by Susan Wright
The demand for cloud computing is now greater than ever. The IDC predicts that cloud computing will jump 130% to $43 billion in 2016. Cloud computing has many benefits for both personal and business users. Cloud computing is cheaper and more secure. On top of this, companies only pay for the amount of data they need. Gartner estimates that 60% of server workloads will be virtualized by 2014. Lower energy costs, reduced environmental impact and the ability to avoid hardware purchases are all major reasons behind this shift. Linode, launched in 2003 by founder Christopher S. Aker, was one of the early players in the cloud hosting industry.
I was able to sit down with Christopher S. Aker to discuss how the company was launched and the unique features offered to customers.
Tell us about yourself first. Where did you go to school and work in the past?
I grew up in a coastal town in southern New Jersey. After graduating from high school, I studied mechanical engineering at West Virginia University. I later graduated with degrees in audio engineering and computers and digital media from Full Sail University in Orlando. I taught at Full Sail as a lab instructor before accepting a position in Nashville, TN at a company developing online continuing education for healthcare professionals. I spent four years there as a content developer and a technical team leader for the systems group.
I enjoy challenging myself in my free time. I recently received my private pilot’s license, and have started learning how to restore vintage BMW motorcycles.
Tell us how your company started and when. Who was involved and what did each person do?
I was working full time in Nashville, but had also developed a small shared-hosting business. I decided that I wanted to take a shot at running my own self-sustaining business. I quit my job in September 2002 and gave myself twelve months. I looked at the hosting industry and realized that virtualization was going to be the next big thing, so that’s what I started developing. Seven months later, on June 16, 2003, Linode opened its doors for business. I did everything–the programming, the marketing, the support–but hardware operations consumed most of my time in the beginning. It was all I could do to get new hardware online to keep up with demand.
Today we have 43 employees. Tom Asaro was one of the most important people hired early on. Tom joined Linode in 2006 and has been an integral part of the company ever since. He is currently our chief operating officer and does an excellent job of managing our hardware operations team, customer service department, and just about everything else.
What does your company sell and how does it make money?
Linode is a cloud hosting company. We got started by offering virtual private servers back in 2003, and that’s still our core product. We used UML virtualization, which was the best virtualization option back in 2003, and we switched to Xen on March 28, 2008. Today, we offer 8-core server instances using Xen virtualization. We call them “Linodes.”
We’ve also expanded by offering other cloud services. On April 3, 2009, we launched our backup service. It allows customers to back up all of the data stored on their virtual servers. On July 13, 2011, we introduced NodeBalancer. This product provides a managed load-balancer service, which intelligently distributes incoming requests across backend Linodes, monitor their health, and takes them in and out of rotation if necessary or if you instruct them to.
We recently launched Linode Managed, an incident response service designed for businesses. It actively tracks uptime and responsiveness for every registered system and service. If an issue is detected, our team jumps in to fix the problem. And soon we’ll be launching Longview, a system-level statistics collection and graphing service that helps users keep an eye on all of their systems.
What is your role in the company now?
I wear a couple of different hats now. As CEO, I’m responsible for the overall vision and direction of the company. I help design and develop all of our new products, oversee the product design and development efforts, and direct the company’s marketing efforts.
Which companies do you consider to be competitors?
Rackspace and Amazon Web Services are the two primary competitors that come to mind. Of course there are many others, like Google Compute Engine, HP Cloud, SAVVIS, and Terremark.
What makes your products and services better than competitors’ offerings?
Linode is an established company with better hardware, networks, and procedures. We have over 10 years of experience in this market.
We’re developers who build products that we personally want to use. We focus on simplicity, quality of design, and user experience to create products that strike a balance between flexibility and power. They’re intuitive to use, they get out of your way, and they let you focus on being productive. Our integrated software and hardware solution allows us to provide great stability and a 99.9% uptime guarantee.
We learned very quickly how difficult it is to manage the complexity of the platform and grow the organization while also providing a wonderful customer experience. Our customer service department is now the largest department in the company. Quality of customer service and technical support is one of our highest priorities. Our company culture is customer-happiness driven. We have over 75,000 customers and we consistently manage to keep our average support ticket response time under 5 minutes.
I think people like the balance we strike between performance and affordability. They also appreciate the fact that we’ve introduced new features and added value to existing plans without rate increases. Our users have received free memory or disk space upgrades every year since 2003. And we’ve launched our backup service, NodeBalancer, Longview, and Linode Managed products.
Does the company have any cash flow from financing activities? What is your total debt, if any?
