Murphy's Law
Shaking up the media
At 18, Murphy joined Westminster Press, then part of the Pearson empire. That was the start of his meteoric career trajectory, becoming managing director responsible for 350 staff of the Free Press Group at just 30 years of age, followed by worldwide commercial director of Financial Times UK three years later and then managing director of FT Business, ultimately becoming COO of the Financial Times at 36. Along the way he grew FT Business, publisher of Investors’ Chronicle and The Banker, from £1 million profit in 1999 to record profits of £10 million a year later, and turned around the fortunes of the online edition, FT.com, which had been making an annual loss of £100 million.
‘I approached the chief executive at the time, Stephen Hill, and made the bold offer to buy FT Business!’ Murphy recalls with glee. ‘I said, “You don’t really want these magazines, why don’t you let me run them?” My entrepreneurial streak was driving me to own something.’
Hill and Murphy joined forces to try and buy the firm, leaving in order to do so, but the deal fell through in the summer of 2002. Rather than jump back into the business Murphy decided to take a break and seek other opportunities, teaming up with venture capitalists to look for an appropriate buy-in, which is how he appeared on the radar of Friends Reunited founders, Stephen Pankhurst and Jason Porter. ‘Within six months, I had two deals on the table,’ remembers Murphy. ‘One was an offer to run a major contract magazine publishing business in the North, the other was to lead Friends Reunited.’
Riding the deal rollercoaster
‘The contract publishing deal looked certain to go ahead,’ says Murphy, ‘whereas the Friends Reunited proposal raised concerns, bearing in mind we’d just had the internet boom and bust. ‘Private equity fund Porteous was backing the Friends Reunited MBI and was nervous about the downturn in the technology sector and the fact that Friends Reunited’s revenue growth was declining. Despite these misgivings, I believed there was considerable potential to develop the business. It was a fantastic brand, for which users felt immense loyalty and respect.’
Friends Reunited began life in July 2000 from the back bedroom of Steve and Julie Pankhurst’s suburban semi in Barnet, North London. It soon captured the public’s imagination, capitalising on nostalgia and curiosity about the antics of old friends and work colleagues. News of the portal spread by word of mouth and the snowball effect soon became an avalanche. By the end of 2002 the site had more than eight million members and was a household name, mentioned regularly in the media as the instigator of happy reunions between long lost chums. This coverage equated to millions of pounds worth of advertising.
‘Unlike a lot of business founders, Steve and Jason were brave enough to recognise they’d taken the business as far as they could and weren’t enjoying it much anymore,’ says Murphy. ‘Even though it would cost them in terms of equity, they decided they needed someone else to come on board.
‘They’d treated the internet like a traditional business and, unlike other dotcoms, hadn’t borrowed huge sums of money without any clear idea of future revenue streams. It was one of the first websites to charge for its services, initally at £5 per subscriber, which was a bold move that paid off. So, although there was a danger that the company was a one-hit wonder, I felt only a fraction of the brand’s potential had been monetised.’
Initially, Murphy pulled out of the deal to pursue the contracting publishing opportunity backed by another VC. With their management candidate gone, Porteous had no choice but to pull out, leaving the Friends Reunited founders without a buyer, but Steve and Jason didn’t give up. As Murphy recalls, ‘They called me and said, “Of everyone we’ve seen, you’re the only one we think understands what we’re about.” So I drove to see them and we talked it over. In a matter of hours, we drafted out an agreement, without lawyers or any of that nonsense, and that’s the deal we stuck to until the business was sold to ITV in December last year. Amazing really.’
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Vital statistics
Name: Michael Murphy
Born: Lewisham in 1965
Status: Married with two daughters
Rules of thumb: ‘Never forget the basics – look after customers and give them what they want, get the right team around you, incentivise them, concentrate on the bottom line and be sensible with cash.’
Biggest bugbear: Over-detailed and inflexible strategy – ‘Plenty of companies write a mission statement, hang it on the wall, write their business strategy around it and try to follow it to the letter. The reality of business just isn’t like that, so you have to be willing to adapt and embrace change.’