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martin-adreev-vp-operations-host-color“We do not consider “Cheap” as an option even in our marketing campaigns”, explains Martin Andreev a VP of Operations of HostColor.com, a well-known middle-sized web hosting provider. He adds that his company can not be found in any Search engine by keywords like “cheap hosting” or “cheap web hosting”. The company he runs has been around for more than 12 years and it’s managing team has been part of the rapidly changing web hosting industry. We are speaking to Martin about Host Color’s business and about his view about hosting industry’s developments.

Hi Martin, good to have you here. If you have to describe Host Color with a few words, what would you say? Is it a “Shared Hosting provider”, is it a “cheap hosting provider” or anything else?

It is my pleasure to do this interview for B10WH. Thank you for the opportunity. Speaking about Host Color I would say just “Quality Web Hosting”. It could be also “Shared Hosting”, “cPanel Hosting” or “Quality Dedicated Hosting”, but not “cheap”. I don’t understand “cheap” as “low in price”. In web hosting “cheap” does not refer to the price. It refers to unreliable. I know that many people would disagree with me, but just take a look any of those “cheap hosting” offerings. They are not based on the stability of the hardware systems, redundancy of the network or on how does the hosting company’s support work. All they say to customer is “you can get it cheap”. And “cheap” means a lack of standards. Cheap means that someone got a budget server or even a desktop computer with one hard drive and put a few hundreds of virtual hosting accounts on it. This is exactly what any reputable web hosting company must not do!

“Cheap” is not an option for Host Color. Nothing is cheap and  we do not do cheap. We do “low cost”, Quality Shared Hosting, VPS and Dedicated servers. Hope that this answers your question, despite that I would not use such words to describe Host Color’s business.

What would you say then?

It is on our website. We say we do “Web hosting about people, not about websites”.

How important is Shared Hosting in your customer portfolio?

It is quite important. Our company entered into the web hosting market as Shared Hosting provider in 2000. I wasn’t named Host Color at that time, however. HostColor.com was registered in January 2002. We started with dedicated servers hosted in what was RackShack, at the time, a company based out of Houston, Texas, that doesn’t exist anymore (It entered to mergers to become part of ThePlanet). What I know from those who founded Host Color that it wasn’t a reliable dedicated server provider so we moved quickly to set up our own IT hosting infrastructure in South Bend, Indiana.

Why Indiana? It doesn’t sound like a popular location for a web hosting provider?

It is very good however! We are very close to Chicago (the ping time is 4.5 ms) and the location works great for all American customers, no matter they are from East coast, West coast or live in the central states. It is great location for Canadian customers as well. The RTT (Editor’s note: Round-trip time) is low for Europe and Asia as well.

You claim to offer redundant network. Which provider do you have?

We are connected to Level3, Cogent and to Internap through a local ISP. We are also working to add two more provide or quality bandwidth in Q1 – Q3 of 2013. One would provide access to European peering to our customers, while the other one would shorten the RTT to Asia. We are also using a few smaller IP bandwidth providers which operate in Midwestern U.S.. Our network is reliable and we guarantee 100% network uptime in our Service Level Agreement. Most of our Shared and Dedicated servers customers are currently enjoying more than 1300 days up-time. However I should say that there is more to be done and we are working on it.

I saw that Host Color manages customers’ accounts with a control panel named NextColor. I wasn’t able to find anyone else to using that one. Tell me more about it. Is it a proprietary technology?

Yes. We developed it in 2003 – 2004 and it was one of the best server automation software on the market at the time. However we decided not to release a commercial distribution and to use it in-house only. This wasn’t the best decision for other control panel itself, because we did not work hard to update it the way commercial hosting automation panels are updated. So in 2010 we have decided to migrate all customers of ours to cPanel/WHM. We still have a few thousands of customers on NextColor, but we decided to migrate to cPanel. I know that we have plans to rebrand our control panel and to release a commercial version, but this would happen in 2013 – 2014.

Why? Do you say your control panel isn’t good enough?

I don not say that! It is an excellent web server automation software. It is stable, secure and easy to use. However we are not a software producer. We are a web host and we decided to focus in providing high quality web hosting, not in developing a hosting automation product. We are spending on improving the network, on testing and then implementing the best hosting automation standards and to continue providing the best possible customer support. These are very different from software development.

