Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses, and joining me is a guy who doesn’t really think of themselves as an entrepreneur. He’s more of a techie, but nevertheless, while working a full-time job, he decided I’m going to start this thing on the side and this thing that he started on the side has grown really big. And I actually, from what I can see, we’re looking at well over $20 million a year, profitable, growing, 125 people working for him. More than that, right, Chris?
Chris: Well, we’re going 130-ish right now.
Andrew: 30-ish. The voice you just heard is Chris Wells. He is the founder of Nexcess. They provide a platform for application hosting. That means if you want to host your WordPress site, you can go to them. You want to host Magento, you want to host other applications, go to them. They’ll take good care of you.
This interview is sponsored by two companies that you probably heard me talk about before. If you want to hire developers, there’s no better place to go than Toptal. And if you want to do email marketing right, you’ve got to go to ActiveCampaign. I’ll tell you about those in a moment. First, Chris, good to see you here.
Chris: Thanks for having me.
Andrew: How much revenue we’re looking at right now?
Chris: We are 25-ish million a year.
Andrew: Wow. And profitable, how much profit that we’re looking at?
Chris: Profit is a good question, right? So, I’ll say it’s healthy. Put it that way.
Andrew: Can we say it’s over 2 million?
Chris: Yeah. Yes.
Andrew: Right. So we’re really looking at a real business here, real growth, real customers, real profits. You know, before we get into like how you built this up, there are tons of hosting companies out there. What separates you from all the other people, frankly, many of whom have been gobbled up by one big competitor. What’s the thing that makes you different that allows you to stand up for all these years?
Chris: So like any business, I mean I like to say often that we’re just a, we’re a support company that does hosting, so it’s all about the personal touch. It’s about taking care of your clients. It’s really the basic stuff. So when we started and it was just me, I was the guy that answered the phone and I would answer the phone 24/7. I didn’t care if I was sleeping or awake or what it would be, I would answer the phone and that became kind of . . . the driver was one, answer the phone and two, fix the client’s problems, whatever they may be, and that’s both a curse and a blessing depending on where you want to draw the line of someone else’s problem versus the business’ problem.
Andrew: Could you give me an example of something. I like the idea of saying we’re a customer service company that happens to do hosting. I feel like that’s a good role model to have, but a lot of people think they do good customer service and they don’t. What’s an example of a customer service that you guys offered that other people don’t?
Chris: So I don’t like hold, right? So we try and not have hold. Also, there is the fact that you can get somebody on the phone quickly is a big deal to me personally. The fact that you can ask almost anything in our line as to where our service stops is as far as we can make it. And it was further in the past. So asking things about, hey my . . . you know, obviously the basics, right, my website, X, Y, Z problem. But the point is saying, “Hey, this one page is slow. Why?” It could be out of our scope.
Andrew: But you’ll still look at it. If I say this one page is slow, you’ll still look at it and tell me why.
Chris: We will look at almost anything that you ask and try to help in some way. Even if it’s opinionated, even if it’s not pertaining to our exact service because we want to ultimately make you happy. And like I said, it’s a blessing and a curse because as a business owner, how do you train to say, “Well, you know that’s out of scope.” And you know, we struggle with this to this day, we struggle with what’s out of scope because back in the day there was no out of scope. Until you were happy, we would work.
Andrew: So you said no hold. I’ve got your phone number right here on my phone. If I hit dial, I’ll get an actual person?
Chris: I hope so. So ultimately I guarantee you’re not going to because we’re testing it right now, but I would like to think it’s quick. Let’s see. Is it weird that I do stuff like this?
Andrew: No, it’s good.
Female: Good afternoon. Thank you for calling nexcess.net. How can we help you?
Andrew: Hi. Wow. I was actually just testing to see how long will it take to get a person. Two rings. Thank you so much.
Female: No problem.
Andrew: Okay, bye.
Andrew: Wow. I was looking at your face and I thought maybe this is the point where I lose him. I should have saved this for the end of the .
Chris: No, dude, this is like the Windows 95 moment, right? It’s got to work. And I’m not saying that there isn’t the hold sometimes. I’m not saying if you said like, “Hey, can I talk to support,” it would be instant. We try. You know what I mean? So it’s important.
Andrew: I said that you weren’t an entrepreneur, and still you sold candy as a kid and I’m going to get into how you built up this business.
Chris: They passed that along, huh?
Andrew: You’ve got to talk about why you sold candy and what happened.
Chris: I like money.
Andrew: Is that true?
Chris: Sure. Yeah. I mean why do we do all the things we do, right? It’s funny. I don’t remember the actual genesis. Now to say I like money and whatever it was, four or five years old, it’s probably a non-true statement. I always felt like I should be doing something. It’s funny though, because like that the question that prompted that and it was such a naive answer at the time from your staff was, were you entrepreneurial before Nexcess? And the one that I could think of was, of course. The question is about something else that was successful and/or in the recent past, right? The only thing I had in my head was these jawbreakers that I sold on the playground at my elementary school. And I had one customer, Jim Williamson was my customer, the only customer. And the dude probably bought like four jawbreakers over the course of like three months. So I was not profitable or nor good in any way, but thank you, Jim. I appreciate it, man.
Andrew: And the only reason you did it was because your mom told you about someone when she was growing up who sold candy and then she bought the candy for you and she basically guided you through this. And the reason that stood out for me was you told our producer, look, “I am not an entrepreneurial person from the start. I’m a maker. I’m an engineer. I just happened to find myself here.” And before we started, Chris, you’ve even told me, look, I made tons of stupid mistakes that business people would laugh at because of this. And as a result of this engineering type of personality that you have, you ended up in Germany in 1997 working for whom?
Chris: For Hewlett-Packard. So I worked for HP in ’97 in Germany, and that was like, actually I just wanted to get . . . I was in college at the time. I took a semester off to get out of, I won’t say the grind, but I had this idea that I wanted to speak German for whatever reason and it was stuck into my head. And it was one of those things where you hear folks in high school saying, “I took two years of Spanish,” and you’re like, you know, you speak a Spanish word and they’re like, “I don’t know what you’re talking about, man.” So I was like I don’t want to be that guy who’s took two years of German and he doesn’t know German.
