Q&A: Edward Jung

The CTO of Intellectual Ventures believes we need a new model of innovation to solve our biggest problems.

Intellectual Ventures was founded 10 years ago by a group including Nathan Myhrvold, the brilliant billionaire former chief technology officer of Microsoft, and Edward Jung, the software giant’s highly respected chief architect, to create and invest in inventions. Most famous for the vaunting ambition of some of its projects (such the development of a novel design for a traveling-wave nuclear reactor) and the seeming playfulness of other inventions (like a laser that zaps malarial mosquitoes from the sky), the company is, in reality, unlike any other research lab or investor. It is incomparably rich and uniquely avid for patents. It has more than $5 billion in assets under management and a portfolio of more than 35,000 patents, including more than 3,000 it developed itself or with its network of independent inventors. In all, the company has spent $1.5 billion purchasing patents, which have generated more than $2 billion in licensing revenue.

This is an extraordinary treasure chest of intellectual property, and an accompanying willingness to defend the chest’s contents has made Intellectual Ventures unpopular in some circles: it is often derided as a “patent troll” that buys up intellectual property and prosecutes violators of patents without much intention of developing the technology. But Edward Jung, the company’s CTO, believes that Intellectual Ventures’ structure will allow it to perform an unusual function in the world: by creating inventions in its own lab, working with its network of inventors, investing in startups, and partnering with governments, the company can act as a kind of master-planning architect, coördinating innovations that seek to solve the kinds of big global problems that governments no longer have the means or confidence to address. Edward Jung spoke to Jason Pontin, Technology Review’s editor in chief, from his offices in Seattle, Washington.

TR: Why do you believe the world requires a new model for innovation? Why won’t the model of innovation that worked so well in the 20th century produce the solutions the new century demands?

Jung: It’s a matter of scale. A lot of the problems we’re looking at now vastly exceed the abilities of single companies. In the past, every now and then a government would step in and try to align lots of companies around big problems. Most often it was around some kind of military or quasimilitary endeavor. If you wanted to build the first jet airplane, or a rocket, or send somebody to the moon, it required a government to really pull together thousands of companies into a concerted effort. It took a government to get all the innovation done in a way that allowed those companies to safely take risks. But by and large, governments are kind of out of that business now. It’s true that as companies scale up they may get involved in large projects of their own, but it’s very hard for them to get into very large integrative projects. So there is an invention gap.

You’re talking about civilizational-scale problems beyond the scope of any one company, where a market-based solution is probably required, but where there is no market mechanism to encourage individual companies to collaborate.

The world has gotten very good at building smaller solutions. The startup economy solves targeted problems very ably. And we’ve seen programs like X Prize and other kinds of prize-based schemes try to solve problems at a somewhat larger scale. But even more open-ended large-scale programs, like those introduced by the Gates Foundation, are just a part of the answer.

Wait a moment. The Gates Foundation has surely been quite successful in tackling big problems. For instance, they encouraged the biotech company Amyris to develop a synthetic artemesinin, a powerful antimalarial drug. The foundation effectively created a market where none had existed; in 2013, Amyris’s drug will be widely available. Are you saying that malaria is so big a problem it’s even beyond the scale of individual charities like the Gates Foundation and startups like Amyris?

That’s correct. One of our roles in working with the Gates Foundation on malaria was to help them develop kind of a schema to involve lots of different groups that would otherwise never even talk to each other. The mosquito laser [which Nathan Myhrvold introduced at TED 2010] was part of that effort, and it got some press, but it wasn’t the important thing. The important thing was that we were able to get people who think about lasers and tracking systems to even think about malaria. Ordinarily, no matter what kind of call to action you might put out, it would be very unlikely that those guys would show up and try to contribute to the problem.

Honestly, the malaria laser wasn’t some kind of stunt? An overflow of Nathan’s good humor and love of technology? It was serious?

Absolutely. It’s a chemical-free way of trying to suppress the mosquito population below a certain critical threshold so that they can’t actually promulgate malaria.

What would a “collaborative, context-based” innovation economy look like? I understand the general criticism of our current system of innovation, but I am finding it hard to imagine the alternative you’re describing. For instance: what, precisely, is the role of Intellectual Ventures?

