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19 July, 2015 - 23:56 By Tony Quested

ARM and the Man: Hauser’s A-list legacy stands test of time

Dr Hermann Hauser Cambridge Torchbearer

It was founding Acorn Computers and the company’s legacy in computer engineering that earned Cambridge entrepreneur and VC Hermann Hauser a place alongside Bill Gates in Silicon Valley’s ‘Visionary’ Awards hall of fame.

But it was three cherries in a row and a tug on a gaming machine handle that helped Hermann and Acorn hit the jackpot after he and Chris Curry gambled £50 apiece. 

In best Michael Caine tradition, Dr Hauser plucks a ‘There’s not many people know that’ gem from a myriad of memories about his early business life.

“Chris and I didn’t suddenly start Acorn, the fountainhead of computer development, with the click of our fingers. Acorn was a soft startup and we began life as a technology consultancy called CPU – Cambridge Processor Unit Ltd.

“We were young – I was in my 20s – and was not averse to taking risks. I had some business experience with my father’s wine business in Austria, which was a successful venture. I was going to export the Hauser wine to England but it never took off.

“Chris had left Sinclair Radionics, where we met during the development of the Mk14. Chris wanted to develop it further but Sinclair couldn’t be persuaded so we each took a gamble with a £50 investment and set up CPU.”

Securing the first client proved a novel experience for the young Hermann. A fruit machine company in Wales, Ace Coin Equipment, was experiencing difficulties with the guts of its machines, which would often cough up a jackpot in the most bizarre circumstances.

It was Hermann, wearing a salesman’s hat – who was despatched to clinch the historic first order. CPU had developed the ACE controller based on a National Semiconductor SC/MP microprocessor and would soon switch to MOS Technology 6502. It was effectively a solid and dependable new ‘engine’ for the fruit machines.

“To be honest I didn’t really have a clue what kind of money I should be asking for in return for our technology and brainpower. Bear in mind that I had just got my PhD in Physics at Cambridge and the business had no money at all.

“From somewhere I came up with a figure of £1k up front just to get involved and then found the courage to demand another £1k to install the technology. We earned £3,000 in total from that first deal. So we produced a completely new design of the core electronic box for £3k and made around a £2k profit.”

That modest cash haul would be swollen to a turnover of about £10,000 in the first year of Acorn, just under £100k in the second  – then the milestones were ticked off: “We hit £1 million, then £5m, £8m, £40m and then £90m-plus. We were the fastest growing company in the UK. We had grown from zero to just under £100m revenue in less than five years – and we were profitable!

“It was quite a ride but there were many times when we flew by the seat of our pants. That first sale is a classic example: My PhD was in Physics, not electronics!”

CPU financed the development of an SC/MP-based microcomputer system using the initial income from the design-and-build consultancy and launched the system in January 1979 as the first product of Acorn Computer Ltd.
The trading name was deployed by CPU to keep the risks of the two different lines of business separate. 

The microcomputer kit was named as Acorn System 75. The name Acorn was chosen because the microcomputer system was to be expandable and growth-oriented. It also carried the additional appeal of appearing before ‘Apple Computer’ in a telephone directory, Hermann recalls.

CPU – and now Acorn – had already assembled a highly talented band of brothers to expand the scope and power of its technology proposition.
Despite the lucky strike of the first sale, Acorn most definitely had a business plan – or at least a vision.

Dr Hauser says: “We had a very simple business plan that contained one detail very precisely: It’s all going to happen in microprocessors and every house will have one. 

“We call them chips now, of course, and with the ARM Holdings business born within Acorn, we are proud of our prophecy. With more than 50 billion chips shipped there are now seven ARM chips for every person on earth. That’s quite a legacy.”

Driven by such talents as Hauser, Curry, Steve Furber, Andy Hopper, Sophie Wilson and Jim Mitchell, Acorn developed the Atom and moved on to the BBC Micro, the Electron and the Proton. 

The BBC Micro sold well and Acorn Computers Ltd became part of a newly-launched and broader church, the Acorn Computer Group with an historic IPO for the sector. The group was born with a market cap of £135m and shares at 120p and at a stroke took the original £50 gambles by Messrs Hauser and Curry to respective holdings worth £64m and £51m.

The Acorn RISC Machine project started in October 1983 with £5m investment and silicon partner VLSI Technology Inc produced the first ARM silicon in April 1985. Its first practical application was as a second processor to the BBC Micro. 