So I tried and I wouldn’t say I’m awesome and to this day, but I was like, I’m going to try to the point of like completion. So I got a job at HP in ’97, which was serendipitous because it was just as internet was starting to become a thing. And so I was in a 9 to 5 workplace at a Fortune 500 company in InternetVille, basically connected all the time in ’97 at work, which was weird. So yeah, that was me in ’97.
Andrew: So basically you were living in the future that you saw other people are going to get into. You were a user of Linux back then and that led to an aha moment which was which led to Nexcess.
Chris: Oh, so the Linux thing I heard about in Germany, like “Hey, there’s this thing called Linux, like dude, if you want to do Unix stuff at home.” And it was purely selfish though. It wasn’t like, I was like, “Oh Linux, this is awesome.” It was purely to get at school, to not have to go to the computer lab so I could sit in my apartment at the time with my, you know, i386 machine and run something that the servers at school would understand.
Andrew: Like what? What did you want to do?
Chris: What do you mean? I wanted to compile programs. I want it to do all the work you had to wait in line in the computer lab to do.
Andrew: Like what? For school work or for yourself?
Chris: For school work. Yes, 100% for school work.
Andrew: I see. So you are in school and you just said, hey, you know what, I don’t want to have to go all the way to school. I want to be able to do this at home. There’s this cool thing to do at home. And then you noticed that the multiuser computer is what set you on this path to create Nexcess. What was the user computer aha moment.
Chris: So again, I’m at HP and we have these servers in ’97 that we’re doing, you know, multiuser things that its users could like do stuff. And it sounds so generically simple and dumb, you know? And even now, but I was like, wow, there’s like a thousand people on that computer right there doing stuff. Like whatever they’re doing, you know, who knows? But it was interesting to me the fact that you can have a multiuser environment on this internet thing, and again, you have to place yourself back in ’97 right? It sounds so simple to say it now because of course servers do things and it’s multiuser but back then it was a newer, at least to my, whatever I was 23-ish eyes was a big deal.
Andrew: And so the idea was, look, I could actually host lots of different websites on this?
Chris: Yeah. The idea was that I could do this thing with this multiuser environment in Linux on an internet connection at home essentially, yes.
Andrew: But if I were to simplify your business, it was you thought I could sell what to whom?
Chris: I thought I could sell web hosting to people who needed web hosting. Now if you asked me who are those people, I would be like, people with website.
Andrew: You just kind of had this idea, look, this is possible. I’ll go figure out who’s going to do it.
Chris: Correct. And like literally there was zero. I mean it was so little thought into the actual business side. It was just like, this thing is neat. I will spend money on computers and internet connections to make this thing possible and people will buy it. And I again, that people will buy it part, that was the part that I hadn’t thought at all about, like zero, but I’ll just buy it. It’ll be great. They’ll look, they will come.
Andrew: I’m looking at the early version of your website.
Chris: What you should do is look at the Napster website of the same era.
Chris: Because if you look at our site and Napster’s site, you will understand my spark of creativity
Andrew: You saw Napster’s design. You said, look this is what’s changing the world. Napster at the time allowed anyone to download anything from friends’ computers, but everyone was basically downloading music. And you said, “You know what? They’re changing the world. I think I can actually just copy the design.”
Chris: It’s a simple website. I like the look. I can do that. So I mean, again, I had to make the website back in the day and so yes, obviously they were successful, they were doing things. It worked for them so they couldn’t be that wrong.
Andrew: The first customer didn’t end up with a happy story. Who was the first customer?
Chris: So the first customer again, I was in college, right? I lived 30 miles away from school and at home was where the business lived. All the servers were there, all two of them in the internet connection. So I got a page on my cell phone at the time, pay new order. I raced home and set up this client. The domain was a [metal crut 00:10:54], which makes nothing.com. It meant nothing to me then. That means nothing now. It’s still available by the way. I checked yesterday as I was thinking about this interview. And raced home, set it up, awesome. Tried to be customer service guy, sent emails, you know that all my nice things and heard nothing. I figured they were happy and 30 days later got my first chargeback. So our very first customer was a chargeback. So we learned about chargebacks real quick.
Andrew: And what was he trying to do? Why did he want to get this free site hosted?
Chris: Back in the day it was about testing credit cards. So they would just test in a credit card to see if it worked. And so hosting was and still is to a degree rife with the folks trying to test credit cards to see if they’re legit.
Andrew: Then a friend of yours became a customer with a comic site. What was that?
Chris: He did. Talk about a guy ahead of his time too. So a guy named Rob Worley, a buddy of mine from Michigan here had a site and again place yourself back in 2000, 2001, had a site name comics2film.com and this is pre-Spider-Man, you know, first Spider-Man movie. He saw it coming which is amazing now because like every other movie now is that superhero movie.
Andrew: He saw that this movement was going to happen and he wanted to do what? Document it? Just tell people [inaudible 00:12:02].
Chris: He was just interested in film and he wanted to talk about it, learn about it. He had higher ambitions to be in the film industry which he is now and so he was just, he was a fan.
Andrew: Okay. I’m actually seeing the alert on his website when he moved hosting company. Again, Internet Archive, “We’re sorry, comics2 film has moved to a new host. This means that the friendly address comics2film.com is temporarily unavailable. However, we can take you to the new host automatically if you click on . . . ” And then he gives his IP address for the new hosting company, which I haven’t clicked on. Got it. All right. And this was a legitimate customer now.
Chris: So what’s a legitimate? Legitimate as in like giving me money?
Chris: I don’t think so. No.
Andrew: Oh, really?
Chris: No, because you have to understand like this is a buddy of mine from work. He’s a software developer and I’m like, hey man, we need clients. I’ll host anything for any amount of money and just to get experience, I’ll do it for free. He wasn’t our second client, but he was our first 20. And so we had other folks, I think he was [apprehencious 00:13:07] about jumping from his current hosting company to us. So we have gotten our, whatever it was, 10 or 20 small clients from random I would assume until we got him. And it was a big deal and we did a lot of work. I mean it was a popular site at the time, you know, for that era it was popular. Not crazy, but it got traffic.
Andrew: Yeah. For the day he was . . . his site had a ton of content. Usually, when I go back in time, there are four pages up and that’s it. No, he was really seriously into comics. And so what he did though was introduce other clients to you because he was plugged into the community.