There is one more thing. We have seen that cPanel has become truly great software automation product within the last few years. Most web hosts abandoned the server management systems they used to use to migrate to cPanel. If we didn’t migrate our customers to cPanel we’d loose value.

How would any hosting provider loose value if they use Plesk or any other control panel, not cPanel for example?

cPanel has become the most popular server automation standard in Linux hosting. Having Enkompass they are now a player in the Windows hosting market as well. Plesk is also good, we offer it to VPS customers hosted on the Parallels Virtuozzo Containers virtualization platform. However we use cPanel/WHM for Shared hosting. It is indisputably the best automation product for Shared and Reseller Hosting, which means that it is the same for managing a stand-alone dedicated servers. I have a good news for our customers as well. We have begun offering cPanel Cloud Hosting.

Isn’t it something that any web hosting provider already does?

Not really! Take a look at Cloud hosting offerings announced by different providers and you will that they are Virtual Private Servers delivered from any Cloud computing platform. What we do is a High Availability cPanel based virtual hosting. This means that we offer Shared Hosting accounts hosted on a Cloud. We have a cluster of servers, which feature load-balancing and High Availability and the accounts of our Shared Hosting customers reside on top of the cluster. It is an excellent service, because our customers save money and time on software licensing and on virtual private server management. We use a technology called Fuscan Linux Cloud to automate cPanel Cloud management and provisioning of virtual hosting accounts on the cloud. It is a new technology and we were one of the first to implement it.

I’m skeptical when it comes to Cloud computing. Nowadays everyone is speaking about it and most providers claims to have it. At the same time it requires a huge investment to build a Cloud computing hosting service? So how could a small or a middle-size d hosting company afford to own a cloud computing infrastructure ?

Well, the major providers want consumers to think that they are the ones who could build and operate a stable Cloud computing hosting infrastructure. However the reality is different. It requires an investment to build a Cloud infrastructure, but it is not a mission impossible. I’d say that any company would start with an investment of $50,000 and to scale its Cloud infrastructure up, depending on the growth rates.

Host Color Cloud is not a monster infrastructure. It is growing and the growth rate depends on customers’ demand. So if anyone says that Cloud computing is a privilege for a companies of large scale like Amazon, RackSpace, etc. then you know one’s opinion is biased. You can see a that more and more web hosting providers adopt some kind of Cloud computing technologies. You can see a growing number of Cloud enablers. So without claiming to be an expert, I can say that we see a lot of competition in the Cloud Hosting market. It is not a competition of corporations however.

Let’s get back to Host Color’s business? How do you see your company in the today’s very competitive hosting market? What do you do to attract customers? I didn’t see much of an advertising for Host Color, compared to some other hosting providers.

We have our own sales and marketing channels and they work good for us. We do not heavily advertise our Shared Hosting, because we do not do “unlimited” disc space and unlimited everything Shared Hosting. We are working to get customers who need stable and customized web hosting environment, which means VPS and Dedicated servers. In the Shared hosting niche we recommend and are trying to attract web designers and developers who are using specific content management systems like MODx, CMS Made Simple, TextPattern, bEvolution, Drupal, Joomla, Typo3. This is not something other do not do, but we have a tradition in supporting different Open Source CMS.

Do you do any Affiliate program?

Yes we do and we offer good payout rates, because unlike Shared Hosting providers Host Color is a popular for its Virtual Private Servers and Dedicated Hosting services. But we don’t do crazy, unrealistic commissions on Shared hosting like $100 or $120 per sale. Our standard affiliate commission is 25% of the sale amount. The lowest commission is $11.97 for Blog Hosting plan. The highest one is a $199.75 per a sale of Dedicated Hosting Power, purchased on monthly contract. However we have customers who buy dedicated hosting services on annual basis, which means that an affiliate could make $1,437 if they refer a customer, who buys a Dedicated Power, dedicated server.

Would you sale Host Color if any bigger web host makes an offer?

I don’t know. This is not my responsibility. Owners must decide on any such offerings. What I know from them is that we would never sell our customers. I have seen a lot of statements like “We buy customers” or “Sell your customers”. It is ridiculous! Host Color has more than 10 years of  business history in the web hosting industry. Our brand and our reputation bring business. So I presume that the company would consider any buyout offering, only if it accounts Host Color’s brand reputation and business history, not just our annual revenue.

Thank you very much for this interview Martin.

