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Hermann Hauser - the Best Years for Technology Growth are to Come

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While Britain's economy slumps in decline, two serial entrepreneurs predict we could be entering a new golden age of technology following in the footsteps of the Cambridge Phenomenon - the formation of a cluster of high-tech businesses, including software, electronics and biotechnology, many of which had associations with Cambridge University.

Dr Hermann Hauser and David Cleevely continue to have a huge influence on business in the UK today and are founders, directors and investors of many Cambridge companies. They shared their vision for our future prosperity and growth with Cambridge Network members in a discussion entitled, Projections for the future of Cambridge. It included radical thoughts about how the university should give away IP for free, or for a small amount of money or shares, to support new spin-out companies.

They also both criticised the "inefficient" way in which large pharmaceutical companies conduct expensive trials without sharing their findings, and described a novel alternative which could revolutionise the way these drug companies work.

Hermann is a member of the government advisory panel for New Industry/New Jobs, who I last met five months ago when he described how his ARM chip had saved Apple. He reminded us of his early days:

"I started Acorn Computers because Chris (Curry) came round was fed up with Clive Sinclair and said, 'why don't we start a company?' And I said, 'well how much does it cost,' and he said, 'fifty quid'. I said, 'I have 50 quid'. It it had to start with £1,000 which we didn't have, we probably wouldn't have started Acorn computers.

"One interesting aspect about Britain at the time was, and it is still true today, is that it is still easier and cheaper to start a company in Britain - in Cambridge particularly - than anywhere else."

The venture capitalist said the best years were ahead of us because of stronger management, experience and serial entrepreneurship, and gave the following example:

"With Amadeus, which we started 12 years ago, we did 17% of our deals with serial entrepreneurs; this has now risen to 70% because there are so many people that we are working with again, people who have done it and now have the experience to do it better than they did last time.

"What I find very encouraging is that I had the greatest trouble explaining to some of the great technical minds we have that they might not be the best people to run a company, and now most of the time these same technical people come to me and say, 'how can we hire a great CEO' right from the start, how can we attract the management team to make the company successful?' That's a phenomenal cultural change."

David Cleevely, founder of Cambridge University's Centre for Science and Policy, which aims "to serve society by promoting engagement between researchers and policy professionals", thought we might be entering another golden age because of support from angel investors and the value of networking. He said our bright people have already succeeded once, and are doing so again, and that other bright people who have worked with them later emulate these achievements.

While Hermann acknowledged that the university now has "a perfectly reasonably IP policy" after years of uncertainty about how to deal with it, he believes Cambridge Enterprise, and other technology transfer offices in the UK, are beginning to charge too much for their IP which is deterring new companies from being launched. He knows of no high-tech company in Cambridge that doesn't employ a Cambridge alumni, and believes people often completely misunderstand the value of the IP that the university produces. He suggested that if part of our culture was for alumni to give 1% to the university, that is a lot more than the university would get by being "really hard-nosed" about the few companies that are actually spin-outs.

"I get a number of reports where the university is actually preventing companies from starting because they charge too much for the IP and the founders, the entrepreneurs, are thinking, 'well if it is that difficult, I am just not going to do it.'

"I think the university should either give the IP away free, or for a very small amount of money or shares in the company, to encourage people to make use of the IP, rather than hang on to it as a major income strength. You acknowledge the university was useful and helpful in getting a spin-out of the company, so why not give some of the shares to the university at an early stage because it doesn't cost a lot, and I would like to see this as part of a culture whether you are getting a university IP or not."

Hermann then described a new way which pharmaceuticals could conduct drug trials to improve the present cloak-and-dagger method in which they operate.

"I was encouraged by an initiative that was announced this afternoon (12 October) in Great Chesterford. A private-public partnership that does early stage drug discovery with no IP. The proposal was, if you take Alzheimer's and all the big drug companies who have together spent about £20 billion on Alzheimer's without getting anywhere, and one of the reasons they didn't get anywhere is that they all work on the same drug targets and spend lots of money and people to find out it doesn't work. They keep quiet about it, so their competitors start working on the same drug target with a lot of money and a lot of people and find out it doesn't work, and keep quiet about it, and so the next competitor....

"The FDA knows about it and is not allowed to tell the other person not to spend £100 million on something which has been found out not to work and drug companies for obvious reasons know that the one area where patents are really valuable is small molecules and are not willing to share anything with their competitors.

"A very intriguing proposal was put forward that you should do this as a public-private partnership, not assert IP at all until you are in Phase 2, and if some of these published things are negative things which didn't work out, everybody knows not to bother and not to spend a lot of money and effort on it.

"But if things do work out, then they will actually take out a bit of IP and protect that, but not protect the molecule itself, just how to scale it up, and when it is Phase 2, then allow the big drug companies to have an auction and actually bid for it so it gets commercialised as well.
"I've never heard of such an initiative before, but I think it is really worth taking seriously."

One can't help thinking how well spent that £50 was all those years ago.