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Downsizing to.. upsize?

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So after much deliberation, we have decided to downsize CollateralFX.

As many of you know.. I started a ‘hosting’ venture a while back with a few friends. It started out pretty small but rocketed upwards in a short amount of time. Of this, I am most proud. We managed to do what many upstart hosting companies can’t do: grow.

But now we have grown to such a level that the rewards of our business don’t merit to work we put into it. I mean, I love most of our hostees but we have reached a point where we just put too much of ourselves into this.

So yes, we are downsizing. Dropping monthly hostees at month-end and moving yearly hostees to a smaller box of their own until their payterm expires. The company will all but disappear once the yearly hostees’ terms expire.

But there is good reason for this. We are regrouping, strategizing, and refocusing our efforts in the niche hosting market. This includes Game servers, Shoutcast servers, Chat servers, Ventrillo and Teamspeak server, etc. We will get a DBA and rename our company Lithic Servers. Yeah, we spent tons of time coming up with that name.

The market for these things is just not as saturated as the plain jane hosting market. Less competition and less work. As lazy as that sounds, the less time we spend wasting time on server maintenance and the like the more time we have to spend on the individual hostee.

As for a bit of proof, take this bandwidth graph of our hosting server. Compare it to the bandwidth graph of our gaming server. As you can see, the bandwidth difference is amazing.

Anyways, I have gained a lot of wisdom throughout this little experiment and I thought I would share it with those of you looking perhaps into starting your own hosting business.

1. Don’t start as a reseller. As cheap and easy as it seems, you will only lose money in the longterm. People are smart these days, and they know they can get it cheaper straight from the horses mouth. Not to mention they want to talk to the provider, not the middle man. Go for a dedicated server to start with.
2. Be sure you have money. Hosting is not a “Get Rich Quick” business. It requires a lot of time, patience, knowledge, and money. You are going to have a lot of unexpected expenses, not to mention the obvious ones.
3. Your datacenter is your lifeline. Be sure to do a lot of research on your datacenter before deciding to lease a server. They must have an excellent support policy. If you don’t have support from them, how can you support your customers? I suggest LayeredTech. I really do. Right now, they are the best out there. In my humble opinion of course.
4. Try to move to co-location when you get bigger. Pretty soon your demand will catch up with supply and you will be forced to turn away customers. The best way to deal with this is to purchase a server and co-locate it at a datacenter. This way all you pay for is the space and the bandwidth. Costs will drop and profits will rise once you are able to buy your own hardware.
5. Be professional with support. People don’t want you to be their buddy. I am not trying to say you shouldn’t be friendly, but if you try to hard to be personal friends, they will realize you don’t have much of a support staff. They want cold hard support. Fast and efficient. But don’t be afraid to throw in a “And have a nice day” at the end of your emails.
6. Love it. If you don’t love what you do, you’ll want to close up shop real fast. You have to love the hosting community. The hosting atmosphere. And the customers. If you can’t get joy out of providing hosting for your customers, you are making a mistake. Because thats pretty much the only reward you get for a long time. Money isn’t instant.

Take this advice, and file it away. It will do you a world of good down the road.

And as a side note: Anyone I am hosting right now, as a friendship type thing, will keep their hosting. Don’t freak.

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