Powerpoint slides

Alan Montgomery, Director

[email protected]

Objective of talkObjective of talk

• Describe what R & D is like in a small IT company

• … at least in my own experience

• Ways of getting funding

• Demo of a product produced

• Differences from academic research

Topics we will coverTopics we will cover

• Starting a company via an MBO (Management Buyout)

• Search for a growth• Research grants for companies• IPR issues• Primacy of people• Cash flow• Marketing high-tech• Selling a business• Demo of Clementine

My experienceMy experience

• 66-73 M Sc. D Phil (Physics) from UoS• 72-74 CAP Process Control - House• 74-84 ICL Compilers - Redundancy• 84-86 Software Engineering Research• Poplog Product Manager, SDL• “AI Winter”• 89-99 Founded Integral Solutions Ltd.• 94-99 Clementine

• Sold Company …?• 00- Director, InferMed

The Management BuyoutThe Management Buyout

• “AI Winter” - Close AI Products Divn.• Main Product was Poplog!• Maybe 60 industry/government clients• Negotiation with Sussex and SD-Scicon• Ignorance of business – enterprise agency• Business Plan• Bank loan – collateral• Ownership• Thank you SDL and UoS/COGS

Where to go next?Where to go next?

• Poplog is a tool, used by R&D defence, manufacturing, academics, ….

• Extend it with a toolset of other AI tools• Still does not solve any high-value business

problem• Have to sell to technicians – endless

technical wrangling• Low prices• Can we turn it into an application, or find

some new market?

ISL Research, Phase 1ISL Research, Phase 1Lucky break as we hit recession!Lucky break as we hit recession!

• Government IT R&D favours SMEs• Get 50% funding for R&D• Invited into three projects:

– UIDE - turn Poplog into UI prototyping tool

– Gateway – KBS Methodology – ISS – semiconductor wafers – SMART proposal FORTRAN. Failed.

Funding research and developmentFunding research and development

• Self funding from profits!

• Co-operative project with customer

• Loans – where’s the collateral?

• Equity finance

• Corporate venturing e.g. Roche

• R&D Grants

Funding - Equity FinanceFunding - Equity Finance

• Equity finance from– Business angel £20K-100K– First stage investor £100K-500K– Major investor e.g. 3i, Apax etc £1M-10M

• Requires realistic market plan• Have to give up part of the company• Expensive: advisors take 10-20% of cash!• Need to have an exit strategy

• The best way if you have the right idea.

Funding – R & D GrantsFunding – R & D Grants

• Governments/EU encourage growth and innovation; get university brains working with business R&D.

• Common themes:– There is a project (sometimes within broad areas

defined by government / EU) – Business only gets part-funding (e.g. 50%)– Often has to be a collaboration (e.g. EU)– Business gets the IPR; pays royalties– Monitoring by the grant provider

• Works if right project and right partners

• User Interface Design EnvironmentUser Interface Design Environment– British Maritime TechnologyBritish Maritime Technology– Integral Solutions LtdIntegral Solutions Ltd– University of Sussex, COGS.University of Sussex, COGS.

• Extend Poplog to allow rapid Extend Poplog to allow rapid prototyping / simulation of UIsprototyping / simulation of UIs

• ProblemsProblems– No end userNo end user– COGS design too sophisticatedCOGS design too sophisticated

UIDE ProjectUIDE Project

Keep it simpleKeep it simple

Widget 1

Widget 2

Data 1

But data flows have type and arguments.

Data 2

If several data flows, what order?

Control 1

So we need control ports, with type, order

• Technically interesting - could prototype a grand piano!

• Research papers on strongly typed visual programming

• Some ideas that turned up later

• No product as such

• Result?

UIDE Project

ISS ProjectISS Project

• GEC-Plessey Semiconductors, ISL, GEC-Plessey Semiconductors, ISL, Reading UniversityReading University

• Better scheduling of wafers through Better scheduling of wafers through wafer fabrication plant.wafer fabrication plant.

