Cautionary Tales with Tim Harford - Beware Tech Tycoons with Piranha Tanks - with Katie Prescott

Episode Date: May 1, 2026

Mike Lynch was often lauded as Britain's answer to Bill Gates. Born into a working-class family, Lynch's incredible intellect and passion for computers led him to become a billionaire tech entrepreneur. But behind the scenes, Lynch was a bully who couldn't bear criticism and was prone to creative accounting. When computer giant Hewlett Packard bought his company, Autonomy, it triggered one of the biggest fraud scandals in Silicon Valley history. Tim talks to Katie Prescott, Technology Business Editor at The Times and author of the book The Curious Case of Mike Lynch, about the lessons we can take from a story no one could have predicted. For a list of sources see timharford.com See omnystudio.com/listener for privacy information.

This is an I-Heart podcast. Guaranteed human. Pushkin. As always, London's Heathrow Airport is heaving. Security cues shuffle forward. Exasperated parents trundled suitcases to the terminal with toddlers in tow. Excited friends gather in bars to toast the trip they're about to take. Through it all walks a heavy set, balding man in his late 50s.

He's wearing a smart suit and open shirt. But this man is not on a business trip. The people walking politely alongside him are not colleagues, their police officers. They guide him through the corridors of Britain's busiest airport and deliver him to their American counterparts. Here, civility ends. The US guards promptly cuff his wrists, wrapped chains around his waist,

and march the man, who's more accustomed to champagne and private jet to the very back of the United Airlines plane. It's the 11th of May, 2023, and Britain's answer to Bill Gates is about to be extradited to the US on charges of fraud. Once the darling of the UK tech world,

a member of the BBC's executive board and a government advisor, Mike Lynch, settles in for the 11-hour flight. As London disappears beneath him, he knows it will be a very long time before he sees Britain again. I'm Tim Harford, and you're listening to Cautionary Tales.

Mike Lynch was the co-founder and CEO of the UK's biggest software company, Autonomy, which he sold to the American hardware giant Hewlett Packer, for $11 billion in 2011. But Hewlett-Packard quickly began to suspect something was awry at autonomy. Soon legal battles raged on both sides at the Atlantic, revealing shocking truths and incredible oversights.

This story of a tech tycoon is a rags to riches tale, a business thriller and ultimately a tragedy. Here to tell us all about it is Katie Press. She's technology business editor at the Times and the author of the book, The Curious Case of of Mike Lynch. Katie, welcome to Cautionary Tales. Hello, good to talk to you. So we should talk about Mike Lynch's background first, fabulously wealthy at the time we

pictured him walking through Heathrow Airport, but he didn't start wealthy. No, quite the opposite. And actually, you know, in a Britain, which is... still riven by class. Mike Lynch was the outlier. So born to an Irish immigrant mother, who was a nurse and a father who was a fireman, but also of Irish parentage. They moved to Essex when he was quite young. And very early on they spotted that he was a super bright little boy. Yeah. And his mother put him forward for a scholarship at a private school when he was 11. Yeah, so he's studying with a bunch of rich or at least upper middle class kids whose parents are paying, you know, large sums of money to send their kids to this school.

But he's in on merit because he is incredibly sharp. Yeah. And academically, where did his interests really shine? What was he doing at school? He loved computing and he loved engineering. And I think unusually for a tech entrepreneur, he wasn't a lonely geek. at all. Actually, far from it. He had lots and lots of friends, and he led societies. So he started an electronics society, for example. He also started a jazz band. We like that. Because he loved

playing the clarinet. And this would have been what the late 70s, early 80s, that he was starting these societies. So just as the personal computer revolution is beginning and people are getting their ZX-81s or whatever, he's a teenager. That's right. He said that there was a place local to school that he used to go so he could gaze at a Commodore 64. So it was an era where the kind of computing revolution was taking off. And he was really enjoying that as a young boy. Yes. There was this sort of sense that computers were things you could take apart and put back together

again. You could use them, for example, to play music. And that was his early business, actually, with a mate from school, making synthesizers. So you could kind of muck about with music in a way that you couldn't before. That's really how he got into the business of tech. And then he goes to Cambridge. So this is presumably 1982, 1983. 1983, yeah, that's right. So tell us about Cambridge in the early 1980s and the connection to the tech industry. So I think a lot of people will picture these amazing gothic chapels and these magnificent buildings and this is where Isaac Newton held court,

