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Web-Hosting Troubles? How One Company Found a Solution By Building Their Own

November 18, 2011
URL: http://www.entrepreneur.com/article/220552

A Terrible HostWeek one of launch was great. It was early July and Fileblaze, a San Francisco-based company that provides bulk-file transfer and preview services--think 10,000 songs via e-mail, securely, in seconds--already had a loyal user base of 75,000, including execs at NBC Universal and a few Grammy Award-winning artists.

Week two was a disaster. The managed hosting provider--hired to handle server administration tasks and provide a dedicated server and technical support--experienced a crash, and thousands of user files were affected. Worse, the promised backup procedure wasn't in place. "The files were gone, poof, with no explanation or solution, because the fine, fine print said it wasn't their responsibility to back files up," Fileblaze founder and CEO Chuck Baker says. "We were saving 70 percent every month in [hosting] costs, but it seems to me like they were cutting corners and overselling."

The fix: Baker sent out an alert and apology letter before most people noticed anything, along with instructions about what to do if affected; fortunately, sympathetic users responded with a spike in uploading traffic. With the potential customer service crisis averted, Baker immediately searched for other cloud-hosting providers, including AT&T Synaptic Compute, Amazon EC2 and Verizon's Terremark. In the end, he decided to cut out the middleman.

"Even though we're in the business of transferring instead of storage, I decided to go straight to the data center to build our own hosting environment so something like this will never happen again," Baker says. "When businesses start out, you have to partner with suppliers, but now that I'm in a position to do so, it made the most sense."

The results: After a few months to get the system up and running, plus a couple months' worth of upfront money, Fileblaze can now guarantee a more secure system for all the files sent by users, who are projected to reach 500,000 by the end of the year. Going forward, the new system will also save the company 65 percent in monthly hosting costs, and Baker can potentially lease server space to other businesses, earning additional revenue and helping others avoid what he went through.

A second opinion: David Strom, St. Louis-based network IT expert and business channels editor for ReadWriteWeb, says it's no surprise Baker ran into trouble. "Managed hosting providers are helpful to business owners who don't want to hire an IT person," he says, "but there's not a lot of regulation or even agreement over what services they're responsible for. They come in all shapes and sizes, and fees can range from 10 to hundreds of dollars a month." To avoid any unpleasant surprises, Strom's top four tips:

  1. Get referrals from like-minded and like-sized businesses.
  2. Check for certifications, and note response time when you call on the phone.
  3. Ask what kind of disaster-recovery and business-continuity mechanisms are in place--maybe even request they stage a mock disaster to see the backup and recovery procedures in action.
  4. Look within driving distance.

"It sounds silly," Strom says, "but a lot of people like to know that they can drive over and visit and touch the actual servers if they need a resolution."