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Lernout & Hauspie was a dotcom era fraud that attracted investments from several major players, including a $45 million investment from Microsoft and millions m

Lernout & Hauspie was a dotcom era fraud that attracted investments from several major players, including a $45 million investment from Microsoft and millions more from Intel and the Belgian government. At one point, it was valued at $10B. They claimed to have solved real time speech recognition and translation, and claimed to have over $300M in annual revenues. None of that was true. Their speech recognition software did not work, and they had very little revenue. Their management went to prison and it was one of the biggest financial frauds in modern European history at the time.

mattkrause 5y ago
My impression was that Lernout & Hauspie had had decent--for the time--technology: they bought Dragon (admittedly in a shady deal), PowerScribe, and a few other "real" companies. It was certainly rougher than people might have desired, but this is the first time I've heard they didn't have any actual products. I thought its downfall was more related to straight-up accounting fraud, with fake sales, hidden loans, etc.
- jacquesm 5y ago
  Yes, they did have a product and the parties that acquired the assets at bankruptcy firesale prices did rather well.
  - ar7hur 5y ago
    I think Nuance bought most of the assets. And 20 years later MSFT bought Nuance. Full circle!
- missedthecue 5y ago
  Like you mention, they acquired legitimate companies, but as far as I can gather, their own tech was fraudulent through and through. This is an account of someone who went on a roadshow with the Lernout & Hauspie sales team in the 1990s. "They had this room with a whole wall of computers and you talked into a microphone and the computers would do the speech recognition. Then they put your sample through a translation program, and the program would convert it to another language. They were demonstrating the Holy Grail of speech recognition in 1999. It turned out all that was done by a man behind the curtain, literally the Wizard of Oz. The man behind the curtain just typed it in; everything else was an illusion." From page 37 of this columbia.edu PDF. https://www8.gsb.columbia.edu/valueinvesting/sites/valueinvesting/files/Graham%20%26%20Doddsville_Issue%2036_vF_0.pdf https://www8.gsb.columbia.edu/valueinvesting/sites/valueinve...

mattkrause 5y ago

My impression was that Lernout & Hauspie had had decent--for the time--technology: they bought Dragon (admittedly in a shady deal), PowerScribe, and a few other "real" companies. It was certainly rougher than people might have desired, but this is the first time I've heard they didn't have any actual products. I thought its downfall was more related to straight-up accounting fraud, with fake sales, hidden loans, etc.

jacquesm 5y ago
Yes, they did have a product and the parties that acquired the assets at bankruptcy firesale prices did rather well.
- ar7hur 5y ago
  I think Nuance bought most of the assets. And 20 years later MSFT bought Nuance. Full circle!
missedthecue 5y ago
Like you mention, they acquired legitimate companies, but as far as I can gather, their own tech was fraudulent through and through. This is an account of someone who went on a roadshow with the Lernout & Hauspie sales team in the 1990s. "They had this room with a whole wall of computers and you talked into a microphone and the computers would do the speech recognition. Then they put your sample through a translation program, and the program would convert it to another language. They were demonstrating the Holy Grail of speech recognition in 1999. It turned out all that was done by a man behind the curtain, literally the Wizard of Oz. The man behind the curtain just typed it in; everything else was an illusion." From page 37 of this columbia.edu PDF. https://www8.gsb.columbia.edu/valueinvesting/sites/valueinvesting/files/Graham%20%26%20Doddsville_Issue%2036_vF_0.pdf https://www8.gsb.columbia.edu/valueinvesting/sites/valueinve...