June 13 2006. A very very bad day for Martin Higginson. Sacked by the company he created; his name emlazoned across all the nationals’ business pages.
It was an ignominious, devastating end to his association with Monstermob, which he set up in 2000 and turned into a stellar business with a market capitalisation of more than £290m. “I fell a long way. It really was a huge kick in the nuts,” he recalls. “It was the worst thing that had happened to me in my entire life. I can still get very emotional about that moment because there was no debate, no argument.”
Despite the words, which might conjure the image of a recovering tear-soaked shell of a man, he’s incredibly upbeat. Why? Because at the tail-end of February 2007 he made a triumphant return to the business. Private Spanish company LaNetro Zed SA (ZED) completed the purchase of 52.6% of the business for £34m and hired Higginson, still the largest individual shareholder, as a non-executive director at the subsequent Extraordinary General Meeting (EGM).
It’s been a turbulent year and no mistake. And the emotion now appears fully channelled into regaining control. “On a personal level, there are a few ghosts and you want to prove a few people wrong. The fact is, I’d never been fired in my entire life.”
The rise of Higginson
Higginson’s career to that point had been relentlessly impressive, although he appears to have forgotten one early upset. His first job as a motorcross photo journalist led to him identifying the growing popularity of BMX bikes. He persuaded his employer, United Newspapers, to let him start a weekly newspaper to cater for the interest. It was axed 13 weeks later and he received his first P45.
This provides a degree of insight into the nature of the man. Not accepting the decision, the 18-year-old Higginson relaunched the title alone as a fortnightly. Two years later he sold it to publishing house IPC Magazines. A premium rate phone line business, Megafone, followed, growing from a £300,000 to £10m turnover by 1998, when it was bought by Scottish Power. Installed as director of internet and interactive businessses at its subsidiary Scottish Telecom, he integrated a series of acquisitions and restructured the company, also taking over the running of Demon Internet, while Scottish Telecom was rebranded as Thus Plc prior to its successful market flotation. Then came Monstermob.
The rise of Monstermob
It generated a flabbergasting £19.5m in its first year of trading. And in 2003, with the demand for ringtones going stratospheric, it floated on AIM with a market capitalisation of £32.1m. His personal wealth was soon estimated at close to £70m.
The company branched out into richer forms of mobile content, offering video on demand, games and interactive communities. To capitalise on the rapid rise, Monstermob bought content providers 9Squared in the US, British- based Phunky Phones, text promotions business Mediaprom and Unrealmind Interactive in Malaysia. Higginson hired in a merger and acquisition team, namely former investment banker Niccolo de Masi and finance director David Marks, then pursued opportunities in China, with Orange founder and former Carphone Warehouse non-executive chairman Hans Snook joining as chairman in May 2005. It secured three multimillion pound purchases by the summer of 2006.
Meanwhile, the UK was suffering in the wake of the Crazy Frog scandal. You may recall, Jamba, the American business behind the annoying animated amphibian phenomenon, was heavily fined for signing up mobile phone users to premium rate subscriptions without their knowledge.
Consumer confidence in the sector plummeted. Higginson, for his part, made the strategic decision to pull Monstermob’s UK marketing completely. “It was the right decision,” he stresses. “Anyone who continued marketing lost a fortune – and we didn’t lose a fortune. We managed that number because there’s no point in trying to swim against a tide that strong.”
Unfortunately, the business was tainted by association, and concerns about performance began to circulate the City with underlying profi ts down £1.5m on projections at the time. It’s since been reported that there were three profi t warnings issued that year. There weren’t, counters Higginson. “All this gets a bit out of kilter,” he says. “What was actually said, and people misconstrue this, is that the UK is tough and we don’t know whether we were going to issue profit warnings, but we’re still in line with our expectations.”
The UK end was only expected to make £1m of the projected £20m profit for the company. So even if the UK figure had dropped to nought, it would not have amounted to a 10% fall on analysts’ profit forecasts, the point at which a warning is issued.
“There needs to be some clarity,” says Higginson. “You’d had a mass period of all these acquisitions, so there were various numbers out in the marketplace as to what our final figure would be anyway.” It understandably irks him, because it was used in defence of his dismissal.