Interview with Ron Sznol, CEO of HostingSource
HostingSource is a company that has a mission to serve every type of industry. Unlike other hosting companies, they seek out facilities that serve different industries well and diversify as much as possible. I had the opportunity to get on the phone with Ron Sznol so he can tell us more about the mission of HostingSource and how they do what they do so well.
You founded HostingSource in 2006. Can you tell us how your story began?
In the beginning, our company was comprised of myself Ron Sznol and my partner, Boris Goldin. We used to work as Network Engineers at a large firm in NYC. We were there for 13 years. Over the final years at the firm, we decided that we were ready to leave the company and venture out on our own. We had a very strong background in IT, engineering, and computer science, and in our role at the company, we were operating solutions for enterprises. Our responsibilities consisted of IT design, networking, and security of the servers and network infrastructure. Towards the last few years in the company we noticed a continued trend of our work responsibilities being outsourced to offshore and local solution providers. We felt the writing was on the wall that the traditional IT job was slowly shifting toward an outsourced model. Therefore, we decided that we would have to shift our focus to the other spectrum and become a solutions provider rather than continue doing the traditional path of doing what an IT or computer engineer would do.
We started out by hosting websites and doing small IT project on the side on a small scale part time. Within 1 year, we decided to turn that into a full time business. We felt there was a strong demand for our services. Being that we already had a strong background with IT services, we figured we could blend IT solutions with web hosting services and offer a wide range of services. This would include small scale and enterprise class web hosting along with managing and hosting business enterprise solutions for small to medium size corporations.
We tested our marketing ideas by becoming affiliates of other hosting companies. We spent about 6-12 months testing out different marketing and SEO and social media strategies. We eventually got to the point where there was a good return so we came up with a business model and shifted away from becoming affiliates to hosting for ourselves.
Originally, we contemplated opening our own datacenter. As the costs were very high, we decided to rent out space vs. owning the datacenter. We rented small facilities in NY (some in the suburbs) utilizing power and bandwidth to test the concept. We did that for awhile, and for the next 2-3 years, we were rather successful. As we started to grow, we were 100% debt-free as we expanded by only reinvesting our profits. Overhead was low and we grew slowly but safely and debt-free. Until this day, 10 years later, we are still only reinvesting what we make. We are growing at a much faster rate now.
As we grew, we acquired much larger and more diversified clients. Some have small shared hosting accounts while other larger clients have dozens of servers. We’re very diversified. We don’t market to one specific group. We customize solutions to make it work for whatever client approaches us. We allow the marketing to dictate what types of clients we have.
Can you tell us a bit about what services are offered by HostingSource?
Our services are rather diversified. We offer anything from shared web hosting, VPS and cloud servers, private cloud services and dedicated servers. We have thousands of hosting accounts to this date. Our services are extremely competitively priced. We offer a large range of hosting packages from low end to extremely high end solutions. We have hundreds of different packages from which clients can choose from. We’re constantly upgrading our solutions to ensure its competitive with our competitors. We build customized packages for our clients as well. We build our own servers to keep low overhead but also use high end servers from SuperMicro and Dell for our bigger clients.
The other solutions offered are VPS’s or cloud servers with KVM for Linux virtualization, and Microsoft HyperV for Windows virtualization. We offer all the major control panels such as cPanel or Plesk, as well as open source panels like Webmin/Virtualmin.
We often get requests from clients to custom install smaller and less familiar solutions and are flexible with their needs and requirements.
You’re advertised as “premier cloud solutions.” When did you take more of a stance toward supporting the cloud, and what would you say is the biggest part of your business right now?
We offer Linux and Windows cloud solutions with Microsoft HyperV and KVM. As far as what the clients look like, it’s very diversified from $5-10/month on the low end to an enterprise public cloud infrastructure that has a cluster of servers that are redundant with each other. For that, we can offer a solution that is kind of like what an Amazon would offer. Clients can use that to install applications, hosting, databases, email, and so forth. We have a set group of packages that clients can pre-install on the server. The client has full control over the server (they can reboot it, install on it, upgrade/downgrade as needed) all on the cloud. Over the last 6 months, we have started our Private Cloud services. This is geared towards the enterprise or larger client. We’d install things like databases, emails, web servers, file servers with load balancing and cluster for redundancy and performance. This is a highly customized and full range of solutions based on the client needs. We have certified engineers that design and builds these solutions for our clients.
Our dedicated server is roughly 70% of the business and that puts the remainder 30% with our cloud services. We project this will shift over the next few years with more emphasis on cloud and less on the dedicated server space.
Can you tell us about how your company evolved to now reside in New York City? I would assume you weren’t always in your office downtown! :) (Were you in Wyoming at one point?)
