It’s not every day you get to watch a U.S. senator swallow a swirling ball of liquid nitrogen-cooled foam (yuzu-flavored, no less). Talk about a palate cleanser.

That was just one stop along a rather surreal press tour and ribbon-cutting ceremony this morning at the Intellectual Ventures Laboratory in Bellevue, WA, as Sen. Maria Cantwell got a personal tour of the lab from company co-founder and chief executive Nathan Myhrvold. “The point of the lab is to do prototyping and do research around our inventions,” Myhrvold said. “We never know exactly what we’ll need, so we have to have a lot of capabilities.”

(Among these is a unique way of doing ribbon-cutting, as you’ll see on the next page. All photos courtesy of McKenzie Funk.)

The wide range of capabilities at Intellectual Ventures was on display in a series of lab demos. The tour included glimpses of an expansive cooking-science station (site of the palate cleanser) and setups for doing epidemiological computer modeling of malaria outbreaks; diagnosing malaria by laser light (instead of a blood sample); designing electricity-free vaccine containers that can withstand 105 °F exposure in Africa for six months; and photographing mosquito wingbeats at ultra-high speed (27,000 frames per second). Then came the coup de grace—bug-zapping lasers that work as a “photonic fence” against mosquitoes and agricultural pests (the live-demo lasers were non-lethal and just for show, shooting 50 bugs per second). OK, maybe not the most practical technology yet, but it’s certainly a striking demo.

The lab hasn’t changed much since I saw it last summer; it still has about 30 full-time employees. But overall, Intellectual Ventures has grown to more than 500 staff members, up from 400-some employees earlier this year. The company has also leased space across the street from the lab for a new supercomputing center, presumably to help its researchers perform large computer simulations for epidemiology studies and other complex problems.

Sen. Cantwell, a Democrat who’s midway through her second term for Washington state, asked Myhrvold what Intellectual Ventures is doing for this state’s economy. “We’re going to try to keep …Next Page »

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On Monday, Bellevue, WA-based Intellectual Ventures signed an agreement with the Indian Institute of Technology-Bombay to license some of the university’s inventions and to work on technology commercialization strategies with its researchers, as reported by CIOL, Express India, TechFlash, and other outlets. It’s not really big news by itself—Intellectual Ventures has formed similar partnerships with other institutes in India, as well as in China, Japan, Korea, and soon, Singapore—but it fits into the broader strategy the firm is pursuing around the world to foster invention.

Last fall, Intellectual Ventures opened offices in five Asian countries in an effort to gain access to a much wider pool of inventors and talent. Led by global head of technology Patrick Ennis, a physicist and former managing director at Arch Venture Partners—and other members of Intellectual Ventures’ senior leadership team, including co-founder and president Edward Jung—the company is building relationships with prominent academic scientists in Asia, and setting up partnerships whereby it can license certain inventions in exchange for helping with patents and commercialization. The strategy reminds me a lot of Microsoft Research, which has set up labs in China and India in the past 10 years and built partnerships with local university researchers and administrators. (This blueprint is not surprising, given that Intellectual Ventures’ co-founder and CEO Nathan Myhrvold was the founder of Microsoft Research.)

The reception Intellectual Ventures is getting also reminds me of Microsoft Research. While most university officials see the partnerships as benefiting their researchers and increasing the flow of innovation, critics have rolled out the standard “patent troll” fears that the company is coming in to buy up all the best intellectual property—which will only be assuaged by years of relationship building and repeatedly demonstrating that these sorts of deals can benefit both sides.

Nevertheless, Intellectual Ventures’ Indian operation seems to be off to a strong start. It is now staffed by about 15 people, led by Ashok Misra, the former head of IIT-Bombay and a highly respected polymer materials scientist.

I caught up with the staff of Intellectual Ventures to hear about the workings of the Indian university partnership. Nicholas Gibson, one of the firm’s directors of business development in Japan, said via e-mail, “The agreement with IIT-Bombay is important as it gives [us] more direct access to top flight university-based Indian inventors. The deal also gives IIT-B access to commercialization possibilities …Next Page »

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It’s taken as a given that universities are integral to the innovation process. Researchers create technology, the university finds a licensee or a startup company is formed to develop the invention, and products are created that drive growth in the economy.

But that is a simplistic view of a complex system. And today, a select group of researchers from around the world is gathering at U.C. San Diego to help examine the process of university-industry interaction and technology transfer in more detail. Their focus is a series of questions—that have long been asked but have yet to be definitively answered and are of abiding interest here at Xconomy: What is the true connection between research universities and innovation, and how does it work? How does knowledge really move from the academic laboratory to industry? And are there new ways to improve and accelerate the process?

Sponsored by the Kansas City, MO-based Kauffman Foundation, the seminar is intended to help analyze a global research effort focused on what industry wants from universities, and how those goals can be achieved. The research, part of an onging multi-year study, consists of interviews and other data drawn from more than 90 companies in four countries where innovation and new technologies play a key economic role: the United States, Japan, Canada, and the United Kingdom.

“What we are trying to accomplish is for people to think about what incentivizes and supports a positive interaction between the university and industry,” says Mary Walshok, a UCSD Associate Vice Chancellor and a seminar host. The participants are “people who care about these things, and who are in a position to influence government policy in the U.S., Japan, Canada and the U.K.”

The three-day event begins with a presentation this evening by Larry Smarr, director of the California Institute for Telecommunications and Information Technology, which Walshok says operates as an example of university-industry “best practices.”  The invited participants …Next Page »

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[Updated Jan. 28, with information on Intellectual Ventures' patents (see below)]
If its volume of new patents is any indication, Microsoft is going to be just fine. The Redmond, WA, software firm blew away the rest of Washington state in terms of the number of patents it was granted last year. That’s according to IFI Patent Intelligence, based in Wilmington, DE, which recently released a national survey of patent grants for 2008. Xconomy obtained the figures for Washington state, as well as Massachusetts and California. (See the list of Washington’s top 25 patent winners below.)

