Academics: The jolly good fellows

A hush descends over the dining hall of Corpus Christi, one of Cambridge University?s 31 colleges. The master, wearing a long black gown, says a prayer in Latin to end the evening meal.

Later, the dons and dignitaries retreat to a private room lit by silver candelabra. As port, elderflower cordials and cigars are passed around, the conversation swings from medieval manuscripts to a less scholarly subject. Lecturer David Greaves leans across the table and confesses he made a mistake with his first business venture ? in high-speed telephone and data networks. ?Next time, I?ll demand equity,? declares the 35-year-old computer scientist.

Cambridge?s dreaming spires pierce the skyline just as they have done for centuries. The dons still dine at high tables and wear their trademark robes. But the buildings bustle with energy from something the old masters would have frowned on: entrepreneurship.

Capitalising on their intellectual talents, Cambridge dons are patenting their discoveries, spinning-off start-ups and moonlighting with the likes of Hitachi, Xerox, and Microsoft. And although they?re loath to discuss it, many are also making large pots of money.

These technologically-skilled men and women belong to a growing tribe of millionaire dons. Academics-turned-entrepreneurs, they feel the same affinity for Intel?s Andy Grove as for the groves which line the academy. Cambridge has spawned the most start-ups. But the same vigour, ambition, and iconoclasm can also be felt in Leeds, Oxford, and Edinburgh.

The UK boasts at least 120 millionaire dons, says financial journalist Philip Beresford, who compiles an annual Rich List for the Sunday Times. This is a rise from just a few dozen in the early 1990s, he points out. And the UK is clearly benefiting from their growing presence.

By providing the entrepreneurial spark for technology transfer from universities to industry, the academics today represent a new means of generating wealth. They also signal a chance for the UK to reverse its poor record of turning ideas into businesses. With so much talent, it?s only a matter of time before universities produce a homegrown Intel or Microsoft, predicts Christopher Evans, one of the UK?s richest dons. Scientific entrepreneurship, he says, is an un-stoppable beast.

These dons are also adding momentum to a transformation already well un-der way in the economy. Now, the technology and life-science businesses mush-rooming around universities in London, Ox-bridge, and Edin-burgh can attract global capital as they go public on the London Stock Exchange, the Alternative Investment Market, or Easdaq, the European equivalent of Nasdaq.

Both economic and cultural factors are spurring the dons to go into business. University salaries are low in the UK, compared with those in the US and some dons have to supplement their livelihoods. Full professors at the top of a rigid pay scale only make about #40,000 a year.

?Whether you?re an Einstein or a dunce, you?re still paid the same amount,? says Shin Williams, master of Cambridge?s Emmanuel College. In addition, universities generously share or hand over patent rights on discoveries to their scholars rather than guarding the rights closely as many US institutions do.

A younger generation of academics is moving up the hierarchy, bringing a greater tolerance for materialism and gracious living. The emblems of success in California?s Silicon Valley are potent incentives for turning ideas into products.

Entrepreneurship and the desire for its rewards are becoming infectious. ?I didn?t want to be an academic drea-mer,? explains Evans, aged 40, who has started 15 technology companies. ?I wanted to make things happen.?

Britain?s millionaire academics come from all walks of science and engineering, although IT is predominantly where they are making their fortunes. Like their American counterparts, most license their discoveries to established players or start venture-backed businesses and take them public.

David Potter, a former physics lecturer at Imperial College, quit the academic life in 1980 to start what is now one of the UK?s best known IT success stories, Psion ? which now has a market capitalisation of #338 million.

Potter says his academic colleagues ?thought he was nuts? when he quit his tenured-post to start Psion. But the gamble paid off and now the Potter family?s equity in Psion is worth #112 million.

No less successful are David Rhodes and Andy Hopper. Rhodes, a 54-year-old professor of electrical engineering at Leeds University, has founded four companies, including the high-flying, mobile-communications venture, Filtronic Comtec. Situated near Leeds, Filtronic employs 1,000 people and is capitalised at about #204 million.

Hopper, 45, directs a research laboratory in Cambridge which is jointly owned by Olivetti and Oracle. He advises six local hi-tech companies that he helped to develop; oversees his farm outside Cambridge; and pilots his own Cessna 210 between the UK and North America.

These powerful businessmen have inspired a generation of young scientists and engineers. Like the far wealthier barons of Silicon Valley, many millionaire dons invest time and energy touring the country making presentations to schools and organisations. Their goal is to break down barriers and brainstorm programmes that will build entrepreneurial momentum.

Leading the charge is Cambridge-based entrepreneur extraordinaire Hermann Hauser. Austrian by birth, Hauser arrived at Cambridge in 1973 and received a PhD in physics. In 1978, he founded Acorn Computers and built it into the UK?s most successful PC maker. When Acorn went public in 1984, Hauser?s 50% equity stake made him a millionaire. Soon after, Acorn?s market cap shot up to more than #60 million.

The company faltered when competing systems running Micro-soft?s MS-Dos operating system swept Europe. But now, Acorn has another shot at success with a contract to design network computers for Microsoft rival, Oracle. If the market for NCs takes off, Acorn will be well positioned, having licensed its technology to a new Hauser-backed company called Netproducts, which already has a network computer selling for #305 at Harrods and other stores.

Hauser was never a full-time professor. His only formal links to Cambridge are as a fellow at Corpus Christi College and an occasional lecturer at its renowned Cavendish laboratory. Still, he is Cambridge?s biggest booster. In recent years, he has helped finance two dozen start-ups, many based on the ideas of Cambridge dons. All his companies combined boast a market capitalisation of #457 million. One of his most important functions is as a liaison between Cambridge and California, where he spends two months of every year.

