From the times and the Sunday Times, this is the story. I'm Manvana. For Mike Lynch, the mccurial billionaire and British tech titan, it was a moment of immense relief. After more than a year of being under house arrest in California while on trial for fraud, he was suddenly free. >> I was extra. I had to say goodbye to everything and everyone. I didn't know if I'd ever be coming back. So now it's very strange. You have a new life. And that comes the question which is what what do you want to do? But as he celebrated with friends and family aboard his yacht, the Basian just off the coast of Italy, the celebration abruptly turned into tragedy. A search is continuing into the night for six people missing after a British luxury yacht sank in a freak storm of Sicily early this morning. Among those still unaccounted for is the tech entrepreneur Mike Lynch. It was a tragic twist of fate for a man who'd just been given a second chance at life. Mike Lynch, along with his 18-year-old daughter and five others, died. But for his widow, the drama is far from over. This week, a court will decide whether to bankrupt his estate in order to pay damages to the company he defrauded. The story today, the spectacular rise and tragic fall of Mike Lynch. It's a big week for the Times journalist and host of the Times tech podcast, Katie Prescott. Her first book, The Curious Case of Mike Lynch, is being published after years of following the tech billionaire's story. I was covering his criminal trial in California as tech business editor for the times and I needed to catch up with where we were because this is a story that has gone on for gosh 15 years more than that and I couldn't find anything and yet here was someone who was known as Britain Bill Gates who'd founded a tech company in the UK which rose to join the dizzy heights of the footsy 100 which is incredibly rare and then had sold his company to Hulip Packard for $1 million and a year later been accused of fraud. And it was just it was such an extraordinary tale. I wanted to unpick it. Katie, many people across the country probably only heard about Mike Lynch after his tragic death, after the disaster of the Basian yacht and the freak storm that destroyed it. Just take us back. remind us a bit about who Mike Lynch was. >> Mike Lynch was a very rare figure in the British business world having founded a technology company that joined the ranks of the Footsie 100. So it was one of the the biggest tech companies in Britain and he started it during the dotcom boom. Mike Lynch was in so many ways an outlier. He came from a a poor family in Essex. His mother was a nurse. His father was a fireman. My father gave me wonderful advice which is when you grow up try and get a job that doesn't involve running into burning buildings and that made sense to me. Um but also I think he always regretted that he never had the chance to go to university and he realized the importance of education. He won a scholarship, an extraordinarily bright boy to a private school and then went on to Cambridge where he started by studying natural science and then moved into engineering. Unlike so many of that generation at the end of the 1980s, he didn't join the city and go into the world of finance during the big bang and the Thatcher when the city was exploding. He didn't ever have much time for people in finance. He used to call them the twits in suits. And instead he decided to pursue a career in technology. He was looking really at technology that could recognize patterns, >> early machine learning really. And then he pivoted from using that sort of search technology at the point of the early internet into the search for information. And that is how his business autonomy was born. >> How does he get the reputation of being the Bill Gates for the UK? >> Yeah, it's an interesting one. Actually, this is a moniker that came up a few times. I mean, actually, I don't think there is much similarity between him and Bill Gates. I think it's just a sort of synonym really for a successful tech founder. He was incredibly unique, clearly extraordinarily intelligent. He could be very very charming and not the sort of charm of a oh hello nice to meet you sort of posh swave person but very genuine. He'd make an effort to get to know people. He was quite funny, quite witty, very self-deprecating. And so you had that side of him but then also this incredibly difficult side of him too where he could be a bully in the workplace. One tech guy who worked from just working all weekend on a project and then he came in on Monday morning and said that's rubbish and walked off. Oh. >> Another lady who spoke to me said he moved her desk in front of his office so he could see into her computer and check what she was working on. So it could be really overbearing. >> Tell us a bit about his company Autonomy. So by the end by 2010 its turnover its annual sales was almost a billion dollars. Wow. They moved into America very very quickly which again is very rare for a British tech company. You know you tend to get things the other way round, don't you get big US tech coming over here. He launched the company onto three stock markets, Europe, America and the NASDAQ and the UK in the middle of the dotcom boom. And that propelled Autonomy into the stratosphere at that time because its valuation was absolutely enormous. In fact, so big that when it launched in London, it went straight into the top 100 companies only to fall out 3 months later as the dot boom turned to bust. What did their tech enable clients to do? Their technology allowed you to find information internally. So if you