Crossing Sand Hill Road: SLAC, X-Ray Lasers, and the Venture Industry

7/10/12Follow @dnordfors

Sand Hill Road is a chasm. On one side: the lion’s share of prime Silicon Valley venture capital firms. On the other side, less than half a mile away: the SLAC National Accelerator Laboratory.

If the chasm is crossed, it could bring new wealth to the venture industry, well-being to patients, new manufacturing industries, and good jobs for ordinary people. If it is not, few will know what they missed.

I have been working with innovation systems since doing my PhD in electron spectroscopy. I managed a center on Innovation and Communication at Stanford with my mentor Stig Hagström, also a physicist, one of the early pioneers in using particle accelerators for electron spectroscopy. I have friends on both sides of Sand Hill Road.

Spectroscopy sounds highbrow, and it is, but it’s very hands on. A spectroscopist must know everything from how to change the oil in pumps to what goes on inside molecules. A large part of the time goes into building advanced machines that can make nuclear power plants look clunky. So I know that places like SLAC have tech teams that top many high-tech industries in doing the advanced stuff.

The Department of Energy has put hundreds of millions of dollars into rebuilding a part of the SLAC two-mile linear accelerator into an X-ray laser that can make holograms of single molecules. It may sound far from the market, but keep in mind, the Web was born in similar settings.

The scientists are spearheading the photonic revolution, which could be as significant as the information revolution. The new accelerators provide a quantum step in engineering molecules and materials, opening up new fields of innovation.

The laser is a scientific success, and it works wonderfully. 3D pictures have been made of molecules with a resolution of 0.19 nanometers by looking at microscopically tiny crystals of them. That’s enough to determine the shape of proteins, so it’s possible to analyze their function. Within a few years, the scientists expect to improve the resolution in order to make holograms of single molecules.

A door is opening to a whole new world for the pharma industry. Before, researchers could only study the minority of macro-molecules that can be crystallized on a macro scale, because X-ray crystallography was the only way to go.

The X-ray laser can analyze completely new classes of biomolecules, such as cell-membrane proteins, that are hard or nearly impossible to crystallize. It could bring on a new era of pharmacology.

As it happens, Kleiner Perkins Caufield & Byers, literally straight across Sand Hill Road from SLAC, co-founded Genentech, revolutionizing the biotech industry. So will we be seeing a new pharma revolution, then?

Not yet. Sand Hill Road is a segregated neighborhood. Hardly anyone in the venture capital industry knows what is going on just across the street at SLAC. Hardly anyone at SLAC knows the venture capital industry.

Sand Hill Road also remains uncrossed, simply because there is a lack of entrepreneurs who can and want to cross it. HP, Cisco, and Google came from Stanford. SLAC, although it is a part of Stanford, does not have the same culture. On top of that, venture capitalists don’t invest in technologies; they invest in entrepreneurial teams. Nobody is crossing the road.

When I did my PhD, we said our research would improve catalytic exhaust emission control. Of course, we never spoke to anyone in the industry. We thought it was up to them to read our scientific papers and contact us. We didn’t catch much flack for that—the funders had the same mindset as us.

The scientists at SLAC plan to build an innovation system around the science they’re doing, but these systems have a long way to go. SLAC needs to develop an ecosystem of players, routines, and a culture of innovation that will bridge the chasm between research and commercialization. And so far, there just aren’t as many accelerator-physics-entrepreneurs willing to grab the ball and run with it as there are computer scientists. Science continues to have a much higher priority than innovation. Commercialization of products is not in the mission statement of the X-ray laser. So while it might be welcomed, science is the bottom line.

The venture capitalists, meanwhile, are decreasing their investments in hard technology, going for software and new business models instead. They got burned by solar technology a few years ago, when the budding Silicon Valley solar industry lost business to China almost overnight. Now venture investments in biotech and cleantech are declining, not growing. The tolerance for technology risk is decreasing—social games on smartphones are sexier than accelerators. The chasm across Sand Hill Road is widening, if anything.

But the opportunity remains! Sooner or later, the new photonics will lead to a new era of materials and pharma. Enlightened government can facilitate, as it so often has done before. The Internet is one example. The semiconductor industry is another. Sematech was an example of industry-government cooperation that strengthened the U.S. semiconductor industry in the late 80s and 90s. The Israeli venture industry was successfully bootstrapped by government in the early 90s, and it continues to provide incentives when necessary for players to fill the gap between technology exploration and commercialization.

DARPA, the Defense Advanced Research Projects Agency, always had a magic touch. DARPA funds whacky scientists and it results in commercial technologies, such as personal computing, the Internet, GPS, and robot cars. But DARPA is a special. Why can’t more funders be like DARPA? DOE is facing an opportunity and a challenge, two in one.

Until now the U.S. always led the commercialization of groundbreaking technologies. This time, my friends who were pioneers in the semiconductor industry are worried. One of them told me “This is the first time the U.S. does not know what to do next.” X-ray laser photonics can be big.

It’s time to roll up our sleeves and make history, again.

David Nordfors is the president of IIIJ Innovation and Communication. Follow @dnordfors

By posting a comment, you agree to our terms and conditions.