I founded Star with my brother Ben back in the 90’s as one of the UK’s first ISP’s. On Friday the company was sold to Claranet for $88m.
In between, it has been a long and winding road for the business. We set up Star as an ISP because we felt that it was an exciting and emerging market. We liked the idea of tapping into this new thing called the Internet. We also liked the idea of a recurring revenue business that would generate monthly fees in perpetuity (assuming we looked after our customers!). Our previous business had been a hardware distribution business and we knew how difficult that could be, having to start again every single month, and also dealing with small and every reducing margins.
We decided to focus on the SMB market with Star as we felt that the ISP’s at the time were focused either on the consumer or enterprise markets. But we soon realized that there wasn’t much money to be made in simply offering a connection. There were already quite a few companies with much larger budgets to spend on both their networks and their marketing that would always be able to do this better than us.
So we thought long and hard about how we could stand out in the market and be able to charge more for our services and came up with two main principles:
*Customer Service – provide some real hand-holding in the form of great customer service
*Innovation – offer more than just a connection and help customers to really get the most out of the Internet
We always stayed true to these principles and they helped us to prosper in what was an increasingly crowded and commoditizing market.
Our first product was a single box to connect any network to the internet that we called NetStar. The box included a mail server, a firewall, an IP-IPX Gateway and made what was a complicated process much easier to deal with. NetStar won a number of awards including Internet Product of the Year in 1996.
In 1998 we launched a range of additional services called NetTools, which included an Internet-level anti-virus service. We felt there was an opportunity, with viruses now piggy-backing on email, to build an anti-virus service within the fabric of the internet that could address the problem closer to the source. The service did not require updates or look for an exact match like traditional AV software and instead tapped into multiple data sources including the reputation of the sender, movement patterns, and within the email itself to dynamically recognize new threats.
The anti-virus service was so successful that we set up a new company in 2000, MessageLabs, to scale up this technology and build out the operations on a global basis.
This led to some difficult years for Star as many of the best people and resources were (rightly) drafted into MessageLabs as it was seen as the bigger opportunity.
In 2008 we were gearing up for an IPO with MessageLabs as the company was now a global leader in anti-virus and anti-spam services with revenues of $150m. We were advised that it would be best to sell Star so we could take MessageLabs to market as a pure-play SaaS story.
We took the opportunity to buy Star back from our investors and, towards the end of 2008, MessageLabs was sold giving us the time and money to put back into the business.
In 2009 we set up Notion Capital and Star became our anchor investment for Fund I. We believed that Star had a great opportunity to reposition itself as a broad-based Cloud Computing provider where customers could migrate all their communication and computing needs. We also felt that Star could really help us with the evaluation of new technologies and act as a potential route to market.
Thanks to the great work of the management team and the whole company Star was really delivering on this vision. The business moved beyond the £50m in annual revenues and was back growing again. This all culminated in its sale to Claranet last week. So much of this market is now all about scale and I’m sure the two companies are the right fit and will be stronger and more successful together.
Star has now had the exit that it deserves and I’m sure the combined group will go onto to great things together. But my overriding memory of Star is as a mothership.
Star nurtured so many great things. The business taught Ben and I that the best way to stand out and maintain margins was to innovate. It took so many people who were inexperienced and rough around the edges (myself included) and taught us so much about building Internet businesses. So many of those people have gone onto great things and Gloucestershire is now well and truly on the technology map. Star also came up with and nurtured the idea behind MessageLabs, a company that went on to a $700m sale to Symantec and still stands as one of the largest SaaS transactions.
At the same time as doing all of this Star was a solid, reliable and growing company in its own right. It never had the buzz or the amazing growth of some start-ups. But it was a company that you could trust and that really looked after its customers.
For me Star really was the mothership and I’m going to miss it much more than I realized now that it’s gone.