Business fun

Chris Faulkner
UNT alum and head of CI Host
Wednesday, April 21, 2004

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 equipmentand mail. Lots of mail. After all, the 21-year-old was running his own web-hostingbusiness out of his apartment.

He began the company — housing and maintaining files for web sites — whilehe was studying information science at the University of North Texas.

Today, CI Host is the fifth-largest web-hosting company in the world, with 203,000customers 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 weremore than $45 million.

It all started with Faulkner, a native of Colleyville, going from store to storein his Sunday best, making deals with local storeowners.

"At the beginning, I was a one-man show," says Faulkner, now a millionaireat age 27. "Later on, as business grew, my aunt would come up after herday 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 moveout 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'sfrightening.

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

With a little seed money from his mom, he turned baseball card collecting intoa money-making venture. He'd open up his 1,800-square-foot Colleyvilleshop 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 themfor $1,000 — it was not uncommon to have profit margins of 300 or 400 percent," hesays. "I'd kill for that kind of markup today."

After a year and a half of good business, he sold the shop to another entrepreneurfor $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 NintendoGamecube were popular, Faulkner used his baseball card money to buy himself arcadegames.

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

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

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

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

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

This business lasted until Faulkner went off to college. He sold CentralAmusement 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, many companies were 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 afterthe company earned its first million," he says. "In '99, Iwas more than a little jealous of some of the Mercedeses our competitors weredriving."

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

"It was like a marathon where so many of our competitors came out gunsblazing," 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, 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 thatit made anything possible," he says. "So I think people are willingto accept that I might know what I'm doing."

Most of Faulkner's employees say that after talking with their boss for five minutes, they realized his business savvy goes well beyond his years. Job turnover at CI Host is low, with 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 thatthere is such a great responsibility with all those mouths to feed," Faulknersays. "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.

But instead of having someone display the company logo 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'tthe same," Faulkner says. "And what many don't understand isthat 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 — his boxing trunks — during Holyfield's 1999 championship fight with Lennox Lewis.

Faulkner acknowledges that these unconventional business practices may result in new employees questioning the company.

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

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