Two young Dublin tech executives, Eoin Blacklock and Jonathan Crowe, were on a flight home from California in 2015 having just acquired a cloud computing business from Hewlett Packard for their then employer, J2 Global.
It was the 52nd buyout they had negotiated for Nasdaq-listed J2 and its Irish subsidiary, KeepItSafe, in a $230 million (€206.5 million) shopping spree over just a few years. The duo, then aged in their early 30s, decided it would also be their last.
“It was a great deal. We said to each other: if we got just one deal like that for ourselves over the next 15 years, we’d be doing good,” says Blacklock.
He and Crowe had built KeepItSafe from scratch into a $120 million-a-year business for J2, which had bought it from the duo five years before, a few years after they founded it while studying computer science at Trinity College Dublin.
“We built it up to where it was generating $1 million a week of free cashflow,” says Blacklock. “But we felt there was a huge variance between our personal success and the success of what we created. The [J2] top executives were getting huge bonuses. What about us? So we decided on that flight: let’s go . . .”
The company resides above a women's fashion boutique in Blacklock's hometown, Malahide, a village in north Dublin
Blacklock and Crowe, a genuine double act, are now out on their own once again, jointly running the cloud back-up and disaster recovery group they founded, Ekco, which has operations in Dublin, the UK and the Netherlands. Crowe is more of “the operations guy” while Blacklock is commercially focused.
Ekco, which last month rebranded from Internet Corp, has to be Ireland's lowest profile indigenous technology multinational. It isn't located where you might expect it to be, in the shadow of some trendy tech giant in Dublin's Silicon Docks, ground zero for the city's hipsters. Rather, it resides above a women's fashion boutique in Blacklock's hometown, Malahide, a village in north Dublin. Its boardroom is above a solicitor's office and men's boutique across the street.
Ekco, founded in early 2017, may revel in its low-key status but it has picked up some blue-chip financial backers along the way. It has raised close to €16.5 million in equity and €20 million in debt, which it has already used to make nine separate acquisitions.
It will look to raise a further €25 million in debt funding later this year, which may help it fund a crack at the US market.
Shareholders include former AIB chairman Lochlann Quinn; Sencheer, investment vehicle of the family of the late Superquinn founder, Feargal Quinn; and Pageant Holdings, the investment group of businessman Nick Furlong. The outside investors own close to 50 per cent, with Furlong taking the biggest bite. Management own a small stake, and Blacklock and Crowe own the balance with about 20 per cent each. Ekco expects sales of close to €30 million this year.
“We’re looking at doubling revenues each year, as we did with KeepItSafe. It will take us two, maybe three, years to get it to €120 million, back at the level we were at when we left J2. Then we’ll see where we are,” says Blacklock.
Blacklock and Crowe’s story is not a typical technology growth narrative of unicorns and stratospheric valuations and tech bro excess. Theirs is more a tale of bootstrapping graft, of how two young Dublin Trinity students quietly made it in the fragmented world of cloud-based IT disaster recovery services, before selling out to a Nasdaq buyer and then jumping ship to do it all over again.
When setting up a business, the younger you do it, the better. We were living at home. No loans, nothing. So we thought why not?
The duo first met in Trinity, Blacklock hailing from the north Dublin fishing village and Crowe “from two towns down” in Baldoyle, although he has since moved to Malahide. As they neared their final year, they nursed a business idea.
“When setting up a business, the younger you do it, the better,” says Blacklock. “We were living at home. No loans, nothing. So we thought why not?”
At the time, most businesses backed up all their data and IT systems physically onto inefficient tapes, rather than online in “the cloud”. The duo had the idea of offering safe back-up services to servers over the internet instead. They graduated in 2005 and immediately registered KeepItSafe.
“It wasn’t even called the cloud back then,” says Crowe. “I think we just called it online back-up. We had to explain to people what it actually was.”
Their strategy was to target smaller enterprises, backing up all their data for easy recovery should disaster strike. They acquired a single server to hold one terabyte of data, and convinced a larger servers company to hold it for them.
“Then we started cold-calling SMEs in Skerries and other towns nearby. We had no choice because we had zero money. All we could afford to do was to print brochures and knock on doors,” says Blacklock.
They quickly realised that most SMEs have a stereotypical “IT guy”, usually an outside contractor who takes care of all its technology needs. They decided their best route to market was to sign up the IT guys as partners, who could resell their services to their clients. This simple idea remains at the core of Ekco’s strategy today.
KeepItSafe soon filled up its single server with the data of 250 client companies. For the first 18 months, Blacklock also worked as a waiter in local Malahide restaurant, Cruzzo’s, while Crowe worked as a consultant. Within a couple of years, they had more than 1,000 customers, about 100 reseller partners and €1.5 million of annual revenues, generating recurring fees.
The two young Dubliners had an opportunity to take cash off the table and work for a Nasdaq multinational
By 2010, Blacklock and Crowe, now aged 27, had eight staff. One of their customers was the Dublin branch of Californian group, J2, which owns an assortment of internet businesses. J2 made an offer to buy them out but keep them on.
The economy was in freefall, some of their friends were out of work, yet the two young Dubliners had an opportunity to take cash off the table and work for a Nasdaq multinational, which wanted them to drastically scale up the business by mopping up competitors. And it had plenty of capital to back them up.
They devised a “micro mergers and acquisitions programme” to buy up their small competitors in Ireland. They would develop a relationship with a small IT consultancy, convince them to sell, and bolt them on while retaining the brand.
