How Simon Taylor spotted profits in YouTube

For Simon Taylor, 47, the deregulation of Britain's telecoms market came at the perfect time. By 1995, the management graduate had already "learned a lot" through stints with electronics group Toshiba and telecoms giant Cable & Wireless. When the government decided to allow more competition into the telecoms market, Taylor sensed an opportunity.

He and work colleague Nick Razey came up with a plan to buy and sell telephone-line capacity from the world's telecoms firms, and exploit differences in prices. Funds from a private investor allowed them to build the "switching infrastructure" required to deal with firms around the world.

Interoute, the new firm, "was all about arbitrage. We would offer a company money for capacity it wasn't using... then find a firm that needed it." As the sector boomed in the late 1990s, so did Interoute. By 1999, sales had hit £200m a year.

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Eventually they sold up, for an undisclosed sum, to the Sandoz Family Foundation, one of the world's largest family investment firms. "It felt like the right time, we were keen to work on new ideas."

TelecomFM, the router-making arm of Interoute, hadn't been included in the sale, and Taylor grew its annual sales to £7.5m. But by 2003, he and Razey were ready to launch Saiph Communications. Their aim was to provide businesses with cheap video phone calls via broadband connections, similar to those Skype provided for consumers.

At the time, Britain's broadband network was patchy, and the pair gambled on standards improving fast. Unfortunately, broadband coverage didn't improve as quickly as they hoped. They switched business models and the firm now provides portable data-storage equipment.

The inspiration for Taylor's next business came from simply looking around him. "Everyone was spending time on Facebook and YouTube and starting to buy iPhones and Blackberrys." He and Razey recognised that all this increasing activity in the virtual world would create lots of extra data that would need to be stored somewhere. "People have grown used to accessing stuff on the internet, but they don't realise that the information needs to be physically held somewhere."

The pair decided to build a high-quality data storage centre. In Wales, they found a manufacturing plant that had been built for South Korean firm LG Electronics. LG had spent £150m building the facility and had constructed its own power substation. Taylor and Razey used a combination of loans, their own money and outside investment to launch a £25m refurbishment.

It soon paid off, as the likes of BT and Logica signed up to the site before the new firm, Next Generation Data (NGD), had even opened. "We have several advantages. Our location makes us cheaper than a London site and less at risk from terrorism too."

Another advantage is the way it's powered. Data centres are major energy consumers, but NGD buys power generated from renewable energy an important selling point for technology firms concerned about their image. Last year sales hit £6m, but Taylor isn't resting on his laurels he has "a few exciting ideas" he plans to turn into new businesses in the near future.