Bayesian's Sunk Costs - The Adventures of Aleta

Position: 38°05’11.3″N 13°32’23.8″E

You may have heard of the Bayesian. She is, or rather was, a superyacht designed by legendary naval architect Ron Holland. Last August she sank in a freak storm off the north coast of Sicily. The storm was a ‘derecho’, a type of line-squall prone to violent downbursts. Derecho gusts can reach 70mph. Having sailed through at least a half dozen line-squalls ourselves, we treat them with the greatest respect.

At 184 ft long with a beam of 38 ft, Bayesian was a large vessel. Her ludicrously tall mast stretched up 246 ft. To keep her upright, her keel extended down 33 ft. You’re right, 33 feet is very deep. But Bayesian’s keel was retractable and drew only 13 feet when it was up. That’s still twice what Aleta draws. Suffice it to say, Bayesian was too big to anchor in most Mediterranean harbours. But that is why one has tenders, and crew to launch them. After all, one’s pink gin mustn’t slosh on the way to the yacht club.

Unsinkable, Not

According to the web, the ship was luxurious and won an international design award when it was first launched. It looks a bit too Park Hyatt for my tastes, but that was all the rage for the rich back in 2008. You might think anything this big and elegant would be unsinkable anchored so close to shore. Its builders Perini Navi certainly thought so. Nature disagreed. She has yet to find anything human-made that is unsinkable. Bayesian now lies on her side in 164 ft of water just outside Porticello, not far from Palermo.

Whenever there is insurance involved, there is the question of negligence. During daylight, squalls are easy to spot. Imagine for a moment you are at the helm on a warm summer’s day. Running before the wind at six knots, a gentle swell occasionally lifts the stern and you accelerate forward. To port a low band of thick, grey clouds stretches away perpendicular to your course. Beneath the clouds rain falls in curtain-like sheets. Nothing good is about to happen. If you’re smart you drop whatever you’re doing and shorten sail. Really shorten sail. Drop the main, furl the jib almost all the way in, and God help you if your spinnaker is up. Start your motor. You’re going to need it.

At night squalls are much harder to see. That’s why you check the forecast and radar before turning in. A big yacht has all manner of gizmos to make that easy. Whoever was on watch should have seen something coming.

Autonomy, Lacking

Dave Packard once said, “More companies die of indigestion than starvation.”

When Bayesian went down, she took her owner Mike Lynch and another six people with her. Lynch made a billion dollars (ish) selling his company Autonomy to Hewlett-Packard back in 2011. As soon as the ink on his cheque dried, Lynch cashed it in and bought a boat. Quarterly revenues had, coincidentally, fallen precipitously.

By the end of 2012, HP’s stock was in the tank and it was accusing Autonomy of inflating its value through wilful misrepresentation. The first victim of this fiasco was HP’s hapless then-CEO Leo Apotheke, fired after only 11 months on the job. Apotheke had championed the deal, claiming it was worth Lynch’s $11B asking price. Don’t worry, his severance package was worth $25 million.

Coincidence? or Karma?

HP’s lawyers saddled up and rode herd on Lynch and his VP of finance, Stephen Chamberlain, for the next 12 years. They were eventually acquitted of fraud by a San Francisco jury in June (2024). Six weeks later, almost to the day, both men were dead. Lynch, as we know, drowned in Bayesian on August 19. Chamberlain was hit by a car while out running near his home in the UK. He died on August 20. A third man, Jonathan Bloomer, the non-executive chairman of Morgan Stanley International, also drowned on Bayesian. Bloomer was the former head of Autonomy’s audit team.

How’s that for a twist of fate? Or was it? Bill? Dave? Are you there? What have you to say for yourselves?

Wait, there’s one more thing. Current HPE CEO Antonio Neri’s parents are both from Sicily where, OMG, Bayesian sank! Happenstance, surely. Hmmm, I’m off to investigate further. Perhaps, like the Democrats, HP has learned to control the weather. Let me know what you find out. Inquiring minds want to know…

Author’s note: The sort of corporate stupidity represented by the Autonomy deal was why I left HP in 2010, after 25 years of service. Bill and Dave were long-since dead and their legacies buried. A series of overpaid and under-skilled dunderheads muscled in and turned one of America’s best managed companies into an average one.