Octave Klaba wants to build the European champion of cloud computing
Octave Klaba, the founder of OVHcloud, arrived in a Paris court earlier this year to make an offer for a promising tech start-up that had gone bankrupt, only to run up against a competitor: Xavier Niel, the tech billionaire on most famous in France.
“He’s a shark who can spot a good business opportunity, and so can I,” Klaba said, recalling how he outbid Niel, the founder of technology incubator Station F and a serial investor in startups. ups, for Shadow, a cloud gaming service.
Unlike Niel, the 46-year-old Polish-born entrepreneur has kept a relatively low profile so far. But this week, the cloud computing company OVHcloud he founded in the industrial city of Roubaix, in northern France, will begin trading on the Paris stock exchange.
The group aims to raise 350 million euros by selling new shares during the IPO at a valuation between 3.5 and 3.75 billion euros, and Klaba and his family still own 78% of the shares. .
Even after selling a share in the IPO, their roughly 70 percent stake will be worth $ 2.5 billion if the stock price is at the low end of the range, making it one of the richest tech entrepreneurs in Europe.
âI know it’s hard to believe that a Roubaix business that was started without venture financing can compete with the US tech giants,â Klaba said. “The IPO will help us convince skeptics that this is really happening and that they should get involved.”
Founded in 1999 as a web hosting company, OVHcloud today employs 2,200 people and provides IT, storage and networking services to clients primarily in Europe and the United States. A large fire at a data center in Strasbourg earlier this year kicked off its growth and resulted in additional costs, but it still targets annual revenue of â¬ 663 million and operating profit of around 230 millions of euros.
Octave is the president, his father Henryk and his brother Miroslaw, both engineers, are respectively at the head of the network and of R&D and are members of the board of directors.
The IPO will be a key moment for the French tech ecosystem, which is creating more and more billionaire start-ups, but which has seen few public listings in Paris. Before digital music company Believe went public earlier this year, no France-based tech company had been listed on the stock exchange at a valuation of more than $ 1 billion since the advertising group in Criteo line was listed on Nasdaq in 2013.
Meanwhile, some French founders have moved to the United States to expand their businesses, leading to successful IPOs such as DataDog in 2019 and Snowflake in 2020.
Klaba, who is married with three daughters, doesn’t seem to care much about the outward attributes of wealth. His office outfit consists of T-shirts with OVH logos and sneakers. âI was born in communist Poland where we had nothing, so you learn to get by with very little,â he said.
Instead, he is spending his money growing the business, playing the guitar, and more recently investing in other start-ups and setting up a new wind turbine manufacturing business. A serious battle with Cancer ten years ago made him realize his priorities and that OVHcloud needed to be structured and strengthened to survive him.
Klaba’s grandfather was a minor in northern France after World War I, but returned to Poland in 1949. But thanks to his grandfather’s French nationality, the family was able to settle in France when Klaba and his brother were teenagers.
“We said [our parents] we wanted to go, âKlaba said. âSince then, I have seen it as my role to make sure that the family does not end up poor in France. To take care of everyone.
Klaba did not speak much French when the family arrived in Roubaix, but became interested in the Internet and the servers that underlie the networks, at the engineering school in Lille.
This hobby will lead him to create OVH (the name means âwe host youâ, in French for âwe host youâ) which stores and operates web pages for its clients. As the business grew, the whole family joined the business. Klaba’s father helped invent OVH’s internal server technology which became the key to their low-cost model because it used water to cool its processors instead of more expensive air conditioning. His mother was in charge of finances and administration.
The family did not take any outside investments until 2016, when they sold a 20% stake in private equity funds KKR and Tower Brook for 250 million euros.
“What I’m trying to prove with OVH is that there is another more European model that puts entrepreneurs and families at the center of the ecosystem,” Klaba said, referring to how he avoided the venture capital and had grown more slowly than an American. Start. âWith us, entrepreneurs stay in control instead of being at the mercy of investors or financial pressures.
Klaba was helped early on by none other than Niel, who rented space from the young entrepreneur in a building he owned in Paris for his growing server banks. Klaba was so devoted that he slept next to his gear some nights, Niel recalls.
âConsidering his unusual life history, what he’s done is impressive,â Niel said. “It came out of nowhere to build a great company that will be a European leader in cloud computing.”
Today, OVHcloud is trying to break into the market for so-called public cloud computing services, which is growing by around 25% per year and is dominated by American players including Google, Amazon and Microsoft.
Until now, it lacked the size and financial clout to compete directly with them in this segment – he estimates that it has a 1% market share in Europe, against 66% for American groups.
But its position is stronger in âprivate cloud servicesâ where equipment such as servers are used exclusively by a business or organization rather than shared, such as in public clouds. OVH estimates that this market represents a turnover of 8 to 13 billion euros per year worldwide, and is growing by 15 to 20% per year. In Europe, it estimates it has around 10 to 15% market share, on par with its main competitor IBM Cloud.
OVHcloud also still generates a quarter of its turnover in web hosting, where it occupies a leading position in Europe.
Many political circles in Paris and Brussels want OVHcloud to succeed because they fear that European sovereignty and economic competitiveness will be threatened if companies and governments are forced to rely solely on American cloud providers.
Klaba skillfully used these concerns to defend OVH as a safer alternative, as its servers outside of the United States are not subject to search warrants from U.S. law enforcement and intelligence agencies, although some experts and lawyers question this assertion.
“OVHcloud is the only European company that has a chance to resist the domination of the American technology giants”, declared CÃ©dric O, Minister for Digital Affairs. “It’s a very important player in European technology, and it’s telling that Octave built it on his own without any help.”