but there was something else going on in Cambridge by the time Mike Lynch showed up. Yeah, it's an incredibly exciting time, I think, to be in Cambridge if you loved computing. And the picture you painter of tradition is absolutely right. Mike Lynch went to Christ's College, which is Charles Darwin's former establishment. And it's picture perfect with absolutely pristine lawns. very famous sandstone colored brickwork. But also there was the famous Cambridge Computing Lab where people were putting together computers

and experimenting in this new age, a bit like people are today with AI. Actually, I find the parallels really similar. And Mike Lynch was really interested in something called signal processing. So this is kind of audio, video technology. and he had a professor who really took him under his wing and convinced him to stay on and do a PhD. And he was working on noise cancelling headphones.

Yes, exactly, all sorts of things like that. And they had a project going on to digitise audio as well and sort of try and smooth out some of the crackles from old gramophone records. Yeah. He doesn't become an academic. He's more of a business person. Tell us about that.

He then started a company called Cambridge Neurodynamics. Must be clever because I got no idea what that means. Well, that's exactly why they picked the name. It sounded clever and it sort of picked up on keywords at the time that were hot in the tech world. So this is the early 90s before Google. But one of the products he works on for a while is the sort of thing that Google turned into a trillion-dollar business. People were trying to work out the best way of... sifting through vast amounts of digital information,

Mike Lynch emerged with a company called Autonomy. And the business sifted through information rather than in a clunky keyword search kind of way by, as Mike Lynch described it in marketing material, looking for concepts. When you're talking about corporations, which is where this software ended up being sold to, who've just got huge amounts of information,

It seemed like a real magic bullet. It was a huge thing. I mean, those of us who are old enough to remember the world before Google, but after the World Wide Web, so these few years of, there's a lot of stuff on any computer with an internet connection, but there's no way to find it. And so we used to swap notes about, well, how do you search for a thing? And so, oh, well, so one idea is if there's something,

there's a particular expert in the field, you might search for that. expert's name and then web pages which have that expert's name, which is going to be unusual, those web pages will probably be relevant to what you're looking for. That's that sort of kind of hack, rather than just as we would do today, to go to Google or to go to an AI and just say, oh, I'm just looking for this sort of stuff. And it will just find you. We take it for granted that this stuff will be found. But it is an incredibly difficult problem and a problem that Google turned into a trillion dollar business. But Lynch was on it before Google even existed.

It's very hard in today's age to understand quite how novel this was. Lynch always said he regretted not selling it to the consumer market and not turning it into Google. But instead, so autonomy, so it's not Google, it's not doing consumer-directed web search. So what sort of search and what sort of information retrieval is it doing and who is paying for it? all sorts of enormous corporations in the end, as well as organizations within governments

around the world. So rather than finding information in neat databases, it would look through your emails, voicemails, things like word documents, this kind of enormous trove of information that corporations create. Yeah. And that's who he was selling it to, which made sense as a market at the time because it seemed incredibly... Yeah, well, they've got the money, right? very lucrative and a more obvious place to sell something to than the consumer market. So autonomy, Mike Lynch's company in the late 1990s, is jumping into this space where there's this opportunity because corporations have started generating enormous amounts of digital information that is unstructured. There's no way to make any sense of the stuff.

And autonomy does that. And it's a very successful company. So what was it like to work at autonomy? I think what sums up the atmosphere was the pranatank in reception. Not something you often see in the roundel of the autonomy logo. And Lynch used to joke that that was the tank that he would throw failing salespeople into. Charming. It was a very, very difficult place to work. Mike Lynch was a very hard taskmaster.

He could be brutal. He could be very aggressive. and I'm afraid I heard very early on from researching the book some real horror stories about how people were treated within autonomy and that I think because the tech world in Britain is very small, much much smaller at that time, leaked out very quickly and it got Mike Lynch a certain reputation. When you say a certain reputation,

I mean there all kinds of things go on in companies that we could describe as horrible, but what was he actually doing? There was one woman who worked in the market, team who he thought wasn't working hard enough and he would yell at her repeatedly. And after an incident when he saw her and some colleagues mocking him for his James Bond obsession, because he loved James Bond and he named all of the meeting rooms after James Bond villains, he put her desk first inside his office and then just outside so he could look over her shoulder the whole time and see what she was doing. There were tons and tons of examples of people

being fired at will. Yeah. People were very scared of him. Yeah. So very demanding, cruel, mean, angry, bullying. And I think I'm afraid it was deliberate cruelty. Yeah. I think he enjoyed the power.

