When the dotcom bubble burst, one of the casulties was investment in hosting. Exodus had been one of the poster children of the new world order and for many folks it’s bankruptcy closed a chapter in internet business models. Over the past twelve months though, we’ve seen that perception change.

When 3tera first started working on AppLogic we didn’t envision selling it through hosting providers. Frankly, like most of the industry, hostng never really occured to us. Rather, we were on a standard Enterprise Software trajectory - to simplify the deployment and maintenance of applications in the enterprise datacenter. Along the way, though accidently discovered hosting.

Like all startups we struggled constantly to keep costs down. One way we decided we could do that was not to build our own datacenter. Instead, we’d rent dedicated servers to test AppLogic during development. That turned out be a fateful decision.

During one my first calls to hosting companies I decided to show them why we needed certain capabilities, so I fired up a Webex session and gave them an impromptu demonstration of AppLogic. I was talking with the VP of Sales, who quickly turned my demo around and made a sales pitch about why he wanted to be able to sell AppLogic. We made a few more calls with similar results and just couple weeks later, in Decmber 05, 3tera shifted our go-to-market strategy 180 degrees. We poured our efforts into partnering with hosting providers. At the time investors told us we were crazy. “Hosting’s dead” was repeated time and again on visits to Palo Alto.

Of course, hosting was far from dead. We found vibrant entrepreneurs growing 40%/yr without huge injections of capital. The market was more developed than I’d ever imagined, with players both large and small finding ways to differentiate. The whole segment though, just wasn’t getting much PR.

Today, however, hosting’s making a comeback in popular awareness. Over the past year, one industry stalwart after another has
rediscovered hosting, culminating in Sun, “the dot in dotcom,” attempting to restablish itself through partnerships with hosting providers. Competition is always good, so we’re happy to see Sun in the market.

After six years, it appears the rest of the world has discovered hosting is hot again.