Chris: Absolutely. And that was kind of our initial understanding of what it meant to be niche based and understanding how certain niches can be, you know, verticals that you don’t even understand. So we started getting introduced because he did legitimately have a good experience with us and he, believe me, would have been the first one to roast us if it wasn’t good. He started doing intros to his buddies because they have a little community, at this point, it was big to be honest, of folks doing essentially the same thing, each site focusing on something different. And so we had original sites that focused on the Spider-Man movie that was yet to come out. And other aggregate movie sites, but all movie based, essentially folks that tracked, reviewed, talked about movies, had forums and were growing. I mean, to be fair to them, they were growing and they needed help.
Andrew: One of the first things you did was get business cards. Tell people how much you spent on that and what was the thinking behind that?
Chris: The thinking it was ridiculous. And so, again, in my 23-year-old business mind, like you, all deals were made and broken based on the quality and awesomeness of your business card. So I went to Kinko’s and was like, I need to have double-sided bold color, you know, colors on both sides. I need it embossed on the back with our logo and the front’s got to have some reflectivity to it. So there’s like all of these things that just add costs. Like, obviously it’s got to have my name and whatnot and the contact information, but it had all of these other superfluous things that I thought were cool because, and again, in my young head, business cards were how you got business. So we literally spent, I bought, I had to buy 1000 of these cards to get the setup and everything for Kinko’s to do it and it costs me $1 per card. So $1,000. Literally to this day, I have 800 of these cards left.
Andrew: Did you actually get to give it to somebody in a business setting or was it just showing . . .
Chris: Of course, yes. I went to conferences and I did. But like it never got the oohs and aahs and I had expected. But again, that was me.
Andrew: That was you trying to figure out. What do you think is the equivalent of that today of a thing that every business owner, every novice business owner thinks they need to have, but in reality they don’t?
Chris: So I mean, listen, this still happens to us. Everybody gets caught up in perfection. It’s got to be perfect. I’ve got to make a thing and it’s got to be perfect and that perfectness is going to be what sets us apart. Nine times out of 10 you’ve got to make something that exists. If it just exists and it’s X% better or different, whatever it may be, that’s all you need. You don’t need to keep chasing perfection. And I think that’s a big problem.
Internally with us, it is because we have meetings and we were going to have one on Friday about, don’t chase perfection. Chase existence. Obviously, it is got to work but don’t make it perfect because perfect is something you’ll never get to. There’s always a reason that is not perfect. And so, you know, for me it was, I didn’t want to give that card that wasn’t perfect to anybody because that was going to be a judgment point.
Andrew: You know, Chris, I’d been kind of wrestling with this. So one of the things that we’re doing at our company is taking the six principles that we live by and practicing as a team to apply them each month. So February was, we do less. Like I don’t want to keep piling on more stuff that we do. I want to spend some time looking for stuff to reduce. And I thought, all right, it’d be nice if I gave everyone who did something less, just removed something that was nonsense that we’ve just been doing forever, give them a T-shirt. Just something that says, I did less for Mixergy. And I like the T-shirt to look so good that they want to wear it. So good that they feel pride in this is the company that they work for. And still, I know that that’s going to suck me down into a process where I become like a T-shirt designer and want to be the next Dolce & Gabbana or something.
And so what I’m doing is just creating something quickly on my phone, I’m sending it over to Zee Group. This a company whose founder I interviewed here and saying, please print this out and mail it to everyone who did less this month. But I’m not super proud of the design, and I’m wrestling with the idea that I want to spend a couple of hours doing it so that people on the team feel proud of what they get. And at the same time, I’m kind of thinking, this is a first one. It’s not going to be the last T-shirt. Every month we should have a different T-shirt and if we cycle through these six principles, the next time we do less, the T-shirt design will look twice as good.
Chris: But dude, look at what you’re doing. You’re doing less though, right?
Andrew: I am doing less but . . .
Chris: Maybe you’re not perfect. You are doing less.
Andrew: I think I’m kind of questioning that like just has to exist versus has to exist beautifully. And I know the one that I go for and then I’m wondering whether I’ve been making a mistake going for something quick. What do you think? Do you do get into that where sometimes you launch stuff and you think, you know what, it should look better. Why don’t we just launch?
Chris: Yes. Don’t get me wrong. I am not saying that like if you go to our website if you log into our portal that it’s perfect or that I don’t want to change things. But let me have the corollary here is don’t make it perfect for version one. It’s an iterative process, right? So even for the T-shirt idea, I mean the first one doesn’t have to be perfect. Make it exist though. Do less yourself for the T-shirt, but then iterate over that T-shirt idea and make it so that ultimately it becomes the thing that you want it to be.
Andrew: And do be proud of it, of the fact that . . . you know what and actually I liked that we’re talking about this. I’m getting all the doubts out of my head because I would be proud if it was so ugly that they never wanted to wear it because then when we come back to this the next time and it looks good, this is the way we operate. Keep that ugly shirt where the text was off center as an example of how we operate and then keep the new one as an example of how we get to improvement. All right, that helps me out.
Let me talk about my first sponsor. It’s a company that will help anyone hire phenomenal developers, including you, Chris. Chris, I do interviews with people who suddenly are in blockchain or do artificial intelligence and I know my audience is listening going, this is great for them. I can’t actually even approach it. It’d be nice if I could sit back with a drink and think about how artificial intelligence can improve my business, but I don’t have someone on my team who could do that, and I’m not even sure if it’s really the right thing to do today.
You could go through that kind of thinking all day long or what you could do is, Chris, you or anyone listening to me is go to Toptal, say here’s what we’re doing. Here are a couple of places where I think artificial intelligence can help us. Is there someone in your list that we could talk to and hire to just infuse a little bit of artificial intelligence into our product to see if it makes sense? And frankly, Chris, I’ll be honest with you, Toptal rejects a lot of people and says it’s actually not a good fit. We don’t think we can help you. I think that’s fine. Someone’s got to create a case study.
One of my listeners talked to Toptal. They said, “No, you’re not a good fit.” And he said, “Why?” And they gave him a list of things and he spent the next year improving on those things so that he could hire someone from Toptal. They were so impressed that they asked to fly him out to their conference, their internal company conference and say, “Look, we’re not being jerks by turning people away. We have these standards and some people will live up to them and other people won’t and it’s fine. Here’s an example of someone who lived up to them.”
