chloeveltman.com > features

Profile: pair Networks - managing growth is a big challenge
15 April 2002

Question: What do you do when you can't find a suitable web host to support your website? Answer: You set one up yourself. At least that's what pinball wizard Kevin Martin did when he couldn't find a web hosting company that provided the right kind of service for his pinball portal.

Mr Martin is the 30-year-old chief executive of pair Networks, a web hosting company he founded in Pittsburgh, Pennsylvania in August 1995. In the seven ensuing years, pair has earned a reputation as one of the most well-respected small players in the overcrowded and uneven web-hosting sector.

The company hosts more than 127,000 unique websites and serves customers in 150 countries, half of whom live outside the US. Its clients include the Philadelphia Flower Show, Readers' Digest Canada and a slew of hobbyist, technology and music sites, as well as some 14,000 authorised re-sellers. In Webhosting Magazine's first ever Best Hosts Awards announced earlier this year, pair topped the list in the shared hosting award category, scoring high for its profitability, breadth of offerings, health, growth and word-of-mouth reputation.

As with many other web hosts, customers can choose from a menu of bundled service plans, rather than buying each tool separately, a la carte. The various levels of shared and dedicated website hosting, domain name registration and mailing list services are typical of any small web hosting company. But pair also offers less common options, such as e-commerce solutions and a local peer exchange, PitX, which connects internet service providers within the Pittsburgh area with one another directly.

Pair's web hosting offerings are divided into four categories: shared, e-commerce, high-volume and dedicated. Each category includes several degrees of service. At the lowest end of the shared market, a customer can get 100MB (megabytes) of disk space, one mailbox and 24-hour email support for $5.95 per month. By contrast, at the top of the dedicated arena, $599 a month will buy you unrestricted, private access to an AMD Athlon 1400MHz processor, 250 mailboxes and telephone support.

But most of pair's customers do not need this level of service. The most popular plans are the lower-cost options, such as the FTP, Basic and Advanced accounts, which range from $5.95 to $17.95. The FTP and Basic accounts include 100MB disk space, while the Advanced boasts 200MB.

One of the biggest challenges for pair has been managing its growth over the years. Mr Martin says that aside from the $10,000 loan he borrowed to start up his company, pair has never been in debt and has been consistently profitable since February 1996, two months after going live. The profits are reinvested in the privately-held company to improve infrastructure and support services. "There's no company Ferrari, but we're constantly improving our service," says Mr Martin.

The level of customer service has been one of the company's greatest concerns. During the internet boom of the late 1990s, the widespread demand for domain names and web sites led to a surge in business for many entry-level ISPs. "In 1997 and 1998, we were swamped with business; we had no time to develop better support systems," says Mr Martin.

Since the stampede for hosting services has abated in recent times, pair improved its outreach. A year ago, the company added phone support to all account-holders at the $29.95 level and above and currently dedicates three-quarters of its 41-strong workforce to technical support.

For a company of its size in turbulent economic times, pair is doing better than many of its peers. "There aren't too many hosts out there who can say they are profitable," says Ted Chamberlin, networking analyst at Gartner, the Connecticut-based technology consultancy.

Money not spent on customer service is ploughed into technology. The company's telecoms infrastructure, switching equipment and web servers have been upgraded or replaced.

Pair has turned down acquisition offers from larger companies, while Mr Martin considers other options. One plan is to build a second facility, while another is to partner with a rival company.

But while the market for small web hosts has good prospects, at least in the short term, experts believe the drive towards consolidation within the web host space could force companies such as pair into acquisition deals sometime over the next few years.

Companies like pair predominantly attract amateur and small business customers rather than the bigger corporations which are handled by service providers such as AT&T and NTT/Verio. As a result, they may see their users outgrow them, even at the high-end, dedicated account levels.

"Soon everybody will be on the web, so there will be much less demand for entry-level services," says Mr Chamberlin. "The small 'mom-n-pop' firms just won't be able to compete with the bigger networks."