Profile - Andrew Berend

Focus on a commercial goal, not just cool technology

by Nitin Dahad, The Chilli

"When starting up a new company you have to be awfully clear and focused about what you want to achieve. You can't make a successful business just because you have a cool technology." So says Andrew Berend, CEO of Anthropics, as he talks to The Chilli about the process he went through in starting up his company, a spinout of a government-funded research department (the National Film and Television School).

Andrew Berend

Andrew Berend was educated at Oxford University and the UK National Film and Television School. In 1990, he co-founded Cambridge Animation, which became the world's leading supplier of cartoon animation software, with Hollywood studios such as Warner Bros. and DreamWorks among their clients. Berend, in conjunction with others, was responsible for a number of patented innovations in computer graphics and computer assisted cartoon products.

On leaving Cambridge Animation in 1996, he served as founding director of the National Film and Television School's CREATEC digital media laboratory, responsible for overseeing cutting edge research that led to the development of the FaceWaveâ„¢ technology that forms the basis of Anthropics current product. Anthropics spun out of this research department in 1998.

Different strokes

Berend has considerable experience in working with the research departments of universities, as he tapped into them during the initial stages of defining his company's product. He says they were different to other start-ups: "There were three things that we did that were unusual, different to the way other start-ups do it." He explains the three basic steps:

1) Work with business schools to make sure that the technology would be commercially viable. "Whatever technology we developed, we needed to make sure, so we did a sanity check."

2) Work with the brightest and best in British academia. "We looked at science applications with potential commercial applications from the EPSRC (engineering and physical sciences research council), and the research groups in a number of universities. Like the saying from Isaac Newton: If I see further, it is because I stand on the shoulders of giants."

3) Give researchers equity participation. "When we set up the research division at the National Film School, to attract the researchers we gave them part ownership of the technology."

From step two, Berend says they identified some cutting edge research in machine vision as an area to develop. "The need to project photo-realistic images using the lowest bandwidth," he said.

Their FaceWave technology was thus born, with which Berend claims they were quite successful. "Last year we were selected as one of five key technologies to demonstrate the best of British at the House of Commons. Craig Barrett of Intel demonstrated it as he was involved in funding the research."

Working with universities

When they identified machine vision and robotics as key areas, Anthropics worked with researchers at the key universities - Oxford, Cambridge, Manchester, Glasgow and others. "One of the key areas to be aware of is to learn to negotiate the acquisition of intellectual property (IP). The universities are now becoming realistic about the commercial value of their IP, but in the past they would commonly overvalue or undervalue their IP," comments Berend.

"Research departments are traditionally there to enhance knowledge, so you have to be careful to balance the need for pure research against your own commercial goals in the negotiations."

These commercial goals are the most important part of starting the business according to Berend: "You have to be consistent and hard-nosed about focusing on the commercial goals." He believes that you cannot just have a market because of good technology [Editor's note: read The Chilli's take on university spin-outs]

So what is the market opportunity?

Berend's ambition is to 'transform the way we communicate' by providing a standard in interpersonal multimedia messaging and human image video content delivery across communication networks.

The company's FacePlayer solution is based on FaceWave, enabling the creation, storage, provision, and playback of FaceWave "movies", animated faces (human, animal, or illustrated) which lip-sync text, audio, or video input in a realistic manner over normal mobile phone networks.

This provides an ability to send messages like SMS with a visual face (or other animated object) presenting the message. Berend believes there is a huge opportunity, and that Anthropics has a market lead of about six years. "We just ran a focus group in which the conclusion was that non-verbal communication is not optional. There are 44 muscles in our face, most for expressions that cannot be communicated without images. There is therefore a solid basis for representing visual images, but it needs to be done with quality images."

What Anthropics enables is effectively a video SMS message over normal GSM/GPRS networks. Explaining the opportunity for this Berend says, "Why send a Christmas card when you can send a message with a moving image of your own face? Even with SMS, the volume of messages goes up during football matches. This is when people are updating friends on scores, or even taunting others supporting opposing teams. Just imagine the fun they will have when able to send visual messages."

The company hopes to revolutionise MMS (multi-media messaging) with its technology for delivering messages using real talking heads over narrow bandwidth. Berend says that being in the UK puts them in a very good position, with all the mobile operators and handset manufacturers being accessible. "We're making good progress with the operators as well handset manufacturers. We are running on a number of handsets, including the Nokia 7650 and Sony Ericsson, as well as on Symbian handsets and on Java."

Business model

Anthropics will license its technology as well as share revenue from services using its technology. "There are two sorts of customers: content creators, and content aggregators - the latter being based very much on the successful DoCoMo model, where there are some 1000 service suppliers."

Typically, the content creator or aggregator will go to Anthropics if they want to use Anthropics' FacePlayer technology; an example might be to deliver the latest Manchester United match score delivered using an image of David Beckham's head. " Every time a user downloads a message, we will take a share of the revenue that the content creator makes," says Berend. He adds, "Some [mobile network] operators might want to offer services directly - such as horoscopes."

"We are also working with content creators for producing 'canned messages', and companies specialising in content delivery."

Analyst Woz Ahmed notes "Taking a cut of revenue each time there is a download is a good move, but there are two challenges that are out of the control of Anthropics. Firstly, people have to see the need to send picture messages, beyond the Christmas incentives offered by mobile network operators of free picture messaging. Will the novelty wear off? Secondly, are the operators capable of billing this? If these challenges are not addressed, the revenue will not flow downstream to Anthropics and others."

'Facing' the challenges

Explaining the challenges the company will face, Berend says the biggest will be "the education thing". "We're selling something that's a new concept, and as a start-up, getting people to understand [the benefits] will be the biggest challenge. We do seem to be making progress as we have a great window of opportunity - the operators are looking to increase their average revenue per user so are more than willing to try new things like MMS."

Berend thinks that the standards are emerging to allow MMS, as lessons are being learnt from SMS. "The operators are much more savvy now [after their experience from SMS]."

One thing is clear in Berend's mind, as he is fully aware of the issues that painted a gloomy picture for 'dot coms'. "If it doesn't make money for our customers, they're not going to buy it. Cool technology is great, but we have to be able to monetise it." He is aware that the 'dot com' collapse meant the investment climate for serious businesses suffered. "The days of bullshit are over," says Berend.

It also reminds Berend of the time when Anthropics spun out of the National Film and Television School's CREATEC digital media laboratory in 1998: "The government funding ran out after three years, so we received initial angel funding from investors in Cambridge. We then got first round VC funding from Quester in August 2001. The timing was quite lucky otherwise we wouldn't have made payroll!"

Anthropics aim now is to become cash positive. "We have a reasonable shot at establishing the business as an industry standard in digital human representation in low bandwidth applications. If we can achieve that, then we can also make money for our investors."

© Chilli Publishing Ltd 2003

09JAN2003