Patent awards are, of course, just one measure of an organization’s competitiveness and inventiveness. It’s hard to draw definitive conclusions about a company’s ability to innovate based on its number of patents, say—imagine trying to compare a biotech company with an electronics firm, or a young software startup with an established powerhouse. But it’s still a key measure of an organization’s investment in its intellectual property.

Microsoft’s tally (2,030) is greater than the rest of Washington’s top 25 combined. It was good enough for fourth place nationally, behind IBM (4,186), Samsung (3,515), and Canon (2,114), and ahead of Intel (1,776). In Washington state, Sharp Laboratories and the University of Washington were a distant second and third, respectively.

A few other notables. Boeing is fairly low on the list (16th), in part because the figures only count patents awarded to each organization’s operations in Washington; patents awarded to offices or operations outside the state are not included in this list. Amazon ranks pretty low as well (12th), and Bellevue-based Intellectual Ventures, the invention company, is in 8th place, listed as “Searete.” Lastly, there was a seemingly random tie for 5th place between forestry firm Weyerhaeuser (which just closed two of its Washington mills this week) and biotech company ZymoGenetics (which just bought back the rights to its lead cancer drug candidate today).

Without further ado, here’s Washington state’s top 25 patent winners in 2008:

1. Microsoft — 2,030
2. Sharp Laboratories of America — 144
3. University of Washington — 47
4. Battelle Memorial Institute — 33
5. (tie)
Weyerhaeuser — 28
ZymoGenetics — 28 …Next Page »

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Yesterday, I gave a few highlights from a lunchtime discussion with Intellectual Ventures’ global head of technology, Patrick Ennis. The Bellevue, WA-based firm, founded by Nathan Myhrvold and Edward Jung, is sometimes called an “invention company.” It has gotten a lot of attention—and stirred controversy—for buying up large numbers of technology patents worldwide. So I wanted to hear Ennis’s thoughts on intellectual property, patent reform, and venture capital, among other things. (He’s a physicist by training, and a former VC from Arch Venture Partners.)

But first, Ennis gave me a little taste of how invention sessions work at the firm. He was fiddling with the Saran Wrap on his sandwich, wondering about its material properties and how they might relate to thin-film coatings for medical stents, say. “Inventors see inventions everywhere,” he says. “Invention is not taught, except for kids. When you’re a little kid on the playground, you’re allowed to do this. But as an adult, this would be viewed as weird—’this person is not focused.’ But that’s what inventors do.”

He ran through a hypothetical thought process with his sandwich. “Before we go to bed, we’d know if there are opportunities to invent a better film for food. I suspect we’d find the only opportunities are to reduce a little bit of cost, and maybe to change the marketing of it. A lot of the times at IV [Intellectual Ventures], we look at things like this and it turns out—because it was boring, or viewed as pedantic or mundane—people missed something obvious,” Ennis says. “You want to do a realistic market study. If it turns out there’s only 5 million a year of this sold around the world, it’s not worth your time to invent it. We’d quickly get a number for how much Saran Wrap is sold around the world….Then, someone will raise a hand. ‘You’re just talking about food preparation. These thin films are used for insulation to cover houses.’ Hmm, that’s 100 times bigger than a hamburger…That’s how invention sessions go.”

OK, on to the other highlights from Ennis:

—On patent rights and reform: “Everyone’s whining about there’s too many patent lawsuits, which isn’t true if you look at the numbers,” he says. “You can make a case that stealing someone’s intellectual property is a really bad thing. A lot of patents, people didn’t know they were infringing. Part of the reason they don’t know they were infringing is they’re told not to look. When I was at AT&T in the old days, you were taught as an engineer not to look. Because if you looked, and then it turned out you were …Next Page »

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Why can’t big companies invent? How should inventors handle their intellectual property? And what are countries around the world doing on these fronts? I recently stopped by Intellectual Ventures in Bellevue, WA, to get the scoop from Patrick Ennis, IV’s global head of technology. Ennis was a venture capitalist with Arch Venture Partners in Seattle for 10 years before taking his current post in early 2008. (Between jobs, he took some time off and, among other things, chopped wood full-time for a week.)

Back in October, Xconomy reported that Ennis is heading up Intellectual Ventures’ expansion in China, Japan, Korea, India, and Singapore. The invention company, which is led by founders Nathan Myhrvold and Edward Jung, currently has some $5 billion under management, 450-plus employees, and 160 university partnerships around the world. I wanted to get a deeper sense of Ennis’s philosophies on invention and intellectual property on a global scale.

Ennis organized his thoughts loosely around a talk he gave last month at the Ready To Commercialize 2008 conference, run by the Office of Technology Commercialization at the University of Texas (which happened to be IV’s 100th university partner). In Austin, he spoke on game-changing approaches to commercializing inventions. The conversation we had over lunch in Bellevue was free-flowing and touched on everything from anatomy and antibiotics to Sumerian culture and the Renaissance.

I was particularly intrigued by Ennis’s take on the current state of global competition and its historical context. “It’s a complicated world,” he said. “Leonardo da Vinci could do what he did because the world was not as complicated. Leonardo could not be a Renaissance person today—there’s too much to know.”

A few more highlights from Ennis, in his own words:

—On doing business at Intellectual Ventures: “We want to create a market for invention. We want to reward inventors, perfect the process of invention, and make invention respectable…We don’t ask for exclusive deal sourcing agreements, we like to earn our business a deal at a time, the old-fashioned way. All organizations, if they succeed, have to fight the hubris thing. You see that with all big companies. IBM had it, Microsoft had it, and Google, quicker than any other startup, got it. It’s amazing how the hubris seeped into Google real quick. And the backlash is coming—you see it in the EU and, to a certain extent, in the States.”

