I went home and cried realizing that I was about to spend all of the money I'd made

Interview with John Keagy, CEO of ServePath (GoGrids)

Two years ago I sat down with John Keagy and David Hecht from ServePath (most widely known for GoGrids.com now).  Unfortunately later that day I had a hard drive failure, with little recovered. About six months ago I found a VIM swap file of my notes with them, and today decided I should post what I have. My hope is that I'll run into John & David soon and do a follow-up interview, since the world has quite obviously changed since Oct of 2008. 

Here's what I was able to recover. 

Can you give me a quick history of ServePath? Where you started, how you got where you are now, and where you're going?

David Hecht   John founded, then we built the largest profitable ISP on the west coat, which we sold in Fall of 1999.

OK, can you tell me more about that company, and how it started you down the path to where you are now? (no pun intended) 

John Keagy  It was called Inreach. To differentiate ourselves from the rest of te dialup market we focused on tertiary markets like Stockton. At one point 4% of the City of Lodi used us. We were based in the East Bay, and were the one of the first companies to provide dialup to underserved markets like the Central Valley and the Sierras.

 While at Inreach we built our own colo, and rapidly filled it up with customers. The colo paid for itself. When you look at all the datacenter operators out there, you'd be surprised if any of them have greenfielded a colo that actually paid off the investment with a return. We owned our datacenter in downtown Oakland outright, entirely built on profit.

We sold it off to the entity that owned PacWest telecom. It was recently sold off to some municpal wifi company.

 (Unfortunately our interview almost got cut short because Google's chef burned something. Because of this I lost the train of thought around Inreach).

What happened after Inreach?

John Keagy After Inreach, I did a short stint as a venture capitalist, and then started ServePath with David in 2001. 

2001 was a strange time to start an ISP. The telco market had just crashed right along site the dot-com bubble. Why start another ISP at this point?

John Keagy  This was a time when everybody was reflecting on the feasibility of a career in technology. But the only thing that I knew how to do was to sell recurring revenue internet infrastructure services, and build a fair business one customer at a time. He thought that in terms of operating infrastructure services prudently, because he ran it profitably and debt-free. 

At that point the market place was really spurned by all of the telcos that had went under, and the customer base was really worried about doing business with potentially shaky companies because the hosting market had really melted down. The press definitely didn't make me feel more confident. The party line was that hosting was dead, and here we were going into dedicated servers.  

What sticks out the most in your mind about those first two years?

John Keagy  At that point the press was asking me if renting servers for $99 per month was a valid business model. It was really painful, as I was writing $250k and $500k checks out of my own pocket to get this thing going. We started working on a number of internet services, and eventually decided on dedicated servers.

 After making the decision to build a dedicated server company, I went home and cried realizing that I was about to pour all of the money I'd made on Inreach and in Venture Capital into ServePath.  But it was a relief to realize what our focus was going to be. We labeled ourselves Slicon Valley's best dedicated server provider, because at that time we were the silicon valley's first dedicated server provider.

David Hecht   Well I'm responsible for sales, so like in any company, you have to make sales to make payroll. I enjoy it. After that year of messing around, trying to sell different services and consulting, we really settled into dedicated servers pretty solid. I've definitely enjoyed that, a lot better and more mission critical than the dialup business. 

John Keagy I remember seeing Graham Weston (chairman of Rackspace) and Marcus Miller at events.. They'd say, "John, congratulations you really seem to be doing well building your business without any investors. That made me feel really good". I remember I would do silly little things like buy an 8-pack of razors, and I'd tell myself, "You're going to get this company to break-even before you can buy a new set of razors". So I reused razors, didn't cut my hair, and all of these little psychological games to help me stay focused on making sure we ran the company prudently. I took a massive risk to pioneer this space.

David Hecht  Then I'd ask someone, "Aren't you getting woken up in the middle of the night by raid card failures and DDOS attacks. You guys seem so relaxed, how much longer are you going to live like this? It gave me confidence that I could get the business together and that it would be a life that I could manage. Was it worth it? It remains to be seen, but I'm having a lot of fun now. But, you know, that was a miserable existence.

