The Vicarage Syndrome

Posted in Investors, Entrepreneurs by David Mott on Mon, 22 Aug 2011

'Autonomy to be acquired by HP'. This was the news hitting Twitter on 19th August 2011. A less reported point is that Mike was called in to meet with David Cameron at Number 10, before the deal was announced. For David Cameron, as for many of us involved in the UK tech sector, the question is whether this deal is a triumph or a tragedy?

The Vicarage SyndromeFor Mike Lynch it is a triumph. The company’s founder and one of the leaders in the UK tech scene will stand to pocket some £500m from the deal which values Autonomy at around £7bn($10.3bn). Already there are some predicting that he will be running HP before long.

For shareholders it is a triumph. The deal will pay a premium of 64% on the share price as at 17th August, and this on top of growth in share price of some 250% over the past five years. It was also a triumph for the European technology sector which has long been criticised for its lack of $billion success stories.

There is also tragedy. Over time, the company will migrate its soul to the US and the UK will lose talent that it has nurtured. Autonomy was founded in 1996 and has grown into the world’s leading knowledge management company.

Is this bad? Surely it is simply the capitalist system at work and free market forces should be encouraged to drive innovation, increase efficiency and generate profits.

A friend of mine used to refer to the ‘vicarage syndrome’ to describe the tragic actions of so many successful entrepreneurs in the UK. For many, the entrepreneurial experience of building a company is so fraught with obstacles, red tape, taxes and hardship that, despite their financial success, it is enough to put them off for life and they opt for buying a nice old vicarage in the Cotswolds and settling down for a hassle free life. Would this happen in California or Tel Aviv or Shanghai? No. After a weekend off, successful entrepreneurs are already diving into their next venture.

So for Mike Lynch, the opportunity to run HP may be within reach. For those talented engineers and managers within Autonomy, there lies a choice - to grow and develop their careers within a corporate giant or to recycle their talent and apply their experience to build the next Autonomy.

So standing on my soap box, here is a call to arms for the best 'Autonomous': Do it, again! Don't allow yourself to bask in the warmth of the generous salaries, corporate expense accounts, time sheets and the conference circuit. Take the entrepreneurial path, take risk that can build real capital for yourself, staff and shareholders. Many other Autonomeers will be doing just that.

More entrepreneurs are doing it again. UK plc has suffered two tech downturns in 10 years and many lessons have been learned by the current generation of entrepreneurs. Within our own portfolio, we are backing more and more repeat entrepreneurs. 10 years ago, they were few and far between.

Don't worry about the timing - many of the world's best companies were founded at the depth of a recession, including Google and Apple. A recession is a time for renewal, for reinvention. It is also a time when the talent pool is fluid as talented managers look to move away from companies that are stalling.

Each time a major transaction takes place, many start ups are spawned. Autonomeers can look to companies that have created new generations of entrepreneurs like Powderject, ARM,CSR, British Biotech, Bookham Technologies, Oxford Instruments...

We look forward to supporting you on your journey.

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1 comment

  1. Hear hear!

    — Ed L Wed, 19 Oct 2011