“We’re a collection of individuals, and business is always done personally, one on one, whether you work for a 10-person company, or 450, or 4,000,” Ennis says. “That’s when companies lose their way, …Next Page »

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Bill Klehm may not be aware of his wordplay when he says, “We’re seeing significant traction in the European bicycle market and in light electric vehicles.”

Klehm, 45, is the chief executive of San Diego’s Fallbrook Technologies, a startup that has been developing an innovative transmission without gears. The company says its “NuVinci” technology is scalable and improves acceleration, performance, cost, and overall vehicle efficiency over conventional transmissions.

Fallbrook’s transmission, designed by San Diego inventor Don Miller, is known as a continuously variable planetary transmission, or CVP.

Unlike a conventional transmission, which uses a set of gears with specific fixed-speed ratios, a CVP uses a mechanism that changes seamlessly as a drive train accelerates and decelerates. In effect, the system provides an infinite number of gear ratios between its highest and lowest speeds.

At a time when U.S. automakers are reeling from the 2008 spike in gasoline prices and a litany of other problems, Klehm says, “I can accurately describe us as being overrun with requests to build transmissions for electric vehicles and for hybrid vehicles.”

The company, which has raised about $25 million from more than 80 private investors is not yet profitable. But Klehm remains optimistic, saying Fallbrook Technologies has been extending its business beyond bicycles and light electric vehicles such as golf carts.

Fallbrook’s seven-member board of directors includes Gary Jacobs, a San Diego investor and son of Qualcomm founder Irwin Jacobs; Gary Weiss, whose Weiss Group provides management, advisory, financing and executive search services to growth companies; and James Bartlett, a retired principal of Cleveland-based Primus Venture Partners.

Miller, a bicycle enthusiast, developed his original CVP design while tinkering in his garage to develop his concept for “the world’s fastest bike.”

Other continuously variable designs use belts, pulleys, and various doughnut-shaped designs, but Fallbrook’s design uses a set of steel balls to vary the transmission’s speed ratio. The balls …Next Page »

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Last week, I was honored to give a keynote speech in Dublin, Ireland, at an international symposium marking the launch of the nation’s ambitious new R&D program in energy by its NSF equivalent, the Science Foundation of Ireland (SFI). The Symposium on Science and Engineering Underpinning Sustainable Energies and Energy-Efficiency was an excellent opportunity to reflect on what I think is one of the key elements to successful regional economic prosperity—the development of a vibrant innovation ecosystem.

With my colleague, Ken Morse (Managing Director of the MIT Entrepreneurship Center and an Xconomist), we have been involved first hand in the successful and unsuccessful development of over a dozen such ecosystems, and we have seen what has worked and what has not worked—with often-surprising results. Ireland provided an exciting clean slate platform to apply the framework for success and get feedback for refining the frameworks (based on the initial feedback, our ideas are clearly resonating). For if we are to succeed in optimal fashion in energy innovation, it is essential that we develop regional innovation clusters. Towards this end, we should make use of historical lessons to accelerate our success—and the good news in this regard is that there are some relatively simple leverage points that can be deployed which will have significant impact.

Like many Americans, especially in Boston, I have roots in Ireland. Distant as they are, Ireland has always held some magic for me. That magic was further catalyzed 19 years ago, when I visited with an American basketball team and we traveled that beautiful country playing games and then drinking Guinness from Cork to Galway to Dublin to Donegal to Belfast and a number of places in between. I don’t remember the scores of any of the games, but no one on our trip can forget the legendary memories we took back, which were later written up in a Sports Illustrated article that I keep framed on my wall at home. [Editor's note: that article was written by his teammate, backup shooting guard Bob "Danger" Buderi, founder of Xconomy.] The parade through Donegal with the mayor and the town’s children was one of the most priceless moments of our lives.

The people and the land exceeded the expectations we had—and yet all of this was in the context of an economic situation that we could not fathom at the time. There was little economic vitality, and we met a number of people who had been without work for over a decade and had little hope left on that front.

Last week, I returned to see the “Irish Economic Miracle” first hand. It is truly amazing and a shining inspiration for others throughout the world. I know, because I have been asked about it in places such as the United Arab Emirates, Denmark, Pakistan, Sweden, and Saudi Arabia. Leaders in those countries thirst to have a similar scenario in their lands and want to know how Ireland was so successful.

Well, now the question I posed at the aforementioned speech in Ireland is, “How do you keep it up and keep the economic renaissance moving forward as the global economy undergoes a metamorphosis of galactic proportions?”

The answer, and it doesn’t just hold true for Ireland, is energy innovation. There is no bigger challenge than to help transform our energy position—no bigger responsibility and no bigger opportunity.

So what I offer now is my perspective, based on our deep experience, on how regions can seize this opportunity, and more specifically how organizations like Science Foundation of Ireland can become leaders and full participants in the transformation of the world’s largest industry.

First, by providing leading-edge science, engineering, and mathematics research, SFI and other similar government agencies will help to produce the innovation needed, thereby putting their nations front and center as a role model for others.

But to understand how to most effectively achieve this, I believe it is essential to take a systems view to provide a broader context for the role of research and invention—hopefully in order to alter the traditional mindset so organizations such as SFI can be more effective going forward.

For example, using SFI as our test case, I would like to start with the first line of the organization’s objectives: “Science Foundation Ireland supports science, engineering and mathematics research with consequences in Ireland.” I will focus on three key words in this statement “research with consequences.” Trying to connect with my distant Irish roots, I could not help but have this translated to Gaelic—”taighde le torthai”—which means “research bearing fruits.”

