John Pozadzides LayeredTech started in 2003 as a spin-off of Aldor Solutions. Aldor is a software provider to funeral homes and death-care certificates. We provided hosted ASP solutions to funeral homes. Since we were doing a lot of hosting, we receive
d the inevitable requests from friends and family to host a website here, or a server there. Eventually the webhosting side started getting interesting enough that we decided to see where we could take it. We built 20 servers and posted on WebHostingTalk that we'd lease them out for $35/month. We sold out of our inventory within a couple of days and realized that we had something here.
With this encouragement we setup a new brand called LayeredTech and moved our datacenter into ThePlanet. Before the move we had been using Intel processors, but decided to move into low-end AMD processors and were willing to install any Linux distribution or Control Panel that customer went. Within 9 months we had 2,000 servers hosted at ThePlanet.
Jeremy Suo-Anttila In August 2004 we moved into Savvis' Dallas Datacenter which filled up very rapidly. In 2006 we started working with DataBank and built out a second datacenter. This gave us a much larger blend of bandwidth providers (Sprint, TimeWarner, Level3, Savvis, Broadwing), and a higher power density. We also increased our own internal capacity quite a bit with our new datacenter. In Savvis, we had 2gbps worth of uplink capacity on each switch. In DataBank we're up to 8gbps per switch.
Jeremy Suo-Anttila From the beginning LayeredTech has provided private lans for all of our customers. Initially we implemented it by putting Cisco 3550s on the edge and trunking vlans between switches. Then we upgraded to 3750s and gave every server a /29 on their own VLAN for their public IPs as well. This allowed us to easily shift public connectivity around between switches. Now all of our customers who upgrade to the "Private Rack" option get a shared Cisco 2960 for their back net, and their front net. If they're getting a /25 or larger prefix, then they get a dedicated 2960. For our standard servers customers get VLANs connected to Cisco's Virtualized Routing platforms.
Our customers with Private Racks get plugged into a 2960 in the back and a 2960 in the rear. With a /25 or larger prefix they're getting dedicated switchs. They can specify if their hardware is going into a locked cabinet locked cage or whatever.
John Pozadzides Unlike some of our other comptitors, we offer highly customized solutions. As Jeremy was saying we can put customers in a private locked cage in any number of differentiations. Our target customers are ISVs and systems consultants. We offer build to suite internet infrastructure environments, which is really our specialty.
The difference is soon after we started up, we began focusing on the higher end, more complex solutions which were targeted more at enterprise accounts.
Ultimate about a year ago we made a very conscious decision to focus a tremendous amount of resource & attention on the enterpise space & more custom & larger deployments. We're heavily focusing on our big grid infrastructure. We're working with everything from grid to virtualization using vmware, hyper-v, xensource, applogic, virtuozzo, parallels. LayeredTech is helping to build the next generation of cloud computing.
We just made an announcement that we are the first company to roll-out out hyper-v. We will be releasing a VPS offering based on the hyper-v platform. The starting price point we're targeting for our customers will be around $80/month for a hyper-v for dedicated server equivalent performance. That's 20% of a Harpertown 3ghz core with the ability to burst up to 80% of resources. It includes a gig of memory, 25gb of disk space, The storage subsystem on each server is RAID-50. You can deploy any version of Windows or Linux.
We're working with system center virtual manager, which is similar to VMware's VI3. We're going for a global redundancy and fail-over model on our VM system. How cool would it be to ask a customer where would they like their physical points of presence .. SF TOKYO CHICAGO DALLAS AMSTERDAM .. That's what's in store for tomorrow. We are the virtualization experts in this market.
Jeremy Suo-Anttila We purchase most of our servers from HP and Sun. We love HP's servers. Everything works great on them. We've always tried to support as many different operating systems as possible. I don't think anybody offers the range of support that we offer for operating systems.
Jeremy Suo-Anttila Linux, Windows 2003, and FreeBSD in order. CentOS is by far our most popuar OS claiming over 75% of our linux installation base.
Jeremy Suo-Anttila We have roughly around 17,000 dedicated servers deployed, and over 1,600 servers for our virtualization platforms. The virtualization servers are by far the fastest growing section of our business.
John Pozadzides Well I have just under 200 employees currently. Our average monthly growth rate, since inception, has been around 5%.
John Pozadzides There's a lot of prediction to be made there. I honestly believe that we're going to see a huge amount of transition from the enterpise perspective, a huge amount of transition from internal datacenter to outsourced providers. We've already seen over the last, let's say 5 years, that the story has changed. We don't have to go to them and tell them why they want to do this and why it's better than internal sourcing. Now we go to them and say how do we do this differently than you do, and how do we do this in such a way that you feel comfortable with the change of control? Through our ability to customize eveything we cn suit their needs exactly.
If you add on the level of virtualization going on in the marketplace because it decreases the risk for entereprises. If I create a VM on my office serve r and uplaod it to LayeredTech. If I'm not happy with it? What's the worst thing that can happen I pull it inhouse and put it in another datacenter. The viru
talization makes infrastructure so much more portable. It becomes a matter of, why would you possibly do that in house? There's just no good reason anymore.