You seem to be heavily involved in the community, care to elaborate?

David Hecht  We do a lot of startup events, like StartupSF.com.  It's a bi-monthly event that we con-sponsor with ORRIC. At these events we have speakers to help facilitate networking within startups, and we donate the proceeds from these events to a different non-profit each time. We also sponsor lots of events like SFBeta and SF New Tech. We're also sponsoring a party for FreeBSD's 15th year anniversary.

Can you give me some quick statistics about ServePath as a company? 

David Hecht   

• We support Windows, Linux, and everything else
• Microsoft Hosting Certification
• SAS 70 Type 2 certification
• We're committed to constantly improving our processes through outside help
• We like to think we have the best systems administrators, and network engineers
• Headquartered across the street from our datacenters
• 24/7 operation
• 105 employees
• 7 years of operations

Where is ServePath going? 

David Hecht  We're the number 1 managed hosting company in the Silicon Valley. We're catering special services to our Silion Valley, web 2.0 clientele. We have an international customer base, but our sales in the states  is highly focused on Web 2.0 companies. 

How do you differentiate from the low-cost dedicated server providers?

David Hecht  We really bundle in a lot of services with our dedicated servers. Network attached storage, monitoring, backups, etc. We especially cater to the customers who want private networks.

I remember your old datacenter, 650 Townsend, was a bit of a nightmare. Can you tell me about your new facility?

John Keagy Well, this is a longer story, with us moving ServePath into Above.net SJ2 in 2001. This was already our second datacenter, and when we moved into Aove.net we had to do an overnight move one weekend. During this move we were re-numbering our servers and decided it was time to get provider independent space from ARIN. 

Ouch. Bad time for above.net from what I remember. What was your reaction when Above.net gave word of their failure?

John Keagy Above.net going under was frustrating. We were just getting started, and had just filled up our quarter rack, about to ask Above.net for more space when we got the word.  We were still small enough that it wasn't too big of a deal. Not everybody was so lucky. CNET was in the same datacenter as us and actually tried suing Above.net to keep them open long enough to plan a move.  

 In September of 2003 we moved into 650 Townsend, and that was a pretty short-lived location for us. We rapdily grew to 2,000 servers in 360 Spear, and it just couldn't contain us anymore.  Cooling became a massive problem. We had to open all of the doors and windows.

How did you manage that? Any move for a dedicated server provider has the potential to lose customers and slow growth. 

John Keagy  Luckily we were really organized and experienced with moves by this time. The levels of uptime expected from dedicated servers are far, far greater, and the bar has been set a lot higher. We couldn't have done this in 2008.

Would you say that GoGrid is your biggest focus right now?

John Keagy  We're still very committed to our dedicated server customers. 3/4 of our engineering effort, and a million dollars a month is being invested into GoGrid. GoGrid is the future; we're not building GoGrid for 2008, but for 2010 and beyond. 

Tell me more about GoGrids, how did it come into existence? 

David Hecht  We realized we could make it possible for customers to control their infrastructures with a GUI, and we had to get going on building that quickly.

John Keagy So in 2006 we had the GoGrid Vision, and we knew exactly what we wanted to do. We initially were thinking about hosted VMWare. We tried to get licensing from VMware for their Vmotion, load balancing and heartbeat services. At that time they had a clause in their TOS stuck in the fine print of the things you couldn't use it for. One of those items said, "Utility Computing". I thought, you know, before I put a million dollars into building a product around VMWare I should find out if they really wouldn't allow this. It was just an odd chance that we happened to catch that. 

We worked really hard to get them to write a waiver of the license to allow us to build a utility around VMWare. We realized we couldn't build GoGrid around VMware or the other commercial products available at the time.  Nowadays this isn't an issue with VMWare. But because of that realization, we decided that we had to build our own technology for GoGrid.

• Data Center
• cloud
• colocation
• datacenter
• gogrids
• grid
• ServePath