It is these fruits that I will focus on, because to the degree that SFI can ensure that the research breakthroughs developed in Ireland are put to effective use, the organization will gain relevance.

So it is “torthai,” or consequences, that we seek. That being the case, a closer definition of consequences is merited.

At MIT, we love equations. They are simple and crystal clear. So, in that vein, let me take a minute to drill down on what consequences really are and how they relate to the research done at SFI.

Consequences are what we refer to as innovation. Innovation is something that generates value. For example, innovation helps companies make more money; it can materially reduce greenhouse gases; and it can materially enhance energy security for countries through greater independence.

As Ed Roberts, a professor at MIT’s Sloan School of Management and chair of the MIT Entrepreneurship Center, so aptly described it in a simple equation: …Next Page »

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It’s 10:15 pm, and Patrick Ennis is in a taxi bound for the airport in Delhi, India. He’s getting ready for a 1:00 am flight to Beijing. The streets of India are legendary for displaying 2,000 years of transportation history in one place—animals, pedestrians, carts, bikes, cars, buses, trucks—and it sounds like tonight is no different. “I learned to drive in New York, but this is much harder,” says Ennis. Though it’s late at night, he adds, “It’s still 10 times as much traffic as Seattle.”

Ennis is the global head of technology for Intellectual Ventures, the Bellevue, WA-based firm focused on invention. He joined about six months ago; before that, he was a managing director at Seattle-based Arch Venture Partners, where he funded and built technology startups, many coming out of universities and national labs. And before that, he held senior positions in technology and business at Lucent Technologies, AT&T, and Bell Labs. He did his Ph.D. in physics at Yale, and did scientific research for about eight years before joining Bell Labs.

As we reported last week, Ennis is currently part of a high-powered traveling team that includes Intellectual Ventures co-founders Nathan Myhrvold and Edward Jung. They are on a three-week, five-country tour of Asia to meet with the local communities and launch new offices there. I hope to sit down with Ennis for a more comprehensive discussion after he returns, but in the meantime here are some thoughts he provided by phone—through a dicey wireless connection in Delhi. He touched on some details from the tour, his impressions of the various Asian cities (including the food), and how the VC industry compares with the invention industry.

Ennis said he’d been in Tokyo, Singapore, and Delhi so far, spending three to four days in each city. Next up: Beijing and Seoul. “We’re in the middle of our tour,” he says. “It’s going very well. Our focus on invention is being well-received here, it’s truly a global world now.” Ennis says that in each city, they’ve been putting on events where they have a reception and invite local inventors, university professors, and administrators of research institutions. They’ve also been meeting with local university officials privately. “We have an inventor network we’re building in Asia…We want to get to know the whole ecosystem…and we do presentations. It’s like in Silicon Valley, you invite people who are interested in what you’re doing, to mingle and network.”

Ennis is no stranger to Asia. In the mid-to-late ’90s, he worked in optical networking and sold a lot of products to Asian national carriers like Korea Telecom. And when he was at Arch Venture Partners, several of the firm’s portfolio companies had partners in Asia. So Ennis has worked in places like Taipei, Tokyo, Shanghai, Beijing, and Singapore. “A trend you see more is VCs, even if they don’t have formal offices or deals in Asia, spend more time there,” he says.

He didn’t give details of his meetings this week, but he provided some general impressions. “Asia is so dynamic in terms of growth, innovation, and optimism,” Ennis says. “The energy here is palpable, it’s similar to the energy that exists in places like Seattle and Silicon Valley, both in the technology …Next Page »

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When I visited Nathan Myhrvold in the summertime, he lamented that he wasn’t able to attend the Olympics in Beijing (though he did provide some insight into the physics of ping-pong matches). But this week and next, Myhrvold is taking a grander tour of Asia, as his Bellevue, WA-based invention company, Intellectual Ventures, opens a series of new offices in the region. It is the firm’s first major foray into the global market, with the goal being to amplify its focus on investing in technological invention as a key commodity and driver of innovation.

To that end, Myhrvold (an Xconomist) and Edward Jung, the founders of Intellectual Ventures, are in the midst of hosting office launches and events this month in five Asian countries. The company’s new regional headquarters is in Singapore, with additional offices located in Tokyo, Japan; Bangalore, India; Beijing, China; and Seoul, South Korea. Each office will be staffed by roughly seven to 10 people. “I am struck by the gap between Asia’s collective, innovative talent and the lack of resources for Asia’s greatest inventors. IV is working to fill this gap,” said Jung in a statement.

So what exactly will Intellectual Ventures be doing there? As Myhrvold told me previously, “Most inventing organizations like universities and nonprofits have a tech transfer office or a technology licensing office. Most institutions in Asia don’t.” Intellectual Ventures, he said, wants to “be an outsourced tech transfer agent for inventing institutions that don’t have one. We can provide the same functionality that you’d get from a technology licensing office. We evaluate ideas, we pay for them to be patented, we provide a little bit of funding for them, and then we license them. There’s no reason that smart people in Asia shouldn’t be able to get the same traction that Stanford provides.”

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When I visited Nathan Myhrvold last month at the Intellectual Ventures lab in Bellevue, WA, I didn’t get a chance to meet one of the lab’s most distinguished residents, science-fiction novelist Neal Stephenson. Myhrvold mentioned him during our meeting, but it was too early in the day to find him in the building. Stephenson, best known for his cyberpunk novel Snow Crash and mind-blowing historical fiction like Cryptonomicon and The Baroque Cycle volumes, joined Intellectual Ventures part-time last year and usually comes into the lab in the afternoons, after his morning writing sessions at his Seattle home.