think about the amount of information that businesses generate from voice messages to emails, PowerPoint presentations, whatever it is, it allowed you to search through that information, what was called unstructured data. There were though some problems. I mean, I was going to say because to be honest, it feels like I'm not sure I I see that even now. you know, one thing that will search your voice messages and everything that's out there in the ether and all of your files at the same time. That sounds very forward-looking. >> And there are a number of companies that would buy autonomy software and then leave it sitting on the shelf because they couldn't implement it. And so questions started to be raised pretty early on about how effective the technology was. And all the while autonomy is growing not just by selling but also by buying other businesses. >> So the balance sheets at autonomy started to come under scrutiny from analysts in the city of London who felt that something wasn't quite right about the numbers. For a company like that there is a lot of scrutiny. People are very interested to see what's happening inside your business model. How is he making the balance sheets add up? So from the early days of autonomy, Mike Lynch was always trying to make things look better than they were. They weren't though a failing company. It would be wrong to portray autonomy as some sort of curillion. It was making sales. >> Yeah. >> I think Mike Lynch just wanted those sales to be better >> than they were and also to hit the expectations that were coming from the city. When you're a listed business, analysts and yourself as the company put out forecasts. you say this is how we think we're going to do. >> And in order to hit those numbers, some of the executive team within autonomy started to almost fiddle with the way revenue was recognized and how sales were recognized in the business. One of the ways they did this was very simply rather than selling autonomy software, they were also selling mice, keyboards, printers, >> oh, hardware. reselling it from companies such as Dell. I mean that's quite unusual for a software tech company. >> It's interesting. I I thought it was as well until I spoke to more people in the industry. It is not necessarily completely unusual but you have to tell people about it. And what autonomy was doing was constantly saying we are a pure software business and they were telling the market and pension funds were buying into it based on what they were telling the market. We are a pure software company when in actual fact that just wasn't the case. Were people inside the company raising any questions at this point? >> There were questions, auditors from Deote who had to look over the books to sign them off. >> Yeah. >> Who were actually later fined over what happened at autonomy. And then there were other individuals too who were concerned about other areas of the accounting. autonomy would sometimes use what was called a value added reseller. Basically a middleman to take on a sale if they hadn't completed it by the end of the quarter. That sounds very complicated, but essentially they were kind of passing the sale on. It's like me saying, "Oh yeah, um Manv is dealing with the numbers here, but they'd write it down as a sale even if it hadn't been completed." for Mike Lynch at the center of all this. Seeing that people who are buying the tech aren't necessarily using it, they're raising questions about it and he is a salesman at heart. What does he do to try and fix that? I kept finding that every time there was any sort of dissent against autonomy. Mike Lynch had a very thin skin and he used to get very, very angry. As someone said to me, he was not a man who went through life making friends. And particularly when it came to the city analysts, there were a few who he had a very difficult relationship with and autonomy banned them from going to their quarterly meetings, which is like banning a journalist from going to a press conference. It's kind of wild. >> I mean, I feel a bit anxious just thinking about it. Every 3 months, he's got to find a way of making it look like sales are bigger and better than ever. They're finding inventive ways of doing that to make it look like a much bigger company. And for Mike Lynch, he's getting away with it. What does he do? I mean, how do you get off that hamster wheel of trying to make it look better and better every 3 months and not really knowing how? It's interesting, isn't it? I'm I'm not sure that he necessarily tried to do that. There is an argument when he later sold his business to Huelet Packard that it was a way of, you know, kind of washing your hands of it. I really think he he thought he he was getting away and he was there were a small handful of people in the city who were saying hang on something's a bit fishy here but actually there were also a lot of people who were buying into the autonomy story including as you mentioned Huelet Packard now tell me about that because I think most people think of Huelet Packard will think of actually hardware exactly the sort of thing we've been talking about computer screens and keyboards how do they come into the picture >> so we're talking about 2011. And if you think in 2011 you've got Apple, it's a really cool company. >> Let's go ahead and ask Siri about the weather. Do I need a raincoat today? >> It sure looks like rain today. >> You got Facebook. >> More than half a billion people use Facebook every day. And I mean, I just think that's crazy. >> 500 million people. Yeah. And it's growing. And it's growing every day. It's kind of new cohort of