• Big problem, huge pay-off 5% Big problem, huge pay-off 5% increase in output.increase in output.

• Strong user; strong product Strong user; strong product championchampion

ISS ProjectISS Project

• After 3 years just starting to work, no After 3 years just starting to work, no customerscustomers

• RAs all looking for new jobRAs all looking for new job• Follow-on proposal possible in EuropeFollow-on proposal possible in Europe• … … Mortgage another £90K of our house Mortgage another £90K of our house

and hire the teamand hire the team• Chivvy MPs and ministers to get Euro Chivvy MPs and ministers to get Euro

project!project!

ISS and JESSI Faw projectISS and JESSI Faw project

• Got next customer SGS-ThomsonGot next customer SGS-Thomson• Won competitive tender for IntelWon competitive tender for Intel• Successful trials at Intel, TexasSuccessful trials at Intel, Texas• $1M order negotiated! $1M order negotiated! • Intel decided ISL too small for them to become Intel decided ISL too small for them to become

strategically dependent.strategically dependent.• Intel introduced ASLIntel introduced ASL• Later ISS business sold to ASLLater ISS business sold to ASL• Negotiations, due diligence, IPRNegotiations, due diligence, IPR• $3.5M in total, partly staged.$3.5M in total, partly staged.

HiP – Teaching Company SchemeHiP – Teaching Company Scheme

• TCAs work for 2 years at industry to transfer university skills.

• Academic teaching “bought out”• DTI funds 60% of costs• IPR in industry, royalty to university• TCAs groomed to be high-fliers in company.

• Excellent scheme, light proposal; high success rate; 1 to 1 collaboration.

HiP – Teaching Company SchemeHiP – Teaching Company Scheme

• ISL + UoS COGS (Mike Sharples)• Follow-on to UIDE• Hypermedia in Poplog. World’s first

intelligent multimedia system.• One software guy, one designer.• Success ….ready to launch …..

HiP – Teaching Company SchemeHiP – Teaching Company Scheme

• Success ….ready to launch …..

• Then Tim Berners-Lee introduced a new multi-media standard.

• Too late in project, too expensive to change – so we canned HiP.

Clementine – DTI Smart AwardClementine – DTI Smart Award

• DTI Competition: small companies

• 1. 75% of costs up to £80K?

• 2. 50% of costs up to £150K?

• No need to collaborate

• Easy proposal form

• Very competitive

Clementine – DTI Smart AwardClementine – DTI Smart Award

• Based on our experience of machine learning NN and induction,

• And on Poplog, UIDE, HiP

• Make data mining accessible to business people. (Colin Shearer)

Clementine: a graphical language!

Clementine ProductizationClementine Productization

• EU Project with DB to run on Intel PCs and in theory on parallel machines

• EU Project on DM Methodology

• EU Project on mining web data

TelcosTelcos•AT & T•Vodafone Australia•Cellnet•Airtouch Cellular•Singapore Telecoms

Early Clementine UsersEarly Clementine Users

FinanceFinance•Reuters•Nationwide•National Westminster•Citibank

PharmaceuticalPharmaceutical•Glaxo-Wellcome•Pfizer•Du Pont•Unilever

GovernmentGovernment•HM Customs & Excise•IRS•The Home Office•DERA

ManufacturingManufacturing•Daimler Benz•Ford•British Steel•Caterpillar

RetailRetail•Boots•Tandy •ICL Retail•Halfords

Introducing Introducing ClementineClementine

ISL Sales GrowthISL Sales Growth

Year 90 91 92 93 94 95 96 97 98DM Sales 327 779 1599 2728AI Sales 655 847 901 1091 1246 1165 829 501 348ISS Sale 1000 376

Sales 655.12 846.64 901.36 1091.36 1246.4 1492.17 1607.9 3100 3452195972.6 466326.6 957466.6 1633363

ISL Sales Years 1 to 9.

