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CI Host

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A New Rose From Lima

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		Chris Faulkner

In 1997, Chris Faulkner lived on a small bed in the corner of his Denton apartment; the rest of the place was covered in phone lines, computers, office equipment and mail. Lots of mail. After all, the 21-year-old was running his own web-hosting business out of his apartment.

He began the company — housing and maintaining files for web sites — while he was at UNT studying information science.

Today, CI Host is the fifth-largest web-hosting company in the world, with 203,000 customers that include McDonald's, GTE and the U.S. Department of Commerce. It's averaging 40,000 new customers each month, and its 2003 revenues were more than $45 million.

It all started with Faulkner going from store to store in his Sunday best making deals with local storeowners.

"At the beginning, I was a one-man show," says Faulkner, now a millionaire at age 27. "Later on, as business grew, my aunt would come up after her day job and help with billing — thousands of invoices and billing statements.

"My landlord really hated all of that mail."

Business was so good and landlord complaints so loud that Faulkner had to move out of his apartment and into office space in Bedford.

Today, he also has offices in Dallas, Chicago, New York and Los Angeles.

Monopoly on a whole new level

Faulkner's success is impressive on its own, but in context it's frightening.

While most teen-agers were trying to master their spending money, Faulkner founded his first major business at age 15.

With a little seed money from his mom, he turned baseball card collecting into a money-making venture. He'd open up his 1,800-square-foot Colleyville shop in the mornings before school, leave it in the care of his grandmother, and then return to work in the evenings and close up.

"It was great. I'd buy cards in bulk at $500 or $600 and sell them for $1,000 — it was not uncommon to have profit margins of 300 or 400 percent," he says. "I'd kill for that kind of markup today."

After a year and a half of good business, he sold the shop to another entrepreneur for $105,000. Using that money, he created another company, called Central Amusement, at age 17.

In the early 1990s, before video game platforms like Sony Playstation and Nintendo Gamecube were popular, Faulkner used his baseball card money to buy himself arcade games.

"After I'd finish them they'd just sit in my garage collecting dust," he says. "That's when I got the idea that other kids would pay to play — I mean, these machines still took quarters."

Faulkner went from convenience store to convenience store offering to leave his video games and split the profit from the games 50-50 with the storeowners.

"At first people were a little skeptical — until they started seeing the money roll in," he adds. "All the store owners had to do was give up a little space and electricity."

Before long Faulkner's video game machines were all over Waco, Dallas and Fort Worth and he'd expanded to include vending machines. Every day after school, he and his grandfather would climb into an old service van and drive a 300-mile radius, servicing video games and collecting money.

"That usually took until 9 p.m. and then I'd get home in time to do my homework — it was pretty intense," Faulkner says. "But for me, making businesses work has always been the best fun I could have — overcoming obstacles."

This business lasted until Faulkner went off to college. He sold Central Amusement for more than $400,000. By this time, it had become the third-largest vending company in North Texas with more than 2,400 arcade games and vending machines.

Big spenders, little steps

With business sense coming to Faulkner so naturally, CI Host's success today may seem inevitable.

But Faulkner says it wasn't so easy.

During the dot-com boom, there were lots of companies doing what CI Host did. And those company CEOs were driving nicer, newer cars than Faulkner.

"At the time, my starting salary was $35,000 a year and that was even after the company earned its first million," he says.

"In '99, I was more than a little jealous of some of the Mercedes our competitors were driving."

But CI Host outlasted its competitors. At six years, it's considered a grandpa among Internet companies, Faulkner says.

"It was like a marathon where so many of our competitors came out guns blazing," he says. "We proved that slow and steady works."

Most are a little surprised about this kind of philosophy from someone Faulkner's age. Faulkner, although he is the boss, is one of the youngest employees of CI Host — only the interns are younger.

"Fortunately, one of the good things to come from the dot-com boom is that it made anything possible," he adds. "So I think people are willing to accept that I might know what I'm doing."

Most of his employees say that after talking with Faulkner for five minutes, you realize his business acumen is well beyond his years. Job turnover at CI Host is low — there has been no downsizing or layoffs.

Faulkner says his slow-and-steady attitude comes from seeing that his company is so much more than his first few businesses with only his grandparents as employees. Currently, 180 people work at CI Host.

"In some ways, getting real employees has been the worst change in that there is such a great responsibility with all those mouths to feed," Faulkner says. "It's completely different when it's just your grandpa."

But that responsibility doesn't zap all the fun out of business, he says.

Still a kid at heart

In an effort to market CI Host, Faulkner hired a human billboard — and we're not talking about a guy between two sandwich boards. He hired 22-year-old Jim Nelson to tattoo the company name and logo on the back of his head for display for a year. Nelson, who arranged this by putting his head up for auction on e-Bay, used the money to start his own company.

"I learned early on that getting media coverage and marketing aren't the same," Faulkner says. "And what many don't understand is that for less than we'd spend advertising, we could get free press coverage."

CI Host received coverage of its human billboard stunt in more than 180 newspapers worldwide and more than 60 radio and 40 TV stations. For about $7,000 the company got millions in free press.

Along the same lines, Faulkner bought a nice piece of space on Evander Holyfield's backside — this time it was just the boxing trunks — during his 1999 championship fight with Lennox Lewis.

"Most people coming into my company think, 'What the hell am I getting into?'" Faulkner says. "But after awhile they realize I'm not your average 27-year-old and I actually know what I'm doing."