Anyway, so if you’re listening to me and you need that kind of development skills on your team part time, full time. In fact, even as a whole team, you could hire them from Toptal, but be prepared to just talk it through with them and understand maybe the way you’re thinking about it could be refined. I’ve had that when I talk to Toptal or maybe they could just say it’s actually not a good fit and be prepared to turn away. All you have to do is go to toptal.com/mixergy. When you do, there’s a big button that you can hit and schedule an appointment to talk to somebody at Toptal about what you’re looking for. If it’s a good fit, they’ll help you hire the best of the best.
We’re not talking about the cheapest, we’re not talking about just expensive for the sake of expensive, what we’re talking about people who pride themselves on being the best of the best. And if you use this special link, you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no-risk trial period of up to two weeks. If at the end of the period you’re not 100% satisfied, you will not be billed. I don’t know why I’m reading that really fast like it’s a disclaimer. I’m going to tell you. It’s top as in top of your head, tal as in talent. Go to toptal.com/mixergy, T-O-P-T-A-L.com/M-I-X-E-R-G-Y. All right. You see I come and take pride in a good sales promotion. Do you, Chris?
Chris: I can tell.
Andrew: Yeah. You can tell, right? I used to be so bummed about my sales thing. Do you take pride now in some of the ways that you sell or are you still like, “No, I’m not someone who’s that excited about sales. I’m almost rejecting it”?
Chris: That’s a good question. I don’t know that I am good at sales. Let’s put it that way. I talk people through if I am in front of a customer, I talk to them through what we do, what I think we do well. But I’m not a salesman in so far as I’m going to convince you that you should choose us over somebody else. All I can do is present the information objectively and ideally, I have persuaded you with the objective information that you’ll choose us. That’s again, that’s the tech person in me coming out.
Andrew: I saw that even before we started. I said, look, one of my sponsors is HostGator. I won’t be doing the HostGator ad here because I think it’s a conflict. How are you different? And you didn’t take the bait and go off on the excitement of working with you and how bad it is to work with HostGator. You said you gave me a list of points of where you guys are better and how it makes more sense for people to work with you. I’m looking at your like your sales process here on your site. There isn’t that fun like . . . I don’t know. It’s clearly written by someone who is an engineer for engineers. That’s the way it feels to me. What am I missing about this page that does more salesmanship that I’m not seeing?
Chris: So it’s funny because our new site will literally out in 24 hours and it will be different and this site that you’re looking at most likely was designed and written by engineers that were like this is the information. Here it is. And if you know, even to the point of maybe if you don’t know what these numbers mean, maybe it’s not for you. That sounds bad. I don’t mean it that way. But again, I’m not good at the small talk of the sales process, put it that way.
Andrew: I see that. I went back and I looked at an early version of your site, maybe the first version of the site. A couple of things that were interesting. The first is you didn’t just do hosting, you offered to do development and design for people.
Chris: We did.
Chris: Because I’m a software developer and I was bored in the beginning and there was nothing to do. That’s why. I mean, ultimately we had time and so what we did was we took the time and offered it, development services. And a lot of those early clients actually licensed software that we wrote because we saw they were having these constant problems with whatever. If I understand, there were CMSes, there was no Drupal WordPress. It was different back then, right? So we wrote some simple CMSes and provided those to our clients as a licensed product. Also though we wrote internal software that runs the business when nobody bought the development that we were advertising and that’s helped immensely.
Andrew: One of the first things you did, was you said, look, these people need to publish websites. What they’re doing is they’re writing HTML code in Notepad or using something like FrontPage. I think I could do better. You created an easier way for them to write their content and have it on your site.
Chris: Yeah. So the bigger thing was they needed to be able to . . . they had a template for lack of a better term, right? They had their frame and they wanted content in the frame and all of these sites, movie review sites are doing daily articles every single day, multiple times a day, different articles. What you would look at today and say, well that’s a WordPress site, they were doing it back then without the benefit of a templatized, flexible backend basically. And yes, in retrospect, we should have taken it and done something with it but again, we were so tuned into being the hosting company at the time that we were just doing it so they would be sticky and stick on our hosting, not so that we could make software for clients to license. That was the last site.
Andrew: Got it. Okay. And then the internal software that you did, what was that?
Chris: So internal software, we write everything. I say everything. We write a large chunk to this day to run our platform. So if it’s a feature you use as a client, the software that drives it was written by us. Whether it’s on the server level, on the platform level, on the infrastructure level, it’s all essentially written by us and we’re learning how to license some of it and not write everything because we got in this stint of the last say starting three years ago and before we would write too much. If you’re a software developer, every nail is there for your hammer, so to speak. And we had to dial back and start integrating more than just making from zero. That said, we will still write to this day a lot of software.
Andrew: My brother’s like that. He’s a developer. Nothing is ever right as it is off the shelf. He wants to create his own CMS. He can’t just use WordPress and then he wants to customize it to the nth degree even though you could pay a virtual assistant somewhere five bucks a week to manage this stuff, he wants to create software that will do that and you’re saying that’s the way you did it.
Chris: The way we did it, 100% yes, to the point of being ludicrous ultimately and having to pull back of just doing too much because software, you know again, is this thing that has to be developed, maintained, tested, securitized, bugs fixed, blah, blah, blah, blah, blah, whatever it may be and it’s expensive.
Andrew: What’s the upside for you? What were you able to do because of that?
Chris: The upside is there and it’s why we still do it. It’s complete control and complete flexibility. If you look at our business over the past 20 years, we have made decisions strategically such that we control our clients’ environments. Whether that’s physical environment, software environment, whatever it may be if there is a problem, more than likely we are in direct control to fix that problem. If there is a fiber cut in our front yard, we can fix that problem because it’s our front yard. If there is a bug on our website, we can fix it directly.
And again it’s a double edge sword. That said we try to balance it such that if it’s service affecting, we can fix it. Back in the day we didn’t have our own facilities and we used to rely solely on outsourced co-location providers and it killed me to go like, “Well you know client, I know you’re offline but I haven’t got an update for you so sorry and when I get one, I’ll let you know.”
Andrew: And I don’t have an update because my computer is in somebody else’s co-location facility.
Chris: Yeah, it’s in a third-party facility and they’re not answering the phone and no one’s . . . We’re not big enough to get legit support or whatever it may be. And so now we can tell you literally what’s going on. It may not make the ETA any less but ultimately we can give you information and as a client you can go like, okay, they’ve got it covered. It all makes sense. I trust these guys and so on.
Andrew: And all of this is slowly being added on, slowly being built very slow and you didn’t know was too slow. If you had venture capital backers, they would tell you it’s too slow.
Chris: I know, right? Like we’re on the hundred-year plan. I feel like. No, I had no idea, right? No idea. So yes, we very organically grew very slowly year over year. Absolutely.
Andrew: This was a full-time job starting when? Like two years into it? 2002?
Chris: Back 2003, 2002. Yeah. Yes, yup.
Andrew: Okay. And so, and even then it wasn’t making a lot of money in the beginning, right?
Chris: No, it wasn’t. I mean literally I had my joke, and it’s not a joke, is you get those Social Security statements if you’re in the U.S. and it tells you like how much you’ve paid in and how much you earn. I had a year or two where mine was literally zero to zero.
Andrew: I’ve had that. It’s so painful to see. You almost don’t care about it, but it feels like, what have I been doing?
Chris: Right, right. And another joke I tell too is like you talked to other folks who all want to be entrepreneurial and or want to start a business or get into it and they say, you know, when did you make your first dollar? And I’ll say, you know, 2000, 2003. I’m like, but you know what that means, right? And like, well yeah, it’s like, you know, essentially that’s like your first in your pocket dollar. I’m like, no dude, that’s like your first dollar of profit. And the problem with the profit is, it doesn’t mean you got a paycheck. Like, if the company is not paying you, your first dollar of profit I guess isn’t real but the point is it’s not yours either and it’s just a dollar. That part sucks too.
Andrew: What’s an example of something that you had to cut back on because of this? I know for me it was, I ate really frugally and one thing I remember doing was getting vegetable fried rice from the Chinese place in Queens that was near my house because it costs a buck and I thought it has vegetables is healthy. I’m so stupid. Like it’s they’re frying it up to nothing. What’s an example of how you lived frugally?
Chris: That’s a good question. Honestly, I probably didn’t live as frugal as I should have. We took on debt, credit card debt, you know what I mean? I had a lot of credit for I think 50 grand if a bank, cause they just give you one if you go in as a new company. And we leaned on that and leaned on it. Again, our house was small. We had an 800 square foot house. I used the garage as the data center essentially which was a one-car garage and everything was there for the first three or four or five years. We moved out in . . . so in ’06, we got our first Michigan data center, so six years into being us. And I remember even at that point, we were not even in a million in revenue, so six years, we hadn’t hit a million in revenue yet.
Andrew: And your profit was where at that point?
Chris: I couldn’t even tell you. Like that’s the [inaudible 00:31:29]. I could pay the bills, put it that way.
Andrew: By bills, we are talking significantly under $100,000 then considering how light your bills were.
Chris: I would assume so, yeah. Enough that we got financed for this data center and that means we have to be financed for a physical building, which was again, to me, amazing.
Andrew: You don’t have venture capitalists. You did get blue sky money from friends and family. How much and what is blue sky money mean?
Chris: So we got about $40,000 in 2003. We were looking at 2004 around that time. We were looking to push into licensing software and needed money to what my dad called blue sky money. Essentially allow me to relax my mind so that I could focus on making the software since that was my full-time job. And so we have 40,000 bucks in essentially I want to call it seed money because it was three or four years in. Not understanding how to value the business or what it was even worth and kind of making up numbers along the way. Did a business plan, which didn’t make any sense either but that was our sole and only funding.
Andrew: And have you used it for anything interesting?
Chris: Back then, yes. I used that money back then and ’03, ’04 for doing trademark registrations. Like that’s interesting, right?
Andrew: On Nexcess.
Chris: What’s that?
Andrew: On the name Nexcess.
Chris: On the name, no, it was on InterWorx back then. The Nexcess but InterWorx which we actually still use to this day, InterWorx is a company which houses our control panel or on server control panel and cloud orchestration. Back then we were trying to build it, market it, sell it and so I wanted to make sure we were doing everything right from the get-go. And so we spent thousands of dollars on the basics, right? Getting your marks registered, getting lawyers involved to do things, things that I wouldn’t have done otherwise just because of lack of funds.
Andrew: All right, let me talk about my second sponsor and then I want to pick this up with this great thing that happened that actually was very painful for the business. But I’m going to builtwith.com. I don’t know if you ever use this. I want to see like what your site is built on and so on. Oh, you guys use Marketo for email, don’t you?
Chris: Yeah, I believe so. Yeah.
Andrew: Yeah. Like that, “I believe so.” That’s the level of like passion that you have for it.
Chris: I did the integration on the Marketo stuff. I don’t know if we’re still using it.
Andrew: Oh really? Okay. Marketo is really good for email marketing. The challenge is that it’s really big and I think for a lot of people it’s overkill and it’s too hard to use. My sponsor is a company that does email marketing and more automation. It’s called ActiveCampaign. I don’t mean to pit one against the other, but I thought maybe I could talk to you about why you’re using yours and the difference. Since you’re not that passionate about this, I’ll give you an example of how ActiveCampaign can work for a company like yours. I’m on your blog, blog.nexcess.net. I love, by the way, that you’re on dot net. Remember back in the day when dot net was going to be all the network infrastructure websites.
Chris: And also the curse of death. If you were in a dot com and you were just screwed.
Andrew: What do you mean?
Chris: Like ultimately dot com was official. That was you were a business, right?
Andrew: Right, right. And you got both.
Chris: Dot net was like this side thing that was like networking something. It wasn’t a business though, you know?
Andrew: Yeah. Now, it doesn’t even matter all that stuff like that. But you guys, you have nexcess.com. So I’m on your blog and I could see that you’re writing posts about WordPress. So like WordPress auto-blogging, you write about WooCommerce, you write about Magento, you write about WordCamp, etc. Clearly, someone who’s into Magento may not be into WordPress. It would be interesting if you had ActiveCampaign to say, you know, we’re going to do just put it on all of our sites and then with two strings of maybe three, one for WordPress diehards. People who are into WordPress, just fricking love WordPress. They care about the WordCamps, they care about the latest update. What do you have? Gutenberg, this and that. They want to know and they’re passionate about whether it matters or not. People who are into Magento care about Magento. They’re not that in love with the minutia of WordPress. And people who just want a general hosting, they might be their own bucket.
