When the Cambridge, UK-based search engine specialist Autonomy was floated on the Easdaq stock exchange in July 1998 with a valuation of $165m, investors in The Dialog Corp, the information services company, suddenly woke up to what they had in their portfolio. A year earlier, in August 1997, when Dialog was known as Maid Plc, it bought 70% of another small Cambridge software company, Muscat, for just 9m pounds. Dialog’s chief executive Dan Wagner believed that Muscat had the world’s best search engine technology, and he wanted to use it for his company’s online retrieval, as well as sell it to others.
Shortly after, Wagner’s strategy took a twist. Maid bought US- based Knight-Ridder Information Inc for 300m pounds (CI No 3,231), creating the new global information services provider, Dialog. For various reasons, Dialog has so far disappointed the financial community, and at the end of last year its shares crashed in the wake of a revenue slowdown (CI No 3,543). Muscat is now viewed as a highly valuable part of the company, and one that might be floated in order to raise cash.
Muscat was formed in 1995 by Dr Martin Potter, an academic with experience in natural language text, indexing and cataloging, and John Snyder, who saw the potential of software that could deliver user-centric information in today’s information-rich enterprise. Like the founder of Autonomy, Potter is a graduate of Cambridge University’s Computer Laboratory, where he worked on leading-edge information retrieval research projects.
Muscat’s main product is an intelligent search engine called Empower which employs complex linguistic inference and probabilistic retrieval technology. Using Empower, users can run sophisticated searches on unstructured information scattered throughout the enterprise. They can also create and train intelligent agents that can identify and automatically deliver new information of potential interest.
The customer base for Muscat has now grown to include more than 200 mainly UK-based organizations, including Reuters, Shell, Glaxo/Wellcome and the BBC. Over the next year, the 38-employee company intends to expand into the US and Europe. It has just set up a distribution operation in Amsterdam and is planning a US operation in conjunction with Dialog. Revenues for 1998 were #1.4m (60% from product licenses, 30% from consulting services and 10% from maintenance and support), up from #1.0m in the previous year.
In 1999, the company intends to go head-to-head with the two information retrieval market leaders, US-based Verity and Excalibur. A flotation on either Nasdaq or the London Stock Exchange is the target, says Chris Nowell, chief executive of Muscat.