In the past couple of weeks, Wired and the Seattle Times have run interesting profiles of Stephenson—timed to the release of his latest novel, Anathem, which is due out on September 9. Both articles delve into the author’s ideas and activities—everything from sword fighting to serving as an advisor to Jeff Bezos’s local spaceflight startup Blue Origin (until 2006)—but I was most interested in how he’s actually contributing to inventions at Myhrvold’s company. Could he help design something like the interactive nanotech “Primer” book in The Diamond Age? Or the data goggles and virtual-reality interfaces from Snow Crash?

Not just yet, it seems. In the Wired piece, Steven Levy reports that at Intellectual Ventures, Stephenson and two partners are “helping refine some mechanical aspects of a new tool, a helical needle for operating on brain tumors.” This is a bit vague, but Myhrvold did stress to me that some of the most tangible inventions coming out of his lab are improved surgical tools. And I could certainly see Stephenson, who has his own underground machine shop at home in which he makes armor and other implements, tinkering with mechanical designs at a computer or workbench in the vast IV lab.

Meanwhile, Brier Dudley of the Times explores, among other things, Stephenson’s thoughts on “geeking out.” This refers not just to high-tech innovation but to the pursuit of knowing everything about a particular area. He quotes Stephenson as saying, “I think geeks geeking out is gradually replacing older institutions as a way that knowledge is preserved and developed in this society.” Dudley also quotes former Microsoft exec (and Xconomist) Linda Stone talking about Stephenson’s unique gifts: “Neal is absolutely, profoundly inspiring… He’s a builder, he’s a creator, he’s part engineer, part scientist and he has this splendid imagination.”

But Stephenson isn’t the only notable recent addition to Intellectual Ventures’ geeked-out crew. Here’s a short list of others who are stars in their fields, cutting across the disciplines of nuclear physics, software, venture capital, and intellectual property:

—Patrick Ennis, former managing director at Seattle-based Arch Venture Partners, now leads IV’s global expansion, starting in Asia.

—John Gilleland, co-founder of Archimedes Technology Group and former U.S. managing director of the International Thermonuclear Reactor Program (ITER), now heads up IV’s nuclear reactor program.

—Vincent Pluvinage, former CEO of ipValue and AT&T Bell Labs researcher, now manages strategic alliances and private equity at IV.

—Sanjay Prasad, former chief patent counsel at Oracle, now heads up IV’s efforts in enterprise software licensing.

They sound like strong additions to a diverse staff that is not just dreaming up big ideas to change the world, but is also trying to corner the market on practical inventions. Now can’t they just invent a nanotech e-book reader that’s better than the Amazon Kindle?

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Yesterday, we ran the first half of a sit-down interview with Nathan Myhrvold, cofounder and CEO of Intellectual Ventures, the Bellevue, WA-based invention laboratory and investment firm. Myhrvold, the former CTO of Microsoft (and an Xconomist), placed his current company’s goals in the context of venture capital and private equity, arguing that there is a real need to create what he calls an “invention capital” industry.

In what follows, Myhrvold talks about the lessons he learned in forming Microsoft Research, the differences between research and invention, some ambitious and far-out projects from Intellectual Ventures (e.g., invisibility, geo-engineering), and the motivation behind his firm’s upcoming expansion into five Asian countries.

Xconomy: Before we get into specific projects and inventions, what all did you learn from Microsoft Research that’s applicable to Intellectual Ventures?

Nathan Myhrvold: I have a theory that R&D is a great investment, a fundamentally good business. Using the human mind to go from nothing to something is a hell of a trick. And there’s nothing fair about it. A guy like Einstein can come up with all these things, but so can people who aren’t actually all that smart! There are people dumber than Einstein who’ve made amazing contributions.

So I believe you can make money with research, or invention. But you need a certain scale factor. Let’s say I have this idea called life insurance. If I just insured your life, it wouldn’t be worth it to either one of us. Insurance is fundamentally a risky bet, and to make it reasonable, what you’re buying and selling is variance. You need to have a large end limit to shrink the variance down. With Microsoft Research, I came to the conclusion that research could have been enormously profitable for Bell Labs, IBM, and others. It was profitable, but it could have been even more profitable. Xerox PARC could have made Xerox one of the most valuable companies on Earth. But most people screwed it up.

And after screwing it up, the lesson was mislearned that it’s impossible to be successful in this way. Most of Silicon Valley turned away from the notion of trying to do anything new. The implicit attitude was, hey, that’s why Stanford exists, somehow they’ll come up with new ideas. We’ll wait until that occurs. And then when companies got bigger, the size of Oracle or Sun or Apple, they said, “Well, keep doing that. Screw it, we’re not actually going to do anything really exciting.” And I thought, no that’s the wrong thing to do. If you have the scale at which you can afford to wait 5 to 10 years for a result, that was the key thing. If I say, invent something or do valuable research tomorrow, that’s an impossible task. But if I say, support 100 really smart people working really hard for 5 years, something great will come of it.

X: That’s what you had at Microsoft, because of its size.

NM: At Microsoft, we had the resources to do that. So I talked Bill [Gates] into starting Microsoft Research. It’s been hugely successful; they would say it’s one of the best investments they ever made, enormous customer value and shareholder value…To sum up, Microsoft Research is based on a similar idea [as Intellectual Ventures], with one twist. There, all I had to do was convince one man, and we could go ahead. After I retired from Microsoft, I wanted to keep going. I no longer had the one man to convince to do the whole thing. If you think about how to replicate the model, even if I’d gotten Bill to give me more money to do something else, that wouldn’t be the replicable model. So that’s where I came back and said OK, how could you do this on an even broader scale?

