Denver-based Inflow Inc., a complex web hosting provider whose most prolific sales office is located in Durham, cut seven employees from its local eight-person sales staff last week, including its director of sales, leaving seven local employees,
according to local general manager Art Glasgow.

Company officials did not acknowledge the move until May 1, but sources close to the firm say the cuts actually took place last week.

The move comes as part of Inflow’s decision to cut close to 230 of its 350 full-time staffers, including closing offices in Irvine, Calif., Dallas and Dublin, Ireland.

Inflow officials didn’t return phone calls.

Company officials locally decline to reveal whether or not Inflow is offering those affected employees any sort of severance package, and they also decline to reveal the exact number of employees who were laid off. About 95 workers will remain in Denver and Austin, Texas, while the remaining 25 or so employees are sprinkled between Durham, San Diego, Portland, Ore., Phoenix, Atlanta, Nashville, Tenn., Pittsburgh, Philadelphia and St. Louis.

“Our local staff still provides engineering, remote hands and local monitoring during the hours of 6 a.m. to 11 p.m.,” Glasgow says. “So the people who were affected at the local level served either one of two functions: sales or off-hours operational support. The people who worked the graveyard shift, from 11 p.m. to 6 a.m., are no longer with us. We still have one sales staffer here, and we do maintain a fully staffed networking operation center.”

Wachovia Capital Partners, which owns close to 30 percent of Inflow, didn’t return repeated telephone inquiries asking about the status of the three-year-old company. Inflow grew from one data center to 18 in the span of one year. The Durham office was the third to open in that succession.

Too much too fast
The company’s network security service was centralized during the last 18 months, and all customer support services have been provisioned out of Denver. Network monitoring also was centralized nine months ago in Austin. Both moves were made to increase the quality of service by allowing 24-hour, seven-day-per-week customer support, Glasgow says.

“There used to be a lot of local dot-coms that bought our type of services and now its more established enterprise companies,” Glasgow says. “What that does is it confuses the picture when you have multiple local sales teams going after the same types of companies.”

Glasgow says none of Inflow’s products and services or service-level agreements have changed, but he also admits to knowing that there are competitors out there who are keeping a keen eye on Inflow’s customers, which include FullSeven Technologies, a designer of e-mail branding software, and HowStuffWorks.com.

“It’s nothing new,” he says. “We’ve had other competitors throughout the years telling people we are definitely going bankrupt and closing the doors on the facility. I guess that’s a sales tactic that’s becoming commonplace within the industry. But rather than
slinging mud, we think the fervor will die down over the coming weeks as people see that we are still here and that we actually made a positive move.”

Cary-based Springboard Managed Hosting, one of Inflow’s competitors in the Triangle, already has hired some of Inflow’s former sales staff, including its director of sales. A former employee of Inflow, on condition of anonymity, claims the company’s stereotypical late 1990s growth strategy of adding facilities before generating profits, has placed Inflow into a deadly tailspin.

“Even in good times, that’s a really tough approach,” the source says.

Springboard Chief Executive Rich Lee declines to say whether his company is pursuing Inflow customers but indicates that he is “looking into all possibilities.”

Glasgow claims that Inflow is sitting down with its customers and poring through its financials to help them better understand the privately held company’s position.

Move intended to bring profitability
“The largest obstacle to sales success we’ve had over the last year is financial stability,” he says. “And the reason why is independent companies in this space have been dying or losing to larger telecom companies.”

Glasgow, however, is sharing the same financial information Inflow is sharing with its customers and claims it is accurate.

“The company has a run rate in 2001 of about $46 million,” he says. “Durham has been one of the profitable data centers since April of last year. So if you look at the 18 data centers we had in 2001, five of those were profitable and the Durham center has the lion’s share of customers out of any data center at Inflow. This data center has been a crown jewel, so it’s not going anywhere.”

Inflow officials are keeping their fingers crossed that the company will generate $70 million in revenue this year, compared to the $2 million it was bringing in back in 1999. The company is falling short of its initial goal, Glasgow says.

Inflow website: www.inflow.com