Once upon a time, Jordan Lowe, President and Chief Executive Officer of ServerCentral, found himself hacking the telephone pole outside his student apartment.
The University of Illinois dorms only supported one landline per unit, which presented a happy problem: His little business had grown to a point where that would no longer suffice.
“We had to add additional capacity ourselves through the building, through doors and windows and stuff,” Lowe says.
The little business, at first, was nothing more than a little unused space on a small, private virtual server Lowe and his partner, Daniel Brosk, had purchased for $1,000 or so to support their own websites. They didn’t know what to do with the extra space, so they posted an ad on daily deal site for a free domain name in exchange for an annual hosting contract. They also started offering domain names for $10 — when everyone else was charging around $30 — making just a couple bucks in profit at a time. (Hence the phone ringing off the hook; hence the phone pole hack.)
2000: ServerCentral launches in University of Illinois student housing
2000: Server space opens in Bloomington, Ill., changes from virtual private servers to dedicated servers
2001: Server operations move from Bloomington, Ill. to Chicago facility
2002: HQ moves from U of I to Chicago
2003: Server operations expand into Ashburn, Va. and San Jose, Calif.
2004: Server operations expand into Tokyo
2005: Server operations expand into Amsterdam
2009: Server operations expand into Elk Grove Village, Ill.
2010-2011: Server operations expand within Elk Grove Village, Ill.
The original server soon ran out of room too. “All of the sudden, we had to buy another one and another one,” he says. “We were kind of unprepared to start a real business.”
But as their customers’ needs grew, the business did too. Their web hosting customer base started requiring more and more space, needing racks and additional bandwidth. ServerCentral moved out of the dorms and bought what Lowe calls “kind of a compound” — a three-flat Chicago apartment building with a house behind it. The company’s first employees lived there or in the building next door, and would barbecue together in the evenings.
Even at ~80 employees now, the team clearly still manages to have fun.
“When customers are buying racks and servers, that launches a company. We just kept growing with the customers, and they helped launch this business. We always would do what they said they needed.”
Cabinets and servers eventually eclipsed the web hosting side of things, so ServerCentral unloaded that part of the business in 2008. When they needed better bandwidth, they bought a bandwidth provider — nLayer Communications, which was doing about $1.5 million in revenue at the time of purchase in 2007, and about $20 million by the time they sold it in 2012. This year ServerCentral is on track for close to $30 million in revenue, with facilities in Elk Grove, Illinois; Chicago; Ashburn, Va.; San Jose, Calif.; Amsterdam; and Tokyo.
Although ServerCentral made Inc. Magazine’s 2010 fastest growing private companies in America, Lowe insists the company’s success is due to its slow and steady approach to growth. “Going slowly but surely has helped us through the tech bubble exploding,” he says. Managing growth has been the company’s greatest challenge, since the absence of public funding often means saying no to huge potential customers: They can’t afford the risk of overbuying equipment, only to get dumped later on. “We can’t take a lot of risks, since we’re privately funded. ... We take a safe stance on that kind of thing. We’re competitive, but we’re not cheap.”
High-end facilities and top-to-bottom service cost money, but it’s money ServerCentral’s customers (37signals is one) are willing to pay.
“What we offer is very different from our competitors,” Lowe says. “They don’t have the same level of on-hand staff we do. If you call us, you’re not going to get a call center and open a ticket. With us, you call us, you talk to the person who’s gonna walk out there and do it and fix the problem.”
Every new employee spends their first couple weeks at the data center, working with equipment and interacting with customers. The environment is relaxed and low-stress, Lowe says, because they try hard to hire people who like what they’re doing.
“Did I expect to be doing this 14 years later?” Lowe asks. “No. It’s gone very well. It’s pretty exciting. I still like doing what I do. ... That surprises me, because a lot of people hate their jobs. That’s why we haven’t taken any money.”
Not that there haven’t been offers. “I probably get five emails a week, people trying to give us money,” he says. “It’s ridiculous. Especially this last year; the market’s doing really well. If we wanted to take money, this would be a good time, but we just don’t need it. We want to keep growing in other markets, with this level of service.”
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“Bootstrapped, Profitable, & Proud” is a Signal vs. Noise series highlighting profitable companies with $1 million+ in revenues that didn’t take VC.