Acorn won a Queen’s Award for Technology for the ARM in 1992 – ironically two years after ARM as a separate business managed to wriggle free of Acorn ownership.

Acorn’s days of winging it were effectively grounded in a year that thanks to Orwell already carried an ominous ring – 1984. The glory of the IPO had been replaced by a nuclear winter in the industry; Atari was sold, Apple almost went bankrupt and demand for Acorn home computer products collapsed.

Acorn was in a hole but kept digging, spending reserves on R & D. It lost £11m in six months. Italian computer company Olivetti took a 49.3 per cent stake at £12m. By early 1986 Acorn had exited the US. From then on it was all about ARM.

Dr Hauser said: “The problem at Acorn was that we never had any stock and it was to prove our eventual downfall. The problem was volume production but then we over-compensated, opening factories all over the place. Then demand went through the floor.”

Acorn had 43 per cent of the fledgling ARM and Dr Hauser had little doubt that those who had bought shares in Acorn at IPO were hanging on to them to keep a stake in ARM. Dr Hauser recalls: “I am the only one who was in at the start of Acorn and still there at the start of ARM. In fact I started the ARM project and then spun it out with Apple in 1990. Stan Boland did a superb job of steering through the succession.”

Life after Acorn has proved similarly exhilarating for Dr Hauser who has scarcely sat still. He started the Active Book Company with £1m of his own cash. AT&T acquired Active Book and incorporated it into EO Personal Computer in 1991. Dr Hauser became CTO and chairman. In 1993, he set up Advanced Telecommunication Modules Ltd with Andy Hopper and the venture was acquired by Conexant in 2004. Dr Hauser founded NetChannel which was sold to AOL and then completed what, for many, seemed the next logical move, setting up a venture capital organisation.

It was in 1997 that Dr Hauser co-founded Amadeus Capital Partners which is now investing millions into other tiny tech acorns which he believes will grow globally. 

“I had known for some time that I wanted to be a business angel to help companies access finance much more easily and effectively than when I started out in business. There wasn’t Venture Capital in the UK when Acorn started: We had to go down the bank loan route. 

“The dealflow at Amadeus has been consistently excellent in terms of both quality and future opportunity. Cambridge has developed a world-class cluster in genomics and leads the field in many aspects of personalised medicines development. 

“So I was particularly proud that Amadeus led the Series B VC financing of Solexa, which developed a next-generation DNA sequencing technology which became the market leader. And of course there was added satisfaction when Solexa was sold to Illumina in 2007 for more than $600m. I was also the first customer of the Illumina Personal Genome Sequencing service. It’s good to see Illumina is now building a European HQ in Cambridge – obviously keeping a close eye on me!”

Dr Hauser also co-founded Cambridge Network and in 2000, when Plastic Logic was founded from his alma mater, the Cavendish Laboratory, Hermann became chairman.

He has created or helped create scores of millionaires and says that helping young companies through Amadeus still gives him a tremendous kick. 
“I keep doing it because of the sheer pleasure of working with extremely bright young people who make something out of nothing. Many of my great successes have stemmed from ideas that did not exist before I got involved. I groomed many of them from zero.”

Despite being born in Vienna, Dr Hauser has done so much for the UK economy that the Government made him a Knight of the British Empire – a title he chooses not to bandy about. 

He also wrote the ‘White Paper’ which led to the introduction of the technology Catapult centres across the UK. Now he is paying it forward yet again – and this time with a neat piece of symmetry to his home territory of the Tyrol – by launching a new summer school in the Austrian haven of Alpbach. It is the first major manifestation of the International Entrepreneurship Center Tirol that Dr Hauser founded. The inaugural event will be held in the resort from August 19-24. 

To underpin the initiative he has formed a partnership with both the European Forum Alpbach and the Centre for Entrepreneurial Learning at Cambridge Judge Business School. The venture provides a framework for founders through which they are able to present their product or venture ideas to an international jury. The summer school will include a blend of lectures, interactive workshops and coaching with renowned mentors to prepare the participants for pitching at the end of the programme. 

The overall objective is to evolve the ideas to marketability and create successful new entrepreneurs and companies in the process. Yet another acorn planted in fertile minds that could sprout into a fresh forest of enterprise. Thankfully, after a lifetime as a business pathfinder, Dr Hauser can see the wood from the trees.

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