0

1000

2000

3000

4000

$1000

DM Sales AI Sales ISS Sale

Focus on the winnerFocus on the winner

• Disposal of ISS gave money to develop Clementine

• Opened office in Philadelphia• … and in Singapore• Distributors worldwide• Sales doubled each year• Hard to justify other businesses• But there was one other line of

business…

The Happy EndingThe Happy Ending

• Clementine recognized as best of breed worldwide.

• NCR adopted it, and paid for Japanese version.

• Main competitors SAS and IBM.• Offer from SPSS to buy the business• My wife said “Yes!”• Long negotiations, due diligence, contracts,

guarantees, ……….• 04.00am 1st January 1999 we signed!

The KBS bitThe KBS bit

• Throughout ISL’s ten years I’d been trying to build a KBS business.

• LPE, Gateway, KADS, KACTUS.

• PC-PACK Knowledge Elicitation Tools

• RED

• MACRO, PROMPT

RED ProjectRED Project

• UK Safety Critical Systems Project• ICRF – Prof John Fox• ISL, Lloyds Register, Masons, QMW• Use of logic to express knowledge• Discovery of generic safety rules• Proforma language to describe formally and

enact logic-based guidelines• Demonstrators in Asthma Management and

Ship Safety Assessment• Led ultimately to a new IT company

MACROPadcom, EORTC, ISL

PromptICRF, ICSF, IB, ..

1994 EU H/C Tele

Roots of Roots of InferInferMed Med

REDICRF, ISL, LR, QMW ..

Language for protocols Proforma

1990 UK SCS Prog.

InferMed

Proforma =>> ArezzoTM

MACRO

1999. InferMed

Basic concepts of the language

Clinicalactions

DecisionsDataentry

Protocols (processes)

Scheduling

InferInferMed SoftwareMed Software

Clinical trials

Remote data entry

Vertical applications

Core technology

Electronic best practice guidelines

Generic

Internet delivery

Rapid development

RetroGramtm

HIV drug advice

Genetic analysis

•Bespoke development for Roche

•Fully validated system delivered in 3 months

•Repeat business

Opportunities:

•license to B2C site

•pharmaceutical sponsorship

•flexible revenue models

Pain control

•High value product

•Licence fee (up to £2M)

•Customisation

•Training

•Maintenance

•Direct sales model

Market must be readyMarket must be ready

• Long time from innovation to profitable market (5-15 years)

• Sometimes a standard must be present e.g. electricity supply, IBM PC, WWW.

• Market slow to start - goes critical rapidly• Can only introduce radical ideas if:

– need is great and – current ideas don’t work

• Missionary selling is very expensive

Technology adoption cycleTechnology adoption cycle after Geoffrey Moore after Geoffrey Moore

Innovators

Early adopters Early Majority

Laggards

Late Majority

• Uptake of a new product (that requires behaviour change)

Adoption cycle with chasmAdoption cycle with chasmwhere ISL came from!where ISL came from!

• Beware the chasm! (Geoffrey Moore)

Early Majority

Laggards

Late Majority

Innovators

Early adopters

85-90 KBS business dropped into the chasm: specialist suppliers failed, majors pulled out.

Differences from academic researchDifferences from academic research

• Rarely intellectual curiosity -> a paper. Seek marketable product or process

• Industry is secretive, patents, etc• Academic research often alone – industry

research nearly always a team• Usually short term, exploit in 3 years• At mercy of managers and the economy• Competition is other companies, not quite same

as academic rivalry• New research usually in parallel with the

development/support of current products.

Lessons to rememberLessons to remember

• Keep it simple• Work with users• It can take 10 years• Every project needs a champion• Market solutions not technology• The technology adoption curve and the

Chasm• Real wealth from selling the company• It is also a matter of luck!

Thank you for listening

?Any Questions?

[email protected]