So they believe that buying additional hosting companies would be very complementary to what HostMySite.com does.

To your knowledge, is Wachovia looking at other hosting firms similar to HostMySite.com for possibly merging the assets of HostMySite.com?
ZEILE: Absolutely. That is a core principle of what they call their ‘investment thesis.’ They believe that this is an industry that has an incredible amount of growth. They believe that it’s highly fragmented. They believe that the customer wants to have diversity in terms of the geographies where they put their data, and more specifically, they ideally like to have maybe their primary site in one part of the country but their backup site in another part of the country just to make sure that they’re not on the same power grid, they’re not susceptible to the same natural disasters. So they believe that buying additional hosting companies would be very complementary to what HostMySite.com does. And I like this mentality because it basically says, “Think about the customer and what the customer needs first and foremost. Then formulate your strategy based on that.” And we do believe that geographic diversity– or locations around the United States –are a real need of the customers.

So we could see HostMySite.com as we now know it– in terms of size, quantity of servers and domains hosted– we could potentially see that grow. Would we expect to see that grow exponentially over the next several years?
ZEILE: Yes. I hope that that is the case, both through organic growth and through acquisitions. That’s really the challenge that has been put in my hands, as well as Joel’s, is to grow the company at an exponential rate. I mean obviously, it’s not growth for just that purpose. We think that we can grow the company at the right rate so that we still maintain our consistent level of quality of service and nevertheless become a bigger player so that we have more momentum. And momentum means a lot of good things for the customers but also the employees in the company.

The conscious decision to buy HostMySite.com was one of saying, “Let’s find the company that has the best customer service and the best operations in the engineering platform in the industry and start there, and then grow by adding other companies, adding more customers. But start with the right platform; start with the right set of processes and make sure that under the hood, the engine is sound and running well.” I think that’s very true of HostMySite.com. We’ve talked to dozens of players in this industry already, and we did make that decision to acquire HostMySite.com because it has got this great combination of customer service and engineering process.

And right now HostMySite.com provides hosting services for about 65,000 websites or so?
ZEILE: I think that the official number is somewhere north of 30,000. And obviously it’s changing every day so the benchmark that I always use is about 30,000. I think it’s officially like 33,000.

How many servers do they have now?
ZEILE: Gosh, I think it’s on the order of 5,000 servers, I want to say. But I can give you an updated figure for that as well just to make sure that we count the exact figures, but the number is somewhere around 5,000.

And there are about 250 employees?
ZEILE: Yes.

So where is HostMySite.com now in terms of the industry? I realize that they’re not in the top 25 or so.
ZEILE: No. I would say that their positioning is this, that there are bigger companies in terms of revenues, in terms of numbers of servers, in terms of employee counts– the statistics that we just went through– but their niche is to say that they fundamentally have focused on incredible quality of service and maintaining that reputation, and they also cater to the developer community. So kind of in line with what you described as your introduction to HostMySite.com, they really want to create deep relationships with developers where technical expertise really matters, you know, get their confidence and then win their business. That’s been their core competency, and I would say that that’s their positioning and I like that positioning. I think, in my opinion, I’ve always run businesses that have been kind of hopefully the Ritz-Carlton or the Four Seasons or whatever brand you want to use that denotes high quality within the range of the industry rather than being on the Wal-Mart side.

So the other firms, the leading, say, top 25 firms, host from on the low end of 300,000 domains to several million. And if I understand you correctly then, HostMySite.com isn’t so much after a massive volume amount of domains as it is concentrated on growing revenue from services?
ZEILE: Correct. That’s a great way of putting it.

Prior to the transaction, Lou Honick was the CEO, Neil Heuer was one of the partners; and Neil has since left the firm if my information is correct.
ZEILE: That is correct. He is still a consultant to the company.

He is still a consultant, and an investor as well?
ZEILE: Yes.

Lou emailed all of his customers to describe that Neil made the decision to spend more time with his family; can you offer a more detailed explanation of why he left?
ZEILE: I think he knew what the bottom line is that when you start a company and you’re literally two guys in an office or a basement or a garage– and I’ve done this twice in my own life; I’ve started two businesses from a basement– and you run for a number of years, there are some people that just say, “Hey, I need some time to recharge the batteries.” And that’s what it comes down to with Neil. He is an incredible asset to the company. He has done amazing things to build so many different processes. But when you live your life being a guy that’s being paged at 2:00 in the morning for so many years and then you start a family– Neil’s got a fairly new family in the sense that he’s got two very, very young children– he rightfully wants to spend time with them and figure out what the next thing is in his head. You know he would say that he’s no longer officially with the company. I had a meeting with Neil for two and a half hours this morning talking about our latest data center build status so he is very immersed still in the company, but he is a consultant and he knows that he is trying to basically balance the work that he does for the company against the quality of life he has got. So there is nothing to read into the fact that he is now officially departed other than I think it gives him the ability to do that balance better.