It was my pleasure. Thank you for your  time and your business. I’m glad to be one of the hosting industry professionals featured at B10WH.

Jay Kramer of Colostore: Web Hosting Is A Traditional Business

Posted by hosttycoon On October - 30 - 2009

jay-kramer-colostore“Statistically 2/3’s of all businesses fail, and I am one that has started over 12 businesses can say this statistic is true”, says in his interview with B10WH Jay Kramer who has run a few quite successful web hosting enterprises in his career. He is web hosting business since 1996, at the time when we used to use dial-up Internet access. Jay who now serves as a CEO of the wholesale data center service provider Colostore said something quite interesting about the popular web hosting automation provider cPanel.

“cPanel was not really a software package that was developed for the web hosting industry it was a software package that was written within the hosting business and was developed by people who did hosting tech support and had good reason to solve hosting issues”, explained Mr. Kramer. Read the whole interview below.

Hi Jay, I know you for almost 6 year, from the time I was CEO of Host Color. I found your company when I needed to find a data center solution. Now I’m please to do this interview with you for B10WH.com. Tell me how do you get into web hosting business?

We got into doing web hosting mainly from our client that came to us for Internet access which was back in 1996, since we were the only people in the Internet business in the local area we were naturally the choice to ask about hosting, and we originally offered it as a added benefit to out customers. Later we did get into it more heavily when the dial-up business began to get displaced by DSL and cable modems.

You said “we”. Who are the others?

The others are partners we had in the business originally it was family members, then when we got into web hosting only it included some friends. The first company was called “Simply Internet” then we sold it and bought a web hosting company called “Powersurge” which started “Fastservers” and then eventually got bought out by Layeredtech.

You keep using “we” form. I thought it was you and another one… or you were a team of professionals? I’m asking this because it is interesting how different people get into business – alone or with a number of business partners?

Yes, I suppose it is interesting to look at the evolution of how people flow in and out of business, let me see if I can clarify. The first business Simply Internet was Myself and 3 other family members, when we went to Powersurge / Fastservers we added in two partners and then we sold Powersurge/Fastservers and started Colostore with the original family group.

You have been in this business for almost 15 years. Since then the things changed a lot from a technical perspective. Tell me about web hosting in 1998, what did web hosting customers need to use at that time? There were no advanced hosting automation systems 11 years ago…?

In 1998 most of the website needs were mainly static sites with some CGI’s inserted here and there, an admin could easily pile on a server 300 to 400 sites and keep it running well, assuming mail was on another server. Hosting automation was really in its infancy at that time, although cPanel was around and we used it back when cPanel was based out of Burst.net (although not a part of).

We did have to create our own scripting and control panels to help with automating tech support, we did have scripts on the windows side to create websites and manage accounts. We also have created special control panels to manage email, mysql and mssql databases, backups and server monitoring.

I think cPanel was the first that we found the brought all the hosting automation together under one package. Although I believe Ensim was around at the time promising a winows solution, and we were one of the first companies to try out ensim as a control panel.

Why did cPanel become the most popular web hosting automation software in the industry?

I think mainly it was because of the response to the issues that kept coming up, I can remember seeing security issues popup with a Linux application and Nick would have a fix within several hours, for us it was really about that close relationship with the developers, cPanel was not really a software package that was developed for the web hosting industry it was a software package that was written within the hosting business and was developed by people who did hosting tech support and had good reason to solve hosting issues.

Hmm, this is quite interesting. Now tell me about your web hosting enterprises. Which one is the most successful one?

The second business was probably the most successful, when we took over Powersurge we were able to double the size in a year and had over 100K domains hosted, it was really quite a business to run, however hosting alone was not what we really wanted to do indefinitely, in my personal opinion Colostore although not as many accounts as the previous businesses is by far more successful. Measuring success is a interesting topic, when I was younger success was measured how many dollars you brought in, when I got older success is now measured in the amount of free time I can give to my family and business stability (important in this economy).

If you are about to provide consulting services to someone who wants to create a web hosting business what would you tell them if they ask you how to position the new company? Is it more profitable to target a individuals and/or small businesses, or it is much better to deal with those who need Dedicated / Managed Hosting or any customization on an enterprise level?