It turns out the way the world does this on a broad scale isn’t by saying this will be done by a government agency or by Bell Labs, a research lab funded by a monopoly business. In fact, the modern way to do it is to create one of these marketplaces where large investors are willing to put a small fraction of their income towards really risky things. And so …Next Page »

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This time last week, Nathan Myhrvold was sitting down with Bill Gates. Gates had just returned from the Olympics, where he had watched some high-profile ping-pong matches—a very hot ticket in China. The two former Microsoft colleagues were catching up, and their discussion turned to racquet sports, and the various technical differences between them.

“Bill was telling me that badminton is also insanely popular there,” says Myhrvold. “So then I asked him to compare, ‘OK, you’ve got three implementations of what’s fundamentally the same game—tennis, badminton, and ping-pong. How do they differ?’ So we started discussing the parameters of it.” They made a list of important factors: serve speed, number of shots per rally, average rally time, size of the court, and so forth. “A naïve guy like me watching these expert ping-pong guys,” Myhrvold goes on, “there’s this blur of the white ball, but man the rally’s lasting forever! Versus tennis, I’ve watched a few times, the guy goes ka-whap with his blinding serve, and that’s it. If you can break his serve, you’re there. Bill says badminton is kind of in the middle.”

And why is that? “I bet you could figure that out,” Myhrvold says. “I bet it’s part physics, and part rules. With badminton, you can’t do anything like those serves, because the thing, the shuttlecock, resists going fast. Probably there’s a Reynolds number effect that’s the same thing in ping pong—although it goes fast, the coverage of the table is such that it’d be like tennis if either the ball was really slow or you could run really fast, because you can actually move your paddle—I’ve only played it a couple times in my life—but it’s only this far that you’re moving it. So it’s probably something like the ratio of the ball speed to lining up on it, and then, if that’s true, you’d expect that doubles might be different because each player has a more limited field, so you’ve cut their angle down, so something can come cross-wise in ways you wouldn’t otherwise be able to do. But that’s just a guess…It’d be fun to see if someone has looked into this. You’d like to get some stats, like from the Olympics.”

Welcome to Myhrvold’s world. Given the rules of any game, you can figure out the underlying mechanisms and make predictions—and then start testing them with different scenarios and real-world data. It’s the way Myhrvold has always been—intensely curious and analytical—from his years working on quantum cosmology with Stephen Hawking through his time as Microsoft CTO and founder of Microsoft Research. And it’s no different at his current home, Intellectual Ventures, the private company he co-founded in 2000, which has been described by some as an “invention factory.” Its goal is to create a new marketplace for inventions—both by developing its own patents and buying up those of others around the world. Intellectual Ventures is tight-lipped about its funding, but it is rumored to have raised—or be in the process of raising—several billion dollars from big companies and investors.

I had a chance to visit with Myhrvold (he’s an Xconomist) last week at the Intellectual Ventures laboratory, a recent addition to the company located in an unmarked industrial building in Bellevue, WA. First, I got a tour of the lab from Geoff Deane, VP of engineering (see photo; he’s on the right talking with Myhrvold), who was tapped to run the facility five months ago. It is a giant work in progress—17,000 square feet—that started up 14 months ago, and has about 30 people working there so far.

The most striking thing about the lab is how much equipment is scattered throughout. And how many different types of scientific instruments there are. To explain the look of the lab, Deane quotes Thomas Edison: “To invent, you need a good imagination and a pile of junk.” He says the approach is to buy old equipment “for pennies” and then restore it, or mix and match parts to make high-quality working instruments: oscilloscopes, spectrometers, lathes, mills, lasers, a water-jet cutter, you name it. These tools of the invention trade are distributed amongst an almost comically wide variety of lab stations: a kitchen lab full of Willy-Wonka-like contraptions (Myhrvold is working on a cooking-science textbook), a full-service machine shop, an electronics shop, a photonics lab, even a mosquito-growing chamber to study malaria interventions. And that’s just what they chose to show me. I half-expected to see Morgan Freeman and the Batmobile hiding behind a screen.

Regarding the role of the lab in Intellectual Ventures’ business, Deane makes an analogy that he admits is simplified, but gets the point across. “Imagine a swimming pool that’s infinitely long and wide, but only an inch deep,” says Deane. The idea is to be able to dip a toe into any spot in the pool, he says, and see if the water’s promising there. If it is, they can get the further tools and resources to investigate whether an invention can come of it. But first they have to be able to do basic experiments across a very wide range of technical fields.

Which is a good lead-in to what Intellectual Ventures is all about. I sat down with Myhrvold for a far-ranging interview that began with the topic of theoretical physics—and could easily have stayed there for hours. (With next month’s opening of the Large Hadron Collider, the most eagerly anticipated particle accelerator in history, Myhrvold was full of ideas on what they might or might not discover there. He also thinks there’s been nothing revolutionary in physics since Einstein, is unimpressed by string theory, and notes that, for all the efforts to find top talent around the world, “there’s never been an Einstein from America!”)

But I also found out that the lab isn’t the only new facility brewing at Intellectual Ventures. The company will be rolling out new offices in five Asian countries this fall—part of a new strategy to provide tech transfer services around the world, and also to partner with existing technology licensing organizations at universities and research institutions in those nations.

I didn’t even get a chance to ask about Myhrvold’s almost-legendary “outside” exploits in cooking, photography, or paleontology. But his answers, starting today and concluding tomorrow and covering ideas from inventing a new type of nuclear reactor to stopping hurricanes, give a pretty complete picture of what Intellectual Ventures is really trying to do—and its current progress in supporting what he sees as the most precious of commodities: inventions.

Xconomy: Before we talk about Intellectual Ventures, can you say a few words about the Seattle area as an innovation cluster?

