OnApp: How I Started Out in Hosting

(Special cPanel Edition) – I’ve founded startups since I was an early teen. They’ve always been technology-based and consumer/transaction focused. I think the first time I actually started selling hosting was in 1992. I was importing hardware from the Far East and selling it to my fellow students and local businesses near my home town in Aalborg, Denmark. I also spammed newsgroups quite heavily to get a bit of business from the early Internet adopters, which worked out very well for me.
Eventually one of the frequent contributors to the hardware newsgroups got fed up with me and offered to build me a full website/shopping cart if I would just stop posting. Fair enough, I thought. I later learned that he was a 13 year old kid, but he actually managed to build me a very cool website that was unique at the time in Denmark. My problem – and here begins my hosting story – was that the website had to be hosted somewhere.
I quickly discovered that it was pretty much impossible to buy hosting from a Danish provider at a sensible rate. Prices started at about $1000 a month for around 5mb of disk space. Not a problem for most of the companies that were online at the time, as they were generally large enterprises or public institutions, but for a small business like mine it was fairly prohibitive.
There was only a handful of hosting providers, typically the old telephone companies, and apart from being very pricey, they were impossible to deal with. Everything had to go through fax, they wanted personal, face-to-face meetings, and so on. It was difficult and took up a lot of time. I just wanted some hosting.
I started looking outside of Denmark and found that in the U.S., the market was totally different: prices started at $20-$40 a month and there was already plenty of competition, with compelling offers and great service to match. Back then, most of the Internet was served by 14400 or even 9600 baud modems, so serving something out of USA did not cause latency concerns. The bottleneck would always be the modem connected to the computer, not the connection going into the house.
So, websites hosted in the U.S. were no slower that those hosted locally. For some reason, however, almost all Danish companies bought hosting from their local phone company with their poor service and crazy prices. Hang on, I thought: there’s a business opportunity here. I bought a few servers in the U.S. and starting contacting local businesses around me, offering way more features at much better prices.
This took off very quickly, and after 6 months I hosted quite a few of the top 1,000 businesses in Denmark, and even a few large public institutions.  None of those guys knew that their servers were not actually located in Denmark. They didn’t ask, and most likely didn’t care – their hosting service was running just fine out of the U.S.
So that was my entry into the industry. I ran that business for a number of years, initially from Denmark and later from Brussels when I was working in the European Parliament. I sold the business in 2003 and had a couple of years outside the industry, only to return in 2005 to head the turnaround of UK2.
UK2 had been around since 1997 or so, founded by another Dane who had managed to build a fantastic, primarily domain-based business, turning over around £10m in 2000. In 2002 the founder left the operations of UK2 to a friend of his that had a similar technical background, but not too much interest in the commercial side of the business.
I was brought on board for “a six month marketing gig,” but it became clear pretty fast that the business was suffering badly. I ended up presenting a three-year turnaround plan to the shareholders. They accepted the plan and I got cracking.
This was in 2005, and by then UK2’s revenue had declined to around £3m: the high level plan was to stop the rapid decline in 2006, double the revenue in 2007 and consolidate in 2008. The plan worked, and we managed to more than double the size of the business. By the end of 2007, UK2 was back up to its previous revenue numbers.
By 2009 the team had grown to about 200 people from just eight in 2006. We had made a few acquisitions and launched VPS.NET and 10TB.com (now 100TB.com). We started to get a lot of interest from private equity and eventually my management team decided to go through with a MBO backed by LDC. Ping! Zine has a write-up of the deal.
I had decided to leave UK2 Group to build OnApp. We provide cloud software to hosting companies, enabling them to compete with companies like EC2, Rackspace and VPS.NET. It was not an easy decision to leave after so many years, but UK2 is in safe hands as LDC and Phil Male (the new exec chairman) take the company to the next level. And of course, I can now devote my time to growing OnApp, which has already proven a great success since we launched in July, 2010.
I really enjoy working in the hosting industry, but I have to say that from time to time it can be tough. The pressure of dealing with downtime, knowing that many of your clients have left their business and livelihood in your hands can be pretty intense. You can never lose sight of the fact that if you fail to deliver 100% uptime, it can result in serious issues for your clients.
I think that’s the hardest part of working in hosting. Even after all these years, downtime still causes me physical pain – you are truly affected by the stress your clients are feeling, and it literally does give me headaches, backaches, trouble sleeping and more. I think hosting is unique in this regard, and to a large extent it’s the same at OnApp: if we were to let our hosting customers down I know exactly what trouble it causes them, and causes their customers. In this industry you are never really off duty. I’ve always slept with my cell phone switched on, on my bedside table, just in case.
On the other hand, it can be an amazing community at times. One day you’re fighting tooth and nail with your competitors on the forums. The next day something catastrophic happens – and I’ve been in this situation, when we lost an entire datacenter – and your worst enemy is there, just minutes later, offering you server space for free just to help you get through the rough patch.
That’s pretty incredible. I think it’s because we all understand the pain we go through to make hosting work. There’s something like 33,000 hosting companies worldwide, so it’s hardly a miniscule industry, but it still feels like a close-knit community. There are great people, great products, and lots of opportunity to find new crazy ideas to bring to market. It’s challenging, it’s interesting and it can be very rewarding.