Internet boss has his sights set high

As experts talk up a second dotcom boom, Andrew Mernin talks to the leader of one the region’s fastest-growing internet businesses.

WITH fears mounting that the dotcom age was crumbling around them, all was not well for businesses in California’s Silicon Valley in the year 2000.

The wave of optimism that had given birth to a spree of internet start-ups had transformed into failure of confidence which threatened the future of America’s technological giants.

Meanwhile, across the pond, a group of young tec-heads on Teesside watched with caution as their American parent company, Pacific Gateway Exchange, tottered on the brink of extinction.

The small group of IT experts, who ran internet provider Onyx, were fully aware of what was happening in America and were preparing for the worst as their owner looked on course for certain doom.

However, while the ultimate collapse of Nasdaq firm Pacific was described by Forbes magazine as “a mercy killing”, for the 25-strong workforce across the Atlantic at subsidiary Onyx, it represented a rare window of opportunity.

Neil Stephenson, managing director of Onyx Group, who was 28 at the time, recalls the global disruption which helped create one of the North-East’s fastest-growing technology companies.

“In the dotcom boom people didn’t understand technology and threw a lot of money into a load of daft things that didn’t work, and there were business models which lost money every time you added a customer,” he said.

“Eventually the market got sick, it died in 2000 and our parent company caught a cold. It was in the wrong place at the wrong time and crashed like most other technology companies at the time.

“We were watching our parent company across the water, wondering when we would get the call, and we were just preparing ourselves. Then we loaned money from friends and people that knew us and three of us did a management buy-out.

“In an ideal world you wouldn’t do a management buy-out over Christmas at the height of the dotcom slump when the stock market had halved in value.

”But that is exactly what Mr Stephenson and two of his Onyx comrades did and it certainly looks to have paid off, although he admits that he had “little interest in turkey or having a few beers” in Christmas 2001.

Today the company, which remains the only independent internet provider in the region, has grown exponentially since its inception and is on target to become a £23m-a-year firm within three years.

The group employs around 50 people across its four sites on Tyneside and Teesside and recently invested £2m in a specialist facility in Team Valley, Gateshead, to help businesses recover after disasters such as a flood or fire.

The company’s facility on Newcastle’s Stepney Bank serves as a Fort Knox for North-East businesses as it stores aisle after aisle of precious back-up data, protecting them from meltdown or disaster.

According to Mr Stephenson, Onyx has the potential to become a mass employer in the North-East on a scale equal to Sage, although he acknowledges that there is a lot of hard work ahead.

“We’ve got big plans and we have this magic number of £23m a year which is what we’d like to be achieving in three years – you can never overachieve on your ambitions.

“We don’t intend to grow overseas as we are a UK business and I’m a North-East guy, we live and breathe the business and I hope that passion comes across with everyone we meet.

“We are growing quite aggressively through acquisition and organically and we want to be a UK-wide business but we will always be a North-East company, the next Sage if you like.”Clearly the managing director has raised the bar high for Onyx, but the rate at which the company has snapped up other businesses in recent times would suggest he has good reason to be optimistic about the future.

In the past two years the firm has acquired North Yorkshire-based Askaris, Teesside’s Business Continuity Centres and Newcastle IT specialist Jade Integration.Onyx has also hinted at plans to list on the AIM which could help further boost growth at the firm.

For Mr Stephenson, one of the key weapons in his battle to become a Sage-sized juggernaut is his Newcastle data centre.Brimming with pride, he walks me through the £5m facility, eager to show off its intricate details.

Like something from the pages of George Orwell’s 1984, row after row of lockers complete with flashing lights and coils of wires, store precious information for scores of businesses from across the region.

An interesting point of note is that listed firms in the centre have the extra security of an exterior cage – perhaps offering peace of mind to business leaders with the weight of an army of shareholders on their shoulders.

“This is the best data centre in the region. If you were going to build a data centre in Newcastle, you would build it on this piece of land because that’s BT next door – I can almost touch their building from the back window. You literally have fibre to the door, the pavements are virtually made of glass. Because it’s BT, every other telecoms provider connects to that exchange so in terms of connectivity, it’s amazing.

”Long before the Newcastle data centre on Stepney Bank was built, Mr Stephenson – a South Shields native – began his love affair with computers. “As a kid I had a Spectrum ZX, and today I’ve got five or six computers at home,” he recalls.

The father-of-two launched his career with a computers degree from Sunderland University, but his working life took a very different direction before he finally returned to the technology he loved.“I just wasn’t clever enough to do the keyboardy stuff, nor did I really want to, but I liked people so I had a feeling that a route in sales and marketing would suite me,” he says.

“I started working for Vaux Brewery in Sunderland and it was wonderful as we had a £2m marketing budget so we could do TV ads, sponsor football teams and the exposure was immense.“However, it was quite a big business so it was difficult to move quickly although the market was moving quickly and my own ambitions didn’t match the ambitions of the business.

