I have seen many fail and many succeed. To get your company name out. I think giving away free hosting to certain people would be ideal. My friend has been doing that and now he has such a large user base he is able to easily charge people for the service..
Of course dont have crappy uptime like he does <76%>
Another guy I know started webhosting business spent $5,000 on servers.. offers to little for to much and failed.
So, again good business if you do everything correctly.
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