The Tipperary anti-pirating inventor backing Irish founders' hot tech start-ups
John Ryan made millions from his anti video pirating technology, and he's now backing inventive Irish tech start-ups. He spoke to John Reynolds
ACROVISION anti-video pirating technology inventor, Tipperary native and former RTE sound engineer John Ryan did something that most inventors only dream about.
He designed a small piece of electronic hardware to prevent videos being copied that cost about $100 to build. With just $75,000 in start-up funding - plus a lot of luck, patience, persistence and hard work - he got his technology put on every VCR and every DVD player when they came out, made by all the major manufacturers. His company, Macrovision floated on the Nasdaq in the US in 1997 - making him a multimillionaire - and eventually went on to achieve a valuation of $4bn.
Yet if consumers in the late 1970s and early 1980s had preferred Sony's Betamax video playing and recording technology instead of JVC's VHS, it's unlikely that he'd have had that success, or indeed be featuring in this interview, he readily admits.
Thought to be worth about €60m today, as well as working as a partner in Silicon Valley consulting firm SVG Partners with Limerick man John Hartnett, he's invested about €4.5m in a number of Irish and Irish-founded tech start-ups. These include Louth paper and glue 3D printing firm Mcor, Grainne Barron's award-winning video ad start-up Viddyad, Galway man Anthony Keane's task management app Gneo, Peter Conlon's online fundraising platform Ammado and Dubliner Josh Hogan's miniature medical imaging tech firm Compact Imaging.
There have been losses along the way too, the most recent being Iain MacDonald's Skillpages, which folded after burning through €24m in funding from him and others. He's reasonably philosophical about these, adding that he's never lost a lot. "About one in 10 investments are very successful, another one or two might give you a nice return, and the rest are dogs. I've had a few dogs and they're over and done with," he tells me over a coffee in a Dublin hotel. "They failed for reasons nobody could've predicted, including the founders. They ran their companies in good faith, but their good ideas just didn't work out. It's very much Darwinian in terms of who succeeds and who doesn't. It's not easy to predict."
While he has plenty of praise for the talents of Irish tech entrepreneurs, our strengths in software, the work of Enterprise Ireland and some of our VC firms, there aren't enough sources of funding here and we have problems when it comes to taxes for start-ups, Ryan argues. "The funding just isn't here. Skillpages might have survived in Silicon Valley. And it's wrong that the taxman has his hands in the pockets of a start-up even before they're making any money."
Education is deserving of some harsh words too. He recently took a look at the physics and applied maths Leaving Cert papers, comparing them to the ones he took over 50 years ago.
"The questions were almost identical to the ones from 1961. I nearly fell of my chair in amazement and disgust. This is 17th Century physics. There wasn't a thing about modern physics, quantum mechanics, electronics or software. Absolutely nothing It's a terrible state of affairs."
Seen from that perspective, perhaps world-class start-ups are here in spite of the education system, not so much because of it.
He enthuses about several of those he's backed. Mcor - who developed the world's first paper-based colour 3D printer - is "quite amazing," and is backed through SVG Partners. "They can dip a printed object into various liquids to get various characteristics, from flexible and rubbery to more rigid, they can even print working hinges." There were rumours of an IPO last year, but Ryan dispels them.
"Their goal is growing the company and building great products. That's not to say a year or so from now it wouldn't be prime material to float. They're busy doing R&D to improve their product and have great ideas for new ones - none of which I can talk about unfortunately."
Viddyad is growing steadily too. A partnership with website building and hosting firm Wix is due to launch soon, giving the company access to over 50 million potential customers.
San Francisco-based Compact Imaging could be successful in the area of mobile health, he says.
"I invested in it eight years ago because I believed in the founder. Like most investors, I invest in people - even though it's a trite statement to make.
"When I started investing, I had no idea how long it can sometimes take to develop a technology and start earning money. I thought it might be two or three years, because at Macrovision we were making money in our third year, so I was spoilt to that extent," he laughs.
UCC's Tyndall Institute is working on miniaturising Hogan's technology, which has applications from eye and retina scanning, measuring glucose levels non-invasively and next-generation fingerprint scanning (of the sub-dermal fingerprint). The existing scanners are the size of a large suitcase and cost about €45,000. His device will initially be the size of a box of matches and a hundredth of the price.
"The foremost experts in the field believe that the method this uses - optical coherence tomography - is the best way to measure glucose. They have a few more steps to go, but it's looking very promising. We're hoping that ultimately the group in Cork will come up with something that measures about 2cm x 1cm x 0.5cm. Perhaps it could fit in something the size of an iPhone 6 or the 6 Plus," Ryan explains.
Does he believe that there is a tech bubble at the moment at all, in light of large fundraising rounds by start-ups that don't really need the money and multibillion social media app valuations?
A friend of his who works in a Silicon Valley law firm thinks a crash is imminent "because entrepreneurs are asking investors for things that would previously have been laughed at - but now they're getting them.
"There's more money chasing deals than there are good deals. At the same time so many of these companies are making money, which of course many weren't just before the 2001 Dotcom crash. Whether they're making enough to justify the price, and whether their future justifies it is another matter.
"I'm not a good judge of social media trends and that technology. I tend to find my investments through people I know, and I invest in people whose talents I understand. Sometimes they've been ex-Macrovision employees. I'm mainly interested in hard technology, because I know about physics and electronics and that interests me."
It's an interest that he recalls developing at an early age. In between school hours, he helped out in his parents' grocery shop in Tipperary town - to which the local gossips would sometimes call in several times a day to find out the latest scandal. But when he was 11 or 12 he came up with a simple and clever idea for an automatic dimmer for car headlights, using a photocell.
He later began a physics degree in Galway, but dropped out to focus on studying electronics. He found a mentor in RTE in Englishman Peter Pearse, an electronic engineer who taught him essential electronic circuit design skills, later following him to work at Yorkshire Television in the north of England. From there, a newspaper ad for engineers in California prompted him and his wife and daughter to move to Silicon Valley, where he started a job with a firm called International Video Corporation in 1974.
He founded Macrovision in 1983, prompted by the US Supreme Court's ruling in the Sony Betamax case, and the knowledge that an anti-piracy technology would be worth a lot to the big Hollywood film studios.
After raising the $75,000 in start-up funding from a friend of a friend who became his sole backer and business partner, the first two years were spent working on his own, patenting his ideas and making a solution in the form of a board full of transistors, capacitors, resistors and integrated circuits.
"My wife actually assembled the first four or five of them. And I used to go around local TV stores testing them," he laughs.
After a lot of knock-backs, he found a small studio customer and then, thanks to fellow Irishman Mike Fitzgerald, Universal Pictures used the technology on Back to the Future videos.
DVD players and then set-top boxes like the Tivo went on to adopt the technology in the mid 1990s, which by then was in the form of a chip. When Macrovision floated on the Nasdaq in 1997, one of Ryan's employees was able to afford a house with his stock options. "Something like that makes it all worthwhile," he smiles.
His old secondary school in Tipperary Town, and two others there have benefited more recently too, through a small scholarship programme.
In his spare time, the 70-year-old enjoys spending time at his holiday homes on Lake Tahoe and in Kenmare. He and his wife have also just returned from walking part of the Camino de Santiago in Spain, while he also dabbles in some scientific writing and enjoys the music of Dublin concert pianist John O'Conor.
Perhaps unsurprisingly, he watches very little TV - it seems all those evenings testing his technology in the TV stores turned him off the box.
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