Alan Montgomery, Director

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• Alan Montgomery, Director
• alan.montgomery_at_infermed.com

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Objective of talk

• Describe what R D is like in a small IT company
• at least in my own experience
• Ways of getting funding
• Demo of a product produced
• Differences from academic research

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Topics we will cover

• Starting a company via an MBO (Management Buyout)
• Search for a growth
• Research grants for companies
• IPR issues
• Primacy of people
• Cash flow
• Marketing high-tech
• Selling a business
• Demo of Clementine

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My experience

• 66-73 M Sc. D Phil (Physics) from UoS
• 72-74 CAP Process Control - House
• 74-84 ICL Compilers - Redundancy
• 84-86 Software Engineering Research
• Poplog Product Manager, SDL
• AI Winter
• 89-99 Founded Integral Solutions Ltd.
• 94-99 Clementine
• ? ? Sold Company ? ? ??
• 00- Director, InferMed

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The Management Buyout

• AI Winter - Close AI Products Divn.
• Main Product was Poplog!
• Maybe 60 industry/government clients
• Negotiation with Sussex and SD-Scicon
• Ignorance of business enterprise agency
• Business Plan
• Bank loan collateral
• Ownership
• Thank you SDL and UoS/COGS

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Where to go next?

• Poplog is a tool, used by RD defence,
  manufacturing, academics, .
• Extend it with a toolset of other AI tools
• Still does not solve any high-value business
  problem
• Have to sell to technicians endless technical
  wrangling
• Low prices
• Can we turn it into an application, or find some
  new market?

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ISL Research, Phase 1Lucky break as we hit
recession!

• Government IT RD favours SMEs
• Get 50 funding for RD
• Invited into three projects
• UIDE - turn Poplog into UI prototyping tool ?
• Gateway KBS Methodology ?
• ISS semiconductor wafers ?
• SMART proposal FORTRAN. Failed. ?

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Funding research and development

• Self funding from profits!
• Co-operative project with customer
• Loans wheres the collateral?
• Equity finance
• Corporate venturing e.g. Roche
• RD Grants

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Funding - Equity Finance

• Equity finance from
• Business angel 20K-100K
• First stage investor 100K-500K
• Major investor e.g. 3i, Apax etc 1M-10M
• Requires realistic market plan
• Have to give up part of the company
• Expensive advisors take 10-20 of cash!
• Need to have an exit strategy
• The best way if you have the right idea.

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Funding R D Grants

• Governments/EU encourage growth and innovation
  get university brains working with business RD.
• Common themes
• There is a project (sometimes within broad areas
  defined by government / EU)
• Business only gets part-funding (e.g. 50)
• Often has to be a collaboration (e.g. EU)
• Business gets the IPR pays royalties
• Monitoring by the grant provider
• Works if right project and right partners

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UIDE Project

• User Interface Design Environment
• British Maritime Technology
• Integral Solutions Ltd
• University of Sussex, COGS.
• Extend Poplog to allow rapid prototyping /
  simulation of UIs
• Problems
• No end user
• COGS design too sophisticated

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Keep it simple
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UIDE Project

• Technically interesting - could prototype a
  grand piano!
• Research papers on strongly typed visual
  programming
• Some ideas that turned up later
• No product as such
• Result?

?
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ISS Project

• GEC-Plessey Semiconductors, ISL, Reading
  University
• Better scheduling of wafers through wafer
  fabrication plant.
• Big problem, huge pay-off 5 increase in output.
• Strong user strong product champion

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ISS Project

• After 3 years just starting to work, no customers
• RAs all looking for new job
• Follow-on proposal possible in Europe
• Mortgage another 90K of our house and hire the
  team
• Chivvy MPs and ministers to get Euro project!

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ISS and JESSI Faw project

• Got next customer SGS-Thomson
• Won competitive tender for Intel
• Successful trials at Intel, Texas
• 1M order negotiated!
• Intel decided ISL too small for them to become
  strategically dependent.
• Intel introduced ASL
• Later ISS business sold to ASL
• Negotiations, due diligence, IPR
• 3.5M in total, partly staged.

?
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HiP Teaching Company Scheme

• TCAs work for 2 years at industry to transfer
  university skills.
• Academic teaching bought out
• DTI funds 60 of costs
• IPR in industry, royalty to university
• TCAs groomed to be high-fliers in company.
• Excellent scheme, light proposal high success
  rate 1 to 1 collaboration.

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HiP Teaching Company Scheme

• ISL UoS COGS (Mike Sharples)
• Follow-on to UIDE
• Hypermedia in Poplog. Worlds first intelligent
  multimedia system.
• One software guy, one designer.
• Success .ready to launch ..

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HiP Teaching Company Scheme

• Success .ready to launch ..

• Then Tim Berners-Lee introduced a new multi-media
  standard.
• Too late in project, too expensive to change so
  we canned HiP.

?
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Clementine DTI Smart Award

• DTI Competition small companies
• 1. 75 of costs up to 80K?
• 2. 50 of costs up to 150K?
• No need to collaborate
• Easy proposal form
• Very competitive

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Clementine DTI Smart Award

• Based on our experience of machine learning NN
  and induction,
• And on Poplog, UIDE, HiP
• Make data mining accessible to business people.
  (Colin Shearer)

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Clementine a graphical language!
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Clementine Productization

• EU Project with DB to run on Intel PCs and in
  theory on parallel machines
• EU Project on DM Methodology
• EU Project on mining web data

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Early Clementine Users

• Manufacturing
• Daimler Benz
• Ford
• British Steel
• Caterpillar

• Retail
• Boots
• Tandy
• ICL Retail
• Halfords

• Finance
• Reuters
• Nationwide
• National Westminster
• Citibank

• Pharmaceutical
• Glaxo-Wellcome
• Pfizer
• Du Pont
• Unilever

• Government
• HM Customs Excise
• IRS
• The Home Office
• DERA

• Telcos
• AT T
• Vodafone Australia
• Cellnet
• Airtouch Cellular
• Singapore Telecoms

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Introducing Clementine
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ISL Sales Growth
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Focus on the winner

• Disposal of ISS gave money to develop Clementine
• Opened office in Philadelphia
• and in Singapore
• Distributors worldwide
• Sales doubled each year
• Hard to justify other businesses
• But there was one other line of business

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The Happy Ending

• Clementine recognized as best of breed worldwide.
• NCR adopted it, and paid for Japanese version.
• Main competitors SAS and IBM.
• Offer from SPSS to buy the business
• My wife said Yes!
• Long negotiations, due diligence, contracts,
  guarantees, .
• 04.00am 1st January 1999 we signed!

?
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The KBS bit

• Throughout ISLs ten years Id been trying to
  build a KBS business.
• LPE, Gateway, KADS, KACTUS.
• PC-PACK Knowledge Elicitation Tools
• RED
• MACRO, PROMPT

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RED Project

• UK Safety Critical Systems Project
• ICRF Prof John Fox
• ISL, Lloyds Register, Masons, QMW
• Use of logic to express knowledge
• Discovery of generic safety rules
• Proforma language to describe formally and enact
  logic-based guidelines
• Demonstrators in Asthma Management and Ship
  Safety Assessment
• Led ultimately to a new IT company

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Roots of InferMed
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Basic concepts of the language
Clinical actions
Data entry
Protocols (processes)
Decisions
Scheduling
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InferMed Software

• Bespoke development for Roche
• Fully validated system delivered in 3 months
• Repeat business

• High value product
• Licence fee (up to 2M)
• Customisation
• Training
• Maintenance
• Direct sales model

• Opportunities
• license to B2C site
• pharmaceutical sponsorship
• flexible revenue models

Vertical applications
Core technology
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Market must be ready

• Long time from innovation to profitable market
  (5-15 years)
• Sometimes a standard must be present e.g.
  electricity supply, IBM PC, WWW.
• Market slow to start - goes critical rapidly
• Can only introduce radical ideas if
• need is great and
• current ideas dont work
• Missionary selling is very expensive

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Technology adoption cycle after Geoffrey Moore

• Uptake of a new product (that requires
  behaviour change)

Early adopters
Innovators
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Adoption cycle with chasmwhere ISL came from!

• Beware the chasm! (Geoffrey Moore)

85-90 KBS business dropped into the chasm
specialist suppliers failed, majors pulled out.
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Differences from academic research

• Rarely intellectual curiosity -gt a paper. Seek
  marketable product or process
• Industry is secretive, patents, etc
• Academic research often alone industry research
  nearly always a team
• Usually short term, exploit in 3 years
• At mercy of managers and the economy
• Competition is other companies, not quite same as
  academic rivalry
• New research usually in parallel with the
  development/support of current products.

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Lessons to remember

• Keep it simple
• Work with users
• It can take 10 years
• Every project needs a champion
• Market solutions not technology
• The technology adoption curve and the Chasm
• Real wealth from selling the company
• It is also a matter of luck!

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• Thank you for listening
• ?
• Any Questions?
• alan.montgomery_at_infermed.com