THE ANDREW DAVIDSON INTERVIEW: Mike Lynch - From the son of an Essex fireman to the brilliant probability theorist at Cambridge and then on to become the UK's first internet billionaire - his is an unlikely but dogged story of a pioneering software compan

THE ANDREW DAVIDSON INTERVIEW: Mike Lynch - From the son of an Essex fireman to the brilliant probability theorist at Cambridge and then on to become the UK's first internet billionaire - his is an unlikely but dogged story of a pioneering software compan

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Last Updated: 31 Aug 2010

I first bump into Mike Lynch, almost literally, standing in the foyer of his West End PR company (he has two PRs, as every Cambridge billionaire should have: one for financial matters and the other for 'trade'). Short, bald, bearded and wearing an open-necked shirt and a worried scowl, Lynch looks strangely uneasy, as if he has just walked into the wrong address.

We are made to sit side by side like a couple of aspirant job-seekers, waiting for a room to be made available for the interview. I try and make small talk - weather, traffic, where he's been - but it's hard going, which surprises me really, as Lynch spends half his life in America running his company's Silicon Valley arm and should be smooth, multinational man by now.

But then Lynch, the dazzlingly academic son of a Chelmsford firefighter who founded Autonomy, the dazzingly successful Cambridge-based software company, seems to be well practised at confounding expectations. By now, he could quite easily have measured out the best years of his life pontificating over Bayesian mathematical theory at high-table Oxbridge dinners. Instead, he went into business and has been catapulted into the media spotlight as the UK's first internet billionaire. Not bad for someone who is just 35 this month.

So, Autonomy is a big success. Well, successful at least as far as investors are concerned. For Lynch's baby, like so many tech firms, hasn't actually made a profit yet, primarily because it is burning up cash growing so fast. Oh, and you cannot even invest in it on the London market - it's listed on the Easdaq in Brussels and, as of this spring, the Nasdaq in New York - because when Lynch wanted investment, the Stock Exchange sniffed at Autonomy's lack of trading history and rebuffed him, something he still feels rather grumpy about.

So what with his comparative youth, his background, his prickliness at Britain's initial lack of interest, and the fact that the world is suddenly bowing down at his feet, you realise that things probably look a bit weird in Lynch-land right now, and you might forgive him his awkwardness.

His reaction, say friends, is to do what he has always done: plough on and work things out his own way.

That was how he built his clutch of companies from scratch after realising the commercial potential of his PhD work in computer science. The work, investigating probability (we'll keep it simple for now), evolved into software that can 'understand' and sort text and now provides pattern-recognition tools for everyone else's search packages.

Even so, conventional recognition has come slowly. Autonomy posted sales of pounds 16.5 million for 1999. Those are expected to leap again in 2000, pushing the company into 12-month profit. Then there's all that money being raised in America to fuel expansion and software rivals with good distribution channels being snapped up. About a year ago the UK took notice and Lynch started being regularly canvassed by politicians and worthies about the future of high tech - a sure sign that he had made it. He was happy to give his time to politicians, but now, after the Chancellor's March budget, he says he is rather cheesed off about it all.

Why? Oh, he mumbles, because the Treasury indicated to him it was going to sort out National Insurance on share options and then never did, making his efforts to incentivise staff as tough as ever. He has more than 160 of them now and, although he is a Labour supporter by instinct, he is feeling rather less enamoured with Gordon and Tony at the moment. He growls all this out while we settle into our interview room, then he gives a malicious little chuckle, as if he has got something quite nasty planned for them.

What can he mean? It's hard to know. He has a difficult face to read: with that clipped beard, heavy brow and those Slavic eyes, he can set his features into a decent impression of implacable mid-period Lenin.

We shall now proceed to construct the socialist order! (That's Lenin, not Lynch). Others point out that underneath the gruff facade, he is a much more ebullient man than he lets on, a hostage, perhaps, to his family's Irish roots. Most of his father's relatives come from Cork, his mother's from Tipperary. That, he says with mock seriousness, explains his squat, paunchy build.

