Tuesday, March 28, 2006

Don't Say Cheese

Damian Saccocio put on a great show at MIT Enterprise Forum tonight. This guy's an awesome speaker, and he wants to save all those digital photos on your hard drive from gathering virtual dust. Send your vacation pics to DigitalShoeboxes ("DSB") and Damian will lay them out on a customized map - or turn them into a podcast.

The concept hasn't gathered B2C steam (at least not after a $500 ad campaign), but there's been some interest among retailers and tour operators. Damian's vision is to pitch his outsourced digital media production services to associations, meeting planners and popular birthday-party-venues like Chuck-E-Cheese.

I just checked out DSB's website, and I'm thinking Damian needs to generate some recurring revenue. DSB charges $10 - $150 for creating eCards, podcasts, Google Maps mashups and online albums. These one time fees seem to include ongoing storage for as many as 1500 photos. DSB's website is located at WestHost, where the highest-capacity web server costs $380/month and includes one 250 GB hard drive. As DSB expands its customer base, it will be no small burden to keep every single non-revenue-generating past project online. (As a point of reference, Flickr charges $25/year for keeping more than 200 photos on display.)

DSB could probably use an FAQ, too. A mashup of your photos is $14.99 - but where and how should you send your pictures/descriptions? What's the typical turnaround time? Would you be able to make changes down the line? No details are available on DSB's website. Damian's take was "we need some help on the tech side", but I see product definition as his main challenge. And while I initially agreed with Scott Frederick's (from Vahalla Partners) assessment that there may not be easily aggregatable B2B market segments for DSB's services, the situation seems more optimistic on second thought. Washington DC does have a large number of associations and a shiny new convention center. I'm still skeptical about Chuck-E-Cheese though.

Sunday, March 26, 2006

ISPCON

I'm moderating a panel on Virtual Private Servers (VPS) at ISPCON in Baltimore in May. Jon Price and Denise Miller from the Golden Group lined up quite an impressive group for the session. We'll have (in alphabetical order)...

* Barbara Branaman from XO/Concentric Hosting (offers proprietary VPS solution)
* Christian Dawson from ServInt (offers Virtuozzo)
* Harry Hollines from Verio (offers proprietary VPS solution)
* Ted Smith from Peer1 (does not offer VPS solutions)

I have mixed feelings about VPSes... On one hand, server virtualization (whereby one physical web server is sub-divided into multiple isolated, independently operating virtual environments) maximizes efficiency and scalability; the benefits are indisputable. Still, during my time at EV1Servers ("EV1"), I had a somewhat challenging experience with SWSoft's Virtuozzo (the market leading software that powered 300,000 virtual environments as of the end of 2005).

In late 2004, EV1 rolled out a beta program where 100 resellers each received a free web server with free Virtuozzo licenses. A small number of companies generated significant end user interest and immediately deployed additional servers. At the same time, both EV1's and many resellers' technical staff found the Virtuozzo learning curve steeper than expected. In fact, quite a few customers abandoned their free servers because the project distracted their team from existing business.

I'm curious to hear how VPSes fit into our panelists' business plans. Is it making its way towards revolutionizing multi-user data centers? Will it render the individual web server obsolete as a unit or sale? Or will falling hardware prices undermine its relevance? Join us and find out!

Sunday, March 19, 2006

More or Less

After almost 10 years in the web hosting industry, I'd gotten used to the idea that more is better. One-upping the competition means building data centers with more square footage and more GigE connections, and offering hosting plans with more disk space and more bandwidth. More advertising is also key. Bid more on Google Adwords and buy more ad pages in every magazine you can think of. 1&1 does, and according to Netcraft they're the world's second largest web host!

I've just finished reading Blue Ocean Strategy, though, and here the authors argue that more is... bad. When multiple companies try to make nearly identical products bigger/better/cheaper, consumers are encouraged to comparison-shop based on price, and profit margins plummet. Instead, look through a list of value propositions that you and your competitors share - what can you eliminate? For instance, take the money-losing circus business, get rid of expensive-to-maintain elephants and bears, add a dash of high culture, and voila! Cirque du Soleil has sold out Vegas shows at high ticket prices!

Rackshack's (now EV1Servers) 2001 success fits this pattern as well. Robert Marsh created a mass market for dedicated web servers by eliminating customizable hardware configs and adding automated instant setup. He offered Cobalt RaQs and only Cobalt RaQs at a standard $99/month price - and was flooded with business even during the dotcom bust. More recently, EV1's private racks program became another Blue Ocean case study (disclaimer: I used to manage it): give users isolated hosting environments with dedicated switches - but modify the traditional 'bring your own equipment' colo model. Instead, offer a selection of EV1 hardware they could lease. Phones have been ringing off the hook: less upfront cap ex for customers, and more recurring revenue for EV1. What could be better?

So... what will be the next web hosting money maker? The winning concept these days seems to be web hosting without web hosting. Take a quick poll the next time you're at a Starbuck's or the dry cleaner's: how many of the folks in line have a web hosting account? I'll bet a good number of them don't even know what web hosting is. And yet these same people might have profiles on MySpace, or photo albums on Flickr, or resumes on Linkedin, or backup space on Box.net, etc. Could they be persuaded to build their own websites and consolidate all these functions on theirname.com? I think not. But... as cool tools proliferate, might users be interested in a web-based dashboard from which they could manage logins, view stats and display select content from multiple sources?

Saturday, March 18, 2006

It's Directory Year!

Strange but true: every THIRD year, the MIT Club of DC publishes a PAPER directory of local alums and sends copies via snail mail to members. Does your college/MBA program/law school do that too? The answer is yes in too many cases - and how much sense does that make??

People who've gone to the same school generally feel some degree of affinity towards one another - yes? And we're willing to share contact info because we think there might be some benefit in networking with fellow alums. In which case, what we need instead of school-specific paper directories is a cross between Facebook and Linkedin.

While 85% of college students are on Facebook, it has limited off-campus reach. I was the 9th person from MIT's class of 1994 to sign up for a profile. But what's cool about the site is, users are welcomed into a built-in community upon signup (all students/alums within the same school automatically have access to each other). I think that's been key to the site's mass adoption.

In contrast, Linkedin focuses on the grown-up, out on the job market, demographic. Life is tougher in the real world. No ready-made community awaits. Instead, you build your contact list through one-on-one invites. For me, at least, that's been a significant usage barrier.

I'm envisioniong a middle ground on which...

(a) Every user automatically belongs to one or more open communities, depending on where he/she attended college/grad school

(b) Users might also have the option of joining geographic and special interest sub-communities. Biotech researchers in Boston? Snowboarders in New York?

(c) Meetup/eVite-type features could be incorporated to help users/sponsors organize and promote online/in-person social/professional events. Chicago happy hour for MIT graduates of the last decade? Microsoft recruitment dinner for Minneapolis-based users with computer science degrees? Roche webcast for any user who's indicated an interest in cancer research?

The primary incentive for users to sign up is immediate and automatic access to a social and professional network, consisting of people with whom they have a shared educational background. And the greatest selling point for advertisers is a highly educated - and therefore reasonably affluent and technology savvy - audience. The online/offline combination, in particular, could make for some very compelling sponsorship programs. Think this could work?