Why I Sold Orpheum

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Two years ago I founded a web hosting company, Orpheum Hosting Solutions. I set out to build a web hosting company that could compete with the likes of MediaTemple on infrastructure, and HostGator on price. As time went on I added more plans, did a wholesale move from a cloud server infrastructure to big, dedicated servers, and even switched backend client management systems to make things easier for everyone.

A few months in, I started to think, “Orpheum should be a business services company. A one-stop shop for small businesses to get their website, web-based applications, and even phone lines, or a phone system all from the same place without having to call Rogers, or worse yet Bell.” So, over the course of the next 36 months, Orpheum began to expand into managed servers, hosted PBX, SIP trunks, and eventually virtual private servers via the acquisition of AeroVPS.

Orpheum was doing well. It was not, however, doing well enough to pay anyone a full-time salary. Two years in Orpheum had acquired several high profile, lucrative customers worth over $1,000 a year. Unfortunately, due to a mix of issues with billing systems, and user interface challenges, onboarding these customers was time consuming. Too time consuming when you factor in that I still had a full-time job, and a young, growing family. Too time consuming when, through my own fault, each VoIP customer required several hours of assistance to get online.

So what happened? Orpheum expanded too quickly. I felt like I spent a lot of time finding the right solutions, and partnering with the right vendors. However I don’t feel like I spent enough time ensuring everything worked properly, that I really understood the technology behind the service and what Orpheum’s customers saw on a daily basis (with the exception of the web hosting and VPS services), and ensuring that customers were onboarded properly. I started to fix this a few months ago, but again… the things I *needed* to be doing had to come first, and the things I *wanted* to do came second, or even third or fourth. Orpheum’s customers suffered.

I brought on a team of people to assist with tech support. They provided level 1 support for the web hosting service, but they were not as familiar with the control panel I used as they were with other, more popular solutions. But it still took a lot of weight off my shoulders, and let me focus on supporting the VPS and VoIP customers. It wasn’t quite enough help though.

And then I really bunged things up when I spent several months, and a good amount of my capital, attempting to build a cloud infrastructure-as-a-service (like Amazon AWS, or Rackspace Cloud) offering. My vendors were not forthcoming enough with pertinent information, over promised, and then under delivered. I blew $1,000 to find out I couldn’t do something the way someone told me I could.

So, I made a very difficult decision to sell Orpheum Hosting Solutions. However, despite the disgruntled customers and accusations otherwise, I did not sell to the highest bidder. I had multiple bidders put offers in over five digits, but I chose to sell to a company/owner that I knew was going to leverage the existing services offered, regardless of whether they kept the brand intact or not. Those other high bidders wanted to dismantle the company, separate off the VoIP customers, perform wholesale moves off of the existing clustered hosting infrastructure onto more traditional, single-box solutions. I said “No” to those bidders.

At the end of the day, this was a lesson in growing too fast, without enough resources. You can build a business yourself, part-time, but it isn’t easy. You need razor sharp focus in the first few years… something I’ve read about time and time again, but once again I make myself learn it the hard way. I will be trying again… it’s in my blood, I can’t help it. But next time the messaging, the onboarding process, the support… everything will be polished, ready for customers on day one. And I’m going to focus hard on the core services people want and need out of the company.

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  • http://deys.ca billdeys

    The sale has made me a bit nervous, I am just a domain/hosting customer but still. It’s a bit of tedious work to move again. All said I was always happy with the service and support. I liked to support local too. I hope to remain a customer.

    For the future I will say, don’t expect to have everything polished for the start. In fact I think you shouldn’t. Sure you’ve got some experience now but even over a period of a few moths that could be vastly different from what it looked like with Orpheum. Also I think the people you really want as customers will be lenient of the hiccups as you work to constantly improve!