He had a tiny team around him. And I got the impression they were like his henchman. Yeah. And that's how the company was run. Right. So how does it do financially? Because it grew very fast and it was floated on the London Star. market and became a Futsi 100 company. So this is one of the 100 biggest companies listed on the

London Stock Exchange. So that sounds good. It does. I mean, I think we have to be very careful here. It certainly benefited from the dot-com boom. It actually had a very innovative software product. However, at the time that it went into the Futsi 100, that's because it's valuation. So what shareholders, investors thought it was worth was way above the money that it was actually. actually making. People were very, very excited. I think it was making something like 44 million pounds a year and it was valued at four billion pounds because people were very excited about its future prospects. And we're seeing that similar valuation difference in AI businesses today. So yes, it was doing well for a startup, but its revenue certainly didn't

match up to its valuation and it very quickly actually fell out of the Futsi 100 when the dot-com bust happened. I would love to talk about the bust, but let us do that after the break. Canadian women are looking for more. More out of themselves, their businesses, their elected leaders, and the world are out of them. And that's why we're thrilled to introduce the Honest Talk podcast. I'm Jennifer Stewart. And I'm Catherine Clark. And in this podcast, we interview Canada's most inspiring women.

Entrepreneurs, artists, athletes, politicians, and newsmakers, all at different stages of their journey. So if you're looking to connect, then we hope you'll be. join us. Listen to the Honest Talk podcast on IHeart Radio or wherever you listen to your podcasts. Run a business and not thinking about podcasting, think again. More Americans listen to podcasts than ads supported streaming music from Spotify and Pandora. And as the number one podcaster, IHearts twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus only IHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business. Think IHeart. Streaming,

radio and podcasting. Call 844-844-I-heart to get started. That's 844-8-4-8-4-I-heart. We are back and I am talking to Katie Prescott, the author of The Curious Case of Mike Lynch. Katie, we promised to talk about the dot-com, boom and bust. Before we do, we should probably introduce a new character and that is the Reverend Thomas Bays.

Lynch was obsessed with him. So what did he do and why was it relevant to Mike Lynch? He was an early academic in the field of probability. He came up with this concept that sounds very simple, that what has gone before informs the probability of something happening. So if you walked into a room where people had COVID, it is more likely that you would come out of it with COVID. And Lynch, like, embracing.

this both as part of his business, but he also, I would say mainly used it to inform his philosophy of life. So he was constantly weighing up the odds of things happening. And his teams were very used to him saying, I put 20% on that, 80% on that. If he was hiring someone, he'd say, okay, who are they like that we know? Just trying to work out the odds of things happening. And one of things that struck me in writing this book is that everything about Lynch's life was completely improbable. And the working title of the book was actually improbable odds. Yeah. Because it's so unlikely that someone from his background would go to private school, would go to Cambridge. He was born with no fingerprints. Most startups fail. I don't know. There are just so many improbable things. He was born with

no fingerprints. He slipped that one in. He was born with no fingerprints. Wow. He really is a Bondra villain. Okay. Yeah, and that was part of the joke. He used to say to analysts in the city, look, I've got no fingerprints. I'd make a brilliant criminal. So he's this brilliant guy, he's a bully. He has set up this business. He's launched it on the stock market. So tell us then about what happened when autonomy ran into the dot-com bust. Lynch was only 30 at this point, running a startup out of a co-working space in Cambridge. And it went from Futsi 100 company to, and you can see the share price plummeting,

and Lynch really wanted to work to get that share price up again. Now, on one level, it was still doing well and still making the sales that it was, and its technology was still valued, just because it had dropped out of the list of shares, hadn't changed what it was doing. I mean, it's worth being clear. The reason it was a Futsi 100 company was because it was valued by investors very highly.

And the reason it was valued by investors very highly was not because it was making enormous profits. It was because they were very optimistic about its future prospects. So when they become less optimistic about all these tech companies, it drops out of the Futsi 100. But it's not because... It's doing anything wrong. Yeah, it's not done anything wrong. All the big tech companies did drop at that point, even the likes of Microsoft. This is the first time that Lynch faced the reality of running a public business.