Nathan Myhrvold: This is a very innovative area. Seven or eight years ago, I wrote for National Geographic Traveler about the city. I wrote that, all of a sudden, Seattle in the 1990s became a center of cultural innovation in almost every way you could imagine. Starbucks Coffee is here, Microsoft is here, strangely Nintendo is here. Even more strangely …Next Page »

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There’s endless debate about how to encourage more innovation inside technology companies. But in Waltham, MA, there’s a startup that says, in effect, don’t bother: innovation can be outsourced to a global community of freelancers.

InnoCentive was set up by Eli Lilly in 2001 as an experimental way to farm out some of the giant drugmaker’s biggest product development challenges by posting them on the Web and inviting people around the world to submit competing solutions, with a substantial monetary prize as the reward for the winner. Two years ago, Lilly spun out the company as an independent venture, and it has since diversified beyond the life sciences to a range of disciplines, such as computer science and cleantech. And today, the organization announced that it’s raised a new pile of venture money—$6.5 million altogether, which it will use to upgrade its platform and expand its network of “solvers,” people who submit solutions in hopes of winning awards that range from $10,000 to $1 million.

It works like this: Companies (called “seekers”) work with InnoCentive to craft a well-defined challenge and pick a dollar amount for the award. InnoCentive then alerts its network of solvers, and those who choose to engage in a particular challenge are given access to online project rooms containing proprietary details about the seeker’s project. At the end of the challenge period, the seeker evaluates the solutions and chooses one as the winner; InnoCentive then helps transfer the rights to the solution from the solver to the seeker’s organization.

It isn’t “crowdsourcing” in the typical Web 2.0 sense of throwing open a problem and soliciting thoughts and contributions from thousands of random Internet surfers. It would be more accurate to describe InnoCentive’s platform as a mechanism for soliciting RFPs (requests for proposals) from a much broader cross-section of experts than any company could reach through the traditional business consulting process. Companies like Procter & Gamble use Innocentive’s system to find new product ideas faster than they might on their own, and the model has even inspired imitators such as Ohio-based Planet Eureka, which launched last month.

The problems posted at InnoCentive range from grand challenges (one seeker is offering $1 million for a biomarker that can track the progress of amyotrophic lateral sclerosis, or Lou Gehrig’s Disease) to utterly practical, small-scale problems (the Rockefeller Foundation offered $20,000 for a design for a solar-powered wireless router for use in developing countries). To date, solvers have collected over $3 million in awards, according to InnoCentive.

The lead funder in the funding round, InnoCentive’s second, was Spencer Trask Ventures, a New York-based investment network that includes scores of high-net-worth individuals. Lilly also contributed to the round. On Monday I had a phone conversation with InnoCentive CEO Dwayne Spradlin about how the organization plans to use the funds—and about the effectiveness of the prize-based innovation model in general.

Xconomy: It would be great if you could talk a bit about InnoCentive’s current direction, how that has changed over the past few years, and how you plan to use the new cash infusion.

Dwayne Spradlin: The company has been around for about seven years. We were founded under Eli Lilly and spun out as a standalone company a few years ago by Spencer Trask. As you point out, the company is a fair bit different today from a few years ago. The last several years were really about proving the concept—that is, that open innovation could drive remarkable outcomes for organizations that are innovation-hungry and that need better, faster, cheaper product development and time to market.

Now it’s ready for prime time. In the past six months, we’ve added challenge categories including business and entrepreneurship, engineering and design, physical sciences, and mathematics and computer sciences. We’ve increased the number of tools we offer—we used to focus on deep research-type tools but now we also offer “ideation” tools that help large numbers of people brainstorm very quickly, and electronic RFPs so that clients can find business partners very quickly, and help managing intellectual property rights. So we’ve gone beyond the proof-of-concept stage to the stage of getting InnoCentive into the hands of as many organizations as possible. We and the investors in InnoCentive believe this is the time to expand.

The $6.5 million is earmarked for expansion in three areas: First, our sales and marketing footprint, really getting feet into the street to evangelize the product. Second, expanding our solver community, which is 140,000 strong, but we have about 5 billion …Next Page »

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If you’ve ever tried to wrestle a box spring up a stairway or down a narrow hall into your bedroom, then you can imagine how comically awkward and expensive it would be to ship one via UPS or FedEx. Which explains why box springs (otherwise known as mattress foundations) aren’t exactly big sellers on e-commerce websites. But what if there were a way to make a box spring that collapsed to a manageable size for shipping, then unfolded to its full dimensions in the customer’s home? Then the lowly box spring might finally be able to join the Internet revolution.

That was the idea that struck engineers at Leggett & Platt a couple of years ago. While the Carthage, MO-based manufacturer isn’t a household name, almost every mattress sold contains some L&P components; indeed, co-founder J.P. Leggett invented the spiral steel coil bedspring in 1883. Despite the company’s history of bedding innovation, however, the L&P engineers weren’t quite sure how to squeeze a fully upholstered box spring into a box small enough to put on a UPS truck.

Fortunately, Leggett & Platt owned a piece of software called Goldfire Innovator, made by Boston-based Invention Machine. Imagine that you’re a product developer who likes to make notes and draw diagrams on a whiteboard— but that whiteboard is attached to software that understands the intention behind your drawings, labels, and notes; searches the Web and global patent databases for designs that employ similar concepts; automatically serves up references to related literature; and even makes suggestions about how to improve your sketches. That’s roughly what Goldfire Innovator does.

According to Vincent Lyons, vice president of engineering and technology at Leggett & Platt, the company’s mattress designers had Goldfire Innovator at their sides as they pored over the mechanical, ergonomic, and materials-science problems associated with building a collapsible box spring. Because the team could use the software to quickly search internal company databases and external patent literature for related ideas—including concepts already patented by other companies that the engineers would need to work around—”we were able to speed up the development of the product by at least a third,” as Lyons told one podcast interviewer. The result: the Leggett & Plat Semi-Fold Box Spring, a mechanical marvel that hit the market in 2007 and folds up into a rectangular shape with one-quarter the volume of a traditional mattress foundation.

