CanHost Focuses on "Untapped" Canadian Market

For companies offering hosting services, late night or early morning calls for technical assistance are the nature of business. Working with hosting company CanHost, Anthony Santen understands this well. He was up at 3:00 in the morning to assist with a server issue that was soon resolved. What may be unusual about this particular situation is Mr. Santen is the owner of Toronto-based CanHost - and along with assistance from his technical team, he was eager to lend a hand.

When CanHost was born, Santen set out to create an old-fashioned ‘ma and pa’ business that could work in a ‘new world’. He says, “I wanted a business that wasn’t solely based on making money but focused on doing good for the customer.” It is this belief that drives him to succeed and to work with his employees to get things done, even at 3:00 in the morning.

The seed for CanHost was planted when Santen was working as a network security consultant in England and doing business with a client who required in-depth research into hosting alternatives. What he found through his research was inadequate hosting options – most notably, security was lacking and uptime was poor. Santen felt he could offer better and with his background in operating systems, networks and security, he moved forward to offer a hosting service for his client.

Six years later CanHost is going strong. And, while the technical expertise behind the company has been important to its success, Santen feels factors like customer service in addition to strong partnerships, and service and market focus, have also contributed to the company’s strong growth.

Strategic Partnerships

During a tour of CanHost’s network operating center (NOC), Santen tells us about his company’s relationship with UUNET, a WorldCom company well known for its Internet communications solutions.

Despite the never ceasing loud hum of equipment in the NOC, what comes out loud and clear is the nature of the partnership between CanHost and UUNET – a relationship that builds on the strengths of both partners. Santen explains, “We chose UUNET because of their location, redundancy, power, how long they’ve been around and the kind of influence they have in the market.”

Furthermore, he says, “UUNET is best at providing connectivity and bandwidth, and CanHost is best at providing hosting. They will provide bandwidth up to the router, 100 percent uptime to the router, and after the router that’s where we can go on our own. We have a spot right here on the Internet; we rent the backbone connectivity from UUNET, and it’s all ours - we maintain our access control bases and our own firewall - CanHost can provide that next level that UUNET can’t provide.”

To provide higher level customer service to its customers CanHost also has a partnership with Worldpay, a leading E-commerce solutions company. While CanHost does not focus on its E-business services, the partnership enables it to offer an additional service to customers looking for a shopping cart solution.

Santen explains, “The relationship is more of a strategic partnership than a lucrative monetary partnership.” From a financial standpoint, he says, “it’s not really worth it, but the partnership is there, and because of that we have customer support, we have people from Worldpay come over to show us their system, and we have access to their technical support direct, so it’s very good strategically.” Alternatively, Worldpay is able to gain access to CanHost customers interested in E-business.

Focus, Focus, Focus

Santen credits a lot of the company’s success to its hosting focus. He says, “We’re very focused on what we’re doing-we don’t diversify. It is tempting sometimes. I just had somebody call us up and say they needed development of a web site – but we didn’t want to be a part of it. If you want, we will host you; we will help your developers and we will be your third level support to make sure everything works - that’s what we do. But when you’re talking databases, back-end services - we will not do your programming and we will not do your development.”

As a result of this targeted focus, CanHost is able to build strong relationships with clients who in the past found themselves in competition with hosting companies dabbling in areas outside of hosting. Santen explains that design companies host with them so they could never say that they’re a provider. They’d be competing with their own customers.

“Web developers don’t like the hassles of hosting, they want us to take care of them. And they also don’t want us to compete with them, which we don’t. They find it a good partnership...Imagine if a high profile site was launched and we designed it – we would lose our customers.”

CanHost’s focus also enables it to build solid partnerships, as it has done with UUNET. UUNET not only provides CanHost with access to reliable connectivity and bandwidth, but it also lets them focus on their core business of hosting - without chewing on the hand that feeds them. “Our target is never the high-end customer. They will hire their own security people, hire a rack or part of a rack from UUNET directly and what we do is provide service the next tier down.”

