shop.
Time to think and plan what to do now. As I sat there I thought back over recent events…
CHAPTER 8
The Company I worked for, Control Networks, a software systems company, was a young company at a particularly delicate stage of development. Control Networks was already a half billion pound corporation, expanding rapidly, and likely to continue to do so if it could continue to survive the growing pains. Alec Bell the CEO, and I had founded the Company some 8 years ago and had managed to build a strong team in Bristol, the same area where both of us had been brought up. With Alec running the company as CEO, I was the Technical Director or CTO and among other things led the team working on the ForceNet project development that was close to stage one completion.
With the help of a cash injection from a venture capitalist a few years ago growth had been meteoric and exciting if somewhat bumpy and stressful at times. The ForceNet product had been developed as a result of an extensive research and development programme and it was the stage one completion of this development that was currently under test. ForceNet would significantly add to our product offering and this first stage development would provide the product for our next growth phase, although it only represented a part of the long-term plan.
A successful launch of ForceNet would accelerate sales growth, so as we waited for the outcome of testing and trials the mounting tension in the whole senior team was palpable. All of the senior team had a stake in the future success of the Company, and while at the moment we had to conserve cash and therefore did not pay dividends, that would eventually change.
An alpha release of software had been on test for some time and those tests were close to completion; I was receiving progress reports daily. Once the tests were completed and all of the fixes and changes had been incorporated in to the core software and satisfactorily retested then we would compile a beta release for a controlled and progressive release at up to 5 sites. These had been carefully selected, and were with some suitable long term committed customers that we could rely on and where the initial application of the product was not critical to their operation. The alpha phase was close to completion and we expected to move to beta in the next week or so.
Adding to the tension at senior management levels was the fact that Control Networks was about to go for an IPO on the London Market. The prospectus was almost finished, due diligence had been completed and was waiting for a sign off, and the brokers envisaged giving the go ahead to the board in the next 2 weeks. Once finally approved by the board then the brokers would be watching the market and arranging a float date with the market authorities.
The Company needed a substantial injection of funds to take ForceNet to market while at the same time getting on with developing stages 2 and 3. Although we were now earning substantial trading income, the heavy research programme meant that we were still consuming significantly more cash than we were earning. It was deemed that the best route to raise more cash was through an IPO rather than another round of Venture Capital or possibly bank finance; the latter would have been difficult to achieve at our development stage. We were looking to raise? 250 million and it was planned that an IPO would provide those funds while at the same time allowing the venture capitalists to sell some or all of their shares in to the float, thereby realising on their investment. Other shareholders would not be able to sell their shareholdings for at least a year but potentially I was going to become a rich man, even if only on paper at first. That did not seem so important at the moment, I just felt glad to be alive and wanted to stay that way!
In some ways it was unfortunate that we were at such a critical stage of new product development at the same time as raising money on the market. Preparing for the float was a major distraction from the business for the whole team, and in particular for Alec, and Bill Williams our Financial Director, but one had to go to the market when the opportunity was right and the ForceNet product gave the Company the kind of “blue-sky” appeal that gave stockbrokers and bankers wet dreams.
To further complicate matters, a few weeks ago Alec had received a call from a boutique investment bank, Allied Grampian, who wanted to come and see him. It transpired that an unnamed group was interested to know if the Company was for sale. The price hinted at looked good but not good enough to urgently take back to the board when we were so far down the IPO route, so after an informal ring around the directors we decided not to take it further.
Despite intense in-house security there were already rumours in the market that the Company was about to introduce a major new product and this was stimulating interest in the Company. The brokers were able to project a high float price to encourage us to take the IPO route. They and the lawyers and accountants would make a killing in fees if the float were successful.
ForceNet was a powerful piece of software and it had become clear over the past year that its military applications were even more potent than the large-scale commercial applications for which it had originally been developed. Eighteen months ago, Tom Gale, one of the senior developers had asked for a meeting with Alec and I. Tom was a games freak, particularly computer war games, and had a passionate interest in military hardware. He ’d claimed that with some adaptation, ForceNet had the potential capacity to control and manage multiple squadrons or large numbers of unmanned aircraft or drones. If ForceNet could, as Tom believed it could, facilitate a major step forward in the effective a nd instant control of units and /or fleets of unmanned aircraft to allow rapid decision making and action in attack or defence situations the military implications were amazing. The secret was in the user interface of ForceNet that provided a constant detailed overview that allowed rapid decision-making at varying levels. It had the potential, to put whoever had access to it, years ahead in this technology. Drone technology is advancing rapidly not only for military applications but also for commercial use so if our product was applicable then it was a huge potential market for the company.
At first Alec and I had been a bit shaken by this and somewhat sceptical, but asked Tom to let us have a short confidential report on his ideas, while we considered what to do next. Tom had said he would do so and also told us that he had an old student friend at the Ministry of Defence whom he thought it might be worth talking to.
It turned out that the “old student friend”, Dean Jones, was more than just any one at the MoD, he was a recognised expert on military drones or unmanned aircraft! He ’s co me to see us and I immediately smelled a rat. Although he did not refer to it directly he seemed to have a “feeling”, for ForceNet.
Afterwards Alec and I had grilled Tom but he denied that he had leaked any ForceNet information, although under pressure it became clear that he and Dean Jones had on several occasions had free wheeling speculative discussions on the issues involved in controlling and developing squadrons of unmanned aircraft.
Two days later Alec had received a call from a Nick Ridley, a 'mandarin' at the Ministry of Defence. He wa nted some of his team to come a long for an informal chat, and a few days later a deputation of five people from the MoD had arrived. They understood that we had a new product called ForceNet, could they have some detailed information? Did we design the product for military application? Who were we planning to sell it too? Were there any prospective customers; if so who were they and had they seen the product in detail? They were also interested in our security set up. What were our procedures? How was the software protected?
The Company has what all of the staff believe are draconian security procedures controlling premises, staff vetting, and software control and compilation. We were targeting our new software at very large corporations, and they were limited in number, and there were some key competitors in the market, particularly in the US, so we did not want our concepts and designs leaking. Alec in particular, was anal at ensuring security procedures were followed.
Present at the meeting with the MoD had been a somewhat dour looking Scotsman called Gordon Stewart, who seemed to have a 'watching' brief and contributed little to the meeting. At the end of the meeting however, as everyone was leaving, he took Alec to one side and suggested that the MoD interest should not be taken lightly and could be an interesting opportunity for the company.
“In what was the MoD interested?” Alec had asked.
“Not for me to say on that.”
He ’d then offered to send people in to overview our security arrangements. Alec had accepted the offer but
