Down Home Hosting and International BusinessBy Channel Insider Staff | Posted 2004-10-07 Email Print
Re-Thinking HR: What Every CIO Needs to Know About Tomorrow's Workforce
A small U.S. Web-hosting business can make it as a big international Web site host.
Many U. S. Web hosting companies are discouraged by the flow of business to cheap foreign service providers, mostly based in Asia. But not Stephan R. May Jr., chief cook and bottle washer of InKeeper Co. He gets most of his business from Europe and Canada, with very little effort and an eminently satisfactory ROI.
"I am pretty unique as it relates to a small hosting business in the fact that 80+ percent of my customers are from the foreign market, and that is the market I focus on," drawls the towering, cantankerous Celt from the Appalachian region of Pike County, Ken.
May has several reasons for his business strategy, and some interesting tactics that readers can replicate readily. Above all else, May is very selective about who he hosts.
"I am approached by foreign customers on the average of at least four per week," he says. "After review, I may agree to host two or three of these per month. Sometimes I don't accept any of them, to be honest.
"A customer that hosts here has to be a good fit for me, the host. I tend to take on folks who are just getting into the [hosted Web site] side of things so I can work with them to build a kick-ass Internet presence. That is what I most enjoy."
The maxim "Do what you love and the money will follow" works for May, who enjoys income three to four times higher than Pike County's per capita income, and the concomitant cost-of-living benefits. He also chooses customers who fit his lifestyle.
"Folks also need to be able to deal with all the weird hours and such I work."
A night owl by nature, May finds Greenwich Mean Time and its contiguous time zones suit his biological clock well. He is able to deal with customers while at his peak efficiency, rather than short-changing them during that first cup of morning java. He is available for sales inquiries when most of his stateside competitors are asleepgenerally a favorable market position. May chooses customers with whom he can communicate most effectively, too.
"A customer also needs to be able to deal with the straight-shooting, no-nonsense, attitude I have," May says.
Plain English, stripped of marketing hype and techno-babble excuses, minimizes problems that can arise from cultural and language discrepancies. While May finds Europeans more amenable than U.S. clients to his "tough love" CRM (customer relationship management) style, that's as far as he goes toward the fetish market.
"I do not host porn sites. The money is there, but the problems and bandwidth issues just don't balance. I guess if I went and dropped a couple of T-3's in here I could probably make some sweet money, but that market is just not for me."
The Scottish Connection.
Instead, the ornery entrepreneur selects a surprisingly colorful clientele.
"One of my premier customers is Alastair McIntyre. He owns Electric Scotland Ltd. We met almost 10 years ago at the first AOP [Association of Online Professionals] conference. I was just getting into the hosting business after the BBS days, and he was shutting his BBS down and going with a germ of an idea for a Scottish reference site," May says.
"Costs in Scotland prohibited Alastair from bringing in the bandwidth he needed for the project, and I had two T-1's. We made a deal."
Telecommunications services are government-run monopolies in most of the Eastern Hemisphere. Predictably, service is poor and dear. May is able to undercut any profitable European hosting service no matter what currency exchange rates do, while having things mostly his way.
However, the InKeeper's way is not a mechanistic business of discrete transactions repeated as rapidly as possible, like most U.S.-born business models. It's more attuned to the European way of doing business, in which the full spectrum of a relationship is brought into play to mutual benefit, without undue concern for ledger balances.
"During [McIntyre's] heavy building and development years [roughly five years of gathering a lot of content and playing with different ideas], I saw very little income from him," allows May. "But he brought me quite a number of hosting customers, so it evened out."
Europeans take a much longer view of history and the future than their U.S. counterparts do. May's patience and personal interest in each carefully selected client pay off in the long haul that most U.S. firms now ignore.
"[Electric Scotland] started with maybe 10 to 20 visits per day, and even after five years we were up to only around 1,000 or so," May says. "We both then started to do a lot of serious work together and for the last four years, Electric Scotland has been Alastair's primary source of income. I started seeing a good revenue stream from him at this time also," in addition to the many referred clients who remain with InKeeper.
The Electric Scotland site now receives 40,000 unique visitors per day. The original site has split into numerous subsidiaries full of specialized content, further expanding May's portfolio.
"Electric Scotland is the No. 1 Scottish reference site out there, and his Scottish Search Engine is ranked in the top 10 search engines for Scottish stuff," says May.
Getting paid is seldom a problem for May. His fees comfortably absorb currency conversion charges and exchange rate fluctuations, and even the PayPal fees deducted from the majority of his receipts. Credit cards and electronic bank transfers account for the rest. A client rarely lets May's invoices slide too long, for obvious reasons.
"I just send past-due clients a notice that includes my wire-transfer routing number," shrugs May. "If I don't see money in my account within 24 hours, I pull the plug. That gets their attention!
"One feller e-mailed back to me, 'You wouldn't really do that.' I just replied, 'My finger is on your server's power switch even as I type this one-handed.' A few seconds later, PayPal notified me of an Instant Payment."
Readers interested in hosting European stylehigh-touch and high-profitmay find the following links useful: