Web host firms in $50M combo
HostMySite buys rival Hosting.com to create a $50 million corporate website manager
Business website manager HostMySite, which is based in Denver but operates mostly from a server center that employs 229 programmers and customer-service people in Newark, Del., has acquired rival Hosting.com, Louisville, forming a $50 million (sales) company.
Major investor is Philadelphia expatriate Scott Perper's Wachovia Capital Partners, still based in Charlotte NC but no longer associated with its namesake bank (now part of Wells Fargo & Co.)
HostMySite chief executive Art Zeile won't say what he's paying Hosting.com boss Darren King and his backers. Zeile and chief operating officer Joel Daly used to own Inflow Inc., which operated 21 U.S. data centers, including one in the ex-Lit Bros. store on Market St. that served Comcast's Web sites, until they sold it to Wayne-based SunGard in 2005. "We look at HostMySite as Inflow version 2.0," Zeile told me.
Zeile said his company grew 20% -- "all organic," no acquisitions -- last year despite the downturn, as more companies outsourced their Web-site back offices. "Nevertheless, people are asking for price concessions," and "more time to make these decisions," he added.
HostMySite focused on small business customers; Hosting.com, with centers in San Francisco, Irvine CA, and Louisville, counted larger companies like Hewlett Packard among its clients. Combined, they'll employ 310 -- three-quarters in Newark -- with a new data center under construction in Denver.
Won't this business disappear into the computing cloud of all-online applications? "More things are moving to the cloud, but there's this ever-larger progression of computers being manufactured and shipped," Zeile said. "There are not a lot of national platforms, and we're still in a decades-long transition of applications to a Web-based format. We feel pretty good about growth."
How soon til Perper's investors want their money back and they'll have to sell? "We're poised at global domination," Daly told me. "But our investors will want an exit," Zeile agreed. "Taking it public would make all of us happy. You know, ringing the big bell." But sale to a big tech company, at the right price, would work, too.