Valued at around #20m, Mike Lynch is set to be one of the UK's two software firms and is valued at #20m. Andy Donoghue found out how a loan of #2,000 laid the foundations. richest, young tech entrepreneurs. The 32-year-old puts his success down to his unconventional approach to life. Despite being an academic with little business knowledge, he set up two extremely successful technology companies using the unique combination of a Cambridge doctorate and #2,000 from a stranger in a Soho bar.
His first company was Cambridge Neurodynamics, which he set up in 1991.
It is now a leader in advanced recognition solutions, with customers including Racal, Unisys and EDS. His second venture, Autonomy, formed in 1996, specialises in intelligent knowledge management and in July floated on the Easdaq stock exchange for $156m (#97.5m).
"My background is not particularly well off, and because of that I didn't really know a lot about professions you didn't come across every day," Lynch explained. "I didn't know, quite frankly, what an accountant did.
I wanted to be a research scientist, because I had read about those, so I went up to Cambridge and did sciences."
At the height of the Eighties' boom while his peers were strapping on red braces, skipping lunch and heading off to make their fortunes in the city, he opted to do a PhD in Neural Networks.
"After doing a general sciences degree I went on to do research in an area called pattern recognition - getting computers to recognise things - and solved a big problem in the area of neural networks."
When neural networks were faced with complicated problems they had a high tendency to break down. Lynch developed a method to stop this from happening.
While still at Cambridge he realised that his attempts to model computer systems to function like the human brain could have applications in the management of electronic information. As a result he set up Neurodynamics - with a little help from a stranger in a London bar.
Lynch pin
"This was back then when there was no seed technology finance in the UK at all. After traipsing all round the place, we got introduced to this er ... English eccentric. This guy had discovered major rock groups, including Genesis, but by this stage his lifestyle consisted of decanting himself out of bed about midday, and heading down to a Soho wine bar, where he would carouse until the wee small hours, before the cycle began again.
"He was very flamboyant, and when he heard about what we needed the money for, said: 'I've never 'eard of that, bring 'im darn 'ere'. He loaned us #2,000 which is what we used to get Cambridge Neurodynamics going.
All we had was that #2,000 so immediately we had to make money."
Despite the fact that the company was run from student digs, it wasn't long before Lynch landed a big account. The UK police force needed software to automate the cross-referencing of fingerprints found at crime scenes with those of known criminals.
"Every time someone's charged in the UK their fingerprints are put on file, and fingerprints found at the crime scene would be manually searched against all the paper records. It could take 20 people searching for three weeks. Our technology takes the three million fingerprints and compares them automatically."
A little spark
The company began to make money and after six months Lynch was able to pay off his mysterious backer. He was helped along the way by co-founder Richard Gaunt, now Autonomy's technical director. According to Lynch there was an instant connection between them at their first meeting.
"This is one of the hardest things to explain but every so often you meet someone and there is just a little spark and, although we all concentrate on finance and technology, that is what actually makes it. It's all about that person who has got that little glint."
Lynch puts it down to the fact that Gaunt, like himself, is quite an unconventional character. "Richard had this incredible technical background but very little experience. He left South Africa and turned up in London with basically nothing and had to start from scratch. When I met him, he had survived by trying to sell insurance policies. One of the wonderful things I like to remind him is that he actually managed to sell no insurance policies."
After the success of Cambridge Neurodynamics, Lynch and Gaunt felt confident enough to set up their second venture - Autonomy. It was formed to market Neurodynamics' intelligent concept-searching technology and now has a headquarters in San Francisco, with offices in New Jersey and Cambridge, England.
Autonomy's software is self-learning and analyses, sorts and cross-references structured and unstructured data to deliver relevant information to users.
In simple terms, Autonomy's software understands that an ornithologist searching on the word penguin is more likely to want information about the bird than the biscuit.
"We now do things for News Corporation and big corporations like Barclays Bank. UK police forces also use the technology for analysing witness statements.
It's the basis of a $100m (#62.5m) contract being primed by Unisys called Holmes 2 for all the UK police forces for their knowledge management."
In spite of his techie status and achievements, Lynch admits that it took him a while to recognise the importance of the Lan.
"I got Lans completely wrong. I couldn't see the point of them at the time. Why not just put it on a floppy disk and walk across the room? I would never have been able to found a network company. I don't understand how networking people do what they do."
"We had a classic a while ago. We bought an ISDN line from BT. It recommended some Cisco router, which we installed, but nothing worked. It was incredible, the phone calls between different parts of BT. This went round and round until eventually we managed to fix it by talking to Cisco, who were really nothing to do with it. I remember thinking at the time network people in companies must be heroes."
Despite having founded two successful companies, with clients including the BBC, BT, the Jordanian Government and the South African Truth and Reconciliation Committee, Lynch is philosophical about his abilities.
"There is a great quote from one of the guys who founded Apple: 'If we knew then what we know now, we wouldn't have thought we could make it'."
CURRICULUM VITAE: ALL IN THE MIND
1987: Lynch starts a PhD in Neural Networks. His research has applications in knowledge management. It will eventually make him a multimillionaire.
1991: Lynch decides to a set up Cambridge Neurodynamics out of his student digs.
1992: By chance, Lynch meets an eccentric venture capitalist in a Soho pub and persuades
him to invest #2,000 in technology he developed for his PhD.
1996: Lynch forms Autonomy. In two years it is valued at #40m. Customers include BBC, News Corporation, BT and Barclays Bank. Lynch receives an Achievement Medal from the Institute of Electrical Engineers as part of its Younger Engineer Award.
1998: Lynch, now 32, oversees projects for both companies. He is also a lecturer at Magdalene College, Cambridge, and a supervisor of engineering students.
His estimated assets now total some #20m.