Feature Price Rejects Bids, Shuts Down

• By theWHIR.com , May 09, 2003

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May 9, 2003 -- (WEB HOST INDUSTRY REVIEW) -- In a rare instance of what appears to be one man walking away from a million dollar payday, Feature Price (featureprice.com) appears to have disintegrated amidst strange behavior and customer outcry.

Rumors of the Ft. Meyers, Fl.-based Web hosting firm being troubled have circulated for months, helped in part by Travis Johnson, co-founder of the firm, who reportedly shut down the site in April to post an open letter informing customers that the company had closed and that clients had two weeks to evacuate. Since then, the site has switched on and off almost daily, customers and people close to the situation say, with employees being told to help themselves to equipment and office supplies. At press time the company's site was operational, but the only number listed on the site was giving a busy disconnected signal.

"Feature Price.com / Hosting-Network, Inc. is closing business April 2003," read the letter title posted by Johnson in April, which has been removed from company's site but cached in Google.

The news was shocking to many in the hosting industry since Feature Price was known to be vastly profitable in 2002, reportedly racking in $1.6 million in profits. At its peak, the company had 60,000 customers serviced by 23 employees and several co-founders, of which Johnson was one and Fathi Said, an Austrian citizen, the other. Feature Price is said to have been adding about 3,000 customers per month, with churn averaging four per cent. Technical support, outsourced to a company in India, was reported to be average.

The business started disintegrating in December 2002 when Said and Johnson had a falling out, sources say. Said left the company, reportedly returning to Austria, and sources report that Johnson starting acting erratically, at one point reportedly physically assaulting a pizza deliveryman. As customer service deteriorated some clients added to the stress, allegedly trying to break down the door to collect on a $16 charge they felt was unfair, and slashing tires on Johnson's car. One self-styled activist and a former customer in contact with Said, Maggie Sedai, told theWHIR that by April the customer churn had reached 20 percent.

Competitors willing to buy Feature Price assets did come out of the woodwork during the course of Q1, with at least one getting as far as signing a final sale contract with Johnson, said people familiar with the situation. One offer was as large as $1 million, but Johnson reportedly signed off on the sale and then reversed the contract through his attorney.

Johnson is believed to have suffered an anxiety attack after Feature Price's merchant account holder, Nova Information Systems, alarmed by the number of charge backs on customers' credit cards, stopped processing new accounts for Feature Price, say sources familiar with the situation. Upon rejecting the offer to sell Feature Price in April, Johnson posted his infamous letter on the site, listing all five companies that did due diligence interested in buying Feature Price - GlobalHost, IPowerWeb, Atlantic.net, SERVER4FREE and Affinity - and essentially outlined the acquisition terms except for the financial details. Johnson also wrote that customers had two weeks to leave, essentially trying to destroy the value of the company.

People familiar with situation suggest that upon deciding not to sell the company Johnson told employees to start taking servers home, and while the staff has never been formally laid off Feature Price stopped operations in May, de-facto. The Florida Attorney General's office confirmed there is an investigation into the company, which is owned by another Johnson venture, Hosting Networks Inc., which also owns another Johnson venture CLEC Edison Telephone. All these corporate entities appear defunct.

Johnson was not reachable at the press time. His attorney did not return a request for comment by deadline. SERVER4FREE, a German hosting provider, has set up a St. Louis-based firm, Server4You, which has introduced a program to welcome existing Feature Price customers. Several other Web hosting firms have implemented similar promotions.

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