I think if someone is new to the business and wants to get into a web hosting type of business, definitely start with reselling, statistically 2/3’s of all businesses fail, and I am one that has started over 12 businesses can say this statistic is true. When you start a business make sure you develope relationships with paying customers first and dont dig financial holes right away. Once you get your paying ralationships stable and steady you can then think about integrating up the food chain by buying into servers and infrastructure. But, always look at getting cash in the door first and build a pay as you go model, pricing in the hosting business has always been a moving target.

On the question of if its more profitable to target individuals or small businesses I would lean more toward small businesses, usually businesses are budgeted and do not seem to have as many cash flow issues as individuals do, also they tend to be more the 9 to 5’ers, so tech support does not get to crazy in the off hours.

Would advice anyone to start Reselling a hosting services provided from a Cloud computing class infrastructure or you’d tell them to start with good old rack-mountable servers?

Thats a difficult question because the definition of Cloud Hosting changes like the weather from person to person, my definition of Cloud Computing is simply a site or service that has a simple front-end point of access, and on the back-end has redundant geographic diverse servers. The minimum to implement this would be to get a few servers, put them in different datacenters and do some dynamic DNS with failover.

I think if your starting out wanting to do some cloud computing, you are at the choice of building your own flavor of clouc computing, or waiting to see which solution starts to become viable. Right now cold computing is a huge buzzword without any concrete definition.

Yes, it is true. But there are still a huge different between Cloud based infrastructure and traditional computing… as far as there is such thing like “traditional computing”…?

Well I think the jury is still out on the Cloud computing definition, however traditional web hosting from my perspective has changed quite a bit over the years, I think traditional hosting/computing would be defined as a provider hosting DNS/Email/Web on the same server, there are quite a number or variations on this, but when you really look at the packages that people offer on the web, mostly the $4.95 unlimited everything plans, it ends up being just another account on a cPanel box somewhere.

Do you accept the concept as selling “unlimited” to people who don’t now much of how does the Internet, websites and web hosting in particular work?

This has always been a thorn of arguement across the hosting industry and people seem to always have their opinion about it, from what I have seen and done early on, is that the term unlimited is simply a marketing term that hides limitation on a site, if someone signs up for a unlimited account and they use too many resources they will simply find their accounts dropped. To me it really is just a way to bring in lots of clients and sort out the ones you want to keep.

Do you have many friends who know that you do something related with computers and always ask you to “how to fix” something questions?

Lol, yes, yes and yes, the tech support curse has followed be around for years, however I am about to pull off the holy-grail of tech support technicians, I have almost got my family and friends to call up our tech support guys instead of calling me.

Tell me now have you ever thought of leaving this industry and to get down to any other business that does now require 12 hours to stay connected with your clients?

I think every day, although I would be happy just to be attached to the business for 12 hours, for me it is truely 24 hours, I dream of the day of turning my cell phone into a skipping stone. Although I don’t know what other business I would go into, the hosting business has been very good to me and I actually do enjoy it quite a bit.

Now last question. It is always about to make hard choices. You should either grow and grow and grow further or to sell and get down to something else. Has the web hosting become a traditional business, something that would become a family business for a few generations, the way hotel business is?

The interesting problem with growing is that usually companies always grow to levels of incompetantcies, meaning they always grow to the point that can be managed by the current management. In this case if someone has a hosting business that is growing and growing, you are given a choice to usually either sell out or get some professional management.

I cant really say web hosting is a traditional business, I do have quite a bit of experience in selling hosting businesses and evaluations usually seem to be based on revenue multiples and account values, unlike traditional businesses where the evaluation may be done on a discounted cash flow basis.

windows-server-hyper-vMicrosoft presented Windows Server 2008 with its Hyper-V hypervisor and Microsoft System Center. The world’s leading producer of PC software has outlined its initiatives for the hosting industry on its Microsoft Hosting Summit. The company claims to help web hosting providers to leverage virtualization and to lower their business costs.

One of the key products in Microsoft’s strategy to persuade web hosting providers to use its virtualization technology and its new Windows server is “Dynamic Data Center Toolkit”, which allows for the building and launching of managed services powered by Windows Server 2008 with Hyper-V and Microsoft System Center.

The Microsoft Toolkit holds guidance, sample code, best practices and collateral, that according to Microsoft  help web hosting companies to deploy managed hosting services. The Toolkit also offers step-by-step instructions for building a virtualized, scalable infrastructure.

Microsoft also offers a marketing guidance, that should help  web hosting providers to sell managed hosting services.