Russ: This is The Businessmakers Show, heard here and online at thebusinessmakers.com. And now, it's time for the AFLAC BusinessMakers Flashback, brought to you by AFLAC. Ask about it at work. And staying consistent with the webhosting topic, this morning, we're going to roll back to episode number 144, just about a year ago, when, as our guest, we had Erica Douglas, the founder and former CEO of Simpli Hosting. Erica built a very strong webhosting company as a very young person. In fact, she launched it at an early age and grew it and sold it at an early age. In fact we enter the discussion where Erica was asked, are you actually retired at 26?
Erica: Well, temporarily retired, I might say. But, I started a business called Simpli Hosting when I was 20. It's a webhosting company-still in existence and just not owned by me any more. And, basically, what happened was I was hosting a bunch of websites for clients and those clients grew. They needed more space for their websites, so I figured, "Well, I can do this. So, I'll give it a shot." It was the middle of the dot com bust. Everybody thought hosting was going to be a terrible investment and told me that the Internet was done growing and that all of these websites had gone out of business. It was hopeless. I couldn't make any money doing it, but I decided to give it a shot anyway. I was really passionate about technology, so I wanted to see if I could make any difference in the world.
Russ: Then we wanted to ask Erica how she got Simpli Hosting really in business after being a web developer for a while and realizing that, maybe, that wasn't her future.
Erica: Around that time, my grandmother passed away. She had been sick for a long time and she gave a small inheritance to my dad. So, my dad said, "You now what? I'm going to give this inheritance to you. You can start a business with it." So he gave me $15,000, and I bought some server hardware with it, and I said, "Look, Dad. I will make you a promise. If I can't lease out these servers to customers within 6 months, I'll voluntarily quit the business. I'll sell the server hardware back on eBay, and I'll give you back your money, or most of it." He said, "Okay. Good luck." I sold them all out in two and one-half months, and I grew from there. We had one server, just my server, when we started, and when I sold the business, in September 2007, we had over 400 servers serving several hundred clients, and we were doing just under $1 million a year in revenue. In fact, I think 2007 would have been our magical million dollar year had I decided not to sell the business.
Russ: Then, we move on a little bit later in the discussion, where we asked Erica how was she going to market, how was she going to go out and actually appeal to customers?
Erica: So, a lot of people said to go to market on the Internet, and I really did not like that because if you go on a web search engine and you search for something generic like "webhosting," there's a kajillion companies offering webhosting for pennies on the dollar. And you just wonder how can you make a profit at two or three or four dollars a month. It just doesn't seem feasible that somebody could go buy a big Mac and spend more than they could spend on a month of hosting. So, I didn't really want to be in that market. It was a struggle for me to figure out how I fit in. Then, I realized that there were a lot of customers out there. I started reading forums and places where people could go to post opinions about hosting companies, and that's when it really hit me. A lot of customers try out these small hosting plans and one of two things happens.
One, as they grow, they get larger. The companies can't accommodate their growth. So, that was the first thing that I noticed. And the second thing was, I wanted to work with startup companies in Silicone Valley doing interesting and new things that needed custom, large server configurations. So, I started marketing to companies here in the Valley and finding companies online who needed custom installs. And I became really successful in that area, actually. I found a niche of companies who wanted something different and wanted something unique, and we absolutely went out of our way to provide it to them. When I say we, I mean all my employees. I really hired for that. I strongly suggest that, if you start a business, if anybody starts a business, that they hire employees that have the drive and the ability to do things in a unique manner. Think outside the box. I know, that's such a cliche, but it still rings true. If you're in a small business, you've got to think about hiring somebody who's also going to treat it as their business. And that's really what made us different.
Russ: One thing that Erica Douglas did that was pretty unique for the time is she really guaranteed a lot of uptime. So we ask her, Did you really offer 100% uptime?
Erica: That's true. And that was really hard to do. And, I'll be honest, sometimes we failed with that, but we had integrity about it. And when we did fail, which was rarely, but did happen a couple of times, we would give our customers their money back, and we would hold that promise up. I found out the 100% uptime wasn't what sold customers as much, even though I had it on the front page of our website for most of our company's existence. What really sold the customers was communication if there was a problem. So, to that end, we set up a company blog that was hosted off-site so that people could see it. We set up a toll-free phone number where people could call. This, maybe, sounds simplistic now, but it wasn't as easy or as well understood back then as it is now. Really, the key was, if something went wrong, customers wanted a way to contact us right away and be able to know that we're working on the issue.
Russ: And lastly we wanted to know, how did she end up selling the company?
Erica: It took six years, and six years is a long time. Definitely. About three and one-half of those years were me full time, and then, about three of those years were me with other employees who were full time. So, I realized, at some point-I was doing my taxes, actually, one year. I think it was the taxes for 2003, and I realized that my hosting company, which I was working on part time was making more income than my web consulting business, which I was doing more full time. So, I thought, "That doesn't make any sense. I'll just-Maybe I should just go for this hosting thing. That's kind of cool." So, I did, and within six months, I had told all of my consulting customers that I was no longer doing consulting, and I had, in most cases, found them other people to help them out. And, I just went on to do hosting. Most of them stayed on with me for hosting, so it was great. I had a customer base already built up.
Russ: Okay, and that wraps up the AFLAC BusinessMakers Flashback, brought to you by AFLAC. Ask about it at work. And to hear the whole story about Erica Douglas, just go to thebusinessmakers.com and search for "Erica Douglas." And now, it's time for another Advantage Point, so let's welcome Katie Laird.
[Advantage Point]
Russ: You're listening to The BusinessMakers Show, heard here and online at thebusinessmakers.com. Stay tuned for a big-time, modern webhosting story, as I get to spend time with Doug Erwin, chairman and CEO of The Planet.