But you don’t want to have when somebody signs up a whole form asking them, what are you more interested in? Because people don’t necessarily know and they don’t want to process of filling out forms to tell you. But it would be interesting if when they signed up for your email newsletter, you also use the ActiveCampaign and you let the software just watch. And if they’re reading the articles about WordPress over and over and over again, maybe you start to shift them towards posts about or email marketing about why you are the best at WordPress and why your caching system will allow them to speed up their sites faster than others.
That’s the thing that we’re talking about with ActiveCampaign. It will watch what people do on your site. Watch what they click in your email, watch what they do when they buy, and then allow you to automagically change the messaging that you do in a way that’s easy.
So somebody who’s already bought doesn’t get an email saying, we’re offering 10% off if you sign up now or you should be buying from us versus the competition. Instead, it’s now we’re shifting into maintenance mode. Now we’re shifting into utilization mode. Now we’re shifting into telling you why. If you have a shared hosting plan, you might want dedicated. That’s what’s available at ActiveCampaign. And if you want to get all that in an easy to use package, that’s what ActiveCampaign is about. We have a special offer for anyone who is listening to me. If you go to activecampaign.com/mixergy not only will they let you try it for free so you can just go in and explore it and see does this make sense for me or not? But if you decide to sign up, they’ll give you a second month for free too.
If you’re new to this, and in fact, even if you’re experienced, they’re going to do to free one-on-one sessions with experienced consultants. So the first session, they’ll walk you through the basics, how you can actually integrate everything you’ve heard me talk about into your plant. And then you go use it, come back and then talk about what worked and what didn’t and then get another round of help from them. And finally, if you’re with different email providers, they will migrate you for free. All that is available if you go to activecampaign.com/mixergy, activecampaign.com/mixergy. I’m trying to read your body language, Chris, as I’m talking about it. What do you think? Does it feel a little like unnerving for me to care so much about what people are doing on each blog post?
Chris: No, no, no, no. I’m again, I’m not on the best at marketing and/or sales like I said, so I won’t say it’s magic. I understand that all obviously but still these are all good ideas.
Andrew: The thing that I was going to bring up is Spider-Man, one of your hosting clients had something to do with Green Goblin. What happened?
Chris: Right. So again, you have to transport yourself back in the day of 2003 and 2004, whatever it may be. And you have to understand too, I had a data center in my garage, like literally if there was servers in my garage and that was what we had, that was it. And I had T1 lines. Again, you have to transport yourself back in the day, T1 line is 1.5 megabits. Like all of us at home now had more than 1.5 megabits bidirectional. And the site we were hosting at the time was called spidermanhype.com. It was like the tracking site for the Toby Maguire Spider-Man movie back in the day and they got like onset picks of . . . who played Green Goblin? Was it?
Andrew: William Dafoe?
Chris: Yes, William Dafoe.
Andrew: Not William, Willem Dafoe. Got it.
Chris: Like helmet off but in the Green Goblin get up. And like it melted down. I mean it melted the things down. It was terrible in a terrible way. Meaning like you can’t just snap your finger and get more internet back in the day. It’s easier now to a degree. Back then though we were helpless, no CDN, there was no such thing.
Andrew: That’s it. You have to say to them, I’m sorry. It’s just too much traffic.
Chris: You have to shrug and go like, “Dude, I’ll do all I can.” So we did everything we could to like make this one image be whatever it could be. Made it smaller. I mean all the things you could imagine to make it happen and ultimately had to wait until traffic died down to do anything. Yeah.
Andrew: At some point, you decided, I’m going to bring in salespeople. Where were you? What was it revenue wise or what was it in your business that said, “It’s time for us to hire”?
Chris: So the problem had been, we again answered the phone and it got to be the front desk folks couldn’t answer the phone and they were often . . . they would pass on sales calls to technical people essentially because we would answer the questions and the calls became too many to handle legitimately and so we hired our first salesperson to essentially answer the phone.
Andrew: Just answer the phone and talk to potential customers. This is the number that I dialed earlier. And you know what? One thing that I noticed about your site, sites in the day when you launched did not include phone numbers. You had a phone number up from the very . . .
Chris: Day zero.
Andrew: I don’t know if it’s the very beginning, but it’s as far back as I can see.
Chris: It was a big deal because again, customer service is talking to a human. Like it just is. Self-serve is great, don’t get me wrong. You know, we’re doing more and more so clients can self-serve because clients expect to. But when things go sideways, you want to call somebody and get somebody on the damn phone and you want to be able to communicate with them intelligently and feel like you’re being helped. Like it’s not hard. And honestly, so much of this is won or lost based on real conversations with real people. And even if they can feel that you’re trying your best and you can’t help them, there is a human element there that the connection makes a difference as opposed to me in an email or a ticket or whatever else, which we also do. It’s different.
Andrew: And so you are getting that many sales calls. You said we’re going to get a salesperson in. What kind of guidance did you give this salesperson? How did that work out?
Chris: I mean answer the phone and answer their questions honestly, that’s essentially what it was. And that guy is still with us to this day. He still works for us and he’s been here, you know, close to a decade now.
Andrew: What’s his name?
Chris: Jeries, Jeries Eadeh. And so he’s in our sales department to this day, he works on our partnerships and does a great job. But yeah, he was literally there answering phones, feeling it all. Listen, it was very much a startup environment, a sink or swim style thing. Like be honest, you know, vague advice, like do a good job, all right, and things like that. So he and I would often talk about questions he got and I would provide answers and then he would remember them and will be able to instantly talk the talk.
Andrew: To the next person who has that issue.
Andrew: And there was no process with you where you were telling them how to convert people into customers or close a sale? No?
Chris: No, no.
Andrew: Okay. Hiring people is an issue. You told our producer, look, it’s not just hiring, it’s also the level of management that sometimes frustrates me. What happened?
Chris: I forget the context. Give me more context with that question.
Andrew: Yeah. We were asking about challenges and it was, we have so many levels of management that I get frustrated. In fact, we can’t just have an idea, make it and get people to use it. It sometimes takes us six months to birth anything.
