Interview with Dr Hermann Hauser

Dr Hauser was born in October 1948, in Vienna, where his mother came from, and he grew up in the Tyrol, where his father was a wine wholesaler. He was bilingual, with a bi-cultural background.  His mother was very keen on education, although neither of his parents were university educated. His father was very much an entrepreneur and was very productive throughout his life, building a wine business, inherited from his father, from a very small outfit to a company of 30 people.

Dr Hauser went to school, in Wörgl and he remembers the primary school was very simple.   Because it was so small, he had four years in one class, and he doesn’t think that the detailed personal attention that they got was very good.  He went on to the Gymnasium in Kufstein, which he thinks was a fine education that he’s very grateful for.  His primary school teacher didn’t think he would pass the entrance exam as the Gymnasium was for the bright children but he got some special tuition, and just scraped through.

When he was 15 his father came home with some language school brochures and told him that he was going to learn English.  He said, ‘Well Father, but, but why should I learn English?’  to which his father replied, ‘Well English is the most important language in the world now.  You choose a language school in England and you go there for the summer.’  He got the choice down to Exeter or Cambridge although he knew nothing about either – not even that Cambridge had a university.  In the end, the train connections to Cambridge being more convenient than the ones to Exeter was what decided him on where to go for summer school.

He returned to Vienna for university and his first degree, in physics, is from the University of Vienna, in the Boltzmanngasse. He had a wonderful three years there and can remember working on a blackboard that Boltzmann used in the theory department.  Because Austria still had National Service, he had to spend a year in the Army.

He then decided to do a PhD at Cambridge because he had fallen in love with the city, after his period of being at language schools there for several summers.

It was in that period that he met his first computer.  There was a wonderful group of people that banded together in the Cambridge Microprocessor Group.  Microprocessors were an inspiring component, because they were so cheap that ordinary people, with an interest in computing, could buy a microprocessor and build a sort of home brew kit, and compute.  Until then. Computers had to live in an air-conditioned room and were only accessible to PhD students or professors.  By joining that microprocessor group, he got to know many bright people who later joined Acorn and produced all the excellent products for them.

He finished his PhD in, ’76 and then was a research fellow at the Cavendish Laboratory.

Dr Hauser’s first company was called CPU, for Cambridge Processor Unit Ltd, formed in 1977.  A year later he and Chris Curry started Acorn Computers and later merged the two companies.

He puts the incentive to be adventurous and entrepreneurial down, in part, to the fact that both his father and the Cavendish Laboratory were very entrepreneurial and the laboratory was very supportive of researchers trying new and different things.  Chris Curry was also very much a like-minded person to work with.

When they started in 1978 there was no business plan but they had a clear vision of what they wanted.  The vision was, that it was all happening in microprocessors, and we wanted to be part of it.   Dr Hauser, being a physicist, not a computer scientist, taught himself about computing from a book on microprocessors by Adam Osborne, the inventor of the first portable computer.   He had no big problems understanding software and what computing was all about.  However, his main contribution was finding very gifted people, who had both the passion and the ability to produce Acorn’s wonderful products and software.  Arguably Acorn, at that time, was the most innovative computing company in the UK, and that had to do with the quality of the people.

To start with, everything was about the hardware, although the software became more important.  They had to produce different layers, of software, including an operating system, applications, user interfaces and network protocols and they had a subsidiary, called Acornsoft, which produced games, word processors and spreadsheets.  At this later stage, the majority of developers in Acorn were probably working on software rather than hardware.

Acorn was chosen by the BBC to provide the BBC Micro as it was called.  After two years of working with Newbury Laboratories the BBC still didn’t have a working prototype, so they decided to go out to six companies.  Acorn asked for the specification and found they had everything and the kitchen sink in the spec.  But fortunately, Stephen Furber, one of the people that he recruited from the Cambridge Microprocessor Group, had a design in his drawer that they had called the Proton.  Fortunately, Proton had most of the features that the BBC was asking for.  There was a famous week in which, on Monday a group from the BBC came to them and told them the specification of the machine that they wanted and Hermann tricked Roger and Stephen into building the computer by the following Friday, for when the BBC returned. They worked three days and two nights to get it going and the BBC was impressed that they had done it so quickly by contrast with Newbury Laboratories.

Things started to change in the marketplace when IBM brought out their personal computer; which later became the standard.  It was a standard that Acorn chose not to follow because the only differentiation that hardware vendors could have had was price.  Acorn survived for another ten years after the IBM PC was launched, because they had our own operating system, which was much more efficient than that of Microsoft.  Furthermore, they developed a new processor for themselves, which was much better than the Intel processor, especially when it came to graphics, and that was the ARM chip.

