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Combining Two Web Hosting Companies Sparks Growth

Combining Two Web Hosting Companies Sparks Growth

What do you get when you combine two companies in a down-slope? After getting past the slightly disgruntled employees, you get a single company with increased profits and a few new sources of revenue that grows like gangbusters.

In 2006, GI Partners, a private equity firm in California, bought and merged EV1 Servers (Houston, TX) and The Planet (Dallas, TX). The newly formed company retained the name The Planet and appointed Doug Erwin as its new CEO. His first job? To take the two very different business styles and create a cohesive unit. In addition, the new company needed to show profits and possibly go public.

Merging more than just the companies

Employees from each former company were decidedly biased in regards to business practices, making Mr. Erwin’s job that much more difficult. To counter this, Doug presented a unique competition to the unenthusiastic employees of both companies. Arming each employee with ten plastic bricks, they were instructed to create an artistic sculpture – the winner having his or her creation showcased at their Houston offices. The employees quickly realized working alone produced nothing (what can one do with only 10 bricks?) and by pooling their resources, they created better results. Several sculptures were created and all are now displayed at the Houston office. Erwin stated that this was a simple representation of “rebuilding the company, brick by brick”.

Reviving up profits

While the company won’t disclose net income figures, annual revenues for the privately held company are close to $150 million. Prior to the merger, each company was reporting less than $100 million in revenues each year.

In order to increase profits, The Planet switched to utilizing servers from Dell. In addition to server rentals, the company hosts web sites, offers cloud storage space, as well as co-locates and manages servers for businesses. These new services have placed the company as an equal competitor with other web hosting companies. The merged company now receives fifty percent of its current revenue from sources neither original company offered.

Due to the current economic climate, growth has slowed a bit but the company remains optimistic. When one of its Houston data centers went offline due to a fire, causing approximately 8,000 customers to be without service, the company responded by waiving monthly fees for two months. This combined with the loss of the Houston servers has been a bit of hit to the company economically. The Planet is still attempting to recover from the loss of $3 million via its insurance company. And they have an unused $45 million credit line that was secured last October to fall back on, if need be.


The company has not yet gone public. Having tackled two out of the three tasks assigned to him, Doug Erwin is optimistic and doesn’t seem overly concerned about The Planet currently remaining a privately held company. He’s an old hat when it comes to running companies as if they were public. Prior to The Planet, Erwin ran RLX Technologies (Houston, TX blade server company) before it was purchased in 2005 by Hewlett-Packard Co. Erwin has done this four times before but never made it to the IPO stage – the companies were sold.
For now, the timing on going public seems hazy. However, if Doug Erwin’s track record shows us anything it’s that it is only a matter of time.

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