tech businesses coming through and Huelet Packard is like the original Silicon Valley startup. Born in the '60s, it's known for printers and ink and being a bit of a dinosaur, frankly. And in 2011, it had made various attempts to try and pivot and innovate over the years. And it had made some spectacularly big mistakes in terms of spending large sums of money on companies like Palm. Do you remember the mini computers? Yes. For example, the kind of just >> God that brings back memories. >> Little flip top sort of thing. >> It was more like a port calculator really, but we all got very excited >> and HP was famous for those at one point as well. It had also churned through a number of chief executives and at this point it had a new boss called Leo Apotica who had been from the software industry. So quite an unusual choice of boss for Hulip >> backard shows where they think they want to go >> where they think they want to go and they were casting around for companies to buy and they looked at several one of those was autonomy and so that's how the conversation with Mike Lynch started and that's where the two sides met for the first time and I suspect wish they hadn't. How much does Mike Lynch make out of HP buying his company and does he still have a role in the HP version? >> Yeah, very much so. I mean, they promised that he would have a very very important role and he was very much running autonomy afterwards. So, the sale was 11 billion and he made a billion dollars out of that. I gather when the sale happened he was concerned about what might happen to his company and it's the first time he's ever had a boss which I think is really really important to note as well. >> Yeah. He doesn't sound like a man who takes instruction. >> Exactly. He's been running his company since he was in his 20s. And suddenly here he is in a big American conglomerate, which is completely the opposite of a Cambridge tech startup. And it was a very unhappy marriage from the start. And that was partly also because Leo Apoica, the man who bought Autonomy, got fired just as the sale was announced. >> So their biggest cheerleader inside the company is gone. he's out the door. And within the company, they were all getting cold feet. And then when they started to merge the companies, they really didn't like what they saw at Autonomy. And Autonomy really didn't like how it was treated by HP. Katie, you've been telling us how Mike Lynch became the UK's first tech billionaire. Huge success story. He's managed to sell a British company to an American giant to Huelet Packard, but it's not going brilliantly. At what point does Huelet Packard realized that some of those figures they'd seen, some of the spreadsheets were creative? Like any terrible divorce, right? You've got two very different sides to this story. So if we start with the HP one, we had executives who were touring offices of autonomy, for example, in Chicago where the staff said, "We can't talk here. It's not safe. We need to go and stand in a doorway because the office is bugged." >> Oh wow. >> So So the HP HP execs felt that something was a bit off there. And then on the autonomy side, you had salespeople saying, "Oh, we can't get access to HP systems. they're not letting us hit the numbers. And it was all exacerbated by the new chief executive of HP, a lady called Meg Whitman, who had been the chief exe of eBay. Meg Whitman and Mike Lynch really did not like one another. Things started to get bad when it became very very clear that Mike Lynch and Autonomy would not hit their numbers for a quarter and really wouldn't do so by a country mile and he only told her about that a few days before >> and she's like this is just not how you run a business. And very shortly afterwards, Lynch was fired. And it was at that point that a member of autonomy came forward and blew the whistle about what he perceived was going on within autonomy. They started to peel through the numbers. And then in November 2012, Me Whitman gave a press conference where she accused Mike Lynch of fraud. There had been very significant strategic misrepresentations, accounting improprieties, and when we understood what had happened, we had to explain to our investors and then of course turned over that understanding and that data to the authorities, the serious fraud office here in the UK and of course the SEC and the DOJ in the United States. >> I mean, that really is a complete change in his affairs. He's gone from being the star billionaire to being publicly accused of fraud. >> Because of that, there are legal proceedings suddenly underway, lots of them. So, there's a civil trial here when HP sued Mike Lynch and his chief financial officer, Sushan Hussein. And then the Department of Justice in the US was pursuing Sushan Hussein, but also trying to extradite Lynch. And then the financial reporting council which might sound very dry but it's like the accounting watchdog was going after deote as well. >> Tell us about the very first one that the case in the UK this is a civil case it was build at the time as the tech trial of the century. What was it like and what were the charges? Essentially Lynch and his chief financial officer Sashan Hussein were accused of enticing Hulip Packard to buy autonomy by making its numbers look better than they were. He always denied that. He always said actually they approached me. My company wasn't for sale. It's extraordinary really that the actual trial didn't get underway until 2019. And the judge at the time said it was one of the most complex cases in I think British legal history. It it was incredibly complex as well because