Profile: Power behind the palmtop: David Potter. The chief of Psion has built a computer company able to take on the giants, writes William Kay

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The Independent Online
IT COMES as no surprise that David Potter is already talked about in hushed tones at business schools. At the age of 51 he has acquired something of a sub-legend status, as a shining example for keen young business undergraduates to emulate.

Understandable, then, that as chairman of Psion, the hand-held computer manufacturer, the tall, angular Potter is less than impressed by what he sees as the unecstatic treatment given to his company's shares on the stock market. 'If I was valued by American venture capitalists they would pay three times the price,' he said in his still-noticeable southern African accent.

That might say more about US venture capitalists than about Psion, as the shares are selling on more than 30 times last year's earnings. But that rating will come down with a bump if Potter delivers the increase in profits from pounds 3m to pounds 5m that the analysts expect in 1994, and the City is always wary of companies that - even temporarily - fail to deliver. In 1991, thanks to a combination of recession and new product development, Psion slipped into losses.

The blip may partly explain the omission in Psion's otherwise fulsomely informative annual report of the five-year profits history that many companies provide.

Such a blemish would offend Potter, who has single-mindedly driven the group from little more than a garden-shed operation to a niche company sufficiently well entrenched to have kept at bay the combined might of Apple, Casio, Sharp and Hewlett-Packard.

Psion has done that, first, with the Personal Organiser, one of the earliest attempts to put a diary, address book, notebook and computer into one handy handful. That was followed in 1991 by the Series 3 palmtop Personal Information Manager, which in its latest 3a version also incorporates a word processor, spreadsheet and audio recorder and player.

Amazingly, Psion has fought off the competition almost entirely by dint of brainpower and programming talent. The board and senior management bristle with doctorates - Potter included.

He was born in East London, a charming port on the South African coast. His father died when Potter was a baby, and for the next 10 years or so he was brought up by his mother and grandmother.

Potter recalled: 'My grandmother acted a bit like a mother and my mother acted a bit like a father. My mother was a nurse and had to work. We were on the poorish side, actually, although it didn't feel like it. So she had to work all day and came back late at night.'

Of his grandmother, Potter said: 'I remember her reading me Winnie-the-Pooh in Latin. She was a very forward-thinking, rather intellectual lady for her era.'

Then Potter's mother married a Rhodesian doctor, and he spent his adolescence in what is now Zimbabwe. There he began to experience the two sides of his academic-entrepreneurial character.

An early business endeavour was a photographic studio in his school holidays. 'I had some success for a while,' he related, 'but then I didn't do it properly and lost my customers.' That did not stop Potter from winning a scholarship to read natural sciences at Trinity College, Cambridge.

'I came across to Britain when I was 20. I came when I was still kind of unformed, in a sense - still foetus-like - because I think university is quite influential and Cambridge integrated me into Britain very well.'

His staircase at Trinity gave Potter a crash course in the British class system, with its typically eclectic mixture of public and state school boys (no girls in those far- off days). Two became journalists, one - Peter Bottomley - went into politics, and an old Etonian son of a general affected a yobbish accent and went around with Jonathan King, the student pop-singer- turned-promoter.

Nevertheless, Potter's embryonic business instinct kept rearing its head - and occasionally getting him into hot water. One wheeze was to rent an ice- cream van. Potter boldly parked outside one of the gates of Hyde Park. This did not go down with the regular ice cream purveyors, who escorted their colonial competitor to a phone box and set about him. 'I got off lightly,' he insisted. 'A few weeks later I read that someone else got knee-capped for doing the same thing.'

But despite such distractions, Potter took a first-class degree and went on to a doctorate in mathematical physics at Imperial College, London.

He married Elaine, a fellow South African who joined the Sunday Times Insight team during its heyday of revealing the Thalidomide babies scandal. They have three sons, all good at maths. The eldest is already following in his father's footsteps - reading natural sciences at Trinity, Cambridge.

While studying for his doctorate Potter also taught at UCLA, California, and that was where he inadvertently began to create the seedcorn capital for the formation of Psion.

In autumn 1974 the London stock market was crashing, taking the FT-SE 30 index to its post-war low of 146. Potter phoned his London bank manager from the US West Coast, instructing him to take the pounds 3,000 in his deposit account and invest it in a handful of promising companies such as GEC, Rank Xerox and the fledgling Racal Electronics - now a giant but then making profits of only about pounds 1m a year. 'Unless the Russians were about to take over,' Potter pointed out, 'these shares had to be cheap. They quadrupled in about a year.'

That gave him the bug for investing, and he took to analysing small companies. By 1979 he was worth pounds 100,000. 'Look, I'm a numerate, analytical person,' Potter explained. 'It wasn't difficult. But it was ultimately boring.'

So he got together with some friends to write programs for the enormously popular, though short- lived, home computers made by Sir Clive Sinclair. One, a flight simulator, made a fortune. Psion - the PSI stands for Potter Scientific Instruments and the rest is mere decoration - was born.

Now the question Potter has to field most often is how he stays ahead of the computer competition. His answer is that Psion, despite its growth, is still too small to matter.

He argued: 'Sharp has a turnover of dollars 36bn - dollars 20bn in components. Its end products range from microwave cookers to radios and printers. Only a part of the empire competes with us, but that part doesn't have any more resources than we have. We probably have more resources in palmtop computers than Hewlett-Packard. But the chairman of the main board is not going to focus all its resources on beating us. It has to match and allocate its resources according to the tremendous responsibilities it has.'

It sounds alluring, tiptoeing among the elephants. But Potter admitted that Psion was already having to juggle risk against reward.

'We face tremendous opportunity,' he said, 'but the risks are high as well, no question.'

His main hope is that the sheer 'ooh-ahh' advance of technology will bear Psion upwards.

'The change we are going to see in the next five years will be dramatic,' he predicted. 'The change from the Organiser to the 3a is 1,000 times, in terms of memory and software.'

At that rate, in another five years the 3a's successor will be in danger of making compact discs redundant - and that really could set the big boys galloping after Psion in earnest.

(Photograph omitted)

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