It seems like a lot of people these days have turned to the internet in hopes to become the next dot com millionaire. Tom Cruz, owner of Apto Hosting and our proud web hosting provider, turned to the internet as well but from a different angle. After successfully clearing $100,000 running an ecommerce website in high school, Tom wanted a more scalable and passive income stream through the internet which lead him to start Apto Host. Tom gives us his insight and success to date from launching a business from nothing to running a 6 employee operation at just the young age of 22.
What can you tell us about yourself to get us up to speed?
My name is Tom Cruz, I am 22 years old and I am the owner and founder of Apto Hosting, LLC. I graduated from the University of North Carolina – Wilmington with a degree in Finance and minor in Spanish. I am a huge car enthusiast, I have owned everything from 350z’s to M3’s to Z4M’s. I am also a watch collector, mainly Tag Heuer and soon to be getting into the Breitling collection. I just purchased my first Condo last year at Carolina Beach, North Carolina.
How did you get started in the internet business in the first place?
I knew that I never wanted to work for anyone else (in fact I have only had one real job my entire life and that was working at the technology department on campus). I originally started an online paintball company out of house while I was still in high school. We mainly focused on selling high profit margin paintball markers and accessories. The beauty of this was I had all my products dropshipped from the manufacturer, and my overhead was $0.00. So I was able to offer $200-$300 off retail, and make only $25-$50/marker however the volume was huge. During my senior year in high school I was already clearing close to 6 figures, just selling paintball markers.
What was your marketing strategy for your paintball website?
During that time PPC via Google Adwords and Yahoo was VERY cheap, I remember bidding on $0.05-$.10 for keywords like “paintball guns” or “paintball marker”. I was able to drive a lot of traffic for very cheap. I also used more conventional techniques such as fliers at the paintball field, my high school and at UNC. Banner advertisement was also very popular, and I was able to advertise on PBnation.com not only the world’s largest paintball forum, but one the world’s largest forums in general. This quickly turned into word of mouth advertising; I mean I was cutting my competitions throat by at least 25-30% on each transaction. It was literally impossible for them to offer the same prices as me.
Since this business was doing well, why did you decide to pull out?
This business grew at a rapid rate mostly because of the hype that paintball was getting during that time (ESPN TV coverage, etc). This quickly pissed off a lot of the big players in the industry, which caused them to start enforcing a MAP policy (minimum advertised price) which effectively put a floor on how much you would sell the guns for. After they started doing this, I knew it was the wrong business, and decided I didn’t want to deal with the bullshit any more. This was the same time that I was planning on going to school at UNCW, so I sold the business for a hefty sum and planned my next move.
Where did you find the buyer for your paintball website?
I actually placed an advertisement on PBNation.com. Within a few weeks, I found a serious buyer that had cash and was ready to buy the company. My attorney at the time sent over the company financial s along with tax returns, and client agreed and purchased the site. Nowadays I would use Flippa.com or Sedo.com to sell websites; it is much easier and safer.
Do you ever look back and think your time at college was wasted?
Going to college was always a given, it was really never an option for me not to go to college. I just didn’t want to miss the best 4 years of my life for anything, especially if my parents were paying for it! Everyone in my family has gone to college and it was pretty much expected of me. So I chose the best option available UNCW. It not only boasts a 60% female ratio, it is 2 miles from Wrightsville Beach, fast growing economy, tons of small business and opportunity for growth. I knew that I would never be employed by anyone, so the finance degree to me was a “fall back” in the unlikely event of some catastrophic failure. I was really in it to meet new people, get the whole social experience, learn new languages ( I was already fluent in Portuguese/Spanish/English, and I picked up French in college).
The transition to webhost provider is a total 180, what got you interested in that field?
Once in college I started designing and developing websites for local companies in 2006 when I was a freshman at UNC-W. I realized that trading off time for money was a terrible idea, and I needed to create a passive income system. So I began selling dedicated servers/VPS’s/and shared hosting on a monthly/annual basis. I got interested in the hosting business because I was never able to find a good web hosting company when I was running the paintball store. I always had issues with downtime, high loads on the server, interruptions of service, etc. I knew that I could definitely run a much more stable and affordable services for my clients. I had a friend that was in the industry and he helped me a lot in the beginning. He helped choose software, servers, data center, best place to co-locate, fees, etc. After I got on my feet I learned as I went along and a lot of reading!
What was YOUR first step in starting Apto Hosting?
I got started with a VPS (virtual private server) because it was just a bit more expensive than a reseller account and I was able to get much more resources and root SSH access. I quickly outgrew the VPS and started purchasing Dell & IBM rack servers and began co-locating at the data center. Co-locating is when you purchase equipment and then lease space at the data facility to host your servers.
How did you get the word out early on for your business?
Getting the first few clients was the toughest part especially in the super saturated web hosting space. I initially began locally because you don’t really have to compete against the $1.99 Godaddy packages. And people are also much more likely to pay a premium to have someone down the street that they can call up to fix any issues. I marketed on campus, hired UNCW students at $8/hour to post up fliers in all of the buildings, placed fliers/signs all over downtown and at the beach. These primitive offline techniques have a FANTASTIC ROI. If I spent $200 on 125 signs and I placed them all in one weekend, by that Monday I would already have 4-5 people calling asking for appointments and more information. I also used webhostingtalk.com as they are a huge hub for people looking for web hosting.