Chris: Yeah. So again, we got to this point where I did feel like when we were working on that where I felt like ideas and it’s not just me, a bunch of our staff felt this whereby taking an idea like the inception of the idea to the actual completion of the idea would have to go through whether it be layers of management and/or just layers of process. And processes are great. Like don’t get me wrong, they’re awesome. That said, when you get to a size, you do lose some of that startup mentality. Like, dude, I’m going to start this thing in the afternoon, I’m going to finish it, and then in the evening I’m going to release it and we’re done. And that’s huge. And that we continually try to keep that mentality because if you lose it, then all of a sudden you’re the big slow sloth that can’t move on a dime.
Andrew: What about the changes in technology? That’s another issue you said, look, it feels like a treadmill.
Chris: So it did and we stopped it and we took a long time to make the jump from traditional to what we call cloud now, right? Cloud is everywhere and it has been for a while. We were looking for the, how does this help the customer for too long, to be honest, and we should have jumped on quicker. So we jumped on this point three years ago and it took us because we do so much internal development because we are so invested in our own infrastructure and our own people that we took two years to ultimately make this cloud platform exist and it went live April of last year.
Andrew: What do you mean? What was it before?
Chris: So it was before it was your standard hosting model. It was essentially software on metal and if you’ve signed up you got a chunk of a real physical server, non-virtualized, right? Non-automated, not orchestrated, not self-serve, you know, not all of these things that we associate with being modern.
Andrew: And can I install WordPress myself or was there like a one-click install?
Chris: No, you probably would have installed yourself at the time.
Andrew: Myself. I would go to wordpress.org, get the software and install it.
Chris: Download the thing, upload it to us, blah blah blah. Yes, very manual.
Andrew: Up until what? A year or two ago?
Chris: No. So again, I was going to say, ultimately we would help. We would help you with all of these things. We would be very good about helping you. We would ask you during the order process what you wanted it installed. So you may actually not be physically doing it, but it was manual whether it be . . .
Andrew: A person had to go and do that.
Chris: Correct. Whereas now it’s automatic. Like you would expect, not only automatic, but configured how it should be and reproducible. And there’s lots of other costs in this that was baked in but the point was, you know, we kind of lost that startup mentality for a bit, in my opinion, and got it back last year and had been trying to hone it and just make it so that ideas become reality quicker. And even if it’s not perfect, it’s not perfect.
Andrew: You know, Chris, what I’m trying to understand is the reason I knew your revenue was you guys were in the Inc. 5,000 for 2017 because your three-year growth was 98%. Within three years you doubled your revenue. What happened in that period and this is before you made the change that you just talked about. What was it allowed you guys to grow so fast?
Chris: Again. So finding niches that you are good at and making sure that you define your own awesome, right? Ultimately you say, I am going to do a thing and it’s got a need obviously and we’re going to do it and be the only people doing that thing. So we defined this thing called application-specific hosting and said we’re not going to host everything for everybody. We’re not going to be the generic, you know, anywhere, anytime. We are going to host certain applications really well. And that was kind of the definition from the top down and we’re building on that to this day. But the point was, we clicked, that understanding clicked, especially with e-commerce folks who understand that they need a specialist in a certain application and they don’t need to be their own system admin and their own monitoring department and their own backup department and all of these things that are baked in when you choose a application platform like us.
Andrew: But even three years ago on the homepage, where am I now, I can’t tell. 2015’s website clearly had Magento, WordPress ExpressionEngine, vBullentin. You clearly were saying we are here to host this software. What’s changed?
Chris: What’s changed from then until today?
Andrew: Yeah. It seems like you’ve had that for, if I go back even further you’ve had it. Probably 2014.
Chris: We’ve had it probably since 2010 to be honest.
Andrew: Yeah. So then what was the difference over the last, like from 2014 to now that did it?
Chris: In terms of growth you mean?
Chris: If you look back though, I think we were already on that path of growth. If you look back to 2010 even going back with the Inc. 5,000. Ultimately it was a, it was, we were consecutively in Inc. 5,000 for 3 or 4 or 5 years. I forget the exact number. And so it was just that there was that pattern, right?
Andrew: You know, I see you’re right. You are in the Inc. 5,000 even what? 2010 to 2022 is what I see here. Got it. So you’re saying as soon as you said we’re not going to be the anything hosting company. We’re going to be the hosting company that focuses on these applications. WordPress, Magento seemed big and a couple of others, that’s when things clicked.
Chris: That’s when things changed.
Andrew: But then other companies were doing that too? I’m sorry to interrupt you, Chris, but other companies jumped in on that. I was looking at, again, the sponsor HostGator, but also, WP Engine was getting into focusing on WordPress. Weren’t you then competing with all these people head-on by saying we will host the same software as everyone else?
Chris: Yeah. So, let me go back even further. If you go back to 2008, right? What tipped us off at the time was the fact that Magento in particular, right? Magento was born in our facility. So we knew about it early. We were very, very early adopters of the actual platform because I knew the CEO personally, the CTO personally. And so it was funny because back then and ’07, ’08, we were the generic host anything. If you go back and look at our site, it’ll say we host everything anytime, any day.
And I remember I was at dinner with Roy Rubin, who was the CEO of Magento at the time, and he said like, dude, if again, a much smaller Magento company, but he said, “Dude, if you don’t do this, you are missing out.” And I took his advice and I took it seriously and I said, we’re going to focus on this thing called Magento. And so we instantly became the de facto Magento hosting company basically from that day and that opened our . . .
Andrew: And then they started sending people to you.
Chris: No. Sure. I’m sure that happened, yes, but the community, right? The community understood that we were experts at this thing after, one, stating the goal and then two, acting behind it so that we took care of those customers. So just like my buddy Rob with his comics2film in this community, the community around that software, you know, again, good and bad, they would talk about us, good and bad, honest discussion and we had to live up to that bar and we did and we continue to try, right? And so that was our kind of entry point into this application vertical.
Andrew: I see. Okay. And at the time Magento themselves as a company wasn’t doing hosting, it was just starting to change commerce online hugely. I remember actually going to their events. I remember actually they had this issue where they were growing so fast that their community was upset at them for not doing the things that they did before. They invited me to their office to say, can you just interview us with the questions that our community is asking? Just tee us up because we’re just the feeling the pain. And you saw that this was an opportunity to jump into Magento hosting and I do actually see that. I’m looking at a 2013 version of your website and you guys were going to be, you’re inviting people to meet you in Germany at Magento DE, which was I guess one of their events.
