Back in 1999, if you wanted to get a new web-based business up and running, you wrote a business plan, presented it to a venture capital company, and they would give you all the money you needed - and maybe some you didn't. The reason most dotcoms of the time came undone is because they didn't watch their costs. When Holiday Digest were researching key costs, meeting Smartythost meant the difference between getting the business up and running and?not moving forward at all.
Today, launching a web-based business is quite different. Following the carnage of the dotcom collapse and the sudden return to sound business basics, today's start-up web businesses need to pay very close attention to their costs. A key cost of course is hosting, and self-funded Holiday Digest discovered that low-cost, high value web site hosting can be very difficult to find.
"We looked at the market to see what kind of services we could buy, and we were frankly very surprised," said Malcolm Anderson, who co-founded Holiday Digest with Chris Langfield. "Hosting something on the scale we envisaged was astronomic, as was the design-and-build services we also needed. Even if we could afford the fees they were charging, we weren't sure we were getting the kind of vertical expertise we needed."
Far from your classic circa-1999 Dotcomers, Malcolm and Chris were not in the web business, they were in the travel business. They run the Sorento Meridien serviced apartment complex in Adelaide. As a niche business themselves, they recognised a need for services like their own to be sold in a niche way so they conceived of an online and offline catalogue to help businesses align themselves better with the type of customer they are targeting more precisely. But while Malcolm and Chris would describe themselves as a small business, the size of the site itself would far exceed average small business needs, and therefore the average small business hosting plan was quite insufficient.
"It seems that once you outgrow a certain size, you need to start paying the kind of prices only the large blue-chips can afford," says Chris. "Especially for us to factor in the sort of scaleable capacity we needed for what would be rapidly expanding content, we would have had to buy into plans that were simply out of our league."
So there seemed to be a huge gap between SME-focused services, and large corporate-sized services designed to suit massive budgets. The Holiday Digest team fell right between these stools and was concerned that their needs could not be met by the Australian market. Would they have to host abroad?
Fortunately, the South Australian Business Enterprise Centre put them in contact with Smartyhost, a web hosting service with a good understanding of the travel market and a service model that could easily accommodate Holiday Digest's rapid-growth, yet tightly-budgeted, model.
The online component of Holiday Digest would allow travel clients to list themselves either in terms of location, type of accommodation or by activity or target market. The SQL database was searchable by several types of criteria, and needed to provide clients with the ability to manage their own display or mini-site. With 79 different categories of accommodation, 60 different geographical categories and a vast array of different demographic or activity-based search criteria - and hundreds of providers in each - the scope and scale of the site would eventually be enormous, representing the equivalent of up to 140 different web sites! This was no small business endeavor, and yet the budgets were far from that of a multi-national.
One of the key services Smartyhost was able to offer Holiday Digest was a self-design tool for helping to build the site. An out-of-the-box tool based on a control panel technology developed internally, Smartyhost was able to provide a high level of self-control, while at the same time keep costs low. Certainly with very little web design experience themselves, Malcolm and Chris were able to build their site themselves - through the use of templates and a self-build SQL database. In turn, they were then able to make this same service available to their clients, making it an easier sell-in for them.
"Being able to build the site ourselves was a relief on two counts," said Chris. "First, despite the fact that we felt Smartyhost understood our business very well, and what we were trying to do, being able to self-manage its design took away a lot of anxiety about losing control of the project. But all the time we knew we had good technical support behind us."
"Yes and second, there was the money," continued Malcolm. "This was a new business to us, and while the online element was a crucial part of the project, we had no intention to start learning hardcore programming skills! At the same time, we didn't really have any visibility of how much this should or would cost."
But on the issue of scale, the hosting costs were the next crucial factor. The site involved more than 5000 different files! Most packages Chris and Malcolm looked at would quickly become redundant because of the rapid growth the project would experience as hundreds of new travel providers came on board, all building their own mini-sites. Only Smartyhost's pricing model seemed to offer any likelihood of keeping pace with that growth within a realistic cost parameter. But the site still required dedicated hosting with 100% up-time. It was a Rolls Royce service for a Ford Laser price!
Smartyhost's solution was costed with the future very much in mind, effectively meaning that there was enough capacity in the hosting environment to accommodate the projected growth without quickly escalating costs. Other providers would have steeply grown prices as the data needs grew. Malcolm and Chris' business plan meant a lot of data growth, but the income growth was much slower.
Working with Smartyhost basically meant that instead of buying the services of another commodity provider looking to squeeze as much value from the relationship as possible, Chris and Malcolm had found a partner willing to price his solution in a way that worked best with their business model. Putting the emphasis back on service is what Anoosh Manzoori of Smartyhost says his business is all about:
"The hosting business has gone to a commodity model which is bad news for the customer," says Anoosh. "Trying to squeeze every cent out of customers to make the business profitable is not the way forward for the small business. At Smartyhost we think adding true value to the customer is what counts, with an emphasis on building, not billing!"
