Ask most companies how they bring value to the market and they'll point to their products. Cycorp is a bit different. The 10-year-old company cares about the services it sells -- but mainly because they bankroll its true quest: creating a "knowledge base" called Cyc that can endow computers with something approaching common sense. This quest has been so time-consuming that most venture capitalists would long ago have written off their investments -- or demanded the CEO's head on a platter. That Doug Lenat and his 54 employees have avoided this fate is a lesson in managing long-term, visionary R&D projects.

Two decades ago, Lenat was a computer science professor at Stanford University with a dream of building a com­puter smart enough to know, for example, that people are smaller than houses and live in them. But he feared that, with just himself and a half-dozen grad students, programming such a computer would take more than a lifetime. Meanwhile, American high-tech leaders were worrying that the Japanese, with their so-called "fifth generation" artificial intelligence development project, would do the same thing to the American computer industry that they had done to the automotive and consumer-electronics industries. So they set up a research consortium called the Microelectronics and Computer Technology Corporation (MCC). Lenat snatched at the backing offered by MCC, and went to work for MCC in 1984.