You've got the glory of being in the Futsi 100, of being the young cool guy in Britain's tech scene during the dot-com boom. But then during the bust, actually, you've got the pain of trying to convince the press and trying to convince people in the city who are scrutinizing your company and telling investors whether they should put their money into it. you've got the pain of really trying to get them on board. And he really hated criticism, especially when it came to autonomy. He had very, very thin skin.

He is subject to a level of scrutiny that he's not used to. He doesn't like it. And he wants to prove that autonomy is for real. There's a certain pressure to make the numbers do what Mike Lynch wants them to do at this point. So every quarter autonomy would, publish their results publicly. This is what we sold.

This is what it cost. Exactly right. This is how much money we made. And it kind of unusual for a British company because reporting every six months here is more normal. But autonomy had been listed on the NASDAQ and Lynch always wanted to make parallels with his company and the very successful tech businesses in the US.

So he was forced every three months, or he had chosen every three months, to publish their results. As a condition of NASDAQ listing. So he had to not only keep up with the forecast or the predictions that Autonomy made about their expectations for their sales, but also the predictions that would be made by city analysts in London who were making their own predictions.

And really that set a target every three months to hit. And when Autonomy didn't hit that target, its share price would fall. Yeah. He didn't want that to happen. And he didn't want that to happen. If you fast forward towards the financial crisis of 2008, companies stopped buying software in the way they had done

because budgets were squeezed, understandably. But to continue hitting those targets, autonomy, which had always prided itself and boasted about being a pure software company, started selling hardware and reselling other people's hardware. from companies like Dell. So things like keyboards and laptops, very basic things. Yeah.

Mice. That doesn't sound like a high margin business. Well, no, and that's the problem, because analysts in the city and investors liked autonomy's pure software model because it had an enormous margin because you're not paying to manufacture something physical when you're selling software. It's the dream.

You create some IP and then you can just ping it around. And so your margins are massive. But clearly when you're reselling hardware that you've bought from somebody else, that's very different. And autonomy bundled all these sales into one set of numbers and still told investors that they were a pure software business. But actually a chunk of those sales in one quarter, the biggest time that this happened, 20% of those sales came from reselling hardware. Yeah. Just explain to me in a nutshell. What were Mike Lynch and his team doing?

to make autonomy's numbers look better. So they were essentially wrapping the sales of more expensive hardware into their software sales and putting expenses that came from that in the marketing budget. So moving numbers around the accounts. They were clocking sales on their books before they'd actually happened by using resellers, which are very common in the software industry,

but they should really have had a deal signed before they passed it on to the reseller. And so that created holes in the accounts every quarter that they struggled to fill. And then also they were writing down sales as sales to original equipment manufacturers or OEMs. So they'd say, we're putting autonomy software in Dell, but they were calling all sorts of companies OEMs,

including Tottenham Hotspur Football Club. Yes. Lynch used to describe it as the Pina Collada model. He'd sell to an OEM and then you could sit back, on the beach with your cocktail while someone else sold it for you. And I'm curious, autonomy had auditors, professional accountants, independent, coming and looking at their accounts. What were the auditors doing?

The auditors were signing off the accounts. Behind the scenes, there were often questions about how things were being registered as sales. The auditors, Deloitte, were later fined over the autonomy accounts. There was an extraordinary investigation by the accounting watchdog into how they handled them, which essentially found that Deloitte Cambridge, which was a branch of the main Deloitte office in London, bear in mind they're one of the top four accountants, wanted to keep its relationship with autonomy. It was its only Futsi 100 customer.

Keep the customer satisfied. They wanted to keep the customer satisfied and the relationship was just too cozy with the company. And so people looking at these numbers are just going to fundamentally misunderstand what is actually going on inside the company. Yes. And there was one particular analyst in the city, a chap called Dowd Khan, who wrote a rather negative note about Lynch. And this sparked a very bizarre reaction. He ended up banning Dowd Khan from autonomy's meetings, from their results meetings. So normally they'd announce their results. They'd invite everybody in. an analyst would be able to ask questions. And he said, you're not allowed to come.

