Cloud Hosting Provider, E2E Networks Raises Seed Investment, Founder Shares The Story

Cloud Hosting provider, E2ENetworks has raised seed investment from Blume Ventures and Freeman Murray (the deal was closed in the month of Feb/March).&160; The funding is a combination of of preference shares and convertible debt and will be used to improve E2E’s technology and R & D functions.

E2E Founder, Tarun Dua shares the startup journey (since 2002!) and how the team has played the underdog game all this while.

Year 2002

In 2002 the principal founder (i.e. Tarun) of E2E was involved in selling shared hosting off cheap 100 USD/month kind of machines hosted in US. I didn’t have a credit card, so got my employer to pay through his card and gave him cash :-).&160; E2E till 2008 was a side show, never a full time business going into long hibernation often and coming back briefly in between jobs.

Year 2004

1. The ISPs in India didn’t interconnect with each other. There were no benefits to host in India as latency was low only for the ISP where one hosted and a even higher latency for all the rest. So while one could get a latency of <100milliseconds for a single ISPs audience, it was > 600 ms for all the rest thanks to a round trip to International peering locations where Indian ISPs backbone networks peered with others.
2. The bandwidth and colocation was prohibitively expensive and completely useless for improving latency.
3. Nobody seriously considered hosting in India except one or two larger portals. The big ISPs were not even geared to sell datacenter services.

Bandwidth buyers like me (helping in leased line purchases of their organizations) were more concerned with the amount of International bandwidth available with the provider than with anything else.
The reality then was pretty much like the perceived reality we still hear in startup mailing lists often, that US is more reliable than India in terms of datacenter services.

This situation started changing in late 2008 with process accelerated through 2009. In early 2008 one could ping the PC in the house next door at about 700 ms latency if the broadband connections were from different operators.&160; This was the time when International Bandwidth was aplenty but domestic bandwidth on backhaul networks mirrored the thinly lit International datalinks.

The first changes in low latency were driven primarily due to work for home possibilities being explored by IT managers in booming IT industry where road warrior VPN setup became a must have.

Year 2009: Inception of

  • NIXIs become operational, Delhi and Mumbai were exchanging a reasonable amount of traffic limited perhaps by the small amount of content hosted in India.
  • The larger corporate group’s media arm’s and well funded travel/social networking startup’s with target audience in India wouldn’t host anywhere but India. They (say top 15% of the hosting market) can afford to pay and have a need for dedicated bandwidth which ISP’s like to sell rather than 95th percentile billing which is more the norm elsewhere in the developed world.
  • The bottom 15% of the market the bloggers and small static sites can be hosted on Yahoo! Small Business India at some 50USD/year its by far the cheapest shared hosting plan hosted right here in India.
  • Latency from any datacenter to any broadband connection within India is around 85 milliseconds. Broadband to Broadband RTTs range around 150ms on the other hand. The page load times and application response times can greatly benefit by hosting in India improving delivery times for web-applications by as much as 50%.
  • Trans-Atlantic or Pacific cable cuts could leave businesses hosting outside India vulnerable.
  • The developing regulatory environment(sadly) also points to even more robust growth in this segment, EU like laws for storing Indian personal data in India might not be too far away in future. The datacenter business is in fact booming right now with a lot of consolidation happening in corporate datacenters even without any regulatory push.
  • Its not just India, the whole of Asia from Morocco till Taiwan has no competitively priced mid-segment datacenter offerings for lean startups.

We were still talking to Datacenters in Singapore where latency was 105 ms and price was about 1/5th of that in India with a risk that latency could increase without any pre-announcement whenever there were routing gotchas in India.

The Singapore datacenter we were talking to brought up a 2 year contract which forced us to incorporate as a private limited to limit personal liability, which wasted a couple of months for us.&160; Meanwhile, a friend’s telecom startup negotiated excellent prices with an Indian datacenter+ISP and we could see the tide turning in favor of datacenter industry in India. We weren’t 100% convinced (whether our first cloud facility should be in India), but then we went ahead and negotiated bulk bandwidth prices @ Rs. 150-200/GB or so.

Right until the moment we spoke to a fellow incubatee and a friend at Amity Technology Incubator who became our first client (cut us a cheque for 3 months of dedicated server hosting) when we named a price point based on what should be possible in India rather than what was possible then (USD pricing)x.

In the hindsight, Singapore so to speak had cheaper bandwidth than India then by an order of magnitude however the cost of power/man-power was prohibitive plus hard legal contracts for period of time you need to have fixed rate contracts and the fact that Singapore could never hope to have the domestic capacity for bandwidth consumption that India had.&160;

So here we were shorting the Indian hosting marketplace with Bandwidth we were buying high and selling low with the hope that in near future the prices would crash because of the virtuous cycle we helped create by bringing content back to India and accelerating broadband growth plus enabling applications like low latency gaming servers etc – all of which are helping in creating use for domestic bandwidth available aplenty and helping reduce the overall cost of connectivity in India.

[Disclaimer: Pluggd.in is hosted on E2E Networks/who is also a sponsor of the site.]

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