”It was during his time at Vaux that Mr Stephenson met a leader who would shape his own management style in the future.“Vaux was run by a guy called Frank Nicholson and he knew everyone’s name out of 700 members of staff,” says Stephenson.

“He even knew what colour car you had and would stop you in the car park and say, ‘That’s a lovely new car you’ve bought,’ and you would wonder how on earth he knew.“The staff at Vaux would have done anything for him and I want my staff to feel like that about me.

”A pay-cut and a commute to Teesside later and Mr Stephenson joined a little-known internet start-up company called Onyx.

This was at the start of the dotcom boom and he admits selling the internet to the world wasn’t easy. “We had no marketing budget and you had to roll your sleeves up, get dirty and work weekends and late nights – it taught me that there’s no substitute for hard work.

The company was one of six internet access firms in the UK in the mid-90s. We only dealt with businesses because they have various requirements whereas a consumer only has one.

“If you look at the market for consumers, it’s all consolidated with only five or six players trying to sell you a mobile phone, landline and cable TV.

“The problem is that those consumers are really loyal until you’re a penny more expensive than someone else and they leave you.

“I remember in 1996 people would put a picture on a website and think it was amazing. It would all be black text on a white background. I used to tell people that in the future they wouldn’t need fax machines as everything would be done on emails but they didn’t believe me.

”His prophecy has since come true and his business has prospered, so where next for the young director?“

I have mixed views on selling up. I love the business and have made it what it is and I have a three-year plan so I can’t see beyond that.

“We said we have ambitions to float and that may provide us with the equity exit that we need but I wouldn’t say I’m desperate to make millions. It really depends where we get on the Onyx journey – the next step could be £50m, or even £100m.

”Forbes magazine as “a mercy killing”, for the 25-strong workforce across the Atlantic at subsidiary Onyx, it represented a rare window of opportunity.

Neil Stephenson, managing director of Onyx Group, who was 28 at the time, recalls the global disruption which helped create one of the North-East’s fastest-growing technology companies.

“In the dotcom boom people didn’t understand technology and threw a lot of money into a load of daft things that didn’t work, and there were business models which lost money every time you added a customer,” he said.

“Eventually the market got sick, it died in 2000 and our parent company caught a cold. It was in the wrong place at the wrong time and crashed like most other technology companies at the time.

“We were watching our parent company across the water, wondering when we would get the call, and we were just preparing ourselves. Then we loaned money from friends and people that knew us and three of us did a management buy-out.

“In an ideal world you wouldn’t do a management buy-out over Christmas at the height of the dotcom slump when the stock market had halved in value.”

But that is exactly what Mr Stephenson and two of his Onyx comrades did and it certainly looks to have paid off, although he admits that he had “little interest in turkey or having a few beers” in Christmas 2001.

Today the company, which remains the only independent internet provider in the region, has grown exponentially since its inception and is on target to become a £23m-a-year firm within three years.

The group employs around 50 people across its four sites on Tyneside and Teesside and recently invested £2m in a specialist facility in Team Valley, Gateshead, to help businesses recover after disasters such as a flood or fire.

The company’s facility on Newcastle’s Stepney Bank serves as a Fort Knox for North-East businesses as it stores aisle after aisle of precious back-up data, protecting them from meltdown or disaster.

According to Mr Stephenson, Onyx has the potential to become a mass employer in the North-East on a scale equal to Sage, although he acknowledges that there is a lot of hard work ahead.

“We’ve got big plans and we have this magic number of £23m a year which is what we’d like to be achieving in three years – you can never overachieve on your ambitions.

“We don’t intend to grow overseas as we are a UK business and I’m a North-East guy, we live and breathe the business and I hope that passion comes across with everyone we meet.

“We are growing quite aggressively through acquisition and organically and we want to be a UK-wide business but we will always be a North-East company, the next Sage if you like.”

Clearly the managing director has raised the bar high for Onyx, but the rate at which the company has snapped up other businesses in recent times would suggest he has good reason to be optimistic about the future.

In the past two years the firm has acquired North Yorkshire-based Askaris, Teesside’s Business Continuity Centres and Newcastle IT specialist Jade Integration.

Onyx has also hinted at plans to list on the AIM which could help further boost growth at the firm.

For Mr Stephenson, one of the key weapons in his battle to become a Sage-sized juggernaut is his Newcastle data centre.

Brimming with pride, he walks me through the £5m facility, eager to show off its intricate details.

Like something from the pages of George Orwell’s 1984, row after row of lockers complete with flashing lights and coils of wires, store precious information for scores of businesses from across the region.

An interesting point of note is that listed firms in the centre have the extra security of an exterior cage – perhaps offering peace of mind to business leaders with the weight of an army of shareholders on their shoulders.

