President CEO Adam Stern used some equipment financing, and was considering some debt financing, to scale Infinitely Virtual. When we last spoke, he had not used any venture capital or private equity, but had built a substantial company. Read on to learn how.
Sramana Mitra: Let’s start at the very beginning of your story. Where are you from? Where were you born, raised, and in what kind of circumstances?
Adam Stern: I was born in Los Angeles to parents who came to this country in their early teens. Neither of them had attended university or college. My grandfather was denied entrance into university in Hungary on account of being Jewish. I was, early on, told that I was the hope of the family to go to university and do what my grandfather and father could never do. I grew up in a middle-class household. We didn’t want for anything but we didn’t have anything extravagant either.
Doing well in school was a top priority for my family. It was what my parents mostly cared for. If I did poorly in school, it was a very big problem. If I did well, it was a huge achievement. That was something that I enjoyed growing up. When it was time to go to university, I was very distracted and far too young to understand the value of education. Though I wanted to make my family proud, I couldn’t finish university. At least, not in my early 20s.
Sramana Mitra: Where did you go to school?
Adam Stern: California State University.
Sramana Mitra: You dropped out?
Adam Stern: Yes. I had a job, mostly to pay for gas money and insurance. It was a small value-added reseller (VAR). There, I worked initially doing pick-up and delivery and minor computer repair but, very quickly, became the Senior Network Engineer for the company within three years. I had a team of engineers installing networks all over Los Angeles. It was during that time that I stopped going to school. It was far more interesting to me to work than to attend university.
Within several years, I was VP Operations of this VAR, running the company for the owner. I worked for that company for eight years. At the end of eight years, the owner and I didn’t see eye to eye on how to continue, so I moved on to another company. I ended up working for 3Com as a network engineer. Of course, it was difficult to make the transition from a large title in a small company to another company. I continued doing what I knew. I was a Network Engineer at 3Com. 3Com decided to downsize. It was in the middle of the tech bubble. I was laid off. When that happened, I decided to go back and finish my university education.
Sramana Mitra: What year was that?
Adam Stern: That was 2000.
Sramana Mitra: You went back to university to finish your degree. When did you come out of school?
Adam Stern: 2003. I got my degree and I had an epiphany. I wanted to build my own professional services company and began that in July 2003.
Sramana Mitra: What kind of professional services work were you doing?
Adam Stern: We were doing what I knew – installing networks.
Sramana Mitra: Geographically, where were you based?
Adam Stern: We’re based in Los Angeles. The network engineers that I enlisted to help me with this business are all in Los Angeles. I sought out an old friend, who I knew was a CPA, to handle the financial aspects of the business—Angela Terry, she’s my current CFO. I asked her to be a part of this new organization.
In 2003, I reached out to some old customers. I talked to other people in the industry that I knew. We began installing virtualized infrastructure for some of the larger companies in Los Angeles. We helped them build their entire network infrastructure on VMWare. It was during this time that I thought about the possibility of building a hosting company using virtualization as the backbone. This was in 2005. In 2005 and early 2006, this was a novel concept. Nobody was thinking about building virtual infrastructure for hosting using VMWare. The closest thing to it was people using VPS containers for web hosting.
We went to some of our customers and said, “This is something that we think will be a great tool for you.” We, very quickly, had pilot cases built using HP pizza box servers. Within three or four months, we had outgrown this small environment and moved on to a larger environment. We became one of the first hosting companies.