Fatal Error (34 page)

I saw them together on the pavement. They were waiting for a taxi too. They were very close together. It looked as if Guy had his arm round Ingrid’s waist. I could hear Ingrid’s laugh ringing up the side-street towards me.

I stopped still and watched them. They didn’t see me.
Suddenly I felt cold. The comfortable glow of internet success left me.

I turned on my heel and walked all the way home.

I slept little that night. The next morning I asked Ingrid to join me for a coffee. She agreed, and we headed for the place round the corner.

‘I wonder how many of those people last night will actually get funding,’ she said as we stepped out into the street.

‘Not many, I hope,’ I replied uncharitably.

‘I met a guy from QXL, you know, the auction site?’

I grunted. Ingrid went on.

‘It’s an amazing story. They floated in October with a market cap of two hundred and fifty million, and now they’re worth nearly two
billion
. Can you believe that? I knew they were doing well, but I didn’t realize it was that well. And all from selling knick-knacks over the Internet.’

I grunted again. We entered the coffee shop and ordered.

‘OK, out with it,’ she said as we sat down with our cappuccinos. ‘Something’s bugging you and you want to talk to me about it. By the look of you, it’s bugging you pretty badly.’

‘Oh, it’s nothing really.’

‘Come on. What is it?’

I looked her straight in the eye. ‘Are you sleeping with Guy?’

Ingrid appeared genuinely shocked. She put her cup down. ‘Am I what?’

‘You heard me.’

‘No. No, I’m not.’

‘It’s just, I saw you last night.’

‘And I saw you,’ she said defiantly.

‘I mean I saw the two of you. Together. Getting a taxi. Together.’

‘So what? I got in one and then he got in another.’

‘Oh, I see,’ I said.

‘Don’t you believe me?’ It was a challenge. Ingrid did not like having her honour questioned.

‘Yes. Yes, of course I do. It’s just, he had his arm around you. You were together. I’ve seen Guy with women. I know what happens.’

‘I said we went home in different taxis.’ She was getting angry now.

‘OK, OK.’ I held up my hands to calm her down. ‘It’s got nothing to do with me, anyway.’

‘Too right,’ muttered Ingrid. She swallowed the rest of her coffee and checked her watch. ‘Well, if that’s all it was, we ought to get back to work.’

Our IPO approached. Lastminute.com shares were priced at three hundred and eighty pence. On the first day of trading, desperate investors bid the price up to five hundred and fifty. That meant lastminute was worth over eight hundred million pounds.

I spoke to Bloomfield Weiss. They said they felt a valuation of two hundred million for Ninetyminutes was definitely achievable now, maybe even two hundred and fifty if the stock market’s exuberance continued. We’d get a better idea when the roadshow started the following week.

Then Derek Silverman called Guy. He had just received a phone call from Jay Madden, the head of Champion Starsat Sports. Madden wanted to meet Guy the next day. He had a suggestion he wanted him to listen to.

That could mean only one thing.

We met at the Savoy for breakfast. Guy insisted on bringing me along, for which I was grateful. Jay Madden was a forty-year-old South African with an American accent and business manner. He began by discussing Chelsea’s
performance in the Premier League. A good move. He wanted to show us that although he was South African he knew his English football. He then slid into a quick description of Champion Starsat’s sports strategy. Basically, they wanted to own it, especially football. They were a long way towards this as far as TV was concerned, but nowhere when it came to the Internet. This didn’t bother Jay: he was sure he had plenty of time. He could either start his own site, or buy one. He liked ours.

I could feel my pulse quickening. This was real. This was going to be big money.

‘How much?’ asked Guy simply, biting into a croissant.

‘A hundred and fifty million pounds,’ said Jay.

‘Cash or stock?’

‘Stock. With a lock-up. We want to keep you people around.’

‘Not enough,’ said Guy immediately. ‘We can get two hundred and fifty million at the float next month.’

‘I’m not nickel and diming you this morning,’ Jay said. ‘We can do that next week. But what do you think about the idea in principle?’

Guy munched his croissant. Then he took another bite. This was a big decision. It might take him a whole croissant to get through this one.

‘No,’ he said.

No?

‘No? Just like that?’ Madden looked unhappy.