This is the equivalent of the White House saying, we don't want a reporter showing up to the presidential briefings because we don't like the way you write your news. It's a similar sort of energy. Yes, it was. It was very strange. And a little group formed of quite maverick analysts in the city who started to question autonomy's numbers

and be quite vociferous about it. So they're cutting various corners in terms of their... accounts. Did they need to do this? Was it existential that basically they were just going to run out of money or run out of funding if they hadn't stepped across the line occasionally? Or was this entirely Mike Lynch's vanity? I think there were definitely problems with the technology. They weren't investing enough in research and development. And there were very serious competitors. Google had created a version of the technology that was much, much cheaper. But they were still selling it. And actually

there are some bar charts in the book which show how much they inflated the revenue each quarter. And you're not talking about enormous sums. They probably could have kept going

and actually probably pivoted to other sorts of technology. So Lynch was very, very early to the cloud. Yeah. But he was so very proud. Well, he had a lot to be proud about. So he'd created this very successful company. He's a pillar of society. He's being celebrated as a tech genius. He has an OBE, kind of medal given to him by the Queen. He's a fellow

of the Royal Society of Engineering. He's on the executive board of the BBC. He's an advisor to the British government. All of these great things. Then he is approached by Hewlett-Packard, who want to buy his company, autonomy. What were they hoping to gain? It's probably worth turning and having a look at the state that Hewlett-Packard was in at the time, which was not brilliant. They'd cycled through a number of chief executives. They'd made a number of acquisitions for many billions of dollars, which had failed. And they're famous making hardware.

So most famously printers, but they make computers. Exactly. And at a time when the new cohort of 10,000, tech companies were coming through, Hewlett-Packard felt like a dinosaur in Silicon Valley. And they got a new boss, a guy called Leo Apotheca, from the software industry. So his big vision was, okay, we're going to find a really interesting, innovative software business to bolt on to Hewlett-Packard's massive customer base, and it'll be a winner, and then came across autonomy.

Leo Apoteca is convinced that this is a brilliant idea. Did everyone at Hewlett-Packard think that autonomy is a steal of $11 billion, whatever it was? Certainly his advises, the various banks and consultants that he was talking to, were very positive. In fact, they even encouraged them to do... They're on a percentage, right? They're on commission if they've shepherd this deal through. They encouraged him to do the deal quickly because... Someone else might buy it.

Because somebody else might buy it. Yeah. That's right. And that ended up being a massive problem for everyone. Yes, you have a beautiful description of this in your book. You describe Hewlett-Packard's due diligence as more akin to squeezing fruit at a market stall than a full-on dissection. I love this idea with them just saying, yeah, seems about right. It felt like the obvious analogy, because they only spent 18 days on their,

due diligence. Yeah, and they're spending $11 billion. You would spend far more time than that buying a house or, I don't know, probably buying lots of, making lots of major purchases. Should Hewlett-Packard have been a little bit more wary, we will find out after the break. Canadian women are looking for more. More to themselves, their businesses, their elected leaders, and the world are out of them. And that's why we're thrilled to introduce the Honest Talk podcast. I'm Jennifer Stewart and I'm Catherine Clark and in this podcast we interview Canada's most inspiring women.

Entrepreneurs, artists, athletes, politicians and newsmakers all at different stages of their journey. So if you're looking to connect, then we hope you'll join us. Listen to the Honest Talk podcast on IHartRadio or wherever you listen to your podcasts. Run a business and not thinking about podcasting, think again. More Americans listen to podcasts than ad-supported streaming music from Spotify and Pandora. And as the number one podcaster, IHearts twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus, only IHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business. Think iHeart. Streaming, radio, and podcasting. Call 844-844-I-Hart to get started. That's 844-844-I-Hart. We're back, and I'm speaking to Katie Prescott, the author of The Curious Case.

of Mike Lynch. So Katie, the computer giant Hewlett-Packard has just agreed to buy autonomy for $11.1 billion after giving it a quick squeeze and saying, it seems about right. That did not last very long. The honeymoon was pretty brief.