'Autonomy's co-founder Richard Gaunt says I am genetically predisposed to survive the potato famine,' he laughs, warming up, prodding his own expanding belly. Gaunt, a South African mathematician who has worked with Lynch for longer than most, is one of the few allowed to get away with that kind of joke, you would guess.

No-one doubts that Lynch has run his companies astutely. Like Psion's founder David Potter, he has made the leap from academia to commerce with barely a twitch. Lynch is, by reputation, a hard negotiator and a good communicator, who is always happy to explain to press and investors alike just what his software does. And he has a clear vision of the business he wants his outfit to be in, attributes that convinced investors of the calibre of Apax, Durlacher and Enic to back him.

But most of all, say those who know him, he is also very tough. You take him on at your peril. 'Mike's not a boffin, not at all,' says one adviser, 'but if you want to get into an intellectual argument with him, be prepared to get ground into the dust - he'll have you.'

Autonomy's strength is the size of its gross margins: 88%, according to marketing director Dominic Johnson. It makes all its money up-front, selling software rather than providing service post-sales. The software has become increasingly popular as the web clutters up with prose (what Lynch calls 'unstructured information'). So popular that investors have swamped the company in their efforts to buy a chunk, pushing Autonomy shares up from dollars 5 last year to, at one point, over dollars 200 this year.

Crazy or what? But then Lynch has marketed his software astutely. 'Selling shovels to the people digging' is his clever Gold Rush analogy, designed to show the resilience of the core business. And there is even an academic twist to it all: as Lynch likes to tell it, the software was derived from his research into the probability theories of the great Reverend Thomas Bayes, an 18th-century cleric and mathematician who ...

Enough historical reference. But Lynch's eyes twinkle when he gets to academic homebase. He clearly loves all this, which is why everyone at Autonomy agrees he is the best person to handle the press interest. 'Mike is just very straightforward,' says Johnson. 'He says what he thinks without worrying about it. Success won't change him.'

When I ask him who has had most influence on his business career, Lynch replies promptly: 'John Harrison.' No, not a recent management guru, but the 18th-century clockmaker who fought snobbery and convention to devise a sea-going timepiece accurate enough to enable sound longitudinal calculation.

Lynch applies those same views about challenging preconceptions through to company management and recruitment. 'Things are changing in business on an amazing time scale and it's not predictable any more, so you need people who realise there are no rules about what happens next.' That is why, in running his companies, he has learnt to love outsiders, executives from other cultures who have experience of other industries. 'I love having mixtures,' he says, 'that's where you get real benefit.'

But it is clearly a mixing of elites. Lynch runs three companies: Neurodynamics (his first), Autonomy (his biggest) and NCorp (a new e-commerce venture).

Autonomy, based outside Cambridge, has a reputation for hiring only the fiercely bright. 'They have to be,' agrees Lynch, 'because the composition we have requires more per employee. It's a big turnover company with a small number of people - what we are not doing is process-based management, which is what all other businesses do.'

Lynch describes the open-plan offices as a 'very fast, quite blunt, incredibly young environment'. Everyone mixes together; marketing is next to research and anyone can bring their dog in (Lynch has a huge otter hound). The atmosphere, says others, is democratic and vibrant; Lynch is often to be found huddling between the desks of his research crew, whiteboarding out ideas algorithmically. Staff turnover, says Lynch proudly, is almost zero for those who last the first three months.

He is clearly in love with the Cambridge base - one of the reasons he has never emigrated to America, as many expected him to do once Autonomy took off (more than half Autonomy's revenues come from the US). He keeps an office in the company's American HQ in San Francisco, works there two weeks in four and has an American girlfriend.

But he says he had to have an American base because the market and the money is there, and he is surprisingly caustic in his views on Silicon Valley culture. 'Silicon Valley is completely and utterly self-referential, everyone does everything by proxy. You could turn up with a working time machine and be ignored unless you have got the right person on board.'

The worst part, he says, was how in the early days he couldn't get anyone even to speak to him at social events. 'I would talk to someone and the guy would just walk away. The sad thing is they are really missing a trick, they really need to have conversations with the odd guy in the corner because that's where the deals are. Now we are the people everyone wants to talk to, and it just makes us cynical.'

