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You Ignored SirFoxy and Plan to Start a Hosting Provider Anyway. Sigh. OK, Here's What You Need...

Yesterday, SirFoxy outlined the reasons why starting a new hosting provider might not be a good idea.

But you’re going to do it anyway.

Look, it’s tough.  Imagine a company that has very competitive products, distinct branding, next-level marketing, a clever loyalty program, and community adulation.  If anyone’s going to succeed, they’re going make it, right?  NexusBytes folded in ignominy.

But you’re different.  You have grit where others lack guts, economic insight where others are blind, a 200-page perfectly-formatted business plan that your cousin in business school helped you write, and Patrick Mahomes signed up as a spokesman.  Well, if you really do have Mahomes as a spokesman, maybe you will make it.

Here’s what you’re going to need.

You Need the Big D

@SirFoxy talked about differentiation.  That’s vital.  What make you different than your competitor?

This stuff doesn’t cut it:

  • Superior service, we really care, always there for you, etc.  Everyone says that.  Everyone can say that.  Sure, eventually you’ll build a reputation for service but that alone won’t carry you.  Plastic surgeons, attorneys, and CPAs live and die on their reputation but for providers, you need more because lots of companies provide great service.  Even those that don’t say they do, and consumers can’t always parse the truth when they’re buying.
  • Lowest prices.  This is a road to suicide.  See @SirFoxy’s comments on commoditization.
  • Local marketing.  In the 90s, you could walk down the street and sign up your neighborhood barber shop for their first web site.  In 2023, this ship has sailed.
  • DMCA Ignored.  So many providers already.
  • Tons of datacenters.  The number of clients who want to put VPSes all over the world is small, and those that want to are sufficiently sophisticated to host with multiple providers.

Things like this might:

  • A niche.  “cPanel hosting” or “game servers” aren’t niches.  It has to be something that no one else (or very few people) are doing.  In the past this could have been Raspberry Pi hosting or pay-per-hour.  Today you’ll have to think up something new.
  • Value-add.  For example, if there is a software package that is not easy to admin, or you have exclusive licensing to, and you offer it as a service.  Or if you design web sites and then host them.  Or if you put together a soup-to-nuts package that perfectly meets the unique needs of churches, plumbers, or dentists.
  • Geography.  This doesn’t mean “hosting in Amsterdam” where a zillion providers host.  More along the lines of “hosting in Argentina, with Spanish-speaking support.”

Etcetera.  Something you’ve got that others don’t.

You should be able to explain your company’s in an “elevator pitch” – 60 seconds at most.  If I can hear your pitch without knowing the name of your company, and immediately apply that pitch to a dozen companies, you don’t have differentiation.

Then You Need a Plan

OK, so you’ve got an angle that no one else has thought of.  You’re starting a company using a special faster-than-light routers that gives you blazing performance from US<->Asia or you’ve deployed an IBM supercomputer that analyzes every packet with a fleet of AI PhDs to stop every single possible nefarious attack.

Great!  Now how are you going to reach your audience?

It takes some cash.  You know, advertising.  As the saying goes, advertising doesn’t cost, it pays, but it still requires some marketing dollars.  You can do some guerrilla-style marketing, post on forums, spread the word on Reddit, whatever, but you should definitely expect to spend some bucks on advertising.

Might we suggest LowEndBox / LowEndTalk?  Reach an audience of eager hobbyists who come to the site looking for new providers!  Click here for details.

I’m not saying AdWords necessarily – and probably not, given what those clicks cost.  If you’ve got the ultimate all-in-one hosting solution for hair stylists, buy a list of stylists or make your own and contact them.  If you’ve got that FTL Asia hookup, look on both side of those pipes for customers.  You can’t just hang out your shingle and expect people to find you via SEO.

Then the Rest is Easy

Please don’t use TOS Generator.  For one thing, it’s obvious.  You need to spend a few bucks to get your basic company papers (varies by country) setup, a TOS written, and other business basics completed.

We haven’t talked about tech, network, datacenter, etc. yet…because that’s the easy part.  Yes, you need to stand those up, staff a team to handle requests, and set up your ThemeForest-templated website.  But that’s what, a weekend?  Make a few calls, give out a few credit card numbers, edit a little HTML, and you’re good to go.

Figuring out how you’re going to market and how you’re going to reach that market…that’s the hard part.  Work on those first.

Over the years I’ve seen threads on various forums with titles like “If you had $50,000 to start a hosting company, how would you spend it?”  I’ve noticed there are always two kinds of responses:

Newbs and non-providers: I’d buy 12 of server X in an N+1 config with J-1000 routers, Z-2850 advanced switches, and N-9000 storage arrays in RAID-10 with…

Experienced providers and pros: I’d buy one server and spend $48,000 on acquiring customers.  Then they could pay for all the growth.

Be like the pros.


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