There is a role for some architect to appear and attempt to coördinate all the pieces of a large-scale project: to try to define all the sub-problems, and then try to find the different companies and coördinate them. So, for example, if you wanted to launch a mission to the moon, the mechanism you don’t use is to say: “Oh, well, let’s just assume a whole bunch of startups will show up and one of them will build the command module, and one of them will build the rocket, and one of them will build this or that”—and imagine they will all magically integrate and you’ll get this system that’s going to go to the moon. You have to go at it from the top down. You say, “This is the system I want, and I’m going to go find a bunch of companies and give them technical targets to shoot at, and try to produce those things; and then we’re going to integrate them and test them and have them finish the product.” To do that on a large scale—say, for something like a health-care system or energy infrastructure—is very rare.

Rare? I can’t think of a real, working model.

Well, a real, working model is the aerospace industry. What Boeing does to produce the 787 is coördinate the output of thousands of companies. They don’t produce all of the pieces. They produce the big architectural spec, and they guarantee the financing. And that allows all of those innovative companies underneath Boeing to create new kinds of tire rubber, or new forms of engines, or composite materials. They know if they satisfy the architectural spec they’ll get the business.

Please give me some examples of projects where Intellectual Ventures would provide this “architectural spec.”

I’ll give two. One of the two is much easier to see on the horizon.

The easier one is I’ll talk about megacities. Lots of people have written about how many billions of people are going to be urbanized over the next 20 to 40 years. And in fact, there are more cities being built today than ever in history. There are hundreds of city projects. A large number of them are being built in China. Now, that’s a big project. Some of these city projects are in the dozens of billions of dollars. But mostly, they’re building cities just like any other city. They might be a little greener, but they’re pretty much built to the same blueprint as always. But we believe that this is an opportunity for tremendous amounts of new innovation, because each city is essentially an economic infrastructure for innovation. Building a city around new innovations would reduce the cost of deploying innovations and increase the demand for innovations. Our belief is that if you design a city slightly differently, you can make it as easy to plug new stuff in and unplug old stuff as it is to buy apps in the Apple App Store.

The really interesting thing about the iPhone wasn’t the iPhone’s hardware, which has commodities integrated with great design. What made the iPhone interesting was that it was an applications platform. The hardware became an infrastructure for deploying innovation, not just a communication device. The possibilities of what an iPhone can grow into are relatively unbounded. You can do the same thing with a city.

Can you give me another example of how Intellectual Ventures might be the architect for planetary-scale innovation?

Another big problem, whose solution is harder to imagine, has to do with the world’s aging population. One piece of this problem is that today the longer people live, the higher their medical costs. Our entire medical system was based around treating acute conditions. The other piece is that, concomitantly, developed nations tend to have a nongrowing base of workers. So as your aging population grows and your birthrates go down (which is generally true of most developed economies), you’re going to hit an economic wall where you don’t have a lot of people generating your tax-base revenue—and yet you have a lot of people consuming more.

There are these two pieces of the problem that need to be addressed together: you have to both cut expenses and increase revenue. To address both pieces, we have a project we call “Wisdom Economy,” which is a very grand architecture for an innovation economy that, on the one hand, improves the productivity of the dwindling work force of young people as well as the productivity (including the social contributions) of the aging and, on the other hand, creates a platform for diagnostic and therapeutic medicine that induces more innovation and shifts the emphasis from acute care to chronic care.

Now, none of these things are new in and of themselves. Lots of people have been thinking about them for decades. But very few people have tried to bolt all of this together into one system and create incentives for innovation throughout the system. I’ve talked to health ministers, and I’ll ask them, “How do you build your big building projects like dams? I mean, do you get somebody to come up with a big plan, an integrative plan, and then find all of the people to go build it?” And they say, “Absolutely.” “And you build your house that way too, right?” They go, “Oh, yeah, absolutely. You need a plan.” And I say, “How come you don’t do your health-care system that way?”

I should be remiss if I did not bluntly ask: Are Intellectual Ventures intellectual-property trolls?

Are you asking, “Why do we litigate?”

I accept that you litigate. You have a large pool of intellectual property that you created yourselves, or which you acquired in investing in technologies. It must be defended. No, the line against Intellectual Ventures is that you buy up undervalued intellectual property as assets and then take patent violators to court. That all your own invention is just a kind of window dressing for a fairly squalid business.

At the end of the day we can’t control how people describe us. I can only tell you my intention.

What’s the intention?

Our whole reason to exist is to create better ways of coming up with inventions. So it’s very, very important to us that those inventions are well protected. We have a network of thousands of inventors all over the world who are working on the kinds of problems we’ve discussed. If you can’t protect their inventions, then you’re undermining them.

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