Repositioning of Specialized Hosting Provider Leads to Acquisition

This case study is based on conversations with John Kraft, former CEO of ServerVault, a hosting firm specializing in secure and sensitive government applications.

1. John Kraft on Turning the Corner

Founded as a secure hosting company, ServerVault is still remembered by many people as the company with the giant Hummer H-1 (not one of the cushy new ones but the original military-style model) cruising around town bearing the ServerVault logo. Now under the leadership of CEO and President John Kraft, ServerVault is a leading provider of highly secure, federally compliant hosting and IT infrastructure management services for government agencies, commercial enterprises and system integrators with sensitive, security-driven applications.

“When I joined ServerVault as CEO in 2003,” said Kraft, “the challenge wasn’t how to generate flash and attention–hence we no longer needed the Hummer with the giant ServerVault logo on it–but rather to rebuild the operation and the company’s market legitimacy. Together with great leaders like Seth Finkel, who I worked with at PSINet, and John Curran, who had been CTO XO Communications and BBN/GTE Networking, we retrenched not only operationally but strategically.”

“Hosting as a standalone business had changed. You either had to achieve massive scale as a collocation or infrastructure provider or find a niche in a growing segment. We chose the latter approach based on a careful analysis of the market’s requirements and ServerVault’s assets and strengths, including:

  • Legacy positioning in secure, bulletproof hosting, including the ServerVault name;
  • Industry-leading physical, logical and procedural security;
  • Proximity to the booming federal IT market; and
  • Proliferation of federal IT security regulations, notably FISMA.

“Building on our strengths in secure hosting–which was a solid positioning but not enough to distinguish ServerVault from much larger players–ServerVault is now a leader in providing secure and compliant hosting and management services that help government agencies and corporations save time and money meeting major IT security regulations such as FISMA, DITSCAP / DIACAP and DoD 8500.2.

“As a result our clients save time and money by outsourcing their sensitive applications rather than having to build compliant data center facilities. While we can’t divulge much of the work we do for clients for security reasons, we have announced deals with IBM to provide secure, compliant infrastructure for the DISA NCES system, the military’s major new collaboration platform and with Northrop Grumman to secure, maintain and operate the DoD’s Web-based travel system.

“The results have been terrific in terms of customer wins, revenue and margin, and ServerVault is better known than ever in the federal IT sector–both agencies and system integrators. The future looks bright indeed.”

2. John Kraft on Bob London

“We talked to several larger, more traditional marketing firms before electing to go with London, Ink. The first thing that struck me about Bob’s approach were the following questions he asked me and our team during our first get-to-know-you meeting.

  • “Why do you think you’re ready to invest in marketing?”
  • “Do you already have a marketing strategy (i.e. do you know what you don’t know?)”
  • “If you hire a traditional agency, who is going to manage them?”

“So here’s someone who makes a living helping companies develop marketing strategy and manage marketing execution, but rather than focusing on tactics like radio, print, web, Bob started by getting us to look at our motives. In other words, spending a dollar on traditional marketing meant not investing that dollar on, say product development, support, or an additional sales person.”

“That approach helped build trust right from the start of our relationship. And the question about who within ServerVault would manage a traditional agency, if we went in that direction, was poignant. We needed a resource that could span marketing strategy to planning to execution, including program development and management and creative services.”

“A year later we remain convinced we made the right choice with London, Ink. Bob’s ‘outsourced CMO’ model plus full-service capabilities, is the right combination for a growth-stage company like ServerVault.”

3. Post Script: ServerVault Was Acquired by Carpathia Hosting  

Carpathia specifically cited ServerVault’s strong positioning as a provider of “unmatched compliance-driven hosting solutions” as a reason for the acquisition.

Share this: