Dr Hermann Hauser could conceivably have been the British rival to Bill Gates. The 59-year-old was behind the now largely forgotten Acorn Computers, which was the dominant player in the UK computer market in the early 1980s.

Its BBC Microcomputer, which had 1.5 million sales in the UK, never made it in the US, despite being far more advanced than anything Apple was producing at the time. Then the geek from Seattle came along and made his software the way forward – and the rest is history.

Hauser, who has been based at Cambridge since the early 1970s, had to make do with selling out to Olivetti and the consolation prize of becoming a multi-millionaire instead of a multi-billionaire.

According to the Sunday Times, he is now one of Britain’s richest men with a £125 million fortune and, through his venture capital company Amadeus Capital Partners, is a leading investor in high-tech companies.

“I think we could have been cleverer in addressing the US market and we made a big mistake when we went there,” he recalls.

The BBC Micro fell foul of US regulations because it had numerous connector ports which the Americans insisted needed leads coming out of them.

Acorn’s answer was to cover them in metal shielding. “If we had been smarter we would have de-featured it and removed a number of these interfaces for the US market. Then we could have become an alternative to Apple and have been more successful vis-à-vis Microsoft, “ he says.

“I could perhaps have been more like Steve Worzniak [Apple’s founder] than Bill Gates,” he says.

Gates, in fact, once came to Cambridge to try and sell Acorn his MS DOS software but Hauser told him he couldn’t take such a retrograde step.

Acorn, however, was far from a heroic failure. It developed the ARM chip, for one, which was more powerful than anything produced by Intel for ten years and is used in 90 per cent of the world’s iPods and mobile phones.

It also spawned a whole generation of British computer programmers who learned their skills on the BBC Micro, many of whom work in the UK’s computer industry today.

Hauser, who was born in Vienna and retains a slight Austrian accent, focuses on Amadeus, which was launched in 1997 and has already produced two companies valued at a billion dollars. Hauser has personally been involved in a staggering seven businesses that have achieved that size.

One of Amadeus’s most interesting current investments is Plastic Logic, which is behind the potentially revolutionary electronic book reader – the E-Reader.

Hauser hopes that soon we will all be carrying its electronic plastic sheet on buses, trains, tubes and trams, reading anything from War and Peace to the Sun newspaper.

It is set to be launched early next year and will cost, according to Hauser, a “few hundred dollars”.

It is a product potentially that could become the iPod of the printed medium. If widely adopted, it could free newspapers altogether of their costly printing and distribution costs: E-Reader users would just pay a subscription.

Hauser hopes it might put a nail in the coffin of books. “I think it is a great myth that people like books. I hate books because they are so heavy, particularly the 1,000- page ones I typically read. Books are crap. You could easily carry around one million pages in the E-Reader,” he says.

Hauser says Amadeus only invests in about five out of 500 applications it receives for funding, a one in a hundred ratio.

“A lot of them are not very good and they take about ten seconds to turn down. In order to choose the five we probably engage closely in about 20 or so,” he says.

He says his team are looking for three main criteria: whether the market the company operates in is big enough to produce a big company; unique technology that can be defended by patents; and the quality of the management team.

“The team needs to have at least one star, whether they are technical or a manager. If you have a star it is much easier to build a world-class team around them. Mediocre people just hire mediocre people,” he says.

He says there is now a real base in the UK of technology entrepreneurs with proven track records.

“When we launched our first fund in 1997 we did 17 per cent of our deals with serial entrepreneurs, with Amadeus 2 in 2000 it was 40 per cent and with Amadeus 3, launched in 2006, the figure is now 70 per cent,” he says.

One of Amadeus’s great successes has been CSR, which has a 60 per cent share of the chips used in Bluetooth products globally. It was sold at the end of 2005.

Another was Solexa, which developed the ability to read individual genomes building on the Cambridge legacy of Crick and Watson. It was sold to the US company Illumina last year.

Hauser likes to foster those who want to innovate wherever he can. He is helping fund this by way of an £8 million gift of new Cambridge Entrepreneurship Centre in the west of the city which should be built in early 2010.

Its aim will be to encourage spinouts from the university and to give those with ideas access to commercial support.

“It will be for any academic who has got a clever idea or who has come across a breakthrough to try and make a company out of it, rather than just letting the Americans and Japanese do it when the idea has been published,” he says.

He is very bullish about the state of the UK technology industry. “We are very positive. We have always had a great
technology base with our research universities of Cambridge, Oxford, Imperial and University College London, where most of the research dollars are being spent.

“What is improving is the quality of the management prepared to get involved in early stage technology start-ups,” he says.

He believes the Government has been generally supportive of the UK’s technology industry but shot itself in the foot by increasing the capital gains tax rate by 80 per cent from 10 to 18 per cent.

He says, “The Government was supporting us surprisingly well until this recent disaster where they took away one of our main selling points which was this 10 per cent capital gains tax rate. We had half the CGT rate of California and they have just taken it away from us.”

He says the credit crunch has had a very limited impact on Amadeus investments so far. “It doesn’t have as big an impact on venture capital as it does on private equity because we don’t use loans and we don’t use debt a lot.

“Practically all our money is equity. There are indirect effects because there is less money in the economy and they buy less from our companies,” he explains.

He says a full-scale recession will make it more difficult to exit companies because getting placings on the stock market will prove difficult: “Our average holding period is about six years and so long as a recession lasts for a year or so we will be all right. If it lasts for six years that will be very bad news.”

Hauser, who became an “honorary” CBE in 2001, has had a long association with Cambridge, where he came to learn English at a language school at 15. He went home to do his first degree in physics at Vienna University before returning to Cambridge to do a PhD at the Cavendish Laboratory.

He founded Acorn with fellow scientists Chris Curry and Andy Hopper in 1979 and when the company was sold to Olivetti, he had a spell working in Italy.

Despite his wealth, he walks to work and flies on business with Ryanair whenever he can.

“When I was worth £100 million for the first time I told my wife people who are worth £100 million don’t do the washing up. She didn’t take it too well. I did, however, invest in a dishwasher after that,” he says. He does have other labour saving devices at home now including a Roomba (see Great Business Ideas, EN September 2007), a robot that cleans his kitchen floor.

He thinks artificial intelligence and robots will be a focus of technological advancement over the next few years.

“I have been following artificial intelligence for quite a few years. It got a very bad name in the 1980s when there were optimistic predictions about computers beating the world chess champion,” he says.

“It was going to be a great barrier but it came and went and was eventually a bit of an anticlimax. We are waiting now for the world champion table tennis robot which will soon become a reality.”

He also believes that serial hybrid cars that do up to 200mpg are just round the corner. They will be electric with small internal combustion motors whose only function is to recharge their batteries. He thinks the internet will continue to produce exciting breakthroughs and that people will soon start to have conversations with their computers: “We are looking at a number of investments in this area where you will be able to interact with your computer. You will say you want to go on holiday and it will know your preferences and make a number of suggestions.”

He is also confident that the PCs we have on our desks will gradually disappear and that locallystored hard drives will become a thing of the past.

“I think what we perceive now as the PC will move into the clouds. It will be handled by BT or companies like that,” he says. Hauser says predicting future trends can be hard and it is equally hard to pick winners when it comes to investing in technology companies.

“On average a third of companies fail so it is very risky,” he says. “It really is venture capital. It is not the technology that fails. Of the 50 companies we have invested in we have had only one single case where the technology failed. What goes wrong is the market doesn’t want to buy the products and you lose all your money.”

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