Interview with John Pearce

John’s father was a piano tuner for Steinway. He had joined as an apprentice, aged 15 and died at 81, still working for the company. He had tuned two pianos the day he died. His mother had been a shop assistant, when she left school, and didn’t work after getting married.

He had a happy childhood, in spite of growing up during the Second World War. His father went to the Air Force in 1939, with his mother taking him to Taunton and then Exeter to stay with her relatives. He remembers the sound of the sirens and the bombs dropping on Hendon Airport.

From the age of about 12, he had been purchasing ex-war department electronics as he was fascinated by how things worked. He built crystal sets, wiring one into his friend’s house three doors down, so they could phone each other. His first job was at 13, doing posters for a newsagent shop window, and then painting house number signs for his neighbours. A mini-entrepreneur from an early age.

John attended his local church primary school until he was eleven, and then was a beneficiary of the assisted places scheme. He was awarded a scholarship to University College School in Hampstead.  Everything was paid for including books, uniforms and lunches.  His brother became an architect, and his sister a graphic designer.  Both parents had left school at 14.  His father gave him three messages: 1. Do well in your exams. 2.  Your face is your fortune. 3. It doesn’t matter what you know, it’s who you know.

Arrival a UCS was a shock, having been consistently first or second in a class of 50 at his primary school, John was now in classes of 20 with many of his fellow students chauffeur-driven to school.  He was learning Latin, Greek and French so there became a big division between his parents and himself.  His parents had no influence on what he did and what he studied.  He saw clearly that the things he thought he liked, required money.

He went on to study Electronic Engineering at University College, London. He was unimpressed by the course as it was “mainly people standing up and scribbling on a board and you copied it down in your book and went home”.

John’s first job after university was working for Joseph Lucas and Smith Industries.  Following an engineering degree, graduating in 1956, at a time when engineers were highly sought after.  The standard job for an engineering graduate, was as a graduate apprentice on a salary of £500 per year.  The job at Joseph Lucas stood out as they were offering a salary of £700 a year.  They were forming a team for their IBM 650, the second of its kind in the UK – Rolls Royce had the first one.  The team was made up of four Oxbridge graduates, four people from within the company and an electronic engineer. Pearce was the electronic engineer.  He was immediately sent on a 6 week training programme with IBM and then brought back to teach the team what he had learned in 4 weeks.  He describes it as a baptism of fire.  He had never heard the word computer before.  His background in engineering enabled him to think analytically about abstract things, and to work incredibly hard.  There were no courses in systems analysis – you just did it.

His next task was processing sales orders.  They set out to become systems analysts and began by designing and making a template.  They documented  the existing systems before deciding which of those systems would be cost-effective on the IBM 650. The computer was able to multiply 100 8-digit numbers together, 100 times per minute.  It had a 2K, 4K drum and the programs and data went on the drum. John was trained in programming by IBM, but does not see this as a strength.

John joined CDL to develop the 1301 – their answer to the IBM 1401.  He was part of a three-man team developing coding in the English language.  They wrote manuals and trained people in ICL.  The project ended when they discovered Grace Hopper in America had created COBOL.  He went on to Smith Industries, doing work similar to what he had done at Lucas.  he was now assistant team manager.  He was able to replicate the system in a much shorter time – “ the learning curves were kicking in”.

At this stage it was not obvious how important computers would become in business.  The applications being used were mainly for payroll – gross to net calculations with tax codes – and production scheduling.  They were aiming to achieve machine shop scheduling which is immensely complicated.  Lucas had 250,000 components, and hundreds of products.  working out a schedule of products to be built, which components were needed, where the materials came from, and what happened if one of those materials was in short supply, was a challenge.  At that stage it was solved with an enormous punch card system. John says it was too much both for his team and for the 650.  During this time he developed a fascination with computers as he believes he would have been bored as an electronics engineer.  The demand for experienced, good people was enormous – IBM were poaching staff, resulting in Smiths changing from IBM to English Electric.

In 1960 John joined IBM following a meeting set up by a colleague from Lucas.  His job was to help the salesmen introduce new concepts to existing customers.  One of the first of these was a card reader.  You put a punch card into a device, pull it back, and it clicked out 39 characters per minute over a phone line.  His division was renamed Advanced Market Development – it was a form of hands-on market research.  They took the products with them to the meetings, allowing the customers to test them out and think about them. They were getting feedback from the customers, as well as providing them with information.

The culture at IBM was very different from the 9 – 5 culture at Lucas, where you would be admonished for being in the office at five past five. John describes being “really beaten up” on the one-month initial training course.  They were made to work all night, and told they were useless. He says the experience bound the team together without competition.  In the early 1960s he was on a salary of around £3,000 a year. They were taught a bit more about programming, but not a bout market research or market development. There was a tremendous feeling of freedom, with the culture of doing your best, because everyone else was doing theirs.

In January 1962, John was transferred to IBM’s world trade headquarters in the United States.  30 system engineers from Europe joined a team of 1,000 engineers in the US, working on SABRE and PANAMAC – airline reservation systems. They believed railroad, banking and airline businesses were going to become online systems. The engineers were sent to learn about these systems so that on their return they could help sales and make proposals. John was team leader of a six-man team from the UK, and was based in Manhattan, acting as a coordinator between UK sales efforts and the design teams in Poughkeepsie.  Rationing had finished in 1959 and as a 26 year old “the shock of hitting Manhattan, and the food, and the pace, and the ladies walking in furs down Fifth Avenue, was quite remarkable”.  The other 29 Europeans got hands-on design experience.

In Poughkeepsie they were building special hardware as well as software and the design problem was significant. The response times with the airline reservation software were slow, and agents became quickly bored if the response time went up.  The telecoms systems were fault prone as well.  There were between 100 and 200 terminals around the world, and it was a challenge to work out how many messages were going to come in, and how long they would take to process, and send back.  In 1964 IBM launched system 360, which everyone wanted.  It was a family of machines which meant that the software was transferrable on to updated versions of the computer.

It was in Manhattan that John met John Hoskyns who was the IBM Airline rep for British Airways.  BA wanted a proposal for an online reservation system.  In those days the seat utilisation was 72%.  The agents in each country were given a block of seats, and within three weeks of the flight taking off, they were all brought back to London.  If you wanted to buy a ticket in the three weeks prior to departure, the only way to do it was to phone London.  By creating an online reservation system, they would be able to get the take up of seats to 90 or 90% which would have an enormous impact on the bottom line.  In November 1963 John and Hoskyns made a proposal to BA, accompanied by the IBM ‘top brass”.  The proposal came to £42 million which was equivalent to £800 million in today’s money. As they were getting ready to deliver the proposal, John Hoskyns’s car, containing the visuals for the meeting, was stolen. They conducted the meeting anyway, losing the deal to UNIVAC whose proposal came in at £26 million.

Following the BA debacle, John Hoskyns approached him asking if he thought there was a market for Data Processing.  They concluded there would be a market for a small consultancy.  Hoskyns would get the business in, and Pearce would execute it.  Hoskyns was seven years older than John, and had been a captain in the army.  The company was formed in March ’64 and began trading in April.  They worked out of Hoskyns’ sitting room with twice weekly visits from a lady secretary who “typed letters and licked stamps”. The business began with an investment of £50,000 from Hoskyns’s father-in-law, Herbert Hill, which they did not use.  They charged £40 a day – equivalent to the top five accountants.  Their IBM training had given them enormous confidence, the clients paid at the end of the month and they had no overheads.  There was complete openness and honesty between them.

The first job was with a Birfield company, Lacock in Sheffield.  The meeting was set up by Herbert Hill. John was the team leader, training eight of the people with Lacock. he trained them in the whole process, working on site for six months, and they went on to implement the system. .  Hoskyns put together Centre-File, an online system for stockbrokers, backed by Birfield for £2 million.

On his return from Lacock, John hired more consultants and Hoskyns increased the sales effort.  They trained new recruits in their particular approach, as they wanted to keep the quality control, rather than just letting people do their own thing.  They expanded to 20 consultants and realise that real growth meant creating products.

In 1972, John Hoskyns told him that he wanted to go into politics,  John was closely involved in the sale of Hoskyns to Martin Marietta in 1975.  John left Hoskyns after 12 years in 1976 as John Hoskyns began to develop his political career.  The company was the first computer services firm to be sold in the UK.  It is now one of the key businesses of Capgemini.  It grew from 450 people at the point of sale to 9,000 without any further injection of capital. John says the culture and attitudes that were “set in concrete” allowed the company to grow.

In 1976 John joined the National Enterprise Board as Deputy Director of the Computer and Electronics division. The NEB had a £3 billion budget and was seeking to buy into profitable companies in computers and electronics and to market them overseas.  The organisation was called Insac.  The idea was to buy into ten of the top UK software companies with the NEB holding 25 to 30 percent of the shares and having a board member.  If the project failed, NEB would lose its money, if it did well, NEB would do well.  The companies were funded to develop products which they could sell in the UK, and the NEB would sell internationally. The companies involved were SDL, Systime, CAP, Logica, SPL   Furthermore, a board was created with representatives from each of the companies, to develop its own products – as long as these were not in conflict with what the companies wanted to do themselves.

Viewdata, developed by the Post Office, was thought by Insac to be a product that was marketable overseas.  It was sold around the world to about seventeen distributors. It was an early form of the Internet, great for disseminating information, but not for online applications. Travel companies, including Thomas Cook, made good use of it. John says the terminals were not great as they were modified TV sets and were a bit slow.  In 1979 John pulled out of Insac to run the Viewdata piece, renamed Aregon. Initially the NEB owned 100 per cent of the shares.  He and his team had been promised equity, but the Labour government did not want “funds being used to make entrepreneurs rich”.

