Piers Linney explains how he turned a mobile reseller business that “looked like an Argos catalogue” into £44m cloud computing firm Outsourcery.
“I never meet myself,” says Piers Linney, when I ask him about what’s inspired his work with the government-backed Reach programme, which aims to provide positive role models for black pupils. As a former City lawyer, investment banker, venture capitalist and now owner-manager, it’s understandable if the 39-year-old has few contemporaries, but his point is a fair one: “Some professions, like law and banking, have very high hurdles to get over. If kids don’t see people like themselves in those positions, they think, ‘why should I try’.
On the other hand, the joint chief executive of £44m communications and IT firm Outsourcery gives the impression that he’s learned to enjoy being different. Linney, who was the only black pupil at his comprehensive school, now boasts of wearing jeans to small business summits at Number 10 and, during the photo shoot when we meet at his West End offices, becomes the first Growing Business interviewee to offer to ride a mountain bike off a patio table.
The son of a Barbadian mother and a father who was one of the first working class boys to win a Cambridge scholarship, Linney grew up in the Lancashire town of Bacup. “Kids always look for differences and mine were pretty obvious,” he recalls. “But it wasn’t this dour upbringing with people throwing bricks at you.”
It took him “a while to focus” on exams, but he was ambitious. “I wanted to be a businessman but I didn’t know what it was,” he says. “The closest I could equate to it was being an accountant or something like that.”
He studied law and accounting at Manchester University and went on to land a job at City law firm SJ Berwin. In the first example of a recurring restlessness that punctuates Linney’s career, he quickly found himself “more interested in why people had done the deals than what it should look like in a contract after the event”. On qualification, he left law for investment banking, taking an M&A role at Barclays de Zoete Wedd (BZW). When it was acquired by Credit Suisse, a mismatch in management structure propelled Linney to a more senior position focused on cross-border M&A and leveraged buyouts. “I was one of those guys who’d work 16 hours straight and do one all-nighter a week. I missed out on a lot of family life but I loved it.”
In 2000 however, a nagging desire for a more tangible relationship with business than the ‘helicopter view’ banking delivered drove Linney to walk out of Credit Suisse, bonus in hand. He survived launching an online marketing business just before the dotcom crash, became the COO of a VC-backed dance music firm led by former Radio One controller Matthew Bannister and then, frustrated by a lack of equity, left in 2003 to launch a venture capital firm which became Tower Gate Capital.
The fund evolved into the UK’s first private placement agent, bringing the US concept of Private Investment in Public Equity (PIPE) funds to the UK, a method by which small listed firms can quickly raise further finance without going back to the market. “It’s like venture capital but you can get out by selling your shares,” he explains. While it became one of a handful of European specialists, Linney admits the concept proved “quite a hard sell” but insists a “big opportunity” to exploit it in the UK remains.
Along with Simon Newton, a colleague and friend he’d met on his first
day at BZW, Linney kept his hand in on entrepreneurial ventures by
investing in and mentoring start-ups, often converting fees to equity.
In 2007 the pair heard that electronics retailer DSG International
wanted to sell Genesis Communications, which provided mobile and data
services to small businesses. DSG wanted to move quickly on the deal, so
Linney and Newton, by then managing director for corporate finance at
Dutch bank ING, structured a management buyout of Genesis in under three
weeks, completing their own due diligence and beating a number of
larger rivals to the punch.
“The opportunity we saw was that a FTSE 100 company wanted to sell a
business it didn’t really understand. It had revenues, it had customers
but it also had a very high cost base which we thought we could do
The firm, rebranded as Outsourcery, turned over £44m last year, up
from £33m in 2008, but under Linney and Newton’s leadership, its story
has been as much about restructuring and turnaround as growth.
Their initial plan was to keep their day jobs and leave the
existing management team in place, but following an appraisal of the
operation, they soon changed their minds. Genesis was too committed to
selling “commoditised products” – including pure mobile, fixed line and
ADSL. “As it was, the business looked like an Argos catalogue. It was
dying. We were never going to achieve our vision unless we took
Their plan was to reposition it from being a mobile reseller to a
diversified seller of ‘unified communications’, ultimately positioning
it halfway between an IT firm and a traditional telecoms business.
“I was very interested in how we could do something new and
interesting. We stopped selling all the traditional stuff apart from
mobile and instead decided to focus on hosted IT and cloud computing.
Software companies struggle to do telecoms, telecoms firms struggle with
software. But they’re all heading in the same direction: converged or
unified communications. Rather than coming up the side of the pyramid
through a specialism, we decided to build the end result at the top and
Linney claims that by June, Outsourcery will have “the broadest and
deepest software plus services product set in the UK”, which includes
hosted IT, a full phone system via the internet including video links,
smartphones, CRM, email and collaboration software, with the option to
have all of the products customised, integrated and synchronized.
Customers pay nothing for maintenance, online support, or crucially,
upfront investment in an IT infrastructure.
Unlike many cloud computing firms, Outsourcery hosts its own data, a
move Linney describes as bold and expensive. “We decided to own all of
our own infrastructure so we can move quickly. It cost us £10m. That’s
where the market’s going, we just got there faster.” Its two data
centres, in Leicester and Manchester, are mirrored, which he claims
offers a level of data security ‘on premise’ systems, or even most
hosted options, can’t hope to rival: “If a meteorite hit one of our data
centres, you’d never notice. Small businesses, and even most
corporates, are unable to afford the kind of infrastructure we have.
“Other firms say they have back-up of all your data. That’s fine,
but if they lose the application servers it’s like having a VCR without a
TV. It could take a month to rebuild the applications. Simon and I took
the decision to build this in such a way that we could offer our
services to our friends in the City and look them in the eye with full
confidence that their data is secure.”
Mobile still represents the bulk of the firm’s revenues, but the
investment and restructuring is gradually changing the mix. Genesis had
285 employees, all mobile focused, and Outsourcery added a further 85
people when it acquired THUS Mobile from Cable&Wireless last year.
Now, of a total headcount of 230, it has 120 people in its mobile