‘For most of my business life I have been a serial entrepreneur, starting businesses from my back bedroom. The link has always been communications. I was originally trained in information graphics at art school in the 1960s. And each company has been a real learning experience. It always amazed me how many people thought that, as the managing director of my own company, I would pay myself what I wanted and take as much time off as I liked. This is far from the truth, as my long-suffering family will attest. Many times I’ve re-mortgaged our house and gone without a salary for a year, working 14-hour days to get a business off the ground. And Infobank, for myself and the other founders, has been no different.
Infobank provides business-to-business e-commerce infrastructure software, offering a range of e-procurement, e-supply and marketplace software solutions, packaged in one multi-platform product, giving companies of all sizes the ability to create a trading community. Each software solution addresses the individual needs of purchasers or member suppliers within their organization or marketplace. In lay terms, we help companies reduce business costs by automating repetitive administrative processes.
Since the period of start-up funding (during which IR usually means keeping the confidence of your wife and children) I have worked with a number of venture capitalists, some good and some bad. I hold the dubious honor of having been presented with a T-shirt by 3i for being ‘survivor of the year’ and, I believe, having generated through Infobank the highest ROI to 3i. I wonder if that is true?
Today, as chief executive of a publicly listed company, I have legal as well as ethical responsibilities to our investors. Different companies have differing attitudes to IR and I have been given a wealth of conflicting advice in recent years. This has ranged from Don’t waste the company’s time and money – you only need to talk to investors when something is wrong! to Your investors own the company. They can make or break it. You should be spending 80 percent of your time on PR and IR. As usual, the truth is somewhere in between.
This week I spent much of Saturday reading and amending the draft of my CEO report to accompany our annual results. It’s difficult to get the message you want across to the different audiences that you need to reach. You must hit the right note for all stakeholders – employees, customers, prospects, partners and investors.
My IR work for this week doesn’t end there. By Monday I will be presenting our latest release of InTrade to Aberdeen Group, a US-based industry analyst who has been following Infobank closely. I’m then set to attend a conference in London before flying to Edinburgh for a presentation to private investors at the Guild of Shareholders event in Edinburgh on Tuesday. Doubtless some will say, Thanks Graham, Infobank paid for my new house/car/holiday. Others will say, Why have I lost so much money, what are you doing wrong? What I really want to do is put these two together and explain that one investor’s loss is often another’s new house/car/holiday – but I won’t. The truth is that those private shareholders who have seen their value decline but stuck with us are precisely the shareholders we want. Taking a medium and long-term perspective, many have spent time understanding our proposition and potential. They are informed investors rather than speculators, and their loyalty is highly valued.
Opportunity for success
What I will do is, once again, ask them to trust myself and the team. Convince them that we have a world-class product, a world-class team, cash in the bank and a huge opportunity for enormous success ahead of us. I will also try to explain that both the scale and timing of that success is as much in their hands as ours.
As a new economy company, Infobank has been through a roller-coaster ride of investor enthusiasm and derision over the last 18 months. In 1998, while on Aim, the business diversified, lost focus, did not communicate and was severely castigated by investors. Following a steady climb in the share price from 125p to 350p in 18 months, we dropped to 35p in a month.
I was offered the position of CEO and went to our investors to explain our turn-around strategy. Our investors backed us and in 1999 we re-constituted the board and divested non-core businesses. Our shareholders ‘ticked the boxes’ as we achieved our goals; and they recognized a groundswell of support for e-commerce in the US. Our share price rode – on the crest of the internet wave – a mind-boggling 1,600 percent during Q4 1999 and Q1 2000 to reach 4300p. Infobank was now a £2 bn company. During this period we collected a number of awards for best performing share, star performer of 2000, and, indeed, from Investor Relations magazine, for best investor relations by an Aim company. We devote considerable effort to communicating with both institutional and private investors. A lot of this takes place through our web site but we also hold numerous one-on-one and group meetings and participate actively in organizations like The Guild of Shareholders.
Playing with the big boys
Late in 1999, we decided that to be a global company we needed to move from Aim to the main market. We wanted more international visibility and to attract US and European investors. We made the move with an open and international offering to raise capital to fund our international expansion.
Our advisors, Lehman Brothers and West LB Panmure, organized a roadshow in March 2000 which comprised 120 presentations to nearly 200 institutions in Europe and the US – an exhilarating and exhausting process. Three weeks and 18 flights later, a worn-out team sat and waited for the results. On one screen we watched the book building move to the £130 mn we required while on another we watched the Nasdaq fall off a cliff.
Our shares fell from 4300p through 3000p and below 2000p. Surely they couldn’t fall any more. But they could. And did. We finally closed the book at 1395p. Lastminute.com had run into problems during its flotation and this brought down the whole house of cards. Panic ensued. Nasdaq continued to fall. London followed. We desperately tried to fight our corner: We’re not a dot-com; we developed the platform, the infrastructure. It’s a completely different proposition! It didn’t matter – if any business had uttered ‘the internet’ in its presentations, it was doomed. It was a stampede out of tech stocks.
So what next? Your first instinct is to find someone and tell them how unfair it all is, that they’ve got it wrong (enter again long-suffering wife and children). But there’s no time for whinging; you have to pick yourself up, say to your employees, shareholders, stock option beneficiaries to stop looking at the share price, stop reading the uninformed rumors and speculation on the bulletin boards and get on with our business – develop the product, win customers, generate revenue, move to profitability. And, with any luck, they listen to you.
I continue to believe in the inevitable success of e-commerce, but the speed of adoption depends upon confidence and trust. When market caps have been reduced by 80-95 percent, it shakes the confidence of all stakeholders. Sale cycles extend, revenue projections are downgraded, and everyone says I told you so. Announcements of customer wins, partnerships or analyst projections result in price falls. You learn that however good you are, you can’t control the vagaries of the market. And you shouldn’t attempt to. Instead, you’ve got to keep developing relationships with investors. That’s why, for the rest of the week, I plan to concentrate on getting our results out quickly and presenting our new product to European trade analysts.
It is a busy week, an important week, an exciting week – but then again, they all are.’
