Monday, 18 May 2015

How misbehaving at school made one man a multimillionaire

There are not many people who have become multimillionaires as a direct result of misbehaving at school, but Jack Cator is one of them.

Back in 2005, the then 16-year-old was annoyed that his secondary school in Norfolk, eastern England, had put strict blocks on its computer network, to prevent the pupils from accessing music and games websites.

So, as a keen computer programmer he decided to use his knowledge to hack the system.

"I thought it would be fun to bypass the school's filters," says Mr Cator, now 26.

To do this he used a website which disguises a computer's digital fingerprint, by routing it through a remote server, typically located abroad, allowing a user to surf the internet privately and anonymously. Such websites provide users with something called a virtual private network (VPN).
HMA allows people to access websites which may be otherwise blocked
Mr Cator got it to work, and soon instead of using a school computer to research his homework, he could watch his favourite music videos. HMA allows people to access websites which may be otherwise blocked

But unhappy with the qualities of the then VPN providers, which he said weren't easy to use and carried too much advertising, Mr Cator decided to build his own.

This took him just one afternoon sitting on his parents' sofa, and he gave the website a tongue-in-cheek name - Hide My Ass (HMA).

Fast forward 10 years, and Mr Cator has just sold the business - of which he was the boss and sole owner - for £40m.

HMA, which Mr Cator turned into one of the world's largest VPN companies without the need for any outside investors, has been bought by global software group AVG.

For its money, AVG is getting a company with more than two million customers, an annual turnover of £11m, and yearly profits that exceed £2m.

And Mr Cator is to continue as HMA's chief executive.
'Went viral'

Despite being a 16-year-old schoolboy a decade ago, Mr Cator already knew enough about the dark arts of promoting websites, and making money from the internet, to realise that HMA could be a commercial success.

So he started to promote the website on interested internet forums to build up some buzz. HMA set up its headquarters in London three years ago

HMA would make money from something called "affiliate marketing". In simple terms this means that Hide My Ass gets a commission from a retail website whenever someone clicks through to it via HMA and buys something.

Within a month HMA had hundreds of thousands of users around the world, and revenues of £15,000 per annum.

Mr Cator says: "I was so surprised that it went viral so quickly. I never wrote a business plan or anything.

"I just launched the whole site in one afternoon. [But] if people think it's a good cause, they will share it."

With the business earning Mr Cator rather a lot of pocket money, he stayed on at school and went to college in Norwich to do computer studies.

But in 2009 he decided to drop out to run HMA full-time, adding a paid service which now has more than 200,000 subscribers. These are in addition to the two million people who now use its basic free version. Mr Cator says having a fun name has helped the business grow because people remember it

To help grow the business Mr Cator realised he needed staff, which he employed on a freelance basis.

To begin with, he took on people he hadn't even spoken to on the phone, let alone met in person, including a website builder in Kiev, Ukraine, and a customer service manager based in Belgrade, Serbia. Instead they all simply communicated by email, with Mr Cator still based at home in rural Norfolk.

"I would really recommend the outsource route, just because it doesn't cost as much, you don't need a proper office, and you can find very skilled people," he says.

But as the company grew, he soon realised the limitations of this approach.

"One thing I slightly regret is not acting on the whole opening an office space... and making it a proper company a bit sooner," he says.

"When you do grow rapidly there comes a point where hiring people remotely is not ideal - there are trust issues.

"At one point I had people working in seven or eight countries, and you don't really know who these people are to some extent."

Mr Cator adds that the last straw came when a contractor attempted to set up a rival company.

And so in 2012, Mr Cator took the entire operation in-house, with longstanding freelancers coming on board as full-time members of staff.

Mr Cator also moved to London in the same year, where he established a headquarters for HMA in Soho. Meanwhile, subsidiary offices were set up in Belgrade and Kiev for his trusted workers based in those cities.

Today the business has close to 100 staff in total, and is continuing to see its revenues double each year.
Blocked itself

VPN providers such as HMA offer users a number of advantages.

In addition to allowing people to access websites that may be blocked in a certain country, they also protect against hackers being able to gain your personal details, or know where you live. HMA is itself blocked in a number of countries including China

However, VPN companies - which are themselves blocked in countries such as China and Iran - have also come in for criticism.

For while people can use them to protect themselves on the internet, they can also be used by bad guys wishing to cover their tracks.

Mr Cator says that HMA is no more open to potential abuse than most other internet companies, and that it always hands over any information requested by the police.

With the business' popularity now set to continue to grow strongly under AVG's ownership, Mr Cator adds HMA hasn't just been successful because of the service it offers.

"Our name has helped massively too," he says.

"People are amused by it - once you hear it, you can't possibly forget it."
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