The ARM chip came about because Acorn approached Intel to buy the die for their 8286 chip, which they then intended to modify.  Intel wouldn’t sell it to them and because they were riding rather high and were very young and arrogant, they said, ‘We’ll do our own.’  Had Intel given them the die at the time, ARM would not exist.  The Acorn design team had two advantages that neither Intel nor National Semiconductor or Motorola ever managed.  The first was no people: it’s the only microprocessor in the world that was designed by just two people, Steve Furber and Sophie Wilson.  The second advantage was no money, because Acorn didn’t have any.  So, rather than 50 people burning through many millions of pounds, they had to keep things incredibly simple and cheap.  This coincided with an architectural breakthrough at Stanford and Berkeley by John Hennessy and Patterson at Berkeley called RISC, for Reduced Instruction Set Computer.  This was a fantastic breakthrough and when their two geniuses looked at these papers they said, ‘Yeah, that’s so simple, we can do it ourselves.’  And they did.

Olivetti was a leading IBM-compatible vendor, perhaps number one in Europe, awash with cash, and it bought a majority in Acorn Computers.  At the time they were a publicly-quoted company, Acorn got into financial difficulty, and Olivetti rescued them.  In the negotiations, they realised that Acorn had an R&D department which was the envy of Olivetti, and they asked Dr Hauser to become VP Research for the whole Olivetti group.  Olivetti was riding high; the number one PC company in Europe and a seven-billion-euro company at the time, with a very charismatic leader in Carlo de Benedetti.  Elserino Piol, who was the Vice Chairman of Olivetti, became Chairman of Acorn, and they struck up a very strong personal relationship. Dr Hauser spent three years at Olivetti, and says they were three of the best years of his life.

Whilst with Olivetti he set up seven research labs for them all over the world.  He provided them with the research capability that they really didn’t have, because their history was in typewriters.  He never had any problems of any kind within Olivetti, he always got the support that he needed right from the top, and the divisions liked what he was doing as well, because, they saw that innovative ideas that benefited the whole company.  He left Olivetti in 1988.

After leaving Olivetti in 1988, Dr Hauser founded the Active Book Company which was a predecessor of the iPad.  They finally became an American company called EO, which was the main competitor to the Apple Newton at the time, but ahead of its time.  The display wasn’t good enough, the applications weren’t good enough yet: it was basically an iPad, but a bit too early.

There was an American company called PenPoint who were financed by Kleiner Perkins, Dr Hauser did a deal with Kleiner Perkins that merged the hardware division with Active Book Company, into a company called EO.  They were in negotiations with AT&T when AT&T bought NCR who already had a pen computing activity in their computing division.  Bob Cavanagh the CFO of AT&T invited Dr Hauser to present to the board of AT&T at Basking Ridge: this was a huge deal as AT&T was the most important company in the world at the time.  In the end it was decided that AT&T was big enough to have two pen computing divisions.  They invested in EO and it was one of the great experiences his life.

When they launched EO pen computing in Las Vegas a key component was that you could write on the surface and it had a data channel to the mobile phone network.  It was the early days of mobile computing and they had to demonstrate this on the stage in Las Vegas.  They were sketching a road map of where we’re going to meet, and they were going to transmit this sketch over the mobile phone network, into somebody in the audience.  AT&T was scared that this wouldn’t work, because it didn’t always work.  So, AT&T shut down the mobile phone network in Las Vegas and reprogrammed it so that only one call would go through during the hour that they had.  This is unimaginable now because everybody uses mobile phones, but in those days there were maybe ten or 20 people using mobile phones in the Las Vegas region.  Lo and behold, the call went through, the person in the audience could show the sketch, had been received and the journalists were very impressed.  This was the first time, it had ever been done in the world, so it was all very exciting.

In 1990 when Dr Hauser was working on the Active Book Company he met Larry Tesler at Apple, who was working on the Newton.  Apple had been using an AT&T microprocessor called the Hobbit, but AT&T Microelectronics had previously pushed a microprocessor which they then abandoned.  Larry was worried that they would do the same with the Hobbit.  After lots of performance comparisons with the ARM there was very little to choose between the Hobbit and the ARM.  Larry chose ARM because he argued that AT&T would drop the Hobbit a little later, so they wouldn’t get the support from them, while a little Cambridge company would never abandon the only thing they could live by. Apple invested one and a half million dollars for 43 per cent of ARM, and, John Sculley is on record saying that if Apple had not been able to sell that $1.5 million stake for $800 million, when they were in deep financial trouble, Apple would not have survived.  So, interestingly, Acorn, one of the competitors with Apple at the time, contributed to Apple’s survival.

