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A Winning Combination: Software-as-Services Plus Business Consulting and Process Services
By Laurie McCabe
January 30, 2004

KB Chandrasekhar — co-founder of Exodus and chairman and CEO of high-profile ASP aggregator Jamcracker — spoke exclusively to ASPnews.com about his investments in what he describes as an ecosystem of related Internet infrastructure businesses.

Exodus Communications, today the top name in Internet data centre hosting, started out as a sideline for a network consulting business. Company chairman and co-founder KB Chandrasekhar told ASPnews.com how the initial idea came from running a specialist consultancy called Fouress Inc. Some of its customers were insisting that the company should not only give them advice on networking; it should also manage their servers.

“We said, ‘We would love to, but we don’t have the space.’ So they said, ‘Take any room and put it in’,” he recounted. Thus was born the Exodus business model.

Chandrasekhar (known as Chandra to colleagues and industry contacts) went on to found Santa Clara CA-based Exodus Communications Inc (Quote, Chart) in October 1994, to “make a mark in an industry”. His creation has certainly achieved that, establishing an early lead in the booming market for vendor-neutral hosting of high-volume websites. Last month, Exodus demonstrated just how big an enterprise it has become when it signed a $10bn agreement that will see it acquire a former rival, the web hosting subsidiary of telecoms carrier Global Crossing. See related story on internetnews.com, Exodus, Global Crossing Make $10 Billion Deal, Sep 28th 2000.

But when Chandra speaks of making his mark, he has more in mind than the achievements of Exodus alone. Having run the business from 1994, and taken the company public in 1998, Chandra has since moved out of its management. “To grow Exodus to the next level, I needed somebody who was coming in with a fresh perspective, and who was known to the customer,” he explained. “All said and done I was an unknown guy.”

Former IBM and Apple luminary Ellen Hancock is now the public face of Exodus, having become CEO in 1998. In June, she added the title of chairman when Chandra resigned from the board to focus on his other investments.

Internet ecosystem

Chandra sees many opportunities emerging as the Internet becomes the new platform for distributed computing, and he is putting his money into companies that form an ecosystem, with close business and technology links. “Even when I started Exodus it was not meant to be a point solution. I always expected it to be part of an ecosystem,” he said.

That said, the components of the ecosystem are independent companies that will have to scout for their own business opportunities. “Entrepreneurship does not work on managed support, but when you are out in the open and figure out how to survive,” he added.

One of the more obvious instances of this “food chain” of companies is the link between Exodus and Chandra’s latest venture, ASP aggregator Jamcracker, of which he is co-founder, chairman and CEO. Based just down the road from Exodus in Sunnyvale CA, Jamcracker Inc launched in February this year, and last week announced raising a massive $100m second round of funding, bringing its total funding to date to more than $142m. See related articles, Star startups host apps, Feb 8th 2000, and Jamcracker Scores Big, Oct 20th 2000.

Exodus hosts Jamcracker globally and makes its managed services available to the aggregator. Chandra expects that some of Jamcracker’s ASP partners — which include BizTone.com, OpenAir.com, WebEx and another Chandra investment, enterprise ASP United Messaging — will also host with Exodus. And although Exodus will not resell Jamcracker’s services to customers, Chandra believes it will still be an informal but powerful sales channel for the venture.

“Exodus will point Jamcracker to the people who need the service,” Chandra said. “One feeds on the other, one is a fuel to the other. Exodus is infrastructure, and Jamcracker pulls in not only its hosting application needs, but also other ASPs into that. Exodus can feed Jamcracker because it has more of the ubiquitous infrastructure and the clients that are needed there.”


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