Nobody was surprised when Autonomy founder Mike Lynch parted company with Hewlett-Packard (HP), says the FT. After pocketing £500m from the £7bn sale of his Cambridge software house, "industry watchers had been betting he would last less than a year".
Both sides are spinning furiously about what HP witheringly called Autonomy's "very disappointing" performance (see below). Lynch probably couldn't care less. As analyst Richard Holway of TechMarketView observes: "He's an entrepreneur par excellence, the type of person who says beggar the rules'."
Lynch, 47, isn't just used to running his own show, says The Guardian. He's also an "eccentric British thinker" whose ideas would always jar with "a Silicon Valley company with IBM envy". Interviewed in 2000, when he became Britain's first software billionaire, he talked about "perception" instead of software and described his work as "pure philosophy".
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Lynch's hero is Thomas Bayes, an 18th-century mathematician "who tried to use pattern recognition to prove the existence of God", says the FT. "Lynch used it to make software that helps banks track down the emails of rogue traders and call-centres analyse hours of voice calls." But he never lost the sense of magic.
"One of the reasons I ended up where I am today is that I didn't know what a solicitor or an accountant did. We didn't have any in my family or social circle," Lynch told The Daily Telegraph. Born in Tipperary, his parents a fireman and a nurse moved to Essex when he was a child.
Lynch won a scholarship to a private school and read engineering and maths at Cambridge, launching his first company, Cambridge Neurodynamics, in 1991 on a £2,000 loan. Five years later he started Autonomy, listing it in 2000.
Despite being the toast of "Silicon Fen", with 16,000 blue-chip customers, Lynch was a controversial City figure. He claimed analysts were too dense to "get" Autonomy's revolutionary ability to make sense of "unstructured data".They questioned the numbers, "looking for evidence of some sleight of hand", says the FT. They never found it. But after Autonomy's 2010 profit warning, the shares were punished mercilessly.
To relax, Lynch visits his Suffolk estate and rare breed cattle, craving the timeless continuity they offer. "In the country, they don't have many gadgets at all, they have clocks that go "tick"... It's a perspective thing. In the village where I live there's a tower that was built about 900." "In a twist of fate" that doubtless appeals to Lynch's sense of humour, Thomas Bayes is buried in Bunhill Fields, "a stone's throw from London's Silicon Roundabout and its cluster of technology companies", says The Daily Telegraph. "He's buried not far from William Blake," Lynch told Salon in 2000. "They could have a pretty interesting discussion if they woke up for five minutes."
HP's loss is "fantastic news for British entrepreneurs"
Mike Lynch came of age as a tech warrior when he got into a bad-tempered spat with Oracle's fearsome chief, Larry Ellison, shortly after striking his deal with HP last summer. Ellison claimed he'd also been "shopped" Autonomy by investment banks, but had turned it down as far too over-valued. "That gleeful background noise", as HP presented its dismal quarterly results last week, says Lex in the FT, "was Larry Ellison giggling".
"Hats off to Mike Lynch," says Nils Pratley in The Guardian. We always knew he got a "pretty price" when he flogged Autonomy at a 64% premium to its market price last summer. It now looks "utterly beautiful". HP's CEO Meg Whitman (the company's fourth boss in six years) "sounded like a new homeowner who... discovers the property needs new wiring and plumbing". Some 27,000 jobs are to go across the entire HP group as she tries to breathe new life into the ageing hardware has-been. Lynch was top of the list.
If HP had done its due diligence properly, alarm bells should have rung, says Damian Reece in The Daily Telegraph. Numerous British analysts issued critical research notes well ahead of the sale. "It looks like the limeys had the drop on Autonomy all along and now it's the Yanks with egg on their face." Both sides blame a clash in cultures, with Autonomy people complaining that dealing with HP's bureaucracy was like "being waterboarded daily", says Alison Smith in the FT. "As with any break up, there are two sides to the story." What a waste, though, "of one of Britain's few standout tech successes".
Maybe. But Lynch's defenestration is "fantastic news forBritish entrepreneurs", says Ian King in The Times. As a free agent, with £500m in the bank and an "evangelical" passion for start-ups, he's "ideally placed" to nurture the next generation of Mike Lynchs. "HP's loss is definitely the British technology sector's gain."