‘Ninetyminutes is doing well as it is. There is a role for an independent soccer website to dominate Europe. That’s going to be us. And the stock market will put a value on that. A value much higher than a hundred and fifty million pounds.’

‘But we can give you everything you need,’ said Madden. ‘Cash for expansion, plenty of outlets for promotion, contact with the clubs and the football associations.’

‘Oh, I know you’ll do well,’ said Guy. ‘And I’m not looking forward to having you as a competitor. But working for Champion Starsat isn’t why I started Ninetyminutes. It’s not why any of us work there. And it’s not why people come to our site.’

‘Are you sure this isn’t just about money?’ Madden asked.

‘Quite sure,’ said Guy.

Madden tucked into his sausage. ‘You’re not going to like us competing with you.’

‘I know,’ said Guy, staring steadily at Madden. Letting him know he wasn’t scared of him.

‘We could make you very rich.’

‘I intend to be very rich anyway,’ said Guy. He poured himself some more coffee. ‘Do you think Arsenal will catch United in the League?’

The board was waiting for us back at Ninetyminutes: Derek Silverman, Henry Broughton-Jones and Ingrid. Guy explained to the others Jay Madden’s proposal.

‘Wow,’ said Henry.

‘You were just trying to get the price up, right?’ I said.

‘No,’ said Guy. ‘I meant what I said. I think we should stay independent.’

‘But a hundred and fifty million!’ I said. ‘That’s got to be worth taking now.’

‘It’s in Champion Starsat stock, remember,’ said Silverman.

‘Better that than Ninetyminutes stock, quite frankly.’

‘The whole ethos of everything we do is based on independence,’ said Guy. ‘Our relationships with the clubs, our internet partners, our editorial policy. It’s how we’re going to succeed. Of course Champion Starsat will have a good site that a lot of people will want to see. So will the BBC. But ours will be better.’

‘But with their cash we can make our site better,’ I said.

‘Davo, don’t go all chartered accountant on me.’

‘That’s not fair.’

‘I want to make Ninetyminutes the number-one site in Europe. We’re almost there. And Henry,’ he looked pointedly at the venture capitalist, ‘when we are, we’ll be worth a lot more than a hundred and fifty million quid.’

‘That was just their first shot,’ I said. ‘They’ll go higher.’

‘So will the stock market. Tell him what value Bloomfield Weiss thought we might get, Davo.’

‘Two hundred million,’ I said grudgingly. ‘Perhaps two fifty.’

‘And it will go up after that,’ said Guy with total confidence. ‘Hang on in there, Henry, and I’ll make you some real money.’

‘A hundred and fifty million quid is real money,’ I said. I was being outmanoeuvred and I disliked it. I still couldn’t believe that Ninetyminutes could be worth anything like twenty million pounds, let alone two hundred, despite all the hype. Guy was right, and that annoyed me: I was a chartered accountant. The numbers didn’t add up. This was a great opportunity to get out while the going was good.

‘Let’s go around the table and see what people think,’ said Silverman in his chairman’s role. ‘Who’s in favour of talking to Champion Starsat? Guy, I take it, is a no.’

‘Definitely not.’

‘And David?’

‘Yes.’

‘Henry?’

Henry Broughton-Jones paused. He was smiling. You could almost see the greed around his lips. He wanted more, I could tell he wanted more, and Guy was offering it.

‘I think we should tell them we mean no,’ he said. ‘I have a very good feeling about Ninetyminutes. I think we would be selling it just before it takes off.’

‘Ingrid?’

I looked at Ingrid hopefully. I knew she had common sense. I could see I was going to lose this one, but it would be nice to have her on my side.

‘I agree with Guy,’ she said. ‘If we stay independent, we could well end up with a higher valuation. Besides, I like this company as it is. I don’t want to work for Champion Starsat.’

I was disappointed. Why was Ingrid supporting Guy and not me? Was it because … No, I’d drive myself crazy thinking like that. But if Ingrid was sleeping with Guy, then should I expect future disagreements to go this way?

‘Well,’ said Silverman. ‘For myself, I think there’s a right price for everything, even Ninetyminutes. But if the Chief Executive and the lead financial backer don’t want to sell, then that’s pretty conclusive to me. I’ll tell Jay.’

‘If they start up a site, we’ll cream them,’ said Guy, rubbing his hands.

