21st century fox

By Ian Fraser

Sunday Herald

October 22nd, 2000

New technology stocks may still be in the dog house, but for dot.com dame Martha Lane Fox it’s very much business as usual, says Ian Fraser

Martha Lane FoxSEVEN months ago Lastminute.com and its founders Brent Hoberman and Martha Lane Fox were the epitome of cool. Shares in their online business were so desirable that theirs was one of the most frenzied flotations in stock market history.

But markets are a fickle mistress. Within days, the media and the City had turned these dot.com pin-ups into their whipping boys. As internet stocks crashed to earth the IPO seemed overpriced. Today, much to the chagrin of its investors, the business has more than halved in market value to about £200 million.

But talking exclusively to the Sunday Herald, Lane Fox displayed no bitterness. For the erstwhile queen of the dot.coms, who has a history degree from Oxford University, it is very much business as usual.

She can cope with these changes in sentiment, saying: “It started with everyone saying ‘what’s the internet?’ Then, overnight it became the trendiest thing in the world and the answer to everybody’s problems. Now, suddenly, it’s the most terrible sector and everybody hates it. It’s crazy – although I’m sure it will bounce back.”

“What really matters, however, is what your average consumer is up to. The truth is our customer numbers are growing every single month, traffic is growing every single day and this is a medium that is not going to go away.”

In August, Lastminute.com said that it had increased its customer base in Europe to 2.1 million and reduced its third-quarter losses to £9.27m on transactions worth £9.6m. That was down from the previous quarter’s loss of £11m. Today the business, which sells flights, hotel rooms, packaged holidays, tickets to entertainment events and gifts, has 2.5m registered users and analysts predict it will be profitable by 2002.

Lane Fox says: “Of course I mind (about the different attitude towards internet stocks) because I want to deliver value to shareholders. It’s not ideal. But that’s is not something I am able to change. What I can change is making sure this is a thriving business that reaches profitability very quickly and which is delivering real value.”

Lastminute.com, a business that is two years old this week, today employs 400 people in five European countries. Last Friday it took on a further 200 staff when it completed its £59.8m acquisition of Degriftour, the pioneer of online last-minute travel in France.

Lane Fox is coy about plans for further acquisitions in Europe. “Clearly if the right opportunities come along we will look at them very seriously. We want to be the market leader in Europe. We are already the number one home-grown e-commerce company.” In the UK and Europe Lastminute ranks behind US e-commerce giants, Amazon and E- Bay and Lane Fox believes it can surpass them.

She is also planning to enter the Japanese market through a joint venture with the industrial giant Mitsubishi to set up a Japanese language equivalent to the Lastminute website.

The company’s biggest coup was persuading Alan Leighton, chief executive of Asda/Wal-Mart Europe to become Lastminute’s non- executive chairman. “He understands the vision and was able to cut through the crap that’s been written about this company.”

Leighton believes the ingredients of a successful business are the same whether it is domiciled in cyberspace or not. Now that dot.coms are so out of fashion, Martha wants to position Lastminute as “just like any other retail business. We want to remain extremely focused on execution.” Having a grocery magnate on board should help achieve this.

Today Lastminute’s sales are about 20% flights, 20% hotels and 20% pre-packaged holidays. “We are very widely spread. We don’t want to be a travel agent and we are not one.”

But she is realistic about what remains to be achieved. “We are really at the bottom of the mountain. There are so many areas where there is room for improvement, such as the product we are offering, the personalisation that we can achieve through the website, the depth of inventory.”

Lane Fox said her long-term ambition is to make Lastminute a service that people use every day – for their information, retail and travel needs. Personalising the site, meaning making it attuned to the lifestyles of individual users, is her top priority. But she says the clicks and mortar model of opening some physical branches is “not something we are planning at the moment.”

“Our vision is to create a global e-commerce brand that is part of people’s everyday lives.” Lane Fox said the most difficult thing is to maintain momentum. “We are growing fast every month and we can’t let that slow down.” Lane Fox seems confident shares in the business will regain their flotation value of 380p per share. “This is a long term sustainable business, we’re going to be a business of scale. But I’m not going to predict when I think it will happen. Most of the strategic investors in this business are delighted to continue to support it to the extent that they have agreed to extend the lock ups for another three months.”

She refused to speculate as to whether there is likely to be a run on Lastminute’s stock when these lock-ups end in early December.

Martha Lane Fox will speak at the Institute of Directors’ Scottish conference at the on November 24.

She was the media darling of the dot.com era But the £580m flotation of Lastminute.com – a business specialising in cheap deals in the travel and entertainment sectors – ended in tears. The March float enraged investors who saw their investment sink in value as the dot.com bubble burst.

Bloodied but unbowed, Martha Lane Fox is now focusing on delivery. She believes Lastminute, a B2C site that she co-founded with Brent Hoberman two years ago, will become Europe’s leading e-commerce business.

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