So cynical, he says, that he and his team have invented a game for Silicon Valley parties, whereby one of them is nominated to spread a rumour about an amazing, fictional start-up, and they wait to see how long it takes for the rumour to come back to them in the cocktail chatter. 'And you know what?' asks Lynch. 'It always happens by the end of the evening.'

Is there a sneery edge to Lynch? I wonder. One investor says Lynch's prejudices about America are simply him being provocative. Others counter that he just loathes pretension, and point out that he is 'amazingly supportive' of other young, up-and-coming entrepreneurs, freely providing advice and, often, investment. He has just never forgotten how tough it was in America.

Cambridge, on the other hand, still entrances him. Autonomy sponsors PhDs there and is an integral part of the social, academic whirl. 'It's an amazing place because of its people,' says Lynch. 'They're all so bright and multi-talented.'

Really? I suggest that, whatever the success of the science park outfits, Cambridge University still seems rather public school and irrelevant to many (and I can think of a few business chiefs who will tell you as much off the record).

Lynch gives me a sucking-lemons look. 'No,' he says fiercely, 'that image is completely outdated. I may be unfashionable in sticking up for this, but in science and technology Cambridge has a good shot for being the premier university in the world. Where else have you got? Stanford and MIT? It's certainly in that league. There is still a culture of excellence there that has been eroded in other places and that is a good thing.'

It feels as though I've hit a raw nerve. Lynch, for all his left-leaning instincts, is ferociously meritocratic. You can put it down to his background. A prodigiously bright child, he was sent to Bancroft's public school on a scholarship, but as part of a clutch of Essex 11-plus boys billeted there by their education authority. That taught him a few lessons in life, he says.

'If you've been in a class of 11-plus boys from Ilford and Redbridge at a public school, you tend to learn how to duck and dive quickly,' he says. He didn't just get a good education; he learnt how to move between social groups. 'I think one of the most valuable things is being open to people of all different cliques,' he says.

And he credits his parents with instilling in him the value of education. The elder of two boys (his younger brother is a builder), Lynch says he gets his work rate from his fireman dad, and his vision from his mum, a former intensive-care nurse. 'We didn't have much money, but she read a lot of books and when we got a car we would go out every weekend, go and see museums, airplanes and steam engines. There would always be something interesting to do.'

His father, he adds, is pretty much the sensible one, a great believer in 'you reap what you sow'. He also gave him what he took to be indispensable advice from a fireman: don't get a job that involves running into burning buildings. 'Both my parents were bright,' says Lynch, adopting a more serious tone, 'and I suspect they did not have the opportunities to fulfil things that they could have done.'

And being from a less affluent background than many had another advantage, too. When it came to choosing careers, he never thought of plumping for the safe bet. So many people he met at university switched tack to become solicitors, accountants and management consultants just because it was the sensible thing to do. 'But one of the reasons I ended up where I am today is that I didn't know what a solicitor or accountant did! We didn't have any in my family or social circle.'

And mainstream business? Not for him, he says. He became badly disillusioned after a holiday stint with GEC Marconi in Chelmsford. He is withering in his contempt for the company. 'I got their get-up-and-go culture - basically anyone with get up and go had got up and gone! It was like a cliche, the offices looked like rubbish, the equipment wasn't there, everyone was waiting for some poor guy to die so they could move up a chair ...'

This was the company, he adds, that used to turn up at British universities and show glossy videos of fighter planes, and cream off the brightest people. 'And it was all cost-accounting driven, which is the big British problem. I came back from that and thought, there is no way I am doing that for the rest of my life.'

He toyed with doing medicine, but decided it was 'an inexact science'. So it was solo or bust. But why him? Hundreds of entrepreneurs try and fail. What made him so successful? John McMonigall, director at Apax, which invested in both Neurodynamics and Autonomy, says what has differentiated Lynch from the hundreds of other science park techies pootling along is that he has always been good at generating cash, right from the early days, when Neurodynamics was making 50% return on sales.

Investors love that. And Lynch has been smart enough not to fall into the arms of a big corporate, some of which have tried to buy their way in. 'Mike is just incredibly commercial,' says McMonigall, 'when we started negotiating with him, he was a 27-year-old academic. But it was like dealing with a 45-year-old serial entrepreneur, he's extraordinary.'

Chortles Lynch: 'I was blessed with a wonderful quality called the naivety of youth. It makes all things possible.' And he was lucky. He and a group of colleagues had done most of the hard work for Neurodynamics doing their PhDs. He knew it had commercial possibilities. He was just in the right place at the right time. But he was the one who made it pay off.

So does he think the others read the Lynch profiles today muttering: 'Damn, damn, damn'? 'Nah,' he shrugs, 'because most of them can keep doing their research without worrying about commercial imperatives.'

And Lynch, say those who have dealt with him, is the man who always sticks with things, he perseveres - that, it appears, is one of his defining qualities. 'In order to get things done, you have to be decisive and believe in what you are doing,' he says. And, he adds, don't put limitations on yourself.

'I learnt that at school,' he says. 'They used to grade us from seven to one in subjects and I used to get seven in everything except maths, and I couldn't work out why. I decided I was going to get seven and I did. Before I had just been held back by fear. That's what holds people back, their own idea of what they can do.'

It is, I guess, hard not to sound a bit self-satisfied when you have been so successful so young. It colours everything. But no-one is accusing Lynch of letting it all go to his head. He has a nice house outside Aldeburgh in Suffolk, a smart car and some expensive technology, but he doesn't have a conspicuously flashy lifestyle. Most of the time he is on planes, jetting between Cambridge and San Francisco. When he is here, say friends, he tinkers. He has outhouses crammed with old machinery that he picks up at agricultural fairs, including a miniature steam engine and railway line, which he has set out around his garden.

'Yeah,' he says, 'I like collecting all sorts of old rubbish. I like old things, you can learn from them. People always seem to think that we are cleverer than our ancestors but it's just not true.' Others say he is never happier than when confronted with some knotty problem to unpick.

(Rumour has it Lynch still fills in his own tax form, only because he loves doing it so much.)

What else does he do with his money? He says he has made sure his parents, both retired, are comfortable. And, like many tech bosses, he already has philanthropic plans for how to spend a chunk of his wealth. How? He doesn't want to give details, but says it will be in the area of mental health, an issue about which he feels strongly and which is connected with research work he has done on the brain and perception.

Other than that, what he wants now is time, because it is what he has so little of. The pressure of running a business expanding at such a phenomenal rate, the pressure of constantly travelling between here and America, of being in the news, of being a name, seems to have clogged everything up for him. It is the same for so many successful people now, he admits.

Those who predicted we faced a future of ever-expanding leisure time just got it so wrong.

That's why he loves places like Suffolk and Ireland so much, because the pace of life is slower, and people have time to stand and chat. And yet it is the technical genius of men like Lynch that is driving that pace of change ever faster. An irony, surely, if that is his big regret.

Guess what? We are out of time, says his PR woman. Really? I look at Lynch. 'Oh, I do what I'm told,' he winks.

Would he ever float on the London stock market? 'Well,' he says, getting up, 'I have forgiven them for not letting us list initially - it was another example of England shooting itself in the foot.' Maybe Autonomy will come back to London, he says, once this summer's listing on the Nasdaq has gone through.

So what's it like being so rich? 'Wealth doesn't make any difference,' he shrugs. 'It doesn't matter what the next number is, but it is a great enabler. If I see a great piece of technology, I can invest in it.' And then he smiles, rather wolfishly.

LYNCH IN A MINUTE

1965 Born in Ilford, Essex. Educated Bancroft's, Woodford Green, and Christ's College, Cambridge

1988 Commences research for PhD degree in probability

1991 Founds Neurodynamics to develop pattern-recognition technology

1994 Sets up Autonomy with backing from Apax, Durlacher and Enic

1998 Floats Autonomy on Easdaq at dollars 3.70 a share

2000 His 20% stake in Autonomy is valued at more than pounds 1 billion.

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