Creating a Cloud Hosting company with $0 investment

Cloud is all the rage these days, what if you could create your Cloud Hosting company with a $0 investment…

Let’s begin

Cloud Hosting is a growing business, reaching $250.04 billion in 2021, and is projected to grow at an annual rate of 17.9%, expected to reach $791.48 billion by 2028, according to Fortune Business Insights.

Given this potential, it seems to be a good market to explore, right?

There are already big players, like AWS, Azure, and GCP, but also smaller (although still big) players like Digital Ocean and Linode.

But, as in every market, there is always room for one more, just a matter of finding your niche.

What is a Hosting company and a Cloud Hosting company?

So, what is exactly a Hosting company itself?

Typically, a Hosting company provides space on a server owned or leased for use by clients, as well as providing Internet connectivity, typically in a data center.

A Cloud Hosting company provides computer system resources, especially data storage and computing power, without direct active management by the user, and often has functions distributed over multiple locations, each location being in a separate data center.

Most of the cloud services provided nowadays are part of some sort of Cloud Hosting, most likely AWS, which has more than 30% market share:

Some examples of Cloud Hosting are for instance AWS EC2 or S3 and Azure’s VMs.

One of the main benefits of using cloud services is that, generally, the resources will just scale up when needed, be it computing power or storage.

Two ways to create a Cloud Hosting company

So, you have seen the market potential, the expected growth and are not afraid of going up against the big players because you have a different take on how to provide Cloud Hosting services, but how do you start?

There are fundamentally two ways of creating a Cloud Hosting company, starting from scratch or reselling services from another already established provider.

There are advantages and disadvantages to both of them, for instance, the first one gives you more freedom and control but more initial investment while the second one is less flexible but allows for almost no investment.

Let’s take a closer look at these two options in the next sections.

Start from scratch (investment high, risk high)

So you have decided to start from scratch because you want to have more control over your product/services, its roadmap, evolution and you don’t want to depend on 3rd parties.

So what do you need and how to start?

First thing is that you are going to need a data center where to host your servers because the cloud is just somebody else’s computer, in this case, the cloud is your servers.

There are also two approaches for this, you either build your one data center or you lease space from a data center provider.

For instance, Hetzner (a German cloud provider) has its own data centers located in Germany and Finland:

Other companies, like the cloud backup solution, Backblaze, rents data center spaces in multiple locations:

As you can see, both of these options require a big investment upfront, creating a data center from scratch requires the space, licenses, internet providers, and backbone structures besides power delivery and backup power solutions, not to mention the staffing.

It may seem that renting a data center space is a more safe and less investment cost solution, but most of the time the leases are negotiated for several years and expected business, meaning you might get a cheaper price with the promise that your business will grow and you will acquire more resources. So this means that it is also a long-term investment.

Now you have your physical location and hardware resources, you need to build your cloud, meaning creating your software solution and setting up your DevOps operation.

Again, Backblaze has a very good blog post on behind the scenes of what is need to run their services:

Building the software, maintenance and monitoring require a fully staffed team working 24/7/365, so it is also expected that these types of costs are also quite considerable.

The last needed part, now that you have hardware and software, is to sell your product/services, so you will need a marketing team to make sure that you will have enough customers to have a return on your investment and pay off your investors.

It is possible, but for the majority of people, these types of investments are a bit outside of the realm of possibilities.

So let’s look at another approach that requires considerably less investment…

Reselling from existing Cloud Hosting providers (low investment, low risk)

So instead of building and creating your cloud solution from scratch, why not just use somebody else’s cloud and resell it?

This is the second approach to create your Cloud Hosting company, but how to start?

One example is Host Launch:

Host launch uses standard existing solutions to allow you to sell cloud hosting services, like Server Pilot for WordPress hosting and using Digital Ocean as the cloud provider.

You can define your pricing plans for selling your services and all it costs you is $1 per month per customer, plus a Server Pilot fee per application.

You also need to pay for the cloud hosting provider, in this case, Digital Ocean, but you define your pricing plans to cover all these costs and have a small (or big) profit per customer.

Even for hosting your product, with Host Launch, you don’t need to pay, since they host your website for you and are completely white-label (no reference to their name). All you need to look more professional is to acquire your domain name.

Another more advanced option, but also more complete in terms of services, is Liquid Web:

With Liquid Web you can resell everything, from dedicated servers and cloud servers (VPS) to Cloud Sites.

There is a partnership fee, starting at $99 per month, and you also need to apply for the Partner Program.

But once you are in, all the technical cloud services are handled by them, you even have access to your WHMCS license.

WHMCS is the #1 Choice in Web Hosting Automation that allows you to oversee every aspect of your hosting business from within a single interface.

WHMCS is capable of handling everything from account provisioning and management to billing and email all by itself because it’s built for automation.

All you need to do is to provide technical support and customer service to your customers.

Let’s wrap up

Cloud Hosting and Cloud Computing are the future in a post-COVID era where remote work and distributed working environments are expected to become more and more the norm.

There is potential for you to jump on the bandwagon and provide backbone infrastructures that can provide the cloud services for these solutions.

And best of all, if you have a bit of the technical knowledge, or can hire someone to do that for you, you can start your Cloud Hosting company with low risk and low investment.

For other topics, you can also check out some of my other stories:

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