Originally we started and incorporated in Wyoming because I had other businesses based there prior to HostingSource. We had accountants and attorneys there and our administrative staff was there. We used the same administrative staff to establish the HostingSource corporation. That initial corporation lasted for under 3 years in Wyoming. In those days, we were testing the business out and the business was relatively small in its infancy stage. When the business picked up, we decided to reincorporate in NJ which was where our major datacenter was. We reincorporated in NJ as Premier Web Group LLC d/b/a HostingSource.com.
What colocation facilities are used by the company? Where are all of your datacenters? How do you evaluate datacenters to meet the needs of your clients?
As we grew, we shifted away from our smaller datacenters to higher end facilities in the NY and NJ area.. We have 3 datacenters that each serve different purposes. Our Cogent facility in the NY Wall Street area caters to our financial clients and our cloud hosting clients. The facility in Secaucus, NJ, servers low to medium dedicated server clients, and the third facility in Weehawken, NJ (SSAE-16 Certified) for our enterprise clients who require 100% uptime SLA. By doing this, it’s allowed us to provide the best price point without compromising support.
We have plans to spread to the West Coast in the next year which will allow our midwest and west coast clients to get better lower latency services.
What types of clients do you service?
As discussed, it’s very diversified. There is no “one client” – we have a very large base of small clients in the $5-10/month but also many clients who are in the thousands of dollars per month (Fortune 100-500).
How many employees do you have? Are they all based in NYC? If not, where can we find them?
We have a mixture of consultants and in-house employees. This represents about 15 people in total.
We have a first and second level tech support team that is located in US and Europe. Our third level support is in India and they handle chat as well as backup the first and second tier support.
What tips do you have for networking engineers who want to get into the hosting world?
For me, it was a natural progression. I always was involved in side business and marketing. The challenging part is taking a good idea or service and properly marketing it to achieve the required market penetration to make it successful. I’m really strong with the marketing end; my partner is very proficient on the technical end. This was very beneficial to our success. I recommend for someone who has good skills on the technical side and can do well with business service/acumen, they’re 50% of the way there. Its important to partner with someone with different skill sets so that your each benefit from each other. The hosting business is a very competitive space so its very important to know your market and to find a way to differentiate your services so that you can capitalize on a niche area.
There’s a lot of trial and error; we spent 2 years perfecting the marketing. If you have good skills, as far as engineering skills go and can offer good customer support, there is a good shot to succeed. This business is a very difficult requiring long hours each day. Someone who plans to start a business has to really be willing to getting the business started. It took a good 5-6 years to really get to a point where we were satisfied with our success. There’s a big sacrifice early on but if you are willing to work hard, once you establish the framework, there’s light at the end of the tunnel. The automation will be there and the workload will be less and less. Once the business framework has been established this business can scale out very well.
Can you tell us about some of the specialty services you offer at HostingSource? I notice you offer some interesting VPSes (gaming and forex) so I’d love to learn more about what you mean there.,/h2.
We do have financial clients (in our Wall St. facility) and as far as specialty services go, it’s more of what we used to do in our previous jobs. We had an enterprise background. Aside from hosting, we had a business that we wanted to build in multiple directions. If one aspect of the business slowed down, we would need to grow in another vertical.
We really also focus a lot on enterprise clients, not necessarily hosting servers and websites but an entire infrastructure. We have a good amount of clients where we completely outsource their entire office. We take their servers and services that are in-house and outsource it completely to a cloud solution, designed in an efficient model that is highly customized to fit the client’s needs. We typically require a few months to design an infrastructure for these types on engagements. We essentially become the IT department and the hosting infrastructure for the client.
We have clients who are accountants, law firms, engineers and medical practices with each requiring highly customized solutions to fit there needs. As we worked in New York for many years in a large law firm, we were able to get a strong background in the legal world and were then able to turn that into successfully acquiring many law firms. We utilized our skills working as employees to offer customized IT solutions for law firms. Our engineering background allowed us to host private clouds from an engineering perspective. Again, we were able to offer enterprise solutions, keeping the cost at an attractive price point.
How do you see the industry changing in the next 5 years? How does HostingSource plan to respond to these changes?
We see cloud growth with the traditional cookie cutter cloud servers bought on a large volume, there is also a big demand with highly customized cloud solutions. There is growing demand for companies who need specific cloud services and specific software and with our background, we feel we can transition them into a customized solution that fits the business model of the client.
In addition, service availability and security are very important. DDOS attacks and security breaches are on the rise. We offer DDOS and security solutions to block these security intrusions. We have to be able to adapt to the extreme security requirements that are needed to successfully service the client.
Is there anything else you’d like to share with our readers?
This is a very rewarding business. It’s something we dreamed about for some time. We looked at many companies back when we first started and tried to find a unique niche that we can use to enter the market. It takes very careful planning and hard work. I encourage anyone who has a will and desire, if you’re willing to put the sacrifice and learn, I would highly recommend anyone to break out of the traditional cycle of working for somebody else and work for yourself. It’s very well worth it. If you can make a difference in this world and provide a good service, I highly recommend conquering that fear and hesitancy and moving forward in that direction.
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