It blew up so quickly. So the CEO who'd been in charge of the acquisition was fired almost immediately after it happened. Yeah, so Lynch is still working for Hewlett-Packard now, right? Exactly. So he is working for Hewlett-Packard along with many of the autonomy team. And his new boss is a lady called Meg Whitman, the latest in a long line of HP CEOs,

and was presented with autonomy as, you know, one of various headaches to deal with. And I don't think she'd been a massive supporter of the deal and various others also on the board got cold feet almost as soon as it had happened. So it was a difficult situation for Lynch to be in, but I also think he was not a man who was used to having a boss. He'd been his own boss from the very start. He said that autonomy was treated like an unwanted stepchild within Hewlett-Packard,

that they weren't welcomed. They were setting him up to fail, was his argument. On the flip side, I think HP not only regretted buying autonomy after a series of previous failed acquisitions, but also was starting to realise that the company had some quite serious problems. And they became quite alarmed by some of the stories that they heard about how it was run. And are these stories about the accounting irregularities, So with these stories about Mike Lynch the bully?

Started off about Mike Lynch the bully. Yeah. And then there was a showdown between Meg Whitman and Mike Lynch when autonomy failed spectacularly to meet its sales numbers. Yeah. And he didn't tell her about it in advance. And Whitman said this is completely unacceptable. This isn't how you run a company.

So she said it's unacceptable and you need to shape up or it's unacceptable and you're out. You're out. Right. She fired him. But that is not the end of the, of the saga with Hewlett-Packard and Mike Lynch. A whistleblower stepped forward from within autonomy. So you've got the autonomy team that's been absorbed by HP.

And one of them, a chap called Joel Scott, went to speak to Hewlett-Packard's chief lawyer about the accounting. And that sparked an investigation. And then what? As the company becomes more deeply absorbed into HP, it became obvious that things weren't right. But in November 2012, Hewlett-Packard came out and said that they were writing down their acquisition of autonomy. They were saying that a whole chunk of money, $8 billion of an $11 billion acquisition was worthless, essentially.

Basically, we bought this company for $11 billion. We should have paid $3 billion. Oops. Yeah, oops. And they then said that they were accusing Mike Lynch and his team of fraud. And it was such a big deal at the time that they actually called number 10. They called the Prime Minister's Office in Britain before they told Mike Lynch because they knew it would cause such a spectacular transatlantic shock

to accuse one of Britain's biggest companies of fraud. So it was a shock. How did the fraud case proceed? Mr Justice Hildiard, the judge in the British case, who I think has more extensively than anyone on this planet's gone through autonomies accounts and what happened at Hewlett-Packard actually said that HP brought the claim almost before they had all the information. They decided that there was fraud at autonomy. They were hearing that from various quarters. They'd found some anomalies in the accounts, but they went hell for leather

after Lynch without any proper analysis to support it, which is fascinating. But their shareholders actually sued Hewlett-Packard over the acquisition. And I suspect that was one. one impetus for them to really go after Mike Lynch and, as well, his CFO, Sushabhan Hussein, who they accused of conning them, essentially, that you made your numbers look brilliant, much better than they were, to make yourself look more attractive, so we would buy you. We heard he gets extradited to the US. Is he first facing trial in the UK?

Yes, it's a real tangle of litigation here. So there was an enormous, incredibly complex trial in the UK. which started properly in 2015. So that's when the civil case was brought in London when HP sued Mike Lynch and his CFO, Sushaband Hussein. While that was going on, Sushaban Hussein faced trial in the US, accused of fraud by the Department of Justice, so sitting in front of a jury in California,

and he was found guilty. And then he was sent to prison with a five-year sentence. Yeah, right. So you've got these two massive, massive cases kind of going on. on almost simultaneously. At what point does lynch start to be facing down the risk of prison? When Sushivan Hussein, who is his number two, was sent to prison, he started to take the whole thing very seriously

and started to worry about his future. He resisted extradition. And there was a lot of anticipation about the verdict in the civil case. Once that came and the judge categorically found for Hewlett-Packard, Pretty Patel, who was the Home Secretary in the UK and responsible for the extradition, signed the warrant to say that he could be sent to America to face trial there. Right. So you've had his number two sent to prison. He's lost the civil case. And then we're at Heathrow Airport and he's having cuffs put on him and a chain wrapped around him

and he's flying at the back of the plane, which is not where he's used to flying, to the states. But then what? he landed in San Francisco, actually expecting to spend most of the time preparing for his trial in New York with his lawyers. The judge said, I think you're a flight risk. You're not allowed to leave San Francisco. So in a rush, his lawyers had to find him somewhere to live. And some armed security guards who would be willing to shoot him if he ran away. So the two were actually quite incompatible.

