Critical Software goes down in history as one of Portugal’s first start-ups. It started at the University of Coimbra and counts NASA as its first client. Here’s the incredible story of a company today known across the globe – and above it in space.
What do you call an inescapable desire to invest months of work in technology for the aerospace industry in a country like Portugal which, since 1993 (launch of PoSAT-1, the first Portuguese satellite) has never launched anything else? Maybe, irrationality? And what to make of the coincidence of the technology being ready at precisely the moment NASA travel the world looking for something like it? A stroke of luck. This irrationality and stroke of luck transformed an obsession into a group that today employs more than 400 people and continues to carry the name of Portugal across the world and into space. Critical Software, which specialises in the development and marketing of critical information systems, was one of the first Portuguese start-ups when entrepreneurialism wasn’t even talked about in Portugal.
The story is told by Gonçalo Quadros and João Carreira, founders of the company which began in 1998 in the laboratories at the University of Coimbra. It was here that an academic article, published in the prestigious scientific publication Transactions on Software Engineering and catching the attention of the American aerospace agency, was written. It spoke of the vulnerability of Windows systems and the way to ensure more robustness for these systems, at a time when the software was beginning to be everywhere and it was urgent to guarantee that it wouldn’t fail. But what the founders of Critical Software really wanted was to be in space.
“It all began with irrationality. If we told this story to anyone in their right mind, they’d say ‘it doesn’t make sense, it’s stupid,’” says Gonçalo, Critical’s president. But the desire to set up a company and leave behind the university chairs blended with the imaginary world of Cosmos, a 1980s television series by Carl Sagan. “It was worth fighting for, beating this trail without thinking about what could go wrong. We were also lucky enough to be in a really good laboratory, which was absolutely crucial for this to be able to succeed.”
Life beyond university could never be as hostile as space, with its adverse conditions for computers aboard spaceships, where any fault may destroy years of investment in seconds, or even worse lead to loss of life. To save time, NASA had started to adopt the same technologies used down here on earth, but they needed to ensure they wouldn’t fail up there. The recently-founded Critical Software had the answer. “They launched a major project which would allow the use of normal systems and would detect any fault, correcting it before the whole system shut down. And to test this system, they needed a fault injector. They started looking around the world at who was working on that technology, and they found these men in a “primitive village,” recalls Goncalo, laughing out loud. Competition was fierce and mainly American, but one day João Carreira, the first author of the article, got an email from Jet Propulsion Lab, the technological centre for the development of space probes at NASA. At this point, the founders of Critical have different memories. Gonçalo recalls thinking it was a joke by their university friends. He says they were looking over their shoulders “to see if anyone was laughing.” However, João never had any doubts. He replied promptly, saying they were leaving university to set up a company and that they were available for any further information. It was the beginning of a long and beneficial friendship.
But the first problem was explaining to the men from NASA that Portugal didn’t have a space agency. “For them, it was like a bucket of cold water”, recalls Gonçalo. Not even a government programme looking up towards space to give references about Critical’s work. Fortunately what they, and Diamantino Costa (the third founding member of the company), did have was the quality of their technology, academic credentials and the fact of being about to leave a university with a renowned laboratory in fault tolerance. After convincing NASA, João says he left for the USA where, at the space agency’s wish, he founded a company with headquarters in Pasadena. “If we weren’t actually the first Portuguese start-up to have a subsidiary in the USA, we were certainly very close. We opened in 1999.”
From bizarre to Web Summit
It’s not difficult to imagine that’s how it was. For years, while the world was flourishing with technological companies at a hallucinating and unsustainable pace – the so-called technological bubble would later burst in 2000 – there were few examples of Portuguese start-ups. Gonçalo says that not long ago someone referred to Critical as “a kind of Rui Veloso of start-ups”. What this musical pioneer did for Portuguese rock in the 1980s is what Quadros, Carreira and Costa did for entrepreneurialism in Portugal.
Imagining conferences like Web Summit, being held in Lisbon in November, was like imagining several Portuguese companies one day producing software and components to go into space. “At the time, we were invited to meetings to talk about setting up a new company and the auditoriums were generally empty,” says Gonçalo, recalling that they were almost always seen as something “bizarre, exotic.” It was difficult to explain to the world why three doctors, their lives planned to follow academic careers, would decide to let everything go in order to set up a company with a product without any purpose in Portugal. “It wasn’t a natural path; people eyed us with a certain distrust.”
For example, banks refused to lend them money. “We had our own space, our own computers, but we went to a bank to ask for money to invest, to do more things, and the bank told us, in a very polite manner, that “You’re young, intelligent, doing doctorates. What do you want to get involved in all this for?” Confidence gained from winning the NASA contract vanished in seconds: “we got that answer and were shocked”, remembers Critical’s president. Even so, they didn’t admit defeat. They turned to the famous three Fs, “friends, family and fools,” which even with greater access to financial markets, continue to support many young entrepreneurs even today.
With the NASA contract sealed and the project underway, their contacts with other space agencies increased. That was how they got into China, Japan and of course Europe, and even today, they still work with the European Space Agency. But the company’s founders knew that a fault injector for the space industry was a niche market, which would never allow them to grow. Therefore, going against many opinions that they were hearing, they opted to diversify their markets and business. They invested in telecommunications, won tenders in Angola and Mozambique, and quickly achieved a larger turnover abroad than in Portugal.
Leaving the family home
In 2004, via the programme of contracts signed by the Portuguese government and AgustaWestland, suppliers of two Merlin EH-101 helicopters to the Portuguese Air Force, they entered the UK and strengthened their position in the defence sector. More recently, they’ve invested in the automobile, railway, financial, energy and health sectors. And there was the point they realised the technology they were creating had to take off. “We knew the greatest challenge wasn’t developing technology, but generating value with that technology,” says Gonçalo. He explains it was with the aim of maximising value that they launched into the adventure of creating spin-offs, new production companies each with their own management structure.
With the support of Portuguese partners – Caixa Empreender, Finova, Montepio Geral and Portugal Ventures – they launched a venture capital fund of seven million Euros, to support the launch of seven new companies. Some kept the mother company name, such as Critical Links, the first to appear and based in the USA, but others separated themselves in this too: Coimbra Genomics, Oncaring and Watchful Software are a few examples. These are companies which develop technologies in education, look to link genomic knowledge to medical practice, and produce safety solutions. Contrary to the mother company, which never opened its capital fund beyond the restricted group of its founders, the new start-ups are on the finance market and, in addition to capital obtained through Critical Ventures, some have already acquired other funding.
As for Critical Software, it has subsidiaries in seven countries, where it carries out around 80% of its business – in 2015, this reached 26 million Euros – but remains proudly Portuguese. It’s here, in Lisbon, Coimbra and Porto that it continues to employ most people. It already has over 400 employees, and continues to have “85% of its engineering ability in Portugal.” Although Coimbra still remains the company’s main technological base, Gonçalo says “it’s easier to hire a German for Coimbra, than an engineer from Lisbon. An engineer from Lisbon won’t go to Coimbra because it’s a downgrade of his life.”
Eighteen years later, the world has changed. Portugal has an ecosystem of internationally recognised entrepreneurs, and innovation has increased, as has the number of people willing to take risks, to do something different, to surprise. According to Gonçalo, this feeling needs to be embraced as “our ecosystem must give rise to great, powerful stuff, such as Googles, Amazons, Facebooks. We must aspire to doing this because these companies are energy drivers, enabling the economy around them to evolve very quickly.”
by Hermínia Saraiva
web design & development 262media.com