In 1984, John wanted to broaden his wings, and raise money from venture capitalists.  He planned to run a specialist form of venture capital company, focusing entirely on IT, software companies and products.  It would have a finance and marketing division, acting as consultants to the investing companies.He moved on to create a consulting company – Pearce and Associates. John was really a one-man band, employing others as necessary, advising companies that were in trouble and sitting on software company boards.  He had raised £5 million from a Middle Eastern company to get the venture capital fund going again but felt he no longer needed the stress and pressure of it.

He became Chief Executive of Casson Beckman, an accountancy firm.  They had been his accountants for years and wanted to get a new computer system.  He offered to sit in on their meetings and analyse their decision making as it was a bit chaotic.  The managing partner asked for his advice as “you obviously know a lot more about management than I do”.  In most professional firms, you stay in the firm and rise up the ranks.  If you stay there long enough you may become the managing or senior partner – without any training for management. John found the experience different from what he had imagined.   He says he didn’t really understand partnerships – he couldn’t hire and fire, and he couldn’t decide what each partner’s profit share would be.  That was decided by the partners themselves.  It was a very different culture from the young, vibrant IT industry. After two years, when he tried to persuade three senior people to reduce their hours so that the young people could be promoted, and they reneged on the agreement, it was time to leave.

In 1991, John moved to America with his South African second wife.  They moved to live in Santa Fe, New Mexico, and travelled to California and London to do consulting work.  He was also Chairman of Datafit – a small company formed by two ex-Hoskyns people.  They had developed a relational database management system that worked on a micro.  Subsequently they developed QAB – a question and answer programming language.  They had received investment from the venture capital firm Baronsmead and Baronsmead wanted an external chairman.  In 1992, Baronsmead wanted to get out, so together with Ali Athar, Pearce bought the venture capitalists out, becoming the majority shareholders in Datafit.

Their technical director, Tony Montgomery-Smith, saw that JavaBeans could transform what could be done on a retail cash register.  At the time big retailers struggled to download overnight changes in prices or systems. John raised £1.3 million from Trinity in 1994, who insisted he come back from America to run it.  They had a letter of intent from IBM India, Europe, Middle East and Africa and twelve retailers in America, as they needed further investment. John approached three venture capitalists in Boston, and had nearly sealed the deal, when IBM Raleigh and Microsoft found out about it.  They didn’t get the funds and so had to sell the company to PCMS.  The product was installed in Waitrose, John Lewis and Walgreens 4 or 5 years later.  It was too soon to market.

John headed to South Africa and became partners with Jaco Delport, a 34-year old who had formed his own, successful company. John was working pro bono, helping out small IT companies to raise money.  Most of them were techies who had come out of university with a software idea, but had never worked for a large company, usually with insufficient management infrastructure and no idea about finance or marketing.  They set up a mentoring service, using people who had succeeded in business, on a voluntary basis who would give time to 20 IT companies. They raised the money from a government-backed incubator in Cape Town. When they presented to the Western Cape Government, seeking further funding, John being male, white and grey-haired was unable to close the deal.  He is disappointed about this because he really believes in mentoring and has seen it work successfully in New Zealand and America.

John describes “people generally”, rather than one individual as being influential on him.  He says he learned more from John Hoskyns, than everyone else. Later on he was running the companies himself.  He says he worked with some outstanding individuals whom he still meets regularly.

John says a number of lucky events happened and that Hoskyns was hugely influential, mostly fun and a great success.  He does not regret leaving the company as he didn’t want to run a company of 4,000 people.  He really enjoys getting behind a new idea, raising money for it and getting the right people in to run it in the early stages.

John describes having a “flaky banker” during his time at the NEB as a major error – although he thinks the NEB itself was a great idea, prior to the emergence of corporate venture capital. Casson Beckman was also a mistake due to his lack of understanding of the implications of working for a partnership.

John says a young person needs to know themselves well enough psychologically to figure out where they would best fit in the industry.  Are they “analytical style nerds” who want to focus on the job, or “big picture extroverts?” He believes the psychological fit is more than 50 per cent as that profile rarely changes over your lifetime.  They should be prepared to make several moves to find out where they fit, and have the courage to accept when the situation is wrong for them.

He believes the issues about launching and running small companies have not changed – fundraising is always an issue.

In the early days of Hoskyns they were clear that the cost of people would increase whilst the cost of hardware would decrease.  The lifetime of a software product was very short – often by the time an application was developed it would be out of date. John believes the proliferation of IT, with cybercrime and cyber warfare, is creating serious problems, along with “the enormous waste of time of Facebook and Twitter”.  Areas where the IT promise was great, but has had unintended consequences.

John says the biggest influence has been the take-up of the Internet, but says this largely happened after his time.

Interviewed by: Alan Cane on the 20th April 2016 at the WCIT Hall

Video by: Boardie

Transcribed by: Susan Hutton

Abstracted by: Annabel Davies