May 2002

The Invention Factory

Continued from page 1

By Evan I. Schwartz

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Fourth Era of Invention

If anyone can bring the Invention Factory to life, it ought to be Myhrvold. His training and experience extend to so many fields that he is as comfortable brainstorming with software designers or nuclear scientists as he is kibitzing with French chefs or science fiction authors. Talking about obstacles in just about any area of technology gets him energized; the pace of his speech quickens and he breaks out into roiling laughter at the slightest provocation.

Myhrvold, 42, joined Microsoft in 1986 after undergraduate and graduate training in mathematics, economics and physics, not to mention postdoctoral work under Stephen Hawking at the University of Cambridge in England and a brief tenure as the president of his own software startup, which was acquired by Microsoft. His subsequent appointment as Microsoft's chief technology officer gave him license to explore dozens of high-tech domains, from interactive television to speech recognition, and in 1991 he convinced the company to start Microsoft Research, which has grown into one of the largest corporate research labs launched in the past half-century.

Yet even the ability to pursue almost any software-related research project wasn't enough to absorb all of Myhrvold's wide-ranging attention. During his final years at Microsoft he began delving into paleontology and other exotic fields, even taking leaves to go digging for dinosaur bones. In fact, the fossil of an ancient reptile now hangs on his office wall, while the Intellectual Ventures lobby is adorned with the head of a dinosaur model used in one of the Jurassic Park films and a small museum's worth of obsolete gadgets, like a solar-powered telegraph and a giant slide rule for high-precision calculations.

After leaving Microsoft in 2000 with an estimated $650 million in company stock, Myhrvold had the freedom to think seriously about the conditions that foster invention. He and Jung are founding the Invention Factory on the strength of his theory that the American economy is entering its "fourth stage" of innovation, a time when the long-dominant corporate labs are losing their edge and the truly world-changing inventions may once again come from inventors working alone or in small groups, as they did in the 19th century.

The first stage of innovation, Myhrvold says, was a golden era sparked by 1830s patent law changes that made the process of reviewing and granting patents much more rigorous. This reduced the likelihood that more than one patent would be granted on the same basic idea, making each patent much more valuable, and encouraging a parade of great lone inventors from Samuel Morse and George Westinghouse to Alexander Graham Bell and Thomas Edison. The parade continued into the early part of the 20th century with inventors like the Wright brothers, Bakelite creator Leo Baekeland, Polaroid founder Edwin H. Land and television pioneer Philo T. Farnsworth.

But by that time Myhrvold's second stage, the era of corporate-controlled innovation, was already under way. At the turn of the century, companies such as General Electric, DuPont and AT&T began hiring scientists and engineers by the hundreds in an attempt to come up with more breakthroughs before outsiders could disrupt their monopolies. These companies' labs kept the rights to new inventions to themselves, blanketed their fields with filings and overpowered the lone inventors with legal assaults. By the 1920s, corporations moved to gain a majority share of U.S. patents for the first time (see "Lone Inventors Lag Behind").

This system ultimately produced the transistor and launched the microelectronics and computing industries, but by the 1970s, Myhrvold notes, economic pressures were putting the squeeze on corporate research-and-development budgets. Many corporate labs dating from the early or mid-20th century have now been struggling for years. Often, maintains Myhrvold, the surviving corporate research labs became demoralizing work environments, places where "potentially great inventors are treated as mid-level engineers."

Entrepreneurs seized the mantle from the corporate labs beginning in the late 1970s, when the PC era commenced. This transformation, Myhrvold's third stage of innovation, gave rise to the Silicon Valley model, in which leading university researchers, students and corporate rebels obtain massive infusions of private venture capital to fund what Myhrvold describes as largely development work and marketing efforts. But with the bursting of the dot-com bubble in the spring of 2000, this model too has suffered a decline. "The Silicon Valley model has been fantastic," Myhrvold says, "but it's been stretched to the limit. We've had a lot of talented people with a lot of money pursuing dumb ideas."

Brainstorming for a better model, Myhrvold is setting out to launch the fourth stage of innovation. This new era, he says, has two distinct characteristics never seen before. First, there is still plenty of financing available for truly great ideas. Second, individual inventors are armed with an unprecedented array of information tools-such as powerful computers that can create 3-D simulations of new products and test their functions-that weren't available even at the corporate labs or the startups of the past. As a result, Myhrvold believes, independent inventors reminiscent of the heroes of the first stage can rise to ascendancy once again. Yet if these inventors focus purely on creation, they'll need assistance and an infrastructure to support them-which is what the Invention Factory is all about. Says Myhrvold, "We think the time is ripe for organized lone inventing to come back."

Lone Inventors Lag Behind

Independent inventors once earned most U.S. patents. But since the 1920s, loners have been outgunned by corporate, government and university labs, which often keep the rights to their employees' inventions.

The Invention Factory

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