It's quite hard to find someone to rent you a house as it's. It turns out if we're happy to have men with guns there as well. Very in line with the Bond movie, though. Yes, absolutely. And then his trial eventually started in early 2024. And it felt like the outcome was very obvious. Given everything that we'd heard, the Bayesian in us would say he hasn't got a chance.

So why did he walk free? Well, it's another probability question. I think. In a criminal jury trial, you need to find someone guilty beyond reasonable doubt, whereas in a civil trial, it's on the balance of probabilities. Right. So implicitly, he probably committed fraud, but we are not sufficiently confident to deprive him of his liberty. At the same time that Lynch walked free, another senior autonomy executive was also exonerated. Yes. So Stephen Chamberlain was vice president of accounting at autonomy in Cambridge.

It was a very popular guy amongst his team and in his local community. He'd also been staying in San Francisco for the duration of the trial, but unlike Lynch, who'd been under house arrest in an enormous mansion, Chamberlain had rented a one-bedroom Airbnb. Can you hire the security guard on Airbnb as well? He didn't need one, because he didn't fight extradition. So he was never seen as a flight risk. So the two men were in extremely different positions

and their lives got tied together by this trial. Yeah. And at this point, if this was a conventional Hollywood movie, Lynch and Chamberlain would sail off into the sunset to enjoy their freedom. But that is not what happened. Mike Lynch took his family and Chris Mavillo, actually, his lead lawyer and Jonathan Blumer, who'd been the chair of his audit committee at all,

autonomy on holiday, along with a number of other lawyers, to celebrate that acquittal, to celebrate winning the case. And it was the last day of their holiday when they heard that Stephen Chamberlain, his co-defendant, had been hit by a car while he was out running in Cambridgeshire and was on a life support machine in hospital. And he did not survive? He didn't survive. And later that night, Lynch's yacht, which was called the Bayesian, was hit by a freak storm and knocked over in 15 seconds. And Lynch and his daughter, Chris Mavillow and his wife and Jonathan Blumer and Judy Blumer and the chef on board as well, Raqueldo Thomas, all drowned. It's really incredible. Immediately after this dramatic victory, all of these people are killed.

The conspiracy theorists, of course, have had a field day. They have, and I'm sorry to say I haven't found anything that stands up. Any idea that the US Department of Justice or that Hewlett-Packard or any of the other big players in this story are responsible for this at all, it seems these were both just tragic accidents. It's extraordinary, and it's certainly not the ending of the book that I thought I was going to write. On Cautionary Tales, we try to learn lessons. from what's happened.

And some of what you've told us, Katie, is so extraordinary, so unique that I think there are no lessons to be learned, but some of it is strangely familiar. So if you were drawing lessons, what lessons would you draw? I'm glad you said that, because I agree with you. I think it's very hard to generalise about this story because it's so absolutely extraordinary. but the one that jumps out for me overall is about pride.

You know, the judge in the civil case, and I think this goes back to your point about why there was ever any need to inflate the sales figures, the pride that caused Mike Lynch, I think, to fight with people and to trample over relationships, which caused so many problems, so many unnecessary problems.

and especially in the era that we're in now of AI hype, which reminds me so much of the dot-com boom and bust, I think there are lessons for this new cohort of startup entrepreneurs coming through about how to navigate this wild world. Katie, thank you so much for talking to cautionary tales. You can get Katie's book, The Curious Case of Mike Lynch, wherever you buy books. And of course you can also read Katie Prescott's work in the Times newspaper where she is the technology business editor. Thank you, Katie. Thanks for having me.

Cautionary Tales is written by me, Tim Hartford, with Andrew Wright, Alice Fines and Ryan Dilley. It's produced by Georgia Mills and Marilyn Rust. The sound design and original music are the work of Pascal Wise. Additional sound design by Carlos San Francisco. Juan at Brain Audio and Dan Jackson. Ben Nadaf Haffrey edited the scripts. The show also wouldn't have been possible without the work of Jacob Weisberg, Greta Cohn, Eric Sandler, Carrie Brody, Christina Sullivan, Kira Posey and Owen Miller. Cautionary Tales is a production of Pushkin Industries.

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