I bootstrapped Linode and never accepted any outside funding. I’ve been extremely fortunate. The company is privately owned, stable, and 100% debt free. Our three year growth rate is 1,097% and we are projecting to maintain that growth rate through 2014.
How big do you think the market in which you operate will be in terms of total revenue in 2015? 2020?
That’s a good question. We helped create this market back in 2003 by offering people a happy medium between shared hosting and dedicated hardware, which were the only options at the time. One of the things we discovered is that web developers liked doing things themselves, up to a point. Customers wanted full control of a server without all of the headaches associated with owning physical hardware. And of course enterprise customers realized that cloud hosting meant that they could stop purchasing and maintaining their own hardware.
I think we’re in the middle of a big shift. And if history is any indication, the move away from shared hosting and dedicated hardware is just beginning. So it’ll be interesting to see how the market evolves.
What forms of marketing do you use to attract clients?
We sponsor a lot of hackathons and programming competitions. We’re developers and we want to give back to the community by encouraging people to create cool stuff. Plus these events also allow developers to experience our products in very real and tangible ways. For example, Linode has provided the platform for Rails Rumble since 2007, so people actually use our products to build web applications for the competition. We also give away prizes to all of the winners.
We also support open source projects and startup companies. Linode has donated tens of thousands of dollars to the Perl Foundation since 2009. And in 2010 we started offering service credit to startup companies that had been accepted to the TechStars and Y Combinator accelerators.
As far as traditional marketing channels go, we started purchasing online advertising and sponsoring big technology conferences like HostingCon and Velocity years ago. We’re still doing that. The results are noticeable. Plus, it’s been great supporting the websites and technology conferences we love and respect.
And this might sound silly, but word of mouth is still one of our best forms of marketing, if you can call it that. We have this registration form that asks new customers how they heard about us, and maybe half of all new users indicate that a friend or coworker recommended Linode. That’s huge. Personal recommendations are probably one of the best indicators of success, so I’m really happy about that.
How big is the company in terms of its workforce?
We hired employee number 43 earlier this month. We had two employees in 2005 and five employees in 2008. Our workforce is growing rapidly. We can’t hire people fast enough. What we’ve found is that there are plenty of applicants, but very few candidates who have the extensive Linux knowledge and customer support experience that our positions require. I think other technology companies have had similar experiences.
One of things we’re doing to support workforce development is donating servers to the College of New Jersey, one of the public universities in our state. We started last year by giving them 20 servers. The response was extremely positive, so we donated another 70 servers this year. It’s a small contribution to higher education, but hopefully it will have a positive impact on the students. The goal is to get people interested in technology.
Tell us about the upgrades you’ve performed over the years.
We’ve provided customers with free upgrades every year since 2003. And this year we announced that we’ve invested millions of dollars to improve our network and servers. Here’s the full list of free upgrades we’ve performed:
August 21, 2003 – Disk space doubled
January 15, 2004 – Bandwidth pricing reduced
February 11, 2004 – Disk space increased by 50%
September 28, 2005 – RAM increased by 25%
December 28, 2006 – Disk space increased by 33%
January 18, 2007 – RAM increased by 28%
March 1, 2007 – Disk space and RAM doubled
December 23, 2007 – RAM increased by 20%
June 16, 2008 – Disk space increased by 20%
April 23, 2009 – Disk space increased by 33%
June 16, 2010 – RAM increased by 42%
June 16, 2011 – Disk space increased by 25%
September 1, 2011 – Bandwidth pricing reduced; inbound transfer now free
February 28, 2012 – IPv6 support added to all data centers
December 14, 2012 – Disk space increased by 20%
March 7, 2013 – Outbound transfer increased by 1,000%; all new Cisco networking hardware installed in data centers; outbound rate limit increased by 500%
March 18, 2013 – CPU cores doubled; servers upgraded to Intel Sandy Bridge E5-2670 processors
April 9, 2013 – RAM doubled
We’ve also expanded to six data centers around the world to give customers access the best geographic locations for their users:
June 16, 2003 – Dallas, Texas
October 8, 2003 – Fremont, California
February 18, 2007 – Atlanta, Georgia
May 31, 2008 – Newark, New Jersey
December 7, 2009 – London
September 19, 2011 – Tokyo
Of course, we expect this trend to continue. We’re continually innovating to provide our users with new services and additional value.
Has your company won any awards?
Inc. Magazine named Linode one of the fastest growing private companies in the United States in 2011 and 2012. We were ranked 298 in 2011 and 351 in 2012. NJBIZ named the company the 9th fastest growing private company in the State of New Jersey in 2012. Linode ranks 24th in the IT services industry and first in cloud services.