One of Hauser?s high-profile bets is Cambridge Display Technology, which was born out of a single experiment in 1989. What he and his student had discovered were light-emitting polymers ? a promising candidate to replace liquid-crystal displays in compact TVs and handheld electronic devices.

Before publishing their findings in the scientific journal Nature in 1990, the scientists spent #1,000 of their own money to take out a patent. Today, Cambridge Display Technology is attracting some well-known investors. Hauser is one, but there?s also Intel, former Apple president John Sculley, Power Computing boss Steve Kahng, and American technology magnate Esther Dyson.

CDT has licensing agreements with Philips Electronics and Hoechst and a joint development agreement with Seiko-Epson of Japan.

If CDT makes it into the ranks of display giants, it will have the unique milieu of Cambridge ? as well as serendipity ? to thank.

Though Cambridge has yet to produce a world-class company such as Oracle or Hewlett-Packard, it already resembles America?s high-tech Stanford University in the way that newly-minted PhDs and professors comfortably mesh with the IT start-up community. And although total business activity is just a fraction of Silicon Valley?s, Cambridge-grown technology is starting to generate some impressive returns.

The area now boasts an estimated 1,200 technology companies that are credited with creating some 35,000 jobs. Unemployment, at 2.3%, is among the lowest in the UK, while average weekly wages are 8% higher than the national average. The area?s two big science parks are nearly full and commercial real estate values are soaring.

Brian Arthur, an economist at the Santa Fe Institute who has studied Silicon Valley, thinks that Cambridge, and cities like it, could see a multiplier effect once millionaire dons reach critical mass. The effect starts to roll ?when individual academics have really good ideas and are free to set things up,? Arthur says.

Entrepreneurship isn?t entirely new to Cambridge. In 1881, Charles Darwin?s son co-founded an engineering concern now known as Cambridge Instruments. High-tech also began to blossom in the 1970s, when individual colleges started developing surrounding farmland into American-style science parks. Soon, the area attracted venture-capital firms, patent lawyers and other specialists to support the growing cluster of tech companies. Even officials from Montpelier, France, have spent time in Cambridge, absorbing its lessons in tech-company development.

Last summer, the area?s collective brainpower drew none other than Microsoft?s Bill Gates, who announced plans to spend nearly #50 million there for Microsoft?s first, non-US research laboratory. Gates committed #10 million more to back local start-ups. The university got a #12 million donation for a new computer laboratory from Gates?s private foundation.

According to Gates, Microsoft was lured to Cambridge by people such as Roger Needham, the former head of Cambridge?s famous computer laboratory and an expert in computer security systems. Needham was also one of the first directors of Cambridge Consultants, the grandad of the area?s technical consulting firms.

Microsoft came to Cambridge because Needham refused to move to Microsoft?s headquarters in Seattle. So with the university?s consent ? especially vice chancellor Alec Broers, who helped broker the deal ? Needham is now a computer science professor, pro vice chancellor and a salaried Microsoft employee. As managing director of Microsoft Research in Cambridge, he recruits scientists to work at the software giant?s new laboratory.

Needham?s dual roles as a top university administrator and Microsoft recruiter have raised eyebrows. Some people feel that it gives Microsoft an advantage over the university?s other industrial partners, such as Xerox, Glaxo Wellcome, Hitachi, SRI, and Toshiba. ?The people at Microsoft aren?t Boy Scouts,? mutters one Cambridge academic. ?The university must be cautious about not being seen as partisan.?

Others question if Cambridge or any other university town ? can ever achieve the critical mass of Silicon Valley or the Seattle area. For one thing, all of its entrepreneurial energy springs from a relatively small group of people. ?Hermann is great, but Cambridge needs 10 more of him,? says PC industry evangelist Dyson.

But today?s scientists aren?t likely to miss such opportunities. Micro Focus, the software company that first put the programming language Cobol onto a microchip, didn?t just patent its breakthrough. ?Early on, we decided we had to export or die,? recalls Stewart Lang, a Cambridge computer researcher who co founded the company. Micro Focus won a contract with Intel and immediately opened a Californian office. Its shares recently soared, thanks to the announcement of a new contract worth nearly #5 million.

Success stories such as these could be a flash in the pan. But the smart thinking is that Cambridge?s high-tech dons are on a roll, and that the venerable market town could be the next Silicon Valley.

How the professors are creating wealth

CAMBRIDGE:

ANDY HOPPER, 45 Communications-engineering professor; director of Olivetti & Oracle Research Laboratory. Helped found six local tech companies. His stake in Acorn Computer Group netted him an estimated #6 million.

STEWART LANG, 49 Computer-graphics researcher at Cambridge University?s Computer Laboratory. Helped found and now owns software company, Micro Focus Group. Through trusts, he holds stock worth more than #5 million.

OXFORD:

GRAHAM RICHARDS, 58 Professor of chemistry. Helped found Oxford Molecular Group, which develops software for the drug industry. His stake in the company, which went public in 1994, is worth #1 million.

LONDON, EDINBURGH, & OTHERS:

DAVID POTTER, 54 Former lecturer in physics at London?s Imperial College. Founder and chairman of Psion. His family?s stake in the company is worth #112 million.

PETER DENYER, 44 Electronics professor at Edinburgh University. Co-founder and managing director of VLSI Vision, which designs semiconductors for image sensing. His stake in the company, which went public in 1995, is worth some #1 million.

DAVID RHODES, 54 Professor of electronic engineering at Leeds University. Founded three electronic companies, including telecom components-maker Filtronic Comtek. His stake is worth #10.5 million.