J2 began funding them to do the same internationally. Blacklock stayed in Dublin and focused on finding targets in markets such as the UK, Netherlands and Norway. Crowe, meanwhile, spent much of his time working on deals in North America from J2’s offices in Los Angeles.
“The office was on Hollywood boulevard, opposite the Chinese Theatre,” says Crowe. “My agreement was to do everything outside of Europe, so I travelled a lot. We did about 20 deals in the US and Canada over the next couple of years, but also others in New Zealand and Australia. Myself and Eoin co-managed the whole thing, reporting directly to the chief executive of J2. It was great.”
By 2015, KeepItSafe had assembled a collection of more than 50 local cloud back-up operators that was growing sales by about $25 million each quarter. They had also assembled a close-knit team of young professionals in Dublin providing centralised legal, human resource and finance services to the group.
Blacklock and Crowe had also squeezed the last from their earn-out payments from selling KeepItSafe to J2. So, after the 2015 HP deal, they decided to do it all again, but this time for themselves.
Their first year after J2 was a quiet one as they had signed a non-compete agreement. Late in 2016, they took a 45 per cent stake in an Irish company, Datastring. The following summer, they bought Dutch operator, Cloud2. They funded both transactions with their own cash, and a slug of debt for the Dutch deal.
“After that, we had to start funding our own acquisitions,” says Blacklock. “That was a new thing for us.”
They were going to call it <a class="search" href='javascript:window.parent.actionEventData({$contentId:"7.1213540", $action:"view", $target:"work"})' polopoly:contentid="7.1213540" polopoly:searchtag="tag_company">Evil Internet</a> Corp, as an <br/> Austin Powers-esque inside joke about their plans <br/> to take over the world
The duo had to register their new group. They were going to call it Evil Internet Corp, as an Austin Powers-esque inside joke about their plans to take over the world. Sitting in front of a laptop in an Insomnia coffee shop in Malahide one day, they dropped the Evil and registered it as plain old Internet Corp.
They soon started putting the old band back together, reassembling some of their old management team who had worked with them under J2, including head of finance Dave O'Reilly and general counsel Eimear Scully, who worked on most of their previous buyouts.
Through IBI Corporate Finance, they also raised €8 million in equity, bringing on board their blue-chip investors. About €16 million from Ulster bank followed, and another equity round of €8.4 million last year.
Much of that cash has been deployed on a further seven buyouts over the past 2½ years. The group now comprises four Dutch units, four UK units, and Datastring in Ireland, of which they took full control this month.
Crowe explains that the Dutch companies comprise about 60 per cent of sales, the UK 30 per cent and Ireland 10 per cent. Ekco has almost 100 staff, with close to 30 in Ireland. Its largest acquisition so far has been for a company with annual sales of €6 million, while the average is about €3 million. They are mulling some larger buyouts.
“But our strategy is still to be local,” says Blacklock. “Businesses want to back up their data with a local operator they can trust. They don’t want to dial 4 for service, and then dial 2 to get through to the operator. They want the red carpet treatment, to be able to easily reach someone to help them if there’s a problem with their IT systems.
“All of the businesses we buy have that same DNA, the same high touch customer management. We tie it all together in a beautiful customer portal.”
Ekco's client list includes many SMEs, but also big players such as Post NL (the Dutch postal company), Heineken and Schiphol airport in Amsterdam.
If the strategy is to double its near €30 million revenues each year, surely its buyouts must soon become larger and happen faster?
“Yes,” says Blacklock. “When is our next one due? April?”
Crowe shoots back: “There is possibly two in April. We’ve got a huge pipeline.”
Blacklock envisages most of its acquisitions will still be in the UK and the Netherlands: “But Jonny still has his eyes on North America. Towards the end of the year we are looking at a few deals in the US. We know the market.”
Crowe chimes in: “And the transaction sizes are a lot larger over there. We’re starting to get involved with some much larger businesses.”
After it raises further funding and completes a few larger buyouts, Ekco should be well on course to hit the €120 million-a-year benchmark that it has promised its wealthy investors it will meet. What then?
We're not in any rush. We're still in that enjoyable growth phase
“Look,” says Blacklock. “We’re trying to build a European brand. Then there is the US. In 2015, we were doing deals in the US on private jets for a listed company. It was fun. But now we’re doing it for ourselves. When you’ve sold your first company already, you’ve the benefit of a little bit more patience.”
For now, they remain focused on building Ekco from its modest base in Malahide, and in their own idiosyncratic way. Most of their staff live reasonably locally and so are spared the city commute hell.
Ekco has a close company culture, and even organises a company swim each Friday. It brings over clients from the Netherlands for Dublin museum tours and puts them up in the Grand Hotel in Malahide.
There is more than one way to build a tech multinational.
“We’re not in any rush,” says Crowe. “We’re still in that enjoyable growth phase. It also helps that there are two of us. You can share the pressure. It means when you go on holidays, you can actually go on holidays.”
Eoin
Age: 37
Home: Malahide
Family: Partner and four children
Something about you we might expect: "I have dark mode enabled everywhere possible."
Something about you that might surprise: "I worked as lifeguard on Portmarnock beach for six summers."
Jonathan
Age: 36
Home: Malahide
Family: Living with my partner
Something about you we might expect: "I never miss an Apple keynote."
Something about you that might surprise: "I have a blackbelt in Taekwondo."