Sushan Hussein was on trial in the states on criminal charges. Ah >> you got Mike Lynch on the stand in the UK. Hussein not giving evidence here because he's fighting for his freedom in America and with the department of justice. That is a criminal case. >> That's a criminal case. Exactly. Right. >> The UK one is a civil that's Hullet Packard suing. Yes. So there's a financial penalty in the civil case and a loss of liberty in the criminal case. So Sasha van Hussein was sentenced to prison in the US as the UK civil trial was taking place which as you can imagine was an enormous blow to Mike Lynch who by all accounts at that point started to take this really seriously. >> At what point did the American authorities come for him? Well, they've been trying to come for him for a while and he's been fighting extradition and fighting extradition and then the judgment in the UK civil trial finally comes in 2022. It's taken an awfully long time and Mr. Justice Hildiard that the judge in the case found that HB had substantially succeeded in its claims and then later published an extraordinarily detailed judgment which goes through transaction by transaction and points out where the fraud happened. When that judgment came out, Pretty Patel, the home secretary, signed the warrant for his extradition. That is a catastrophic day in the life of Mike Lynch. He's found guilty here. He knows that will come with a huge financial penalty. And at the same time, he knows that he's going to be extradited to America. What happens then? It's a remarkable story. He was taken over in pretty um dire circumstances. His wrists were tied together. He was flanked by armed guards, put at the back of this jet, flown over, put in a tiny cell in this courtroom. >> One of the strange things was that I had various medical issues and because of that it had been pre-arranged that I would get bail and I turn up and even though it was representation was made to the UK court that that would happen, I don't get bail for the first night. And then the judge in the case ruled that he was a flight risk and that he needed to stay in California. And so suddenly his lawyers had this conundrum of how on earth do we find somewhere for Mike Lynch to stay at such short notice? Because the kicker was he had to have an armed guard 24/7 that he paid himself but had to be willing to shoot him if he ran away. >> Sorry. which is what >> how do you even advertise for that post? I'd like an armed guard who would be willing to shoot me if I looked like I was about to escape. >> So his lawyers cast around to find somebody and eventually managed to persuade a company to supply some of these armed guards. But when they tried to go to the Four Seasons Hotel, unsurprisingly, they didn't want an armed guard outside. Airbnbs they found also weren't that keen on the idea. And eventually they managed to find a house in Pacific Heights, very fancy neighborhood in San Francisco. And that's where he was kept under house arrest for the duration of the trial. What was that like? What was his life like? Difficult because he couldn't go out except to meet his lawyers. He made very good friends with one of those guards who seemed to become a confidant. >> They turned out to be the most wonderful people. and you know, we're all about trying to make this crazy situation as easy as possible. And um I grew to become great friends with them. >> He was very prolific on email and keeping up with his contacts in in the UK. He got a dog, but mainly he was working on the trial and he was diverting every bit of his mental energy in order to try and fight this case because he knew that if he lost that meant prison and at his age in his 50s, you know, that could be the end. I think he saw this as a life or death moment. >> And we should say he's not the only one on trial at this point. >> Yes. Alongside him was a chap called Steven Chamberlain. And Steven had been the vice president of finance at autonomy in Cambridge, sitting under Sushan Hussein, but he was accused also of the same fraud. I mean, what are the chances for Mike Lynch and Steven Chamberlain? >> If you look at numbers from the Pew Research Center for those in their position, it's about 0.4% >> 0.5 >> chance of a quiddle. >> Oh wow. >> It's not bad. >> It's looking really bad. just felt like a foregone conclusion. It's a really complicated case, but somehow they do get through it. I mean, just explain how they somehow fell into that 4% and managed to get acquitted. >> Yeah. I mean, it's one of the the very many curious things about this story. The lawyers in the case learned a huge amount, the defense lawyers, from previous cases. But the really clever thing that Mike Lynch's lawyer Chris Millo did was put Mike Lynch on the stand. And I think for a California jury who, you know, worship entrepreneurs. >> Good point. There were some brilliant lines in his testimony about, you know, if you look at any kitchen, you're going to find bacteria. This idea that of course there were some problems. You know, it was a massive company. painting him in that light of successful entrepreneur, the guy who was happy sitting with his techies eating pizza at 2:00 in the morning. It was a great story. So there there was certain points where I think they gained the advantage, but nonetheless, despite all of that, it was a huge surprise when the verdict was read out and there was this kind of joyful moment when Steven Chamberlain and Mike Lynch realized they were going home. >> Everyone burst into tears, you know. Um, you know, they all knew that that we were innocent. They return to Britain in a huge