Stephen Streater of Forbidden Technologies

IN 1996, Stephen Streater – 30, English, inexperienced – had £36 million riding on proving to Larry Ellison that his then tiny company, Eidos, was run by the cleverest people in the world.

Eidos, founded in 1990 to revolutionise the video editing industry based on Streater's PhD research on image processing, had moved into video games through a series of acquisitions, and had now set its sights on acquiring Tomb Raider's Lara Croft. One of only a tiny handful of public British technology companies in a hostile environment, Eidos needed the City's help – and the City didn't believe Eidos was worth it.

Streater thought that if the City would believe anyone on the subject of technical cleverness it would be Larry Ellison, CEO of Oracle and the richest man in California. It seemed a good fit: Ellison was pushing "thin clients" – stripped-down computers working via what was then not yet called the cloud.

"I thought we'd sell our technology to Larry Ellison," says Streater. "Eidos had the only technology that could do full-screen, full-motion video in software. And in a $200 computer you can't put in a $400 accelerator card."

Streater and his team flew to California and staked out Oracle's lobby. Slowly, they worked their way through underlayers of meetings until the Big One with a top negotiator for the company.

"I had to buy a suit," Streater says. Fortunately, a team member had worked for Nordstrom's department store chain and knew what to buy.

So they're at the meeting and the negotiator goes to get Ellison, and a pause later in walk 20 people. Streater is new to California, and he's stuck. For £36 million, which one is Larry Ellison?

"One of them looked like he was wearing a $30,000 suit instead of a $5,000 suit," says Streater, "and he seemed slightly more confident than the rest, so I decided to take a risk and held out my hand. Nineteen people shrank back in horror. No one shakes the hand of the richest man in California."

It took months, but eventually they got the deal by promising half price in return for a public statement saying that Eidos were the cleverest people Ellison had ever met. The next day they got the £36 million, and bought Tomb Raider.

Streater’s father was a mathematics professor and his uncle worked at Cern. Streater read maths at Cambridge and programmed games in his spare time. He was a PhD student at Kings College, London, in 1987, when the Ministry of Defence wanted to spot missiles instantly while cruising at 2,000 miles an hour.

Streater had an advantage over the rules-based systems and neural networks of the day: an Acorn Archimedes computer all to himself. It had enough processing power to use a 20-year-old technique that had been dismissed because of a lack of computing power. The computers had changed, Streater says, but people didn’t recognise that.

He solved the problem but never finished his PhD, partly because his advisors insisted he include a chapter documenting prior research and there wasn't any. And partly because the venture capitalists interested in funding the new company, Eidos, he and his brother had set up to revolutionise video editing, wanted him working full time. He thought he'd leave much sooner than he did.

"I was going to use the company to make mistakes on," he says, "but I always felt that if I left it would collapse." Not wanting a company failure dogging future ventures, he stayed until 1999, not long before the dot-com crash, multiplying his original investment – all he could afford, £4 – by a million.

He thought he'd retire for a bit. "That's really boring, it turns out." After a few months, he set up Forbidden Technologies, licensing video editing technologies from Eidos, which by now was almost completely concentrating on games. As with Eidos, he did a "green field" float to raise seed money.

The software-as-a-service product Forbidden Technologies launched in 2004, Forscene, is a software-only video editing system ported to Java and accessed via a web browser.

"It works on slow machines, it's frame accurate, and I'd had 10 years of feedback on the user interface," Streater says.

Standard interface elements like drop-down menus and scroll bars, he says, are inadequate for finding a split-second in one million frames of video.

"We have a much better fundamental design," he says, noting that one million hours of professional shot content have been through what he calls "the world's most advanced cloud application".

The key, he says, is the company's Osprey codec, which supports loss-free video compression. "We have a different way of doing codecs than anyone else." Forscene also supports Ogg Vorbis and Theora, and he licenses MPEG "because all broadcasters use it".

We are, he notes, at a turning point with respect to codecs because the patents on MPEG, which all broadcasters use, are beginning to expire. "They will be unambiguously free."

Streater could also write his own free codec. "If Ogg became illegal" – because Apple is threatening to sue regarding Theora – "we can always make a free codec, but very few companies can. On2 is one of the very few that has written codecs – and it belongs to Google." µ