Monday 25 September 2017

'I really wanted to be the bloke playing the keyboards in Fame'

After selling his software firm Autonomy for a staggering €10bn, Europe's 'Bill Gates', Irishman Mike Lynch, tells John Reynolds why he's now backing cutting-edge start-ups

Mike Lynch
Mike Lynch
Mike Lynch

THE former CEO of enterprise software giant Autonomy and now founder of $1bn tech investment firm Invoke Capital, second-generation Irishman Mike Lynch has come a long way from the days when he and several colleagues toiled away in a tiny Cambridge office in the mid-Nineties.

Frustrated after numerous visits from potential investors who said that Autonomy's technology was amazing but their company too small, they came up with the quirky idea of sticking a sign on the door of the office broom cupboard. It read: 'Authorised Personnel Only' - in a bid to appear larger and more successful than they were.

Although he carried on the ruse in some of the company's offices as it grew to employ 2,000 people before a $10.3bn takeover by HP in 2011 - making it the largest-ever European tech buyout - there's no... eh, sign of one when I meet him at Invoke's smart office on London's Pall Mall.

Wearing chinos and a navy jacket, the 49-year-old is jovial and gregarious, frequently punctuating our conversation with laughter and short anecdotes. He speaks with a bit of a rural Suffolk burr that's native to the area, where he enjoys rearing rare-breed cattle and sheep, "tiffling - the art of vaguely looking like you're repairing old machinery" and tinkering with a miniature railway on his farm as a hobby.

A myth was previously propagated that he was born in his mother's native county of Tipperary - she was a nurse, his father a fire fighter from Cork - but he's actually a native of Ilford, Essex, where his parents met, and he grew up among its large Irish community, though spent many childhood summer holidays in Carrick-on-Suir.

His firm Invoke has one or two connections here, however, and may soon have a few more. There's an "ultra-high net-worth" Irish backer and he's looked at 15 potential Irish investments to date, "some we're still working on". Two have especially caught his eye. "I'm not going to say who, because their valuations will rocket," he laughs.

He also tells me about an Irish professor from his alma mater of Cambridge - the late Bill Fitzgerald - whose work is proving fundamental to the latest advancements in artificial intelligence (AI), an area in which he has a keen interest, and to which he says there are a number of other notable Irish research contributions.

Lynch has his own long list of accolades. He's been described as Britain's most successful technology entrepreneur and ranks among the world's most influential people in tech. An ex-director of the BBC, he has an OBE and is on various boards. He takes a particularly keen interest in Kew Gardens' seed bank and cancer research and supports both philanthropically.

This approach is part of a plan to use much of the estimated €615m from the sale of Autonomy in 2011 ("I'm not sure figures in Rich Lists are highly accurate," he protests) "to make some kind of difference... through charities that measure and learn from what they do".

He has allowed himself the odd indulgence; there's his 1965 Aston Martin DB5, like the one featured in the James Bond film Goldfinger, and the odd bit of nerdy tech hardware.

He's also an advisor to David Cameron and the Treasury on matters ranging from science to tax - and a recent issue Lynch has looked at is the predicted electricity blackouts that could hit Britain in 2018. "It's something I work on quite a lot; it's a trilemma between cost, security of supply and the green agenda.

"Blackouts are very likely, and it's a failure of the political process. We're going to have some problems," he adds. "Trilemmas are usually quite difficult to sort out," he laughs.

Of course, in recent times he's had serious matters of his own to deal with, but they appear to be nearing a favourable conclusion. Last month, Britain's Serious Fraud Office closed an investigation into the HP acquisition and subsequent $8.8bn write-down, finding no case to pursue. Some $5.5bn of it, HP had alleged, was because of "serious accounting improprieties" and "outright misrepresentations" by Autonomy, which Lynch "utterly rejected".

Although the US SEC has yet to conclude its investigation into the matter, an internal HP document, published in the Financial Times in December, showed that the write-down was due to its own business decisions and changes in accounting policy. What's occurred at HP since has been documented extensively. It was "an anxious time", but it didn't take any toll on Lynch personally. "Luckily my dogs keep me sane," he says with a laugh.

These days he's again working with some of his brightest former staff who have either founded start-ups themselves or are helping to nurture ones.

One company which Invoke has backed is a Swiss firm, Sophia Genetics. "If you imagine that cancer has a deck of cards, and you treat it, then it plays you another card. Well, if you can sequence and analyse the DNA inside cancer cells, you can know the next card it will play.

