09-10-09 | Blog Post
We were recently providing some feedback to a start-up company we’ve been coaching through the business planning and fund raising process. In the process, the subject of hosting came up – something we do a fair amount of here at Online Tech.
Now we don’t coach many start-ups because our time is pretty well devoted to running and growing Online Tech. To be clear, we don’t coach the these start-ups to sell hosting either. There are easier ways to make a couple hundred bucks a month than convince a start-up to use a managed dedicated server. We do coach these start-ups to give back to the entrepreneurial community that has supported our success through a number of start-up ventures over the last 2 decades.
And so, the lesson is focus. We have had lots of start-ups as clients. The unfocused ones make the mistake of trying to manage their own servers and infrastructure and value their time far less than it’s really worth.
Here’s a way to think about it. Everyone involved in a start-up has equity, and equity is very precious. So their time should be really, really expensive, or they don’t believe in the value of their company if they’re willing to spend their time on low value-add efforts.
So here’s an example: if you spend 10% of your time managing servers and you own 25% of a company, than you’re spending 2.5% of the company managing servers. That’s a poor return on the few hundred a month in cash it costs to outsource the management of the server. Would you sell 2.5% of your company for a few hundred dollars a month? I wouldn’t.
Whether it’s hosting your software application, or outsourcing other services, think about the value of your time, and focus on what you do well and what no one else can do.
We do have special servers and bundled services designed for early stage companies – low credit threshold, full service – to help make it a no brainer compared to doing it yourself.