6042
getting-on-with-it

server-farm

The real world is much more stimulating than the confined space occupied by Westminster and its attendant supplicants, critics, gurus, apologists, victims, soothsayers and nay-sayers. Generally, Westminister is an unseemly and bloated crowd of busybodies seeking to share out the spoils garnered from those in the real world who provide the goods and services that others in the real world actually want.

For a refreshing insight into just one corner of a non-Westminster world, take a look at this fascinating story in the Financial Times. Be warned, though, it contains no references to national policies or guidelines or targets, no cries for tighter regulation, no forecasts of imminent Armageddon, no demand for fairness. And, most mercifully, this elegant little business story doesn’t contain the words “Vince Cable.”

What the story does contain is a lesson on what businesses do for a living, beyond generating tax revenues. In brief, it’s a look at two companies, Colt Data Centre Services and Telecity, who are successfully exploiting the rising demand for data storage. Most critically, they are doing this with cheaper, snap-together, modules that can be set up almost anywhere in four months, rather than the usual 18.

The real kick to the story, though, comes from a sidebar on the history of Telecity itself. It floated on the London Stock Exchange in 2000, valued at £1 billion. The dotcom bust hurt badly, prompting a takeover by private equity for just £58 million in 2005. However, restructuring, consolidation and acquisitions in partnership with those otherwise demonized private equity firms led to a re-float in 2007 for £436 million and an estimated enterprise value today of nearly £1 billion.

This is a classic tale of Joseph Schumpeter’s Creative Destruction process. No doubt, Colt and Telecity will have to continue twisting and turning to survive by reinventing themselves, just as IBM, Xerox, Rolls-Royce and British Aerospace have had to do and as Microsoft, Nokia and even Google are now fast discovering.

Let’s just hope the denizens of Westminster don’t get involved. Indeed, maybe Telecity’s private equity investors could be unleashed in Mr Cable’s office.