"This area of genomic, data-driven medicine is very exciting. It's closer to a software problem than you might think," he enthuses.

A second firm, Darktrace, is a cybersecurity tech firm founded by two senior cyber defence specialists. "Tackling the problems in this area operates more like the immune system does," says Lynch. It involves what's been described as "a honeypot for hackers".

Third is the Internet of Things space. "Connected devices will need to understand what's going on around them - so we're building a very big brain in the cloud that does that. It'll be a fundamental platform for them."

Given Lynch's interest in AI and the direction in which these technologies are taking societies, what are his thoughts on whether robots will take all our jobs?

"There's now a very real revolution happening in machine learning, affecting a lot of tasks done by skilled people. I've looked at this for the UK government, and we're less pessimistic. What we're likely to see is whole new sets of jobs - just as all the jobs we now have in IT weren't predicted in the Sixties.

"Will AI terminators kill us all? It's almost inevitable that machines will become very powerful. But if you look at the world's most advanced AI, it's currently at the level of something like a sea urchin. It's not something I lose sleep over at the moment."

He concedes that there will be "upheaval and change" but insists that it will present as an opportunity.

"A lot of things are getting better, but there probably will be things about the future that we won't like," he adds, but emphasises: "There's a danger of a digital underclass being created. That's something policymakers need to be very aware of. We've got to be very careful that people have the right skills."

His own education was a fortunate one. He won a scholarship to a private secondary school in North London, where "amazing teachers" raised their horizons.

"Our chemistry teacher had an after-school club," he recalls, "where up to our delight he blew up a great many things." He and his classmates, many also on scholarships "were running the place by our third year - we were much more streetwise than some of the others."

University, interspersed with summers spent working as a hospital porter, also provided a fertile learning ground. He was the musical director for various amateur productions at Cambridge and also flirted with low-level student politics - a hotbed of division at the time between Boat Club types and anti-Thatcher firebrands.

After taking a stand to get a fair allocation of monies for student clubs societies, he was put in charge of the funds. "That and also ensuring a bunch of slightly inebriated musicians were in the right place at the right time with the right equipment, also gave me an excellent introduction to management - perhaps one that was more useful than an MBA," he laughs.

At that time, he says, the Eighties TV series Fame was the big thing. "Most people dreamed of being an actor or a dancer in it," says Lynch, "but I wanted to be the bloke on the keyboards. I could never afford one though, as they cost about £100,000 - so I set out to design and build one, which got me interested in the type of engineering called 'signal processing'. Being able to program on the BBC Micro computer that had just come out also sparked my interest."

After further studies he started a business that combined these interests, designing and producing samplers and a hard disk recorder for early Atari, Mac and PC computers in the late Eighties.

By 1991 the software Lynch and his colleagues had developed could analyse fingerprints. Their first big customer was the police who could get a set matched in five minutes instead of the 3,000 man-hours it sometimes took previously. Number plates were next, and then came the real paydirt - corporate information in documents, emails and analysis of phone conversations.

Autonomy's powerful software could understand and interpret the nuances and layers of meaning within this data, the demand for it rocketed and the business grew at a staggering rate from there, winning thousands of corporate and government customers and notching up 92pc gross profits.

It could analyse millions of hours of conversations in the financial services industry and deliver the 10 that mentioned a chosen subject for example, and even supplied the software to all three main UK political parties who used it to monitor the media and analyse or catch out their rivals.

None of it would have been possible without the first start-up money - £2,000 that Lynch raised from "an eccentric in a pub".

It's something he always tells budding entrepreneurs, often adding that start-ups may have to employ a few ruses like his broom cupboard caper in order to make it.

"Perhaps I don't see that enough. I'd much rather invest in something that had an amazing idea and a bit of chaos around it, than something with a great business plan but no idea.

"The chaotic ones often have something fundamentally clever. If you've come up with the latest social media fad, we at Invoke won't understand that. But if you've got an amazing piece of software that can do something unique, we're very interested - and that's an Irish strength.

"We're especially interested in things that can have a very big impact and are scalable. I'd say 90pc of start-ups we see are just a me-toos. The next 5pc is beautiful technology but no use to man nor beast. But the last 5pc are the really interesting ones.

"A key lesson for any start-up is to collect people who know what you don't, who are different to you. Many young firms I visit are made up of people who are the same - all MBA types. You've always got to be listening and questioning. And people that can duck and dive a bit are much more likely to do that."

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