How big is Apto Host today and what does your team consist of?
It has grown today into a 6 employee operation out of Wilmington, NC and hosting over 1,000 high end websites. Day to day I manage and make sure everything is running smoothly, a lot of customer service, and marketing. I am constantly looking for new ways to get more exposure for Apto Hosting, and increase the services I offer. We have several people on staff at Apto Hosting (including me), couple web designers that also do quite a bit of web coding for all the websites we do, I still handle customer service and sales, and I have a few people that handle all the billing/website inquiries. We have only been around for a few years so we are still growing very quickly, and managing it pretty well.
There are hundreds if not thousands of webhosts out there, what sets you apart?
Yes there are tons of web hosting companies because it literally can take $100 and 6 hours of time to create a web hosting company. They can go to template monster get a flash template, get a billing system from WHMCS, and buy a reseller account, and boom they now have a web hosting company. The reason why they fail is because they try and compete with Yahoo/Godaddy/HostGator and go after them on price. The key is to add as much value to your services as possible and to offer the best tech/customer support you can. This is just not feasible if you are charging $1/month for 999999999999 gigs of space”. Also it takes a lot of time and money to market a web hosting company, along with finding a niche that hasn’t been completely exploited.
Our web hosting company is different because we targeted small business and non-profit organizations. We only host these types of businesses, and make it a point to limit the amount of accounts we put on each server to avoid slow load times. We also offer free professional websites that we customize exactly the way a client wants, fully optimize the site for search engines, and we allow them to make changes to the site themselves (no hourly charges to make minor changes). We essentially looked at how everyone else was doing web hosting, and did the complete opposite!
How passive can a webhosting company truly be?
Web hosting is a pretty passive income stream. The key is in the tools and education you provide your clients. Because most clients are eager to learn how to manage their hosting accounts, FTP accounts, email, modifying their website, etc. So I simply provided tutorials on my website that showed them how to handle to the majority of the things themselves. Which made the income very passive, there wasn’t much involvement from me, unless something major happened and I always had a 15 minute resolution time guarantee. So my clients trusted that I was able to take care of them when they needed it most.
What steps would you recommend to someone wanting to get started in this particular industry?
They first need to find a niche in the industry, a hole in the market that hasn’t been filled. Trying to go after the big guys is in my opinion a big waste of time; unless you have a really deep pockets and can run super bowl commercials against Godaddy. I also knew that I didn’t want to compete on price, so I turned to something better value. I had a much higher price tag, but I offer a lot more value than my competitors. The hosting industry is a great industry to get into if you have the patience and determination to stick with it. There are hundreds of thousands of other people all doing the same thing (getting a template, buying a reseller account, setting up some packages, and selling hosting). So unless you find something that is not being done, it will be hard to make a good living.
Where do you see the webhosting industry in 5 years?
I see the web hosting industry getting even more saturated with more web hosting companies. Every day that goes by the price of bandwidth/storage/etc goes down, and the barrier to entry is even lower. At the end it will be the companies that provide the most value, best customer/technical support, and the most innovative that will survive.
You said you’re a car guy, what’s your garage look like?
Most of the cars that I have owned were stock (with light modifications), below is the complete list.
1) Nissan 350z
2) E46 BMW M3
3) Honda S2000
4) BMW Z4 M Coupe
5) C6 Corvette
6) BMW 545i
7) BMW 335i
I am not very mechanically inclined so I was never inclined to do much heavy modifications to the cars that I owned. My dream car would definitely be the new Lamborghini LP-700, realistically I think that is still 5-8 years away but it will happen eventually!
What motivates you to do this day in and day out?
I am motivated by financial independence and the ability to do whatever I want to do with my time. Also, I like the finer things in life, nice houses, fast cars, ability to buy family/friends nice things, etc.
Any new business ideas you’re working on that you can share with us?
Right now I like how things are going with web design/hosting business, but my next business will probably involve credit card processing. It is a huge industry that is not going anywhere anytime soon and is constantly growing. I am just getting into now, since I am offering it to all of my e-commerce clients.
Where do you see yourself in 5 years?
I see myself completely removed from the business, with enough staff and managers to run all of the operations. I would love to have time to do all of the things I love to do (cars, sports, travel, time with friends/family, get into sport bikes, etc). I do not plan on staying in North Carolina forever; I am staying here now because my girlfriend, family, and all my friends from college live in Wilmington NC. I would love to move to South Florida or SoCal (San Diego) in particular. I love the lifestyle in these places along with the constantly amazing weather.
We want to thank Tom for sharing his long overdue success story with us and more importantly for providing superb web hosting service since our birth in 2008. Make sure to check out Apto Hosting for free websites when you sign up with them. To sweeten the deal, make sure you use the coupon code “secret15” to get 15% off your order.