Stephen Furber was trying to measure the power consumption of the first ARM when he realised that the power pins were not connected.  They thought well that’s rather good, we’ve got a processor that doesn’t need any power at all.  The secret was that the leakage currents through all the other pins was enough to power up the chip.  They knew that we were onto a winner on the power front and because, it could be driven by batteries, it did not have to have mains, it could therefore be mobile and be in billions of mobile devices and not tied to the desk top.  It was the adoption by Nokia that allowed ARM to become the standard in mobile phones, with, now, a 95 per cent market share.

Dr Hauser started Amadeus Capital with his business partner Anne Glover in 1997 and she came up with the name as she didn’t like the one he had thought of.

Apart from gut instinct he has developed three main criteria for choosing investments.  One is the size of the opportunity, that is, the size of the market; because unless it’s a big play it becomes very hard to build a substantial company.  The second criterion is the quality of the team: he always looks for at least one star, because it’s so much easier to put a world class team around the star, because everybody wants to work with good people.  The third criterion is the technology, but he has had so many cases where an A team with C technology would beat a C team with A technology that the team clearly is more important than the technology.  Amadeus now has offices in London, in Cambridge, and in San Francisco, Silicon Valley.

There are two things that Dr Hauser thinks venture capitalists ought to provide for their investee companies other than money.  One is to help the company through the network that they have built up over many years: they know most people in the industry in the sectors that they invest in. The other is help with the business model: they have got to think through the business models of all their portfolio companies, whereas the individual companies only have got to get their business model right once.  They’re not any smarter than the people in the companies, they just have a lot more data.

One of the partners must also understand the basic principles and the main characteristics of the technology, to see where these new technologies can steal a march on the competitors and whether they can really produce the USP needed to make the company successful?

Dr Hauser is probably proudest of the fact that the BBC Micro contributed to the education of a nation and created a whole generation of software programmers that then produced lots and lots of interesting companies, the games industry and the software industry.  He feels that being involved in a product that has had such an impact on a complete nation is very rare and he’s very grateful that he could be involved in that.

Financially most rewarding is ARM, which was sold to SoftBank for $30 billion. In global terms, last year they sold 20 billion ARMs: that’s three times as many ARMs as there are people in the world.

The thing he thinks will have the, the greatest long-term impact, is revolutionising gene sequencing with Solexa, where they reduced the cost of gene sequencing from $10 million, when they started, to under $1,000 now: 90 per cent of all the gene sequencing in the world is now done on their machines.

Looking forward, the investment that he is most excited about in terms of its impact for mankind, is a company called Evonetix, which uses some of the Solexa team to do gene synthesis, thereby taking control of biology itself, of life itself.  This is a dangerous but also a wonderful thing to do in terms of healthcare and improving the basic human condition.

The easiest mistake to make, especially if you come from the technology side, is to underestimate the importance of sales and marketing.  Brilliant marketing and sales people understand what people really want, and it’s not always what engineers feel people ought to want.

Dr Hauser was asked about people’s concerns over the use of big data from social media, its monopolisation by certain players and the associated use of artificial intelligence.  He thinks it’s very important that we have this discussion now.  Arguably, machine learning, and artificial intelligence in particular, is by far the most powerful tool that mankind has ever developed, and can be used for good and for bad, like any technology.  At the centre of all this is access and availability of data.  We are writing the rules now concerning data, and the new European directive, the GDPR.  He feels these things can only be done on a European basis, and, that, the new directive, is a good step in the right direction.  It must come from Europe, because America seems to be incapable of writing these rule: many of the companies that abuse the data at the moment are American, and the Asians don’t seem to care.  Europe really can take, and is taking a lead, in regulating the access to data.  We are now in an era where data is the most important commodity, and to concentrate it all in just a few hands of American companies is wrong: Google and, and Facebook need to be broken up into, into different entities.

The data needs to be made available to everybody on a fair use basis, and anonymised, so that everybody is in control of their own data and the data belong to the people, not to Facebook. If Facebook wants to use your data, they should have to explicitly tell you that and pay you for it, either in, dollars, or in a service that they, they give you explicitly.

Dr Hauser is a Patron of the Centre for Computing History in Cambridge which he feels is a wonderful museum that people ought to go and see.  It has lots of very interesting historic computers, including Sinclair, Acorn and ICL computers and lots of other stuff right up to, to the present.

Interviewed by:  Richard Sharpe on the 26th April 2018 at the offices of Amadeus Capital

Transcribed by: Susan Hutton

Abstracted by: Helen Carter