celebratory mood, but very quickly things start to go wrong. Tell us about the night many of us will have read about for Mike Lynch when he's celebrating seemingly on his yacht, the Basian. What happened? This is a story of terrible coincidences. Mike Lynch had a yacht and he'd brought together many of the people who'd been involved with this case over the years. So Chris Millo, his attorney, Chris's wife Nada, Jonathan Bloomer, who'd been the chair of his audit committee and his wife, his daughter Hannah was on board, Charlotte Galansky, who had worked for him at autonomy and another one of his lawyers from Clifford Chance. And it was meant as a thank you. They had been celebrating on board Lynch and Chamberlain's victory. But the day before they had heard that Steve Chamberlain, who was an incredibly keen and passionate runner, had gone running from his home that morning and been struck by a car, and he was in hospital, critically injured. People on board couldn't believe it. And so the the mood was pretty bleak. And they were coming to the end of this week-long holiday and storms were due. And so the captain morowed the boat off the coast of a little village called Portoello in Sicily. And what happened then? Nobody could have predicted. Suddenly storms started to get up. Wind got incredibly high and the boat was knocked over in 15 seconds. That really was completely remarkable. >> Yeah. But the the the terrible outcome of this was that Mike Lynch died as did his daughter Hannah tragically and his lawyer Chris Mavillo, his wife Nater, Jonathan Bloomer and his wife Judy and the chef as well who was on board Ricaldo Thomas. >> It was a horrendous tragedy and we we should say uh just explain what happened to Steven. his life support machine was switched off and he died in hospital in Cambridge. >> It is extraordinary these two men who beat all the odds and so so quickly they're both suddenly dead. >> Just absolutely awful for their families and all of their friends. Now, of course, there was still obviously the overhang from the British civil trial, but really it was a chance for them to move on with their lives and for their families and their friends as well. And to have that taken away is just unimaginable. And Katie, as you say, although they'd been cleared in America, that British case was still hanging over them. Just explain the implications of that and what's happened since. This case has moved at a glacial pace. The hearings were 2019. You got the verdict in 2022 and then this year only came up with what was called the the quantum judgment. Basically how much autonomy Mike Lynch Sashan Hussein would have to pay Hulet Packard and the figure they came up with was 700 million and that doesn't include interest. And what's happening now on the 18th of November is yet another get together of lawyers, another trial looking at what that final number should be. >> Casey, obviously Mike Lynch died tragically. That case still goes on though. I mean, that money still >> needs to be found from his estate. Just explain, you know, what the options are now. >> It's very difficult. I mean, it sounds like his estate is worth about £500 million. Clearly, the final sum is going to be a lot higher than that. I think we'll have to wait and see exactly what the lawyers come up with in terms of a figure and how much appetite there is then from the Huelet Packard side to pursue this because they can bankrupt the estate. There may well be other assets that the family have that they might go after. I wonder whether they will or not given the circumstances >> and particularly difficult for Mike's widow. There is speculation that she might face lawsuits of her own. There is a question around now also what happens after the yacht accident. The Basian yacht was put in Angela Baris's name. Angela being Mike Lynch's widow. There's an investigation going on in Italy. There's an investigation going on here in the UK. And we're yet to hear what the outcome of those are, but as the legal owner of the yacht, there is some speculation that his widow could face some sort of action, but it is it's very very early to say. Katie, for you, I mean, you've written this book, you've looked in such depth at all aspects of Mike Lynch's life. At the end of it, with all the court cases and all the businesses, I mean, what do you think his legacy will be? What did the world of tech lose when he died? >> I think his biggest legacy is in the businesses that he has left after the Huelet Packard autonomy debacle. He started a fund called Invoke and he backed a number of companies. One called Luminance, which is an early business in legal AI. There's another company called Dark Trace, which is a very successful cyber security business that was recently sold to US private equity firm for billions of dollars. And it's astonishing how often I cover something in British tech that Mike Lynch has touched in some way or that a member of his team is involved with. He was brilliant at spotting talented people. might have had a reputation that could be more than difficult at times, but everybody I spoke to, even those who didn't speak about him particularly favorably, always said, you know, he was just great at picking people. So, you see that in the businesses that he left and that he backed. That was the Times technology business editor Katie Prescott. The producer today was Michaela Arnerson. The executive producer was Kate Lamble. Sound design was by David Crackles. And theme composition was by Malacetto. If you can, do leave us a review wherever you get your podcasts. Thanks for listening. We'll be back tomorrow.