of marketing is list Aurora, Illinois-based
Interjuncture on Web hosting directories and rely on word of mouth. His
expenses amount to an account with a hosting company and some outlays
for software. His pricing strategy is mid-range — Roberts doesn't go
for volume but figures his premium makes the difference for customers
who need personalized services. This means that his shared hosting plan
— Interjuncture's least expensive offering — costs $4 a month as
opposed to $1 a month.
Interjuncture wouldn't be operational if
it weren't for three tools. First, a control panel allows Roberts to
set up accounts, add services, maintain customer profiles and initiate
billing via a single Web interface. Roberts uses Ensim (ensim.com),
though other control panels are available. Second is his billing
software. Roberts doesn't track usage by end users, doesn't estimate
billing and doesn't lick envelopes when mailing out bills — instead, he
runs his business on ModernBill (modernbill.com),
a system designed with Web hosts in mind by Modern Gigabyte. Finally,
Roberts outsources his technical support and customer service. Yes, he
is available for his customers, but the flood of inevitable mundane
questions is handled by a system called eSupport, from Kayako (kayako.com).
Together, these three tools allow Roberts to run his Web hosting business in as little as 10 to 15 hours a week.
"This is not a hobby, since there is time
and money involved," he says. "However it is nice to take something you
get lots of satisfaction from and make it into a business."
Web hosts and vendors that enable
businesses like Interjuncture have taken notice of this new trend.
Ensim, the control panel maker that supports Interjuncture, has
launched an entire program addressing the needs of the ultra-small Web
hosting resellers. Called Ignite and launched this spring, the program
aims to popularize Ensim tools not just with a handful of large hosts,
but with a wider universe of Web hosting providers.
Ensim's research indicates there are 44
million domain names in the US alone, a stunning number when you
consider how operators like Roberts are making hosting probably one of
the most competitive industries under the sun.
Accidental Web hosts have been part of
this industry as long as there was Web hosting. Some of the very first
Web hosts were Web designers who sought to streamline their client
relationships by giving access to their Web servers so that customers
could view their sites as an end user would see them. Another group
that has long been finding its way into Web hosting is network and
systems consultants who help clients develop sites as part of larger
contract engagements.
It wasn't until relatively recently that
Web hosting became automated and sophisticated enough for individuals
like Roberts to be able to provide quality service on a truly part-time
basis — in off-hours from his job, and without requiring him to spend
too much time away from his family.
Ignite has been specifically structured
to address the needs of this new wave of Web hosts. The big idea was
that the very small hosts neither have the time nor the money to
negotiate good supplier deals from third parties. Through Ignite, Ensim
does that for them, setting them up with a payment merchant system, an
SSL certificate for transactions, an email marketing campaign engine
and a search engine optimization tool. Interjuncture is an example that
these tools can be optional, and if all a host wants is a control
panel, a control panel it gets. The magic of this program is that there
is no money up front. Ensim gets a portion of each sale instead, or a
referral if a third party's product is sold.
"We just launched this program a couple
of months ago and already have 700 sign-ups," says TJ Dupont, Ensim's
director of product marketing.
Web hosts view this phenomenon as another
entryway into the 5 million-strong SMB market in the US. Several
companies have staked out their claims for the very-small business
market, including Interland (interland.com), Hostopia (hostopia.com) and Alabanza (alabanza.com).
Franc Nemanic, founder and president of Hostopia, defines this market
of part-time hosts as companies run by one or two individuals,
supporting between 150 and 200 sites.
Hostopia's offering for this kind of user
provides, not surprisingly, outsourced billing services and tech
support. But the future of this business is not with more automation,
says Nemanic, but with helping these resellers better define and
address their niches as well as develop more sophisticated offerings.
Applications are the next frontier for
the likes of Interjuncture, with hosted Outlook and spam filters
leading the way. Helping resellers better define their market is a more
complex problem, in Nemanic's view.
"This is a segment of the market looking for a franchise concept," he
says.
Indeed, if entrepreneurs like Roberts are
all buying essentially the same automation and penetrate their
communities by making them franchisees? Nemanic is still pondering the
idea of charging for the brand, however it's easy to see where he is
getting the idea — his local office supplies store.
Staples is now offering Web hosting along
with copying and ink jet paper. And if that seems like a bit of a
stretch, consider that Costco is doing the same — continuing with the
bulk-shopping motif in cyberspace. Two industries where the franchising
of Web hosting services would be especially effective, Nemanic says,
are real estate firms catering to their own agents; and dentists.
Brand building works the other way around
too. Web hosts have an uncanny ability to come out from nowhere and
establish themselves as a go-to brand in a niche industry. Consider
Ink21, a customer of Hostopia. The name probably doesn't ring any bells
with anyone who doesn't speak Cantonese, but the firm is one of the
most popular Chinese-American Web hosts.
"Ink21 caters to Chinese entrepreneurs on
the West coast, and is good in catering to this ethnic market and
lifestyle," says Nemanic.
Advances in software and services have
blurred the line between the sizable hosting customer and the small
hosting provider and all-but-eliminated the barriers to starting a
small reseller hosting business.
The challenge, now, is for the hosting providers and software vendors
that are already dealing with these customers to make it known how
close they already are to operating reseller hosting businesses of
their own.
