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Whole host of reasons for Jones to turn down £17m

18 December 2007

UKFast owner says he's lost count of the dotcom millionaires he's helped create in Manchester.

Lawrence Jones has just turned down an offer of £17m for UKFast,the website hosting business he set up from scratch eight years ago.

"Last year somebody offered us £12m," he adds. "It's not for sale. We're on a journey and it's very exciting."

UKFast employs 50 on the 28th floor of City Tower in Piccadilly and at MANOC off Princess Road, where its servers are located. Most employees are in their 20 and 30s and all have scored at least 25 out of 30 in an aptitude test in which the average score nationally is 12.

Jones realised the importance of hosting sooner than most, when he set up a website in 1999 to sell art. He struggled to find anyone who could provide a reliable service and ditched his fledgling dotcom business to pursue the opportunity he had identified by accident.

UKFast now has 1,500 direct clients and its server network looks after more than 100,000 domain names. The company made £700,000 pre-tax profit on £2.8m turnover in 2006 and projected 2007 results are £4.2m and just under £1m. Next year's targets are £10m and £1.5m, with staff numbers expected to grow to 120.

Entrepreneurs

Clients include Printing.com, whose business model depends on email traffic between retail outlets and its production centre in Trafford Park. The company recently expanded to New Zealand but the traffic for that operation is still hosted in Manchester.

Another is Harrington Brooks, the debt management business in Sale which now trades as One Advice. With UKFast's help they were one of the first debt management companies to advertise for clients online.

Jones says he has "lost count" of the number of Manchester entrepreneurs he has helped to become multi-millionaires, but even though he and wife Gail, his finance director, are sole owners of UKFast, they remain reluctant to cash in on their own success as yet.

Jones has unhappy memories of the last time he sold a business. While doing his A-levels at De La Salle Sixth Form College in Salford he set up MDC (Music Design Company), which booked musicians for hotels and events in Manchester.

No borrowings

When Granada's Grosvenor Productions wanted to get into corporate events in the city they had a problem - Jones not only had most of the large Manchester hotels under contract, including Granada's own Victoria & Albert, but he also owned the pianos in their cocktail bars.

Granada had no choice but to buy him out and put him on the Grosvenor board, but a year later he was ousted. Eversheds, who had also just had a falling out with Granada, acted for Jones in a successful lawsuit which financed a year's travelling which included a spell in New York. While there, he realised that the internet would transform the world.

UKFast was set up with money from the sale of MDC, and has financed its growth from cash flow with no need for bank borrowings. The company has collected a trophy in the ISPAs, the internet industry's national awards, for the last three years running.

It was named Best Business Host in 2007 and Best Hosting Provider in 2005 and 2006 and is firmly on the radar of the biggest players in the industry nationally.

Jones is the first Manchester name which came to mind for Fabio Torlini, European marketing director of US-based Rackspace, when Crain's asked him about his competitors. Rackspace, reckoned to be the biggest player in managed hosting in the UK, has 4,000 direct clients and annualised turnover is 55m based on current performance.

Annual web hosting revenues in the UK are 1bn but the industry remains fragmented because ISPs typically do their own hosting. Torlini expects consolidation in the next few years. "There have been a lot of mergers and acquisitions over the last couple of years. I think that will probably continue," he says.

Jones, 39, recently named the Institute of Directors' Manchester Young Director of the Year, is now investing in virtualised backup servers and video content - he interrupts our talk to shake hands with his newest recruit, a videographer, as he leaves the office.

"In a few years' time every company will be using video on its website," he predicts. UKFast aims to keep growing by adding more capability and making a virtue of being located in Manchester.

It hopes to expand into a planned "green" data centre at Central Park in Moston, where carbon emissions will be kept down by using the outside air temperature to cool the servers.

Jones believes the company's location is becoming a source of competitive advantage. "We are the UK's second digital city after London, but we could easily be the UK number one.

"We're in a global market and we're finding customers want to move to Manchester. Pound for pound they get better value for money here."

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