91Èȱ¬

Spinvox: The end of the saga

• Rory Cellan-Jones
• 30 Dec 09, 18:22 GMT

The call with news of a deal in the technology sector came mid-afternoon on 30 December, a day when much more important news was breaking, so I realise that may not attract a lot of attention. But it brings to an end the remarkable and rather sad story of what seemed to be one of Britain's most promising young technology businesses.

At the beginning of 2009, Spinvox was apparently riding high, winning awards for its ground-breaking voice recognition technology, recruiting some of the brightest and best in the telecoms and marketing industries, and signing big contracts with the world's leading telecoms operators. But behind the scenes, it was wrestling with huge issues surrounding both its technology and its finances - issues that we revealed on this site in July (see here, here and here).

Now a company that had raised well over $200m from blue-riband backers like Goldman Sachs and Carphone Warehouse has been sold for $102.5m (around £64m) and about a third of that in Nuance shares rather than cash. The Nuance press release unveiling the deal makes no mention of the company's founders Christina Domecq and Daniel Doulton, and in fact features no quote from anyone at Spinvox - highly unusual in this kind of announcement. So the deal raises a number of questions, which I've put to both Nuance and to Spinvox

(1) Will the backers get their money back?

Neither company was at all forthcoming on this issue; but bearing in mind that a £30m loan - due before Christmas - needs to be repaid, it appears there's little left for the investors. Those who were in at the start - like Carphone Warehouse - may have written off their stakes already. As for Christina Domecq, who at one stage had the biggest stake: hers were ordinary shares, so will rank behind those of investors who came in with refinancing late in the day.

(2) What happens to Christina Domecq and Daniel Doulton?

The chief executive Christina Domecq - and to a lesser extent her co-founder Daniel Doulton - were highly-visible standard-bearers for the company until this summer, since when they have disappeared entirely from view. So will either or both stay on? "We're talking to them... a lot of knowledge, a lot of history, a lot of capability in those folks," was what Rich Green of Nuance told me about the founders, but he would go no further.

(3) Will the staff, and in particular the Cambridge Speech Lab, be retained by Nuance?

Again, Mr Green was complimentary about the skills of the Spinvox staff and in particular about its Advanced Speech Group at Cambridge headed by Dr Tony Robinson. "Spinvox has a lot of great people, Cambridge is part of the value of what we're acquiring." But he could not give any details of who would be retained by Nuance, explaining that there would be an "integration process" over the coming weeks. One former employee tells me that a number of current staff are planning to hand in their notice on Monday, in the expectation that they have no future with the company.

(4) Why is Nuance doing this deal?

Nuance told me back in the summer that Spinvox had no technology that it didn't have already. And this afternoon, Rich Green repeated that: "Nuance voice-to-text technology is second to none." So why on Earth is it buying Spinvox? Surely it's the chance to take over those contracts with global telecoms firms? "The contracts and global coverage are part of it," he granted, and went on to explain that Spinvox brought a lot of operational expertise to the party. That expertise, of course, extends to the operation of call-centres around the world, and it's not entirely clear how many of them will be retained by Nuance. But at just over $100m, the deal may seem to the American company a reasonably cheap way of reinforcing its position as a leading speech-recognition firm while being introduced to some big potential customers.

So the curtain may have fallen on the Spinvox saga - but there are still plenty of questions left unanswered.

Update 1350, 31 December: The data question

Last night, I was contacted by someone who pointed out that I'd omitted one key question: what happens to Spinvox's data?

I'm told by a reliable source that over 100 million voicemail messages dating back to 2006 - both the audio and the transcribed text - are still stored by Spinvox, amounting to 100 terabytes. It's a very valuable resource - so much so that I'm told that a major search engine company was also looking at buying the business in recent months, making it clear that it was interested only in the data - not in the technology.

Now a spokesman for Spinvox has confirmed to me that all of that data will simply be handed over to Nuance as part of the deal.

There are obvious privacy issues here: did Spinvox users realise when they signed up that their private messages might be stored for years, then handed over to an American company?