Julie Meyer, founder and chief executive of Ariadne Capital, sums it up like this: “The genius of Monitise is that it was able to get any mobile banking transaction to be treated as ‘just another ATM transaction’ – a piece of both technology and business brilliance. So while many of Monitise’s peer group focused on selling software to banks, Monitise built the tracks for a mobile banking ecosystem. Lukies thought long-term – very long-term. He dared to believe that he could create an industry.”
Sushovan Hussain, who joined the Monitise board as a non-exec in January 2011, says Lukies reminds him of a “young Mike Lynch”: “They have the same leadership qualities: immense energy; and they never take ‘no’ for an answer.”
Monitise peeled off from Morse in 2007 to go public: “We were like teenagers who had outgrown our parents,” says Lukies. The listing on AIM raised £21.4m. But the timing was terrible: the credit crisis sent shares plummeting from a float price of 22p to a low of 2p in January 2009. It rebounded that summer, when Monitise announced it had signed a five-year exclusive contract with Visa, which also bought a 14 per cent stake in the company.
That roller-coaster ride didn’t faze Lukies. “It doesn’t take a rocket scientist to work out that we listed too early: we only did £400,000 revenue in our first year as a public company,” he says. “But AIM has been great to us. It imposes such good disciplines. A lot of business owners set targets and then reinvent history when they fail to meet them. As a public company, you’re dead in the water if you do that.”
He adds: “AIM is a very positive incubator for the UK’s growth companies. But less than five per cent of companies on the London Stock Exchange are technology firms. On Nasdaq, it’s more than 50 per cent. I find that shocking.”
In October, Monitise raised capital (£25m) for the fifth time at a premium to (or equal to) the share price. It’s the only company in AIM history to have ever done that. And yet the company still isn’t profitable. In 2011, it made an operating loss of £15.7m. Lukies puts it simply: “If you think the only way to value a business is against multiples of Ebitda, then we’re the wrong company to invest in. We’ve made a lot of people a lot of money. If you had invested in Monitise at the beginning of 2009, when we were 2p a share, you’d be enjoying a 20x return right now. We haven’t hoodwinked any of our shareholders. But, like Jeff Bezos of Amazon, I’m ‘willing to be misunderstood for long periods of time’.” [A quick history lesson: Amazon floated in 1997. By 2000, it had notched up a loss of $1.4bn. The online retailing giant didn’t turn its first net profit until the last quarter of 2001.]
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