Can you please give us a general background of yourself and how you came to found Hostopia?

I founded Hostopia in 1999 with a vision - to become the world’s leading wholesale, private label web, email and e-commerce solution provider. At the time, it was evident that there were many hosting service providers who were unwilling or unable to build and support the capital expenditures it took to maintain their existing hosting service infrastructure or put a new infrastructure in place. That’s when the Hostopia idea was created and designed specifically to meet those needs at an affordable cost to the provider while remaining completely anonymous.

During the past several years I have had the great pleasure of addressing keynote audiences at ISPCON, Comdex and Internet World and accepting a number of industry awards on Hostopia’s behalf, including:

- Editors Choice for Best Reseller Opportunity 2002 by Hosting World Magazine
- Pioneer Award 2002 by Web Hosting Magazine
- Best Private Label Host 2001 by Web Hosting Magazine
- Best Host for Resellers 2000 by Web Hosting Magazine

Do you still have the same vision for the company today as you did when you founded the business back in 1999?

The basic vision has not altered and we have been well rewarded for sticking with it. The vision has broadened and expanded and now our focus is to be the world’s #1 Wholesale Multi-Application Services Provider for the Small and Medium Sized Business Community. Our product vision is to provide all the tools an SMB requires to run, launch, and automate a world-class online presence delivered via our WebsiteOS platform. These tools include the obvious such as our EasySiteWizard site-building tool, ecommerce tools, email, Virus scanning, blog tools, and less obvious technologies such as on-line chat, site-promotion tools, newsletter marketing. Our goal is to create the standard platform for distribution of ASP technologies to the SMB market. As always, we will continue to achieve our success through our wholesale customer relationships such as Covad, Velocitus, Xspedius, Bell Canada, Telus, and Rogers.

Which aspect of your position do you find the most rewarding?

As a salesperson at heart, my greatest satisfaction comes from establishing new customer partnerships that produce revenue. From an inward looking standpoint, my greatest satisfaction comes from seeing the growth and development of my people. From an operator’s standpoint, I love the positive and glowing testimonials we receive from our customers. From a personal standpoint nothing can compare to the feeling of achievement you get from a building a world-class business that started out as an interesting idea that popped into my head one day over 5 years ago.

What do you think has been your biggest challenge and triumph to get Hostopia to where it is today?

The biggest challenge as in any business is getting customers to pay you money! Production minus sales equals scrap. The goal to achieve operational break-even was the number one force that motivated and drove our company to succeed and we achieved that goal in January 2002. The challenge, of course, was establishing our credibility in the marketplace and finding customers who were willing to trust us with millions of dollars of their revenue. Our greatest triumph was being able to carve out a sizable niche in a highly competitive industry and in the process establishing us as the standard for private label hosting for Telcos, ISP’s, Cableco’s, and Domain Registrars. Some of the biggest names in the hosting industry have “Hostopia Inside”.

How do you entice potential partners to outsource their web hosting operations to Hostopia as opposed to them establishing it in-house?

Outsourcing web hosting services can be the best decision a provider can make. The cost of running a hosting business to keep up with the massive retail businesses of companies like Interland, 1&1, and Verio is constantly increasing yet the price points and the margins keep falling. It is a nasty squeeze for the player with little or no scale who is trying to compete against these giants.

What you get by outsourcing to a company like Hostopia is a predictable and profitable hosting business with no worries and margins in excess of 60% or greater. Every month there is only one number to think about and you eliminate all of the capital costs, hidden operating costs, and potentially labor costs associated with supporting this part of your business. At the same time you get access to the world’s best R&D for a fraction of the cost of doing it yourself. Also you can focus and direct freed up staff resources toward finding and building other revenue generating opportunities within your subscriber base.

Outsourcing is considered by many as a sensitive - even a political - issue and one that is highly debated. What are your views on outsourcing in general and has this debate affected your company?

