Interview: EV1Servers CEO Robert Marsh

As the CEO and "HeadSurfer" of EV1Servers, Robert Marsh has directed the Houston-based dedicated server company through spectacular growth. In our interview, Marsh shares his thoughts on EV1's success, the high cost of domains and SSL certificates, and the difference between "affordable" and "bargain basement."

Q. Last year was a huge one for EV1Servers, as your company had a big influx of new customers, rebranded itself, and wrestled with growing pains that tested your infrastructure. What was 2003 like for you?

A. 2003 was the best - and at the same time most difficult - year of my life. Our team made a long list of accomplishments: we began offering first cPanel, then Windows hosting, then domain registration and SSL certificates. We also overcame a lot of challenges. I'm particularly proud that not one customer suffered a single second of outage when a transformer explosion in June cut off our utility power for six days. Most importantly, 2003 made us a better company. We ended the year with a more secure network, a stronger and more experienced team, and a new data center whose first phase will see us through our next 12,000 servers. I think this puts us in a great position to make even more progress in 2004.

Q. Your company sponsored the Houston Bowl on Dec. 30, which drew 51,000 fans and put your company's name in the headlines of sports pages across America. What led you to sponsor a college bowl game, and can you quantify how this will translate into benefits for your Internet businesses?

A. The EV1 Bowl is much more than just a sporting event. I see it as an opportunity to bring the EV1 community together. We organized a small gathering during the 2003 Bowl, which was attended by customers from as far away as Germany. I think "invaluable" is the only way to describe the face to face interactions that the event made possible. We're planning to host a much larger group in 2004; several vendors, including Dell and GeoTrust, have already agreed to get involved.

Q. EV1Servers gained attention within the hosting industry with promotions where you resold domains and SSL certificates at extremely low prices (seemingly below wholesale) to attract new customers. How do you assess the success of these promotions, and how did the "bang for the buck" compare to other marketing avenues, such as pay-per-click or banner advertising?

A.When I started EV1's dialup business in 1998, my goal was to bring a much-needed service to the mass market at an affordable cost. This is a philosophy that I still very much believe in. With low cost domains and SSL, my focus wasn't merely on "bang for the buck" marketing. These services are essential to our customers and their end users, and I found it outrageous that some of them paid as much as $35 for domains or $300+ for SSL. I introduced more affordable alternatives because we are one of very few companies that have the bulk purchasing power and market reach to do so. The decision has been good for many users, and it's been excellent for us. In 2003, domains and SSL together produced no fewer than 100,000 new customer relationships for EV1.

Q. You recently made a long-term commitment to Red Hat Enterprise as EV1Servers' standard Linux OS going forward, and have also begun offering FreeBSD. What factors guided your decisions on the "OS road map" for EV1Servers for 2004 and beyond?

A.Our number one consideration was long-term stability. For the majority of our users, web servers are business tools, not unlike phone systems or copy machines. They expect the equipment to work smoothly, and have no interest in devoting significant time and attention to frequent updates. We felt that RHE's 12-18 month release cycle and 5-year support timeframe would best meet their needs.

We also took into account our customers' feedback. While most were strongly supportive of our selection of RHE, we also received a significant number of requests for FreeBSD as an alternative. And that's what we now offer.

Q. You added Windows hosting last year, and currently price dedicated Windows 2003 servers at $89 a month. To what extent do you see Windows hosting as the future growth engine for your company?

A.In the long term, I see us having as much success in the Windows market as we've had in Linux. But I expect the growth engine to be not the server OS, but our high quality network and service.

Q. You rebranded as EV1Servers at a time when Rackshack was experiencing phenomenal growth. Did you have any reservations about the change? How would you assess the market acceptance of the new name thus far?

A.We decided to change our name because, simply put, our racks simply aren't in a shack any more. Within a few weeks, we'll have two state-of-the-art data centers housing over 20,000 servers. In addition, the EV1Servers name reflects our core commitment to provide affordable, high quality Internet services to every user.

As far as market acceptance, I think we've done an excellent job in creating awareness for the new name, even if customers continue to tell me that in their minds we'll always be RackShack - the hosting provider and partner that they've counted on for months or years. Despite our improved infrastructure and growing user base, we're still the same company with the same dedication to giving customers what they need.

Q. There's a growing number of competitors offering dedicated servers at prices near or below EV1Servers' current pricing. What's your take on the current cost/value equation in the dedicated server market? Any interest in "moving up the value chain" and adding services with higher margins?

A.I think there's fine line between affordable and bargain basement. Our focus is on the former. Our customers expect fast connectivity, superior network security, up to date product offerings, and great service. Our shareholders expect a positive ROI. Within these constraints, we'll do everything we can to keep prices as low as possible. However, we will not compromise our standards for the sake of winning price wars.

So my main concern is not competitors' pricing, but rather whether we're meeting customers' needs. Many of our users have hosted with EV1 since the very beginning; they've grown from one to several dozen servers. Our priority is to continue cultivating these long-term partnerships, instead of pursuing bargain hunters. To that end, we are collecting customer feedback on a number of new services. Some announcements should be forthcoming after the opening of our new data center.

Q. Last summer you pretty much maxed out the power capacity your local utility could deliver at your facility. What steps did you take to overcome this hurdle? Any similar challenges with "hot spots" and cooling the data center?

A.We negotiated with the local utility to give us access to additional power from a separate grid. And we began work on getting a new data center up and running. Hot spots have not been an issue to date; we also don't anticipate that it will be a challenge at either of our facilities.

Q. You're known for your active participation in EV1's support forums, as well as Web Hosting Talk (which you recently sold to iNet Interactive). What are the hot issues your customers and resellers are talking about these days?

A.Inventory availability has been THE hot topic for some time, particularly after our recent RHE/FreeBSD rollout. In addition to forum posts, our sales and customer service departments have also received ongoing direct inquiries. To me, this seems to be proof that long term relationships matter more than rock bottom prices in the web hosting business. After all, these users do have a wide range of competitively-priced alternatives to choose from.

Q. One topic you've discussed in the forums is whether to offer colocation services. Any decisions yet?

A.I can't say we have immediate plans to offer colocation. However, we are continuing to evaluate this and other opportunities. I will tell you, though, that we plan to be active only in markets where we have the ability to deliver a high quality service both profitably, and at an affordable cost.

Q. Where does EV1 go from here? Does further expansion make sense, and if so, in what markets and/or regions?

A.Given the strong market demand for our services, further expansion not only makes sense, but seems to be a certainty. Our goals are to maintain high service standards as we grow, and to listen to our customers so that our offerings are in alignment with their needs.