25 years ago, the steep rise of Lernout & Hauspie came to an abrupt end. The Ypres-based company was a pioneer in speech recognition technology. Its last remains live on today under the wings of Microsoft.
Belgium plays only a small role on the global technology stage today, but at the end of the 1990s, that could have been completely different. Ypres entrepreneurs Jo Lernout and Pol Hauspie caused a sensation with their technology for controlling computers with your voice. But pride would come before a great fall: a fraud scandal put an end to their success in 2001.
25 years later, the name Lernout & Hauspie is still etched in the collective memory. What should have been a Flemish success story turned into a painful fiasco. The film Dust, directed by Anke Blondé and starring Arieh Worthalter and Jan Hammenecker, brings their story back to life, although they were not involved in the production themselves. But how exactly did it all unfold again?
Speaking with Computers
The company Lernout & Hauspie was founded in 1987. Founders Jo Lernout and Pol Hauspie gave their names to the company. The former accountant and computer salesman had what was then a revolutionary idea: technology to control your computer with your voice. Lernout made a legendary video in which he demonstrates the technology in his living room.
The idea was a hit: Lernout & Hauspie traveled the world with its technology. In 1995, it became the first Belgian company to go public on the American stock exchange. This also piqued the interest of Microsoft, which bought into the company for $45 million. Microsoft saw potential in the concept of voice control for Windows, and Lernout & Hauspie formed the basis for the Microsoft Speech API in 2000.
Silicon Valley in the Westhoek
Despite their international success, Lernout and Hauspie remained true to their roots. The Flemish government took a stake in the company, as did thousands of Flemish households who put their savings into the business. The entrepreneurs also had grand plans for their home region.
The headquarters in Ypres was intended to be the start of a Flanders Language Valley, a nod to Silicon Valley in California. The site was officially inaugurated in 1999 by (then) Prince Philippe, and Bill Gates also stopped by for a look. Several companies specializing in speech technology were to establish themselves in the shadow of Lernout & Hauspie. The business park on the A24 still exists today, but the seven-story Lernout & Hauspie headquarters stands empty.
Ghost Companies
On the eve of the millennium, nothing and no one seemed able to stop Lernout & Hauspie. But the boomerang would soon return. A Wall Street Journal report in 2000 revealed that the company was being a bit too creative with its accounting. Fictitious revenue was attributed to ‘ghost companies’ to boost shareholder value.
The report caused Lernout & Hauspie to fall from its pedestal almost immediately. In 2001, the company officially filed for bankruptcy, but that was only the beginning of the misery for its founders. The Ypres entrepreneurs became the main characters in one of the largest fraud cases Belgium has ever known. In 2010, they were sentenced to five years in prison for forgery.
The many duped investors who saw their savings go up in smoke had to wait many more years for compensation. Another criminal trial began in 2014. It wasn’t until 2021 that the lawsuit reached a final conclusion: Lernout, Hauspie, and four other convicted directors were ordered to pay a total of 655 million euros in damages.
Heir
Despite its rapid downfall, Lernout & Hauspie certainly left its mark on speech technology. The technology did not disappear along with the company. The American firm Scansoft acquired the remains of Lernout & Hauspie in 2001. Scansoft continues today under the name Nuance Communications, which was acquired by Microsoft in 2022. Under Microsoft’s wing, the speech specialist now operates more in the background.
The idea of controlling computers with your voice may not have broken through to the masses—this article, too, was typed with a classic keyboard—but it is now built into Windows as standard. In this way, a piece of Flemish technology continues to influence Windows to this day. However, speech technology has also served less noble purposes: Jo Lernout himself claimed in 2014 that the American NSA had misused it in a massive surveillance campaign revealed by Edward Snowden.
Dust will be in theaters starting February 25.