HostReview.com Web Hosting Interviews

An Interview with
Ravi Agarwal, CEO groupSPARK

April 10, 2007

Mr. Agarwal, could you tell us more about your position and your responsibilities in the company?
As CEO, I am charged with driving the company's strategic vision and expanding our presence in the fast-growth hosting industry.  groupSPARK continues to be a trusted resource for SMBs and a valued partner of Microsoft precisely because of our keen insights into the market, depth of technical knowledge and commitment to delivering enterprise-class solutions to emerging growth companies. My primary goal is to preserve and build upon this reputation and to continue to innovate exciting new ways to meet the messaging and collaboration needs of a diverse consumer.

What did you do prior to founding groupSPARK?  How did groupSPARK grow to become a leading provider of Hosted Microsoft Exchange?
I’ve worked with small businesses for the last eight years, most recently with Argus Care – a provider of outsourced IT support for SMBs.  It is from this experience – working with small business owners one-on-one – that I recognized the market demand for affordable, enterprise-class messaging and collaboration services.  With this consumer need and my previous entrepreneurial success in mind, I established groupSPARK in 2002.

At that time, hosted Exchange services were scarce and priced out of reach of most small businesses.  What's more, hosted messaging was an option few service providers knew about or offered.  By leveraging our technical ability and experience with the SMB market, groupSPARK was able to provide the nearly 30 million emerging growth companies across the U.S. with an affordable, secure means to safeguard and share their most critical data. 

In 1997, before groupSPARK and Argus Care, I founded BizLand, Inc., a website hosting company with over 85,000 small business customers.  I served as CEO and Chairman, guiding the company through its initial round of angel and venture investments. Subsequently, I served in a variety of positions, such as Vice President of Marketing, Business Development, Product Marketing, and Corporate Development. As Vice President of Corporate Development, I evaluated several companies for mergers and acquisitions and led the acquisition of two companies with strategic product fit. During my tenure at BizLand, the company raised over $21 Million through a combination of equity and debt financing. I am currently the Chairman Emeritus of BizLand.

Through the years, I’ve spoken at numerous business and technology conferences as well as guest lectured at Boston University, Boston College, and Babson College. In addition, I’ve collaborated with professors at Bentley College and Boston University to write three case studies on BizLand - which have since been taught internationally.

In 2001, I was named one of the top ten business people under the age of 30 in Entrepreneur Magazine's '3rd Annual 10 under 30' feature.

Could you tell us about groupSPARK's private-label solution?
groupSPARK, based in Burlington, Massachusetts,  is a Microsoft Certified Gold Partner and leading provider of private-label Hosted Exchange.  We offer small to medium sized-businesses – via partners like local VARS, integrators and resellers – access to the enterprise-class messaging system without the hefty costs and headaches commonly associated with purchasing and administering the Exchange server independently.  Leveraging the company’s Web-based private label application delivery (PLAD) platform, groupSPARK partners can configure hosted Exchange and related services under their own domain and brand.  Set-up takes as little as 15 minutes and the result is a service that looks and feels as if it originated on site.

Could you describe your success with figures? How many customers do you currently have, how many mailboxes have you sold and how does this number grow year on year?
With over 700 resellers to date, groupSPARK continues to show strong results.  In 2006, the company’s customer base increased 250 percent over the prior year – with the number of mailboxes sold increasing 300 percent.  We have doubled the number of mailboxes we sell each month in just three months.

Please tell us more about your latest mailbox promotion?  How will it benefit your partners and SMBs?
Our latest promotion is a $15 reward for every mailbox sold between now and May 31st, 2007.  So in addition to getting the nice increase in recurring revenue our partners also get a bonus for each mailbox sold – which could potentially net them extra hundreds or even thousands of dollars.

With this extra money our partners can offer a variety of different promotions to help entice new customers into getting Hosted Exchange mailboxes, use it to spark up conversations about Exchange that may have stalled, or even keep the money themselves.  We’ve seen all sorts of innovative promotions used in this case and we’ve seen some sharp increases in mailboxes sold from our partners involved in the promotion so it has already shown to be a success.  So successful in fact that we have extended the offer to include everyone that may want to become a groupSPARK partner, not just existing partners.

Who are your competitors and how are your services different?
We have only one real competitor that comes close.  Intermedia.net, primarily a web hosting company, has entered the private label Exchange Hosting market recently though we don’t consider their offering to be full private label.

With groupSPARK, our partners have a true private label offering – the end user has no idea that we exist and we go through great pains to ensure this.  Our partners can use their own URL, contact information, and branding.  The control panel that provisions that system will appear to be completely provided by the partner.  Intermedia.net has not been able to make their offering full private label and the Intermedia name and logo can be seen – it’s small but it’s still there.  The important aspect of private labeling this service is so that our partners can manage and retain the customer relationships and any ambiguity in dealing with their service provider can cause strains on that relationship.

What are your industry predictions for this year?
2007 will be the year of Hosted Exchange, as an increasing number of SMBs turn to hosted messaging in order to realize significant time and cost savings while reaping the benefits of an enterprise-class service.

Exchange 2007 is going to result in more companies outsourcing.  The switch from a 32-bit architecture to a 64-bit one which increases the complexity of working with Exchange and requires all new hardware to be purchased to fully integrate all the features of it.

The need for storage space is going to become more important.  Outlook and Exchange is becoming the new file cabinet.  People are finding it easier to leave their information in their mailboxes and are using it as their main storage space.

SPAM will become a bigger problem.  SPAM already accounts for over 80% of emails received in a business setting.  More and more SMBs are being targeted by spammers and all the statistics indicate that SPAM is not only not going anywhere but it is increasing.

Mobility will continue growing.  We are primarily an Exchange Hosting service but we also have BlackBerry Server, Good Server, and Windows Mobile options.  The growth we are seeing in our mobility services is far greater than what we are seeing in Exchange – and we’re seeing tremendous growth in Exchange.  People are finding that it is important to always be connected and mobility devices are making this possible.

Any expansion/development plans?
Our focus will begin to shift toward more of the mid market companies with between 500 and 3,000 users.  We are seeing that even larger companies and enterprises are more interested outsourcing Exchange Server because they just don’t want to deal with the hassle of constantly upgrading and maintaining it.  To update to Exchange 2007 will require serious investments in hardware and software.  To ensure that organizations are getting the most out of their investment in Exchange they need to have personnel in house that are experts in working in the Exchange environment.  Even larger companies are seeing the benefits of outsourcing their Exchange and putting their own focus on their core competencies.

What challenges do you and the company face in the hosted solutions market?
The biggest challenge we are seeing, when we look at Hosted Exchange specifically, is educating the market on available hosted solutions.  There is definitely a tremendous amount of interest and a real need for Hosted Exchange but the market has not been educated enough to know that such a solution exists.

Microsoft estimates that the market for Exchange mailboxes is 150 million potential users.  About 75 million of them are in SMBs currently.  Less than 1% of that is currently captured.  Clearly the growth potential is huge.  But so isn’t the task of getting the message out to the other 99% of the market.  The good news is that 2007 is the year we are expecting Exchange Hosting to explode.

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