“This is the best data centre in the region. If you were going to build a data centre in Newcastle, you would build it on this piece of land because that’s BT next door – I can almost touch their building from the back window. You literally have fibre to the door, the pavements are virtually made of glass. Because it’s BT, every other telecoms provider connects to that exchange so in terms of connectivity, it’s amazing.”

Long before the Newcastle data centre on Stepney Bank was built, Mr Stephenson – a South Shields native – began his love affair with computers. “As a kid I had a Spectrum ZX, and today I’ve got five or six computers at home,” he recalls.

The father-of-two launched his career with a computers degree from Sunderland University, but his working life took a very different direction before he finally returned to the technology he loved.

“I just wasn’t clever enough to do the keyboardy stuff, nor did I really want to, but I liked people so I had a feeling that a route in sales and marketing would suite me,” he says.

“I started working for Vaux Brewery in Sunderland and it was wonderful as we had a £2m marketing budget so we could do TV ads, sponsor football teams and the exposure was immense.

“However, it was quite a big business so it was difficult to move quickly although the market was moving quickly and my own ambitions didn’t match the ambitions of the business.”

It was during his time at Vaux that Mr Stephenson met a leader who would shape his own management style in the future.

“Vaux was run by a guy called Frank Nicholson and he knew everyone’s name out of 700 members of staff,” says Stephenson. “He even knew what colour car you had and would stop you in the car park and say, ‘That’s a lovely new car you’ve bought,’ and you would wonder how on earth he knew.

“The staff at Vaux would have done anything for him and I want my staff to feel like that about me.”

A pay-cut and a commute to Teesside later and Mr Stephenson joined a little-known internet start-up company called Onyx.

This was at the start of the dotcom boom and he admits selling the internet to the world wasn’t easy.

“We had no marketing budget and you had to roll your sleeves up, get dirty and work weekends and late nights – it taught me that there’s no substitute for hard work. The company was one of six internet access firms in the UK in the mid-90s. We only dealt with businesses because they have various requirements whereas a consumer only has one.

“If you look at the market for consumers, it’s all consolidated with only five or six players trying to sell you a mobile phone, landline and cable TV.

“The problem is that those consumers are really loyal until you’re a penny more expensive than someone else and they leave you.

“I remember in 1996 people would put a picture on a website and think it was amazing. It would all be black text on a white background. I used to tell people that in the future they wouldn’t need fax machines as everything would be done on emails but they didn’t believe me.”

His prophecy has since come true and his business has prospered, so where next for the young director?

“I have mixed views on selling up. I love the business and have made it what it is and I have a three-year plan so I can’t see beyond that.

“We said we have ambitions to float and that may provide us with the equity exit that we need but I wouldn’t say I’m desperate to make millions. It really depends where we get on the Onyx journey – the next step could be £50m, or even £100m.”

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The questionnaire

What car do you drive?

Land Rover Discovery – gives the right impression of reliability and stability. I always feel customers don’t appreciate it if you turn up in a Porsche.

What’s your favourite restaurant?

Romano’s in Cleadon Village.

Who or what makes you laugh?

My five-year-old son Jack, who has the ability to say exactly what is on his mind no matter what the situation.

What’s your favourite book?

The Bourne Identity by Robert Ludlum or The Seventh Scroll by Wilbur Smith

What was the last album you bought?

The Best of Aerosmith – my son thinks the song Dude Looks Like a Lady is hilarious.

What’s your ideal job, other than the one you’ve got?

I would like to be a politician in later life – to serve the public.

If you had a talking parrot, what’s the first thing you would teach it to say?

You taught me to talk, imagine what you can do with intelligent people.

What’s your greatest fear?

That in life, I take out more than I put back in.

What’s the best piece of business advice you have ever received?

Focus on the customer and listen to what he/she really wants. Two ears, one mouth – use them in those proportions

And the worst?

When Onyx bought its data centre in Newcastle I was advised by several people that we would not be able to make a success of it – yet three years on we now have the region’s number-one facility recognised by independent authorities as the best of its kind locally and a real commercial success. Interestingly, we focused on the customer and that made it a success.

What’s your poison?

Gin and tonic, with ice and a slice.

What newspapers do you read, other than The Journal?

Telegraph or Shields Gazette.

How much was your first pay packet and what was it for?

My first ever paid employment was stacking shelves at Safeway during the summer holidays and I thought I was rich to earn £2 per hour.

How do you keep fit?

I live almost on the sea front at South Shields and love to walk with the family along the beach. Long walks help me unwind, solve business problems and re-energise me.

What’s your most irritating habit?

I am incredibly stubborn

What’s your biggest extravagance?

I love dining out with the family and do so at every opportunity.

Which historical or fictional character do you most identify with or admire?

Jack Bauer (24) – because he remains positive at all times, even when he is right in the middle of the worst day of his life.

Which four famous people would you most like to dine with?

Margaret Thatcher, Bill Gates, Leonardo Da Vinci and Jose Mourinho

How would you like to be remembered?

For doing the right thing.

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