Hosting Providers Must Look to R&D for Growth, Experts Say

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LOS ANGELES — A growing area of research points to the success of companies that have a long-term view, but in the web hosting industry, companies have typically been focused on what kind of products can make them money now, or in the next quarter. That view has come at a cost, as companies outside of the industry have taken aspects of hosting services, built a better product, and raised millions.

In a panel at HostingCon Global on Tuesday morning, Dave Koston, CTO of Help.com pointed to some of the companies that have raised capital on services that hosting providers have been offering for years (think email and communications). But these companies weren’t founded by people in the hosting industry. Take Slack. Or Heroku. Or AppDynamics. SendGrid. Mailchimp. The list goes on and on.

Hosting providers have traditionally spent very little on research and development to create new product lines, instead investing most of their capital in things like hardware, Jordan Jacobs, VP of product at Chicago-based SingleHop said. “It’s hard,” he acknowledged, “and it takes a lot of risk.”

But it’s a risk that is paying off for SingleHop as it invests in acquisitions to gain new capabilities and has just finished off a fourth round of developer hires – and the product hasn’t even launched yet.

Hosting companies need to start looking down the pipeline at solutions that may not even exist yet; “it’s a transition we forced ourselves to make,” Jacobs said. The company just launched managed AWS services, and is investing in Actionable Intelligence (AI).

See also: SingleHop Launches Managed AWS Services

“You don’t have to deliver a crazy, out of the box solution,” Koston said. To make things simpler on yourself, figure out what problems your customers are having and create something to help them solve them.

Having this discussion with customers is something that Jacobs has become very familiar with. He’s talked to 80 different customers to understand their challenges in the process of developing its artificial intelligence solution.

These conversations have been critical at security services provider StackPath, too, according to Nick Nelson, chief strategy officer. He says StackPath CEO Lance Crosby is constantly talking to customers to find out how he can address their challenges, including what can be built onto existing products as well.

“If you can fix the customers problems, the money will follow,” Nelson said.

See also: Security as a Service Startup StackPath Launches CDN Service

Simply asking a customer, “What’s the worst part of your day, and how can we solve that problem?” can result in new ideas or innovations, Jacobs said.

A previous version of this article erroneously stated that SingleHop was investing in artificial intelligence, not Actionable Intelligence (AI). 

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