Productivity is the long run measure of an economy’s health and as long as it continues to increase at a rate greater than inflation society as a whole benefits because the average real per capita income rises. Rising average incomes mean higher living standards for everyone including the poorest in our society. When outsourcing creates higher productivity it is a net benefit to society.

Do you see any inherent dangers in the outsourcing model? If so, what steps have Hostopia taken to address these dangers or concerns?

The number one danger is that your outsourcer goes out of business! Our partners are most concerned about the fiscal long-term health of the company they are working with and as a consequence we disclose our financial numbers on a quarterly basis to our customers. We believe that full and open communication creates more trust and ultimately benefits us because our partners continue to reward us with their business.

One of the core strengths of Hostopia appears to be empowering its partners and providing them with readily access to web hosting tools and infrastructure. Is this the key to the company's success, or, is just a small part of the overall picture?

This is indeed a significant factor in our success. We believe that our business should be an extension of our partner’s business. In practical terms we become their hosting division. This means that we have to provide the direct technology tools such as API’s that allow our customers to run a hosting business using our solution as if we were just down the hall from where they sit. This is an incredibly challenging proposition but we have won the lion’s share of our RFP’s on our ability to integrate and project manage customer implementations better than anyone else in the world today. In addition, with our Business Success practice we take it one step further than just technology. We provide a complete marketing and sales support group whose sole job is to help our partners increase their sales by developing a customized go-to-market strategy. We have built a business in which the key purpose is to ensure that our partners succeed in the world of hosting. Our partners make more money by far than we do on every individual sale and that is exactly the way we like it.

Who do believe are your main competitors?

We have two types of competition: direct and indirect. The direct competition includes companies that sell to the same wholesale prospects we do such as Verio, Interland, Affinity, and Alabanza. The indirect is the competition for the retail customer and includes the same companies mentioned and thousands of others. We design a product that needs to be best-in-class for the wholesale market so that we can close deals and we need to design a best-in-class retail product so that our partners can beat the Interland’s, 1&1’s, and Verio’s of the world.

Hostopia is no stranger in raising capital to finance its operations and expansion. Does the company have any plans to go public and ensure a healthy Return on Investment (ROI) for its investors?

Our goal continues to be focused upon building a world-class business. This takes priority above all other concerns. We have the benefit of having very patient investors and since we are profitable, cash-flow positive, and have a fully funded business plan, we have no pressures in the short-run for a liquidity event. Being long-term investors we know that the value of a business only increases as its momentum and its revenue increases. We also know that as we ratchet up the development of our applications we will increase the value of our platform commensurately. We have grown our business every month since inception and we just completed our finest quarter ever with the addition of over 27,000 net paid domain based websites. We have grown more in the last 6 months than we have at any point in our prior history so the best is yet to come. We ultimately do want to take the company public and since we have given all of our employees options we would like to see them get rewarded for their hard work.

Lastly, Application Server Providers (ASPs), such as yourself, was a buzz word back in the dot com days but slowly fell below the radar in recent years. What kind of future do you envision for ASPs, and more specially, in Hostopia?

We believe that the best is yet to come for ASPs because the world of ubiquitous and cheap broadband access is nearly here. When applications can run over the internet at the same speed as a LAN, why would you ever need to install a client based solution when you can get a better, cheaper, and more reliable solution through an ASP? The reason most ASPs have failed in my opinion is the inability to develop distribution channels cost-effectively. We believe that our relationships with over 270 wholesale partners with access to millions upon millions of small businesses and SOHO’s has us uniquely positioned to take advantage of the upcoming ASP tsunami. With the addition of over 40 new people in the past 6 months, Hostopia has over 70 full-time R&D staff working exclusively on the development of applications designed to fulfill our vision of becoming the world’s #1 Wholesale Multi-Application Services Provider for the Small and Medium Sized Business Community.

For more information regarding the Hostopia and its products, please visit the website at http://www.hostopia.com/.