I left the room in a foul mood.

31

The bubble was bursting.

We didn’t realize it immediately. To start with it looked like a temporary correction, a pause for breath while the market regained its strength to climb even higher. Within a few days of launch lastminute’s shares slipped under three pounds, well below the issue price. Thousands of individual investors were sitting on a loss. And NASDAQ, the American high-technology stock exchange, fell steadily as the month progressed.

Guy and I didn’t notice, and although the people at Bloomfield Weiss must have done, they didn’t tell us. At least, not at first. We embarked on our roadshow. Amsterdam went well, as did Paris, and the fund managers almost bit our hands off in Frankfurt. We had practised our presentations to death in front of our PR firm. Guy did an excellent job of extolling Ninetyminutes’ prospects, and I swallowed my pride and did my best to come across as a safe pair of hands. Sanjay was there to answer any technical queries. It was clear from the questions that not all the potential investors understood the intricacies of the Internet, but most of them knew something about football. And they understood, or thought they understood, that if you bought shares in markets that just kept on going up and up, you were bound to make money.

We arrived in cold, grey Edinburgh tired but euphoric. We were beginning to believe not only our own story, but Bloomfield Weiss’s as well.

Things started to go wrong in Scotland. We had breakfast
at the Caledonian Hotel with some big investors who asked difficult and rather cynical questions about when we would ever make a profit. As the day progressed, the questions became harder. I found them particularly tricky, because I usually agreed with the questioner. How could a company that had been going for less than twelve months and was making no money be worth two hundred million pounds? How indeed.

Our smooth Bloomfield Weiss banker was looking worried. This involved not just a frown, but a stoop of the shoulders and a tendency to scurry off to make a call on his mobile at every pause. I was amazed how he was able to shed this demeanour for the few minutes he was introducing us, when he became transported by excitement over Ninetyminutes and its future.

Even Guy noticed things were going badly after the last afternoon session. He pulled the banker to one side. ‘What’s going on?’

‘Edinburgh fund managers are always awkward. They’re notorious for it. They’re just trying to live up to their reputation as canny Scots.’

‘Oh, come on. There’s more to it than that. There must be.’

The banker sighed. ‘Possibly. The market’s a bit shaky. Lastminute was off another twenty p yesterday and the NASDAQ was down again. Have you seen today’s
Financial Times?
’

‘No.’

The banker handed it over. Articles about investors being let down by lastminute’s share price collapse. About fund managers angry with the greed of their investment-banking sponsors. About how companies due to come to market in April were considering waiting to see what happened. And worst of all, an article about us. According to Lex, the
Financial Times
’s, back-page comment piece, we were a promising company but at two hundred million pounds we were wildly overvalued.

The Scots had read the papers. They didn’t like us any more.

‘Why didn’t you show us this earlier?’ I demanded, angry that I hadn’t picked up the
FT
myself that morning.

‘I wanted to wait until you’d done your presentations,’ the banker said. ‘Didn’t want to dent your confidence. These roadshows are all about confidence.’

‘So what do we do now?’

The banker frowned more deeply. ‘We carry on. We’ll win them round, you’ll see.’

When we got back to the hotel Guy and I stopped off at the bar for a quick drink. The banker ran off to make calls. The euphoria of the previous few days had worn off: we were tired and we were worried.

The banker returned. ‘Bad news, I’m afraid.’

‘What?’ said Guy, scowling.

‘I was just talking to the syndicate desk in London. They don’t think they can place the deal.’

‘What does that mean?’

‘It means we’ll have to pull it.’

‘You’re not serious? We can’t do that!’

‘If we can’t sell the shares, we can’t do the deal.’

‘But we need the cash! You promised us the cash. You said we could definitely raise forty million pounds.’

‘And that was a perfectly fair assessment at the time that we said it. But market conditions have changed. If we go ahead with this deal it’ll be a very public flop. That will be bad for all of us.’

‘But the Germans loved us!’

‘I spoke to Frankfurt. They’re getting second thoughts. And the problem with the Germans is they all get second thoughts together.’

‘So what do we do?’ I asked.

‘We wait. This is just a temporary thing. All bull markets pause for breath. In retrospect this will be seen as a great buying opportunity. Things will turn around in April, you’ll see.’