Profile - Walter Herriot

From banking to pioneering UK technology enterprise

by Bipin Parmar

In silicon valley, USA, it's quite common to point to certain individuals as being the true pioneers of the high-tech industry, some of whom are still very active today in nurturing the next generation of startups. In the UK, we rarely get occasion to pay tribute to home-grown pioneers in the sector, so The Chilli is pleased to have had the chance of interviewing Walter Herriot, who we believe to is one of the most important social entrepreneurs in the UK and a key contributor to the Cambridge technology base and startup scene.

Walter Herriot comes from a long line of traditional family roots in business - his great grandfather, grandfather and father were all active in commerce. As most readers of The Chilli would recognise, bankers are well known for their conservatism and aversion to risks. Walter Herriot is one of the rare exceptions to this rule. His calculated risk-taking and pragmatism has been responsible for seeding and sustaining numerous startups in the Cambridge technology cluster.

Not a typical insider

St John's innovation centre

Observations on Cambridge

Market outlook

Herriot's top tips

The Chilli perspective

Walter Herriot

Not a typical insider

Born in Liverpool, with a sociology degree from the University of Durham, Walter Herriot joined Barclays Bank in Liverpool in the 70s and later transferred to their Cambridge branch. He turned out to be somewhat different from a typical banker, in that he took some calculated risks in lending money to high-tech startups such as Acorn Computers, which resulted in spinout companies such as ARM and Globespan Virata. Herriot recalls that in those days, local branch managers were mandated to help local businesses and were authorised to grant loans and overdrafts. During this time, he had lent monies to numerous high-tech startups, some of which are still around and in turn have spawned more startups.

Herriot shed some light on why bank managers are not known to risk backing new ventures: "Barclays originated in the East of England, and it was in the banks' interest to support the region. Unlike today, directors were also encouraged to take risks."

During this time he also instigated a pioneering concept at the time - after meeting Jack Lang, who is currently CEO of fabless chip startup Artimi - of running a business-to-business networking club to help raise startups' profiles and to raise more local funding.

After leaving Barclays, Herriot spent three years at Coopers and Lybrand, where he became a director. He was later appointed onto the steering committee for the St. John's Innovation Centre. He took on a full-time role in 1990 to support the then director, and he is currently managing director of St. John's Innovation Centre (wholly owned by St. John's college, University of Cambridge). The centre provides a range of facilities and services for startups, including office space and business advice.

St John's Innovation Centre

The innovation centre concept is well known today and St. John's was one of the early pioneers in this field (http://www.stjohns.co.uk/). The first building was set up in 1987, and had the combined role of acting as the university's technology transfer office. It currently occupies around 55k square feet of office and service space, with around 50 tenants mainly in software and IT. The average tenure for most startups in the innovation centre is five years. Examples of the most notable companies to pass through the centre include Autonomy and Saviso, which were all incubated at this centre. St John's College, which owns the innovation centre, runs it like any other property service company and actually generates cash surplus for the college. Other activities provided by the centre include an Enterprise Link Club; this provides interaction between businesses and related skills such as negotiating, team building etc. The centre also runs the DTI/SBS Steps Programme, which assists startups in preparing for investor readiness.

Observations on Cambridge

Herriot observes that Cambridge is essentially a market town that has a great university attached to it. In terms of the contribution to generating spinout companies, Herriot credits Cambridge Consultants Ltd (spunout of the university in 1960s), which went on to spinout PA Consulting, Generics, begetting TTP, Symbionics, Alphamosaic, and so on.

According to Herriot, 'Cambridge companies are strong at exploiting and developing technology, but not so strong at building global businesses, giving rise to a large number of small knowledge lifestyle companies as opposed to sustainable high growth businesses. There are still too many new companies based on science projects as opposed to real life technology or products." He continues to add that there are too few examples of outside talent being brought in to Cambridge companies to complement the technology skill set with commercial acumen. He cites a few successful examples of companies which did bring in outside talent, such as John Halfpenny, CEO of Splashpower, Charles Cotton of Virata, Alan Barrel of Domino and not to forget Robin Saxby at ARM. Also, in terms of globalisation, too few companies open offices in key overseas markets, with several companies being run as local projects or hobbies.

Market outlook

Herriot has seen companies resuming growth in the last few months, in stark contrast to 12 months ago, when '80% of deserving companies were not getting funded'. He believes there is still a shortage of seed stage funding, which has seen the number of new startups in chip and system decline, whilst software and IT startups are increasing.

Herriot's top tips

• Have an early focus on the business model
• Have a business model which is robust, with a flexible approach to evolving it
• Learn how to manage a business, not just the technology
• There need to be facilitators
• Make good use of soft money
• Have a missionary zeal for your business.

The Chilli perspective: credit, where it is due

Who knows how Cambridge would have evolved, if there were no Acorn, ARM, Virata or Amadeus Capital? Herriot deserves to be credited with being responsible for this, not just in terms of local recognition, but also in the early pioneering spirit of UK enterprise.

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© Chilli Publishing Ltd 2004

13JAN2004