Pipex – The Early Years
Unipalm was a very early computer networking software company founded in Feburary 1986 by Pete Dawe specialising in the emerging TCP/IP protocol. The company was already profitable when it decided to expand into corporate email in 1991 and set up Pipex as a subsidiary to specialise in providing internet connections to corporate customers. By 1994, the Pipex business was growing rapidly, needed capital and floated on the UK stock market. In 1995, the largest US ISP, UUNET decided to expand into Europe and one of its’ first investments was Unipalm/Pipex which it bought with the early founders leaving the company with millions in their pockets.
UUNET made other acquisitions in Europe, invested in infrastructure and won more market share. UUNET was eventually bought by MFS, who was bought by Worldcom, who was bought by its’ current owner, Verizon, in a series of mega-acquisitions. After all these years the rump of original Pipex business is still #1 in providing dedicated access to FTSE350 companies according to Backdoor research with 18.5% of the market.
In 2001, whilst Dave Rickards was working for Worldcom, the UK consumer market was in turmoil: Freeserve had entered the market and was offering free access for consumers and many of the traditional players like Pipex, who marketed services to Joe Public were really suffering. Pipex was a very small but troubled part of mega-troubled Worldcom who focussed on the corporate market. Dave Rickards in partnership with his wife bought Pipex from Worldcom: it is rumoured that the price was as low as £1. I would guess they immediately felt the benefit of being free from the huge overheads that come with being part of a multinational telco giant.
In January 2002, they decided to invest £5m offering a subsidised self-install ADSL 512Kbps product at £29.95/month for 40k customers. They were swamped by demand and had huge customer care problems dealing with demand and the new technology, but nevertheless sales were extremely good.
In as little as two years, the Rickards built a customer base of 120k. Pipex made around £10.1m in profit in the year and had £20m cash in the bank. The company was sold to a Peter Dubens company, GX Networks, in 2003 netting the Rickards a cool £55m. Peter Dubens previous claim to fame was the selling of heat-sensitive T-shirts to party-goers in the Madchester Dance music era.
In two incarnations Pipex has made serious money for two of its’ owners, both of the owners were true innovators in the ISP area: one by being the first commercial ISP in the UK and the other by being the first to offer mass-market broadband products to the public.
With today’s incarnation of Pipex I don’t see any of this innovation: I see a market-follower rather than innovator with the owner basically following a growth by acquisition strategy. It will be interesting to see the return that Peter Dubens ultimately makes with this change of approach.
UUNET made other acquisitions in Europe, invested in infrastructure and won more market share. UUNET was eventually bought by MFS, who was bought by Worldcom, who was bought by its’ current owner, Verizon, in a series of mega-acquisitions. After all these years the rump of original Pipex business is still #1 in providing dedicated access to FTSE350 companies according to Backdoor research with 18.5% of the market.
In 2001, whilst Dave Rickards was working for Worldcom, the UK consumer market was in turmoil: Freeserve had entered the market and was offering free access for consumers and many of the traditional players like Pipex, who marketed services to Joe Public were really suffering. Pipex was a very small but troubled part of mega-troubled Worldcom who focussed on the corporate market. Dave Rickards in partnership with his wife bought Pipex from Worldcom: it is rumoured that the price was as low as £1. I would guess they immediately felt the benefit of being free from the huge overheads that come with being part of a multinational telco giant.
In January 2002, they decided to invest £5m offering a subsidised self-install ADSL 512Kbps product at £29.95/month for 40k customers. They were swamped by demand and had huge customer care problems dealing with demand and the new technology, but nevertheless sales were extremely good.
In as little as two years, the Rickards built a customer base of 120k. Pipex made around £10.1m in profit in the year and had £20m cash in the bank. The company was sold to a Peter Dubens company, GX Networks, in 2003 netting the Rickards a cool £55m. Peter Dubens previous claim to fame was the selling of heat-sensitive T-shirts to party-goers in the Madchester Dance music era.
In two incarnations Pipex has made serious money for two of its’ owners, both of the owners were true innovators in the ISP area: one by being the first commercial ISP in the UK and the other by being the first to offer mass-market broadband products to the public.
With today’s incarnation of Pipex I don’t see any of this innovation: I see a market-follower rather than innovator with the owner basically following a growth by acquisition strategy. It will be interesting to see the return that Peter Dubens ultimately makes with this change of approach.
<< Home