Hostetter is the son of the late Amos Hostetter, a prominent trader at Commodities Corporation and Hayden Stone. He attended the Pingry School for his secondary education and graduated in the Class of 1954. After graduating from Amherst College in 1958 with a B.A. in Economics, he obtained a M.B.A from Harvard University in 1961.
In 1963, Hostetter and his college roommate and fraternity brother, H. Irving Grousbeck, founded Continental Cablevision in Fostoria, Ohio and Tiffin, Ohio. At the time of the company's sale in 1996 to US West, it was the largest privately owned cable company.
In 1982, Hostetter married Barbara Lynn Walsh. They have three children; Caroline, Elizabeth, and Tripp.
In 2003, Hostetter purchased the historic Second Harrison Gray Otis House on Mount Vernon Street in Boston for an estimated $12 million.