Chris: One of their conferences.
Andrew: Sorry, yeah, one of their conferences. You’re just talking it up. You’re also starting to talk up about how you’re in New Zealand and Australia. What was that, in Asia?
Chris: So what we did was, so it was a twofold process, right? One you learn pretty quick or at the time we learned pretty quick if we were going to, if we wanted to sell to UK folks that we had to actually have metal servers in the UK because obviously, most folks have local end users that want it to be fast for them. So in 2011, I believe it was, we opened the UK pop and from our own metal in the UK and then also in Australia most recently and in Holland, in the Netherlands. And so it became clear this was a need, right? And it’s one of those, you have these times in business where you make decisions based on gut feeling and that was one of those gut feeling things. That said, we had some clients saying again, like, we need this. But back to even the Roy Rubin dinner like this knocked me in the face essentially like, dude, wake up and you have to listen to sometimes. And I try.
Andrew: Why do you think you were able to get so far as an entrepreneur considering that you just don’t see yourself as an entrepreneur? What do we take from that?
Chris: So I do see myself as an entrepreneur. I do not see myself as a business guy. That’s what I’m not, right?
Andrew: What’s the difference?
Chris: I think the difference to me is, I am more than happy to make things and sell them if I believe in them. That part I have no problem with that whatsoever. I am less good at the pomp and circumstance around that process. And so that’s where I need assistance. That’s where I need, you know, a CFO and a director of sales and so on and so on and so on. I like making stuff, don’t get me wrong. And I like building, I like selling it too, I like making sure clients are happy, those things are great. I like doing support to be honest. I like helping. Even our end users today, I was helping one last night indirectly. But still the point is those things are fun. Those things are good. That’s entrepreneurial to me. It’s all of the other stuff that I won’t say bogs me down, but I’m not good at.
Andrew: Like paying quarterly taxes, pain in the butt. That’s not you.
Chris: Absolutely right.
Andrew: I hate that, the whole idea.
Chris: I do too.
Andrew: I wish that every accountant can take all of that off of my plate but your customers have your cell phone number.
Chris: Many still do, yes. I’m trying to wean that out and the reason I’m doing that is because if and when we have issues getting 20 phone calls at the same time, does not help me remedy those issues.
Andrew: And it doesn’t help them either.
Chris: It doesn’t. No, it doesn’t. And so I do still get calls. I’ve had the same phone number for like 25 years now. So it’s like, yes, they do. And yes, I answer.
Andrew: All right, so here’s what I’m taking away from this. Number one, if you’re not into business, you can still be a successful entrepreneur if you focus on the stuff that matters, which is making things and talking to customers and then bring in other people to help with the rest.
Andrew: The other thing I’m taking away is just a really live super cheap so that the slow growth doesn’t even matter and you then can accumulate these monthly fees and have them build up.
Chris: I agree but in retrospect, I mean, listen, there were folks that started the exact same month and me with the exact same, you know, business and skyrocketed. I would not recommend slow growth. Don’t get me wrong, I would recommend faster growth. We grew too slow.
Andrew: You would preferred to skyrocket the way that they did. You saw opportunities pass by.
Chris: No, I would not say skyrocket. I would have preferred faster growth. Because Skyrocketing is hard. We did skyrocketing back in the day, Inc. 5000. It’s hard and you run into real problems real quick that you don’t think you’re going to run it into.
Andrew: I think especially your business. I don’t know that that would happen necessarily for my business, right? Because for you, every time you get a new customer, there are real expenses that go along with it.
Chris: There’s CapEx. There’s real CapEx, absolutely.
Andrew: Yeah. What else? What’s a big thing that I should be taking away from this that I don’t want to walk away from this missing?
Chris: I mean, what I hope folks get from this is, one, anybody can do it even a pure tech guy like myself. Two, hire people that compliment you, that obviously I have a certain skill set. I know I suck at other things. So know what you suck at. Hire folks that are really good at those things and I have and don’t be afraid of a million mistakes because to this day I’m making dumb mistakes.
Andrew: Still have 800 business cards.
Chris: I still do.
Andrew: And I’ll add one more thing. That would have been such a good place to end it. Still, I had one more thing. I see this over and over. When people jump on a platform that’s growing, it’s game-changing for them that when you get into Magento, it’s game-changing for you. And Roy Rubin too, when he got into Google ads, when that was starting to grow, he told me he would get customers that would pay tens of thousands of dollars for 5 cents a click because hardly anyone was doing it. So that’s a huge one for me too from you.
All right. For anyone who wants to go check out your website, Nexcess is spelled N-E-X-C-E-S-S. You can find them at dot net or dot com Nexcess, or you can just dial their phone number, which is kind of amazing that it’s on their website.
Chris: I’m so happy you did that. I’m happy it worked by the way too.
Andrew: Yeah. That would have actually made for bad. I should have actually saved it for the end of the conversation.
Chris: It is what it is. It’s the reality, you know what I mean? That’s good.
Andrew: Yeah, I find that most entrepreneurs actually like when I do stuff like that. I want to thank my two sponsors who made this interview happen. First, if you’re hiring developers, go to the best of the best top toptal.com/mixergy. Second, if you want email marketing done right so simple that you’ll actually use all those features, go check out activecampaign.com/mixergy. And finally, if you liked this interview, my friend Jordan Harbinger, for some reason he had the Art Of Charm, killer podcast, top of every list. And for some reason, he just stopped doing that and I guess his partners are doing it still and he created a brand new podcast.
I thought this guy was going to start fresh and I don’t know what, suffer for a few years. No, he’s back to the top of the charts with an interview program that teaches men how to be men, essentially. Teaches actually, I would go beyond it. Now they’re beyond just men. Teaches people how to be like, how did you make it in society with other people, how to have conversations, how to be the best self you can be within business. Anyway, good podcasts doing really well. You should go check it out. It’s the Jordan Harbinger podcast. Just search for it in your podcast app. I don’t know how this guy keeps getting to the top 10 list but he does and it’s a good show. You should go check them out. All right, Chris, thanks so much for doing this.
Chris: Thank you, Andrew. Appreciate it.
Andrew: Thanks. Bye, everyone.