UNDER THE RADAR: Peter Cluskeyinterviews Daragh MacLoughlin, Letshost.ie
WHEN YOU’RE a newcomer entering an established market you need to make an immediate impact. That’s what Daragh MacLoughlin did with Letshost.ie in 2005 – charging just half the price of his competitors for an .ie domain name.
“We were firmly convinced that prices were too high,” recalls MacLoughlin (25). “The day we started the business, the average price for an .ie domain name was €85 plus VAT, so we entered the market at €42.99.
“Since then, prices have continued to fall and we’ve maintained that strategy of keeping our margin low with the aim of generating more business. The average price today is between €25 and €30 – and we’re at €19.99.”
It’s not hard to see why MacLoughlin, an IT graduate of NUI Galway, takes his business inspiration from Ryanair chief executive Michael O’Leary.
“There was a small number of companies controlling the shared hosting market when we entered it. We took the view that their prices were unnecessarily high and their products unnecessarily technical – and that’s where we saw our opportunity.
“I realise that when people see low prices they tend to believe that the quality will be lower as well, but that’s not necessarily the case at all. We set out to prove that we could be highly competitive and offer an excellent service as well.”
That strategy has worked. From a handful of customers in 2005, they now have a client base of 13,000 and manage 17,500 internet domains, roughly evenly divided between home-users and businesses.
Turnover has grown as a result, from just €250,000 in their first year to €700,000 in 2007 and €1.2 million in 2008.
Letshost.ie won the recognition of the industry and its peers last year when it was presented with the IE Domain Registry (IEDR) Achievement Award by Minister for Communications Eamon Ryan, for its work to promote the .ie brand.
And to combat the effects of the economic downturn, MacLoughlin and his business partner, Graeme Conkie, have decided to expand beyond the shared hosting market into dedicated server hosting – a move they believe will boost turnover to over €2 million for 2009.
Essentially, whereas shared hosting means there is one web server used by many different clients, with dedicated server hosting – the higher end of the market – each website has its own dedicated server.
“When we set up, we used servers located in the US to save costs,” he says. “Now we have that infrastructure in Ireland and in the next six months we’ll launch an additional new dedicated server-hosting service that we believe has the potential to generate a multiple of the income we make from shared hosting – though, of course, there are additional costs too.”
Letshost.ie is essentially an .ie domain reseller. It buys its domain names from the IE Domain Registry, a not-for-profit company which acts as a trustee for .ie domain names on behalf of the Irish internet community and manages the .ie country code Top Level Domain (ccTLD) name space.
Since last year IEDR has been overseen by the communications regulator, ComReg.
“The job of the IE Domain Registry is to ensure that the quality of the .ie brand is not compromised,” MacLoughlin says. “It has done that very successfully and that makes .ie addresses attractive to buy and very trouble-free to use – which makes our job easier.
“I like to think of .ie domain names as the friendly face of Ireland on the internet. It’s like flying with Aer Lingus years ago, when you always got a friendly smile as you got on to the plane.
“There are no hijacking attempts and you never get spam from an .ie address. In fact, a review of different internet country codes last year by the online security company, McAfee, showed that .ie was the second- safest address in the world after Finland.”
ON THE RECORD
Name:Daragh MacLoughlin.
Company: Letshost.ie –
www.letshost.ie
Job: founder and director.
Age: 25.
Background: B.Sc in information technology from NUI Galway. Set up Letshost.ie in 2005 with business partner Graeme Conkie.
Minister for Communications Éamon Ryan presented them with the IEDR Achievement Award last year. They have a staff of seven and offices in Dublin and Galway.
Inspired by: Michael O'Leary, chief executive of Ryanair, "a love him or hate him kind of guy" who built up a highly profitable business at the low-cost end of the market.
Challenges: Adding dedicated server-hosting to their shared-hosting business in the next six months, a move which they believe will significantly boost turnover and allow them to employ three more staff.
