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From $3 a Day to Successful Entrepreneur: Tomas Gorny, CEO of Nextiva (Part 6)

Posted on Friday, Jul 4th 2014

Sramana Mitra: You had web hosting, email, domains, and you had a suite of widgets that people need to build and host a web business. You were doing it all for a flat price at $7.95 a month.

Tomas Gorny: That’s correct. The magic was really in the last statement. The control panel and the widgets really opened the market for us. That’s the same thing that opened the market for Windows.

Sramana Mitra: What was the customer acquisition strategy?

Tomas Gorny: It shifted over the years. In the beginning, it was affiliate marketing. We had a huge deal with Yahoo. We were the biggest advertiser on Yahoo. People thought we owned Yahoo.

Sramana Mitra: What was the brand under which you were doing the hosting company?

Tomas Gorny: IPOWER

Sramana Mitra: You bootstrapped this company to half a million users on your own?

Tomas Gorny: We’re now on one million users. Half a million users were just for the first couple of years.

Sramana Mitra: What year did you hit the million user spot?

Tomas Gorny: Beginning of 2007.

Sramana Mitra: That’s when you did the merger with the second company?

Tomas Gorny: Correct.

Sramana Mitra: That was all stock transaction?

Tomas Gorny: It was a combination. It was stock transaction. We got the bigger piece of the business because we were a much larger business, and all the private equity involved, which was them and us, and a little bit of the original owners of the business.

Sramana Mitra: Until this point, you were the solo owner?

Tomas Gorny: Solo owner. I and my partner were the largest shareholders of their business. In 2008, we sold a little bit of our stock. Then we sold most of our stocks in 2011 to Goldman-Sachs.

We partnered with them and it wasn’t a strategic partnership. This industry was very fragmented. We actually contributed to three fragmentations because the barrier to entry was low. We had a lot of copycats. The market was getting big. People were trying to attack us left and right. We were still growing very aggressively. Looking from the past, we know that anything that is fragmented will consolidate. What we did was become the trend of consolidation.

Sramana Mitra: You did a private equity-backed roll up of the industry basically.

Tomas Gorny: You got it.

Sramana Mitra: Your departure from this combined entity is in what year?

Tomas Gorny: I was operationally less and less involved but by 2011, I had left. However, I’m still on the Board of Investors and I’m still a shareholder of the business. I don’t own much of the business but I think, individually, I’m the second largest shareholder of the business.

Sramana Mitra: You also cashed-out significantly earlier on through these multiple transactions?

Tomas Gorny: That’s correct.

Sramana Mitra: What was your next step?

Tomas Gorny: I founded a company called United Web. The intent behind the company was to own my own incubator. One thing at IPOWER that I missed after we partnered with Endurance was using IPOWER as a launching pad for other ideas. If we had an idea, we could say, “Take those resources and apply those resources here.” After we merged, we couldn’t do that. I wanted to build my own infrastructure in place where I’m able to do more than one thing at any time. That was the original idea of the story.

This segment is part 6 in the series : From $3 a Day to Successful Entrepreneur: Tomas Gorny, CEO of Nextiva
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