You're going to see massive migrations to service providers. Since virtualization is a key enable in that, and we are the virutalization specialist and we
have the neeed.
John Pozadzides Virtualization is going to continue the trend of ISVs being our larger customer bases. Take that to the grid and you're doing that to the entire datacenter. They will get more custmizable and more self-managed with their own grid. If you want to be able to manage your firewall or
your BGP we'll be able to give you the tools to run that.
Jeremy Suo-Anttila Our grid allows you to create within the grid itself a virtually physical standalone network architecture that you would have built. You can do that within the grid itself. You could have a firewall and a load balancer, tied into a backend network. You do it all through a nice visio-like interface. The back-end is all vm to vm communication. Everything on the grid is mirrored to a second node. There's complete high availability on every VM in the grid. You then have a virtual pool of resources. Our physical grid servers have 32 cores, 16 gigs of memory and 4gbp/s of network connectivity. Everything from the firewall to the load balancer is part of the base app logic vm.
With a physical, dedicated infrastructure you can't just plug a cable from a cisco 2950 to a server and say only mysql can go over this. With the grid you can because all of the network connections are actually a tunnel. This will really make PCI compliance and compartmentalized security possible. Our enterprise customers find this very appealing.
John Pozadzides Moving forward, you'll be able to snapshot an entire datacenter and migrate or replicate that to a different datacenter. One of our customers migrated an entire other company's large existing infrastructure to us, and we didn't even know it was going on.
John Pozadzides All components should be manageable by the customer, that's how I see a cloud. 3tera is coming out with their cloudware which allows you to scale outside of their datacenter which is my version of what a cloud is.
Then it gets to the point of disposable infrastructure in a grid. Now you're talking about disposable datacenters. "Whoops we lost the east coast, the west coast scaled up to handle the load."
John Pozadzides We had one price increase just about 60 or 90 days ago. As you can imagine, 100% of our customers didn't like it. Every day I look at the 5 cent rises in the price of oil and and think how this was our first price increase ever. To be fair some of our customers took a hard look at their infrastructure, realized they had way too much infrastructure, and downsized.
At the same time, yes, there was a very vocal minority. We had some people who were literally outraged. They felt like they had violated some sort of a sacred trust, which was not our intention. Our intention was to maintain a reasonable margin on the services we offer that we offer.
When we started out with $35/month servers we just provided a server and nothing else. Over time we've increased our service offerings with more datacenter offerings, better support, and better invoicing systems. All of these improvements eat up capital. With inflation and oil prices going up so rapidly we had to make an adjustment. Our electricity costs rose 50% in the past year at one of our sites. Overall we've seen a 50% increase in energy costs in the past 12 months.
John Pozadzides Here's the deal. When you talk about reputation, here's the decision, your'e either going to stay in business, provide excellent service and go for good margin. Or you watch your services erode, and your margins disappear. In business, You're going to take a hit on a chin and say "it costs a little bit more".
We had a vocal minority and a few of our customers left but we didn't have nearly the attrition as we would have thought. 100% of the complaining has been on WebHostingTalk. A lot of these customers are angry at us. They joined wth us 4 years ago. We've helped them grow from 1 server to 100, 200, 400, 700 servers. At the same time we don't get thanks for "thanks guys for helping my business turn". Instead we get "you bastards, you've raised our prices!".
Some of those guys who said nasty things publically, they turned around, got on the phone, worked it out, and stayed with us anywas. The initial knee jerk reaction usually gives out to reason. For the level of quality we provide, we still believe we provide an excellent price for the service level.
Jeremy Suo-Anttila It's funny that some of the people who left went to customers with similar price points but lower levels of services.
John Pozadzides Out of 17,000 servers we lost a small, small, small percentage. We were very sad to see them leave and we worked really hard to keep them, but sometimes it's not within your control. Other than that we intend to keep our reputation in tact as being one of the highest providers out there with market-leading solutions and excellent, value prices.
Jeremy Suo-Anttila What I find funny is that as a response to this, there are some competitors who are now offering lifetime price guarantees. I feel sorry for some of these guys who are shopping like that. I want to tell them go with someone real here. In an industry where your largest cost basis can rise 50% in a given year, long-term price commitments just aren't feasible.
Another interesting outcome is that With the price increases we've seen a really big reduction in abuse tickets. We're actually recognized by spamhaus as being a whitehouse network.
Michael Halligan is a serial entrepreneur with more than 15 years of experience in IT architecture and operations. His primary role is chief technical officer of BitPusher, LLC, a managed application hosting firm based out of San Francisco and Seattle. He is currently starting up a new Web application providing intelligent services to the convention industry. He previously held architectural and management positions at start-ups MyPoints, Kontiki and Napster.
The opinions expressed in this Weblog are those of the writer and may not represent the opinions of Network World.
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