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Autonomy: surely one person cannot be held responsible?



When I turned up at the Slush Conference in Helsinki last week, one of the first questions I was asked was: “do you have any comments on the Autonomy news?” Once I got my head around what had actually happened, my initial thoughts were, if £200m has supposedly been miscalculated, how on earth could that result in a £5bn write down? Confusing, to say the least. 

As the dust settled on the whole fiasco, it got even more confusing as to what the actual allegations were.

Could it have been that somewhere during a board meeting, some of the investors planted an idea of selling off the company and get the deal closed sooner rather than later? I can only think that the old saying of ‘time will tell’ will actually be very accurate here and that time probably will tell who was a fault or perhaps failed to deliver.

We all respond to pressure in a different way - some of us are really good under it and some of us crumble. During my time at CommerceOne it was always pretty clear on where the company stood revenue-wise and that I was a mere cog in the engine. However, people such Mark Hoffman and The Biestman were continually under severe pressure, especially coming up to IPO time, only to be further harassed afterwards. Yet, knowing their characters, I am sure they would not budge on anything.

This all got me thinking about start-ups and young businesses. Recently, I’ve been thinking of hosting a roundtable on: ‘what they don’t tell you at start-up school’. It’s a bit like a relationship, when it’s good everyone is happy and something very similar tend to happen with a young business. When things are going well, people are happy to part with their money and there are smiles everywhere. This until something goes wrong when everyone forgets the help they had, the smiles and advice given, to instead look for someone to put the blame on. My experience with investors, especially venture capitalists, is that they sometimes, rightly so, apply a lot of pressure onto board members and companies to reduce the risk of failure.

I knew a company that could have been CommerceOne. Instead, hidden agendas and demands got in the way, people got greedy, didn’t listen and as a result the company folded just before the dot com boom. Gone was the $22bn market cap.

Over the years, the number of start-ups I’ve come across where one moment, things are all rosy to the next when co-founders fall out and generally blaming each other. Next thing you know, the IP has never been clearly defined in terms of ownership and investors, people still want their cash, couldn’t care less about the childish fall out and start executing agreements that the co-founders didn’t bother reading in the original contracts. Then someone, usually the CEO, becomes the bad guy. Most of the time though, he will have done his upmost to help in the first place. Chances are, without him, there would be no company to fight about.

A lawyer I know from Taylor Wessing is one of the few solicitors I have met who is actually a genuinely nice guy. More importantly, he has a track record of establishing tech firms that reads like the who’s who of the Valley. For some time now he has taken as his mission to look out for start-up companies and to get their affairs in order from day one to prevent them from end up in terrible and unfortunate situations; it’s all about getting the basics right.

However, not only does this principle apply to start-ups but as I discovered recently, even a well-established business won’t be able ever selling out for what it’s worth unless they’ve got that important basic structure in place but also make sure to keep things current and accurate. Unfortunately, even a simple task such as keeping IPR up-to-date could be a massive hurdle for any trade sale.

I have a saying: “everyone is good at burning other peoples cash.’ It’s true. So investors, once they get a smell for a deal on return of money, will do whatever it takes to make that deal happen.

I guess the Autonomy situation comes down to the acquisition stage and the difference between the value of the targeted hard assets and the purchase price, which was agreed as good will. The ‘good will’ then gets carried onto the balance sheet as an asset and is then reviewed.

As the show goes on, we can only hope that HP will define what they think actually happened. Could it perhaps be that the current Chief Executive of HP might saw the acquisition slightly differently from the predecessor? What I hope is that out of all these intelligent people involved, there won’t be one person that will have to take the blame for it all.
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Tags: autonomy, autonomy corporation, helsinki, hewlett-packard, initial public offering, mark hoffman, meg whitman, taylor wessing

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