Why then does the company offer E-business services?

Santen says, “Our focus is hosting - that’s what we’re good at and that’s what our customers will tell you. We dabbled in that [E-business] for a while; we had a separate department and actually thought of making it a focus, but we did E-business essentially to help our customers - we don’t want them to go out there and have no clue and then find something that looks good and then find out they can’t use it.”

Santen further explains, “Our product, MaxiCart, addresses taking credit cards all the way up to converting a corner store to an online store, but no further. We’re not targeting those looking for credit card processing – there’s lots of processors out there.”

CanHost has two shopping cart solutions under the brand name MaxiCart. MaxiCart Professional is an E-commerce engine that supports a shopping cart and MaxiCart Consultant is a system whereby web developers undergo eight hours of training to learn how to create their own designs and implement the MaxiCart solution.

High Level Support and 100 Percent Uptime

Levels of customer service directly affect costs in the hosting industry. According to Santen the two main costs in the hosting industry are the provision of support and downtime. Luckily, with high-level customer service, the company is able to save on both. As a small company with 11 employees in Toronto, two in the UK and thousands of customers, one wonders how CanHost can deal with customer service issues.

CanHost focuses on keeping its customers – not acquiring new ones. The company is able to maintain its customers by offering high-level technical expertise on the phone. Santen says that when someone calls it gets answered on the second or third ring. “The person who answers the phone is a fully trained person. So, they will understand your problem straight away and they will solve your problem in three to ten minutes. They won’t say ‘try this and call me back’. This is a much higher standard, and it also means customers don’t have to call back for the same problem. So we can, with our little staff, actually manage all of our customers quite easily.”

The phones are quiet most of the time because of the uptime the company can provide. Santen says that CanHost guarantees 100 percent uptime and offers credits to customers who don’t get that. For the last two years, the company has boasted 99.993 percent uptime.

A true indication of how important customer service is today is the number of times, Santen explains, that a customer will actually call CanHost simply to test whether they are picking up their phones – and to make sure they’re there when they are needed. With a laugh Santen also hints that maybe they are calling to see if the company is still around.

100 Percent Canadian Owned and Focused

Santen also attributes CanHost’s success to its focus on the Canadian market. The company is 100 percent Canadian owned and concentrates on selling to customers in Canada. “We have a lot of competitors that say they are international, but the biggest untapped market is Canada and everybody ignores the Canadians. This is a Canadian company selling to Canadians.”

In fact, Santen informs us that people are actually associating Canadian products as better than foreign products, and that he gets a lot of phone calls from people who say they expected to pay more because it’s Canadian.

A Time to Weed out the Bad

As far as new opportunities he sees in hosting for 2002, Santen thinks "the next year is going to be more about the good ones and the bad ones; I don’t think there’s going to be any big opportunities.” Santen’s view is that the hosting market won’t be saturated with big changes. He says, “it’s like the invention of the telephone, we can change the shape of the buttons, but it really hasn’t changed that much.”

In terms of demand, Santen compares the hosting market to the rental market. “The value increases and deceases, but there’s always a need so eventually everybody moves up.” According to Santen, the companies that do fail will be the ones that are too speculative. He makes reference to the rapid expansion of Exodus and states that there are reasons for some companies to expand quickly but if they do they may end up like Exodus-out of business.

Santen states, “We’re a very old-fashioned company; we own everything, so the bank doesn’t own a cent, which also means that in order to grow we have to grow slowly and carefully, and that also has enabled us to last through both recessions without even a hick-up. We’re not a speculative company-our strength is that we are interested in keeping the customers we have.”

Explains Santen, “When we talk to a customer we say don’t worry about it - we’ll take care of it, and they believe us because we’ll say it with conviction…we’re second to none -second largest. We’re never the biggest. And it’s stupid to say we’re the best because we provide hosting like everybody else. What we’re good at is keeping our customers because they like where they are, they like being taken care of by us and our slogan ‘hosting your business is our business’ - that is the case - that is our business.”