I’m not the type to get excited about mattresses, but I was so curious to see how the Semi-Fold works that when I saw the Leggett & Platt box during a recent visit to Invention Machine’s 38th-floor offices at the Prudential Center I made the staff take the assembly out of the box and unfold it so I could take a couple of pictures. Seeing how elegantly the device opened up and snapped into its solid, unfolded shape made it easier to understand why Goldfire Innovator, after only three years on the market, has found its way into more than 500 of the Forbes Global 2000 manufacturing companies.

“We bring ideas to reality,” says Invention Machine CEO Mark Atkins. (If that sounds like an echo of General Electric’s old tag line, “We bring good things to life,” it might not be a total accident. GE was one of Invention Machine’s earliest customers, and the “o” in the company’s logo is shaped like a light bulb.) The company’s history stretches back to 1992, when it was founded by Valery Tsourikov, an engineer in Belarus. His own big idea was to embody in software the so-called “value analysis” principle at the core of Soviet scientist Genrich Altshuller’s Theory of Inventive Problem Solving (more commonly known by its Russian acronym, TRIZ). Roughly speaking, TRIZ advises engineers to assign a value or importance to each component of a problem, then prioritize their research according to those values. And Goldfire Innovator provides an easy format for doing so.

But Tsourikov also wanted to speed that research by giving engineers a way to search the Internet and other knowledge bases according to various types of physical or conceptual relationships, not just keywords. To a traditional search engine, there isn’t much difference between “a pump moving water” and “moving a water pump,” because, for the most part, they look at individual words or strings of words, with no attention to the concepts they embody. But obviously, the two phrases have completely different meanings—and Tsourikov’s inspiration was to …Next Page »

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In studying why Boston has been a center of innovation for nearly four centuries, the Boston History & Innovation Collaborative has identified a set of drivers which came up in all eras, in all types of innovation (technical, medical, and social). Deep historical research on more than 60 cases, conducted with funding from the Massachusetts Technology Collaborative, pinpointed five drivers that re-appeared over and over in the stories behind each of these particular innovations—why they happened in Boston, and why they happened at the time they did. These are Boston’s “secret sauce,” explaining why we have an innovation tradition.

We call these five ingredients or drivers the “High Five.” They are:

1) A driving entrepreneur or a team of leaders.

2) A local network of people and businesses/organizations sharing information, working across silos.

3) Local funders.

4) Local demand which the entrepreneur can use to refine and perfect the new idea or product.

5) National or global demand for the innovation.

An example of entrepreneurship truly driving a particular innovation in Boston’s past is the Boston Associates, a group of entrepreneurs including Lowell, Appleton, and others, who set up the first factories in Waltham and later Lowell, taking the wealth from shipping and transferring it into a new industry, textile manufacturing. More usually innovation is driven by a single entrepreneur like Cambridge’s Elias Howe and his sewing machine or An Wang and office word processing in the 1970s.

An example of the second driver, local networks and clusters, can be found in the fierce debate in Boston between black abolitionist David Walker and white abolitionist/journalist William Lloyd Garrison, which helped to spur the abolitionist movement—a social innovation.

The third driver, local funding, or capital and financing from Bostonians and local institutions, was central to King Gillette’s development of the safety razor, funded by John Joyce; the birth of state-chartered banking in 1784; and Georges Doriot’s invention of the venture capital model in the 1940s.

Local demand, the fourth driver, helped to get Dan Bricklin’s Visicalc, the first electronic spreadsheet, off the ground. Bricklin was able to sell his first units in 1979 because there was a local market exemplified by the Boston Computer Society, a user group founded in 1977. Other cities didn’t have such a ready market.

Finally, the development of the lucrative salt cod trade in the 17th century was a response to national and global demand. Bostonians have been particularly good at gauging and meeting this demand, whether with salt cod in the 17th century, mass-manufactured textiles in the 19th, or Ned Johnson inventing check-writing off mutual funds in 1976.

Four of the High Five drivers are local in nature. Taken together, these factors led us to identify the phenomenon of the “bump and connect.” Proximity brings about crucial encounters among entrepreneurs, funders, and researchers, collaboration within industries and clusters, and professional and social networking. Even in today’s digital world, business leaders like Novartis’ Bernard Aebischer report that networking opportunities are important—and were in fact a determining factor in the decision to locate Novartis’s research headquarters in Cambridge’s Central Square, in close proximity to Cambridge’s “Genetown,” MIT, MGH, and Harvard’s Longwood campus.

Also central to our research findings is that innovation in Boston has had a broader racial, ethnic, and gender base over the past few centuries than many think. Our innovation tradition is not only white and male. African-Americans, Asians, and Hispanics have made an important difference in technical, social, and medical innovations. Immigrants have played a leading role in introducing new ideas and social movements. And the role of women has been critical, from the first years of Massachusett’s settlement all the way through to the present.

Our History & Innovation Collaborative works to ensure that the “bump and connect” is recognized and continually woven into our fabric—whether in new real estate developments, or the Boston Museum coming soon to the Greenway, or our 2008 History & Innovation Awards. Helping to generate new waves of innovation is all about fostering the bump and connect.

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Bose Corporation founder and former MIT professor Amar Bose will be inducted into the National Inventors Hall of Fame, the eponymous nonprofit group announced today. Recognized for audio inventions including the 901 Directing/Reflecting speaker system, Bose joins a group of honorees that includes the inventors of wrinkle-free cotton, light emitting diodes, the anti-fungal drug Fluconazole, and the television remote control.

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