John Paczkowski

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Intellectual Capitalism: Nathan Myhrvold, Founder and CEO, Intellectual Ventures

Nathan Myhrvold

After retiring from his position as chief strategist and chief technology officer of Microsoft (MSFT), Nathan Myhrvold founded Intellectual Ventures, a company that is assembling a large body of patents and inventions. He was a postdoctoral fellow at Cambridge University and worked with Professor Stephen Hawking on research in cosmology, quantum field theory in curved space time and quantum theories of gravitation. Dr. Myhrvold himself holds more than 20 patents and has nearly 200 patents pending. He is currently working on a cookbook surveying the science, technology and techniques used in modern cuisine. It is expected to be completed in late 2009.

  • Walt welcomes Nathan Myhrvold to the stage, noting that it will be a nice change of pace to talk about something other than hostile takeovers and ill-starred mergers.
  • Myhrvold starts out by explaining his business. “We invest in inventions. We invest in the creation of ideas.” But, he asks, how do you invest in companies that don’t exist yet? Myhrvold says he recruits inventors, funds and nurtures them and then takes ownership of their inventions: “It’s like Baby Mama, with me as the mama.”

    Nathan Myrhvold at D6

  • What sort of ideas has your company created so far? asks Walt. Myhrvold prefaces his answer by saying his company’s process requires patience: “We have a very long pipeline. We file 500 patents a year …” Walt follows up, asking for an example of a product or service the company has created. Looks like there aren’t any. Myhrvold says they have a few licensing deals.

  • Again, Walt asks for an example of one of Intellectual Ventures’ inventions. Myhrvold finally responds, saying the company has developed some sort of nuclear reactor that “rethinks nuclear power.” Walt asks Myhrvold to explain. You really want me to start talking physics here, says Myhrvold. Looks like he’s going to dodge again. He serves up a bunch of jargon wrapped in a “swing for the fences” cliche.
  • How do you invest in companies that don’t exist yet? (Honestly, I’m not sure Myhrvold even knows. Perhaps he can recruit an inventor to answer that question and this dubious business model he’s talking up…)
  • Moving on … What’s in this for the inventors? A fee and a portion of the returns on any licensing deal Intellectual Ventures manages to secure, Myhrvold says.
  • Walt: And how do you manage these deals? You don’t go around dropping letters on CEO doorsteps notifying them of patent infringements, do you? Myhrvold says the company has never done anything like that, but can’t say that it never will. There are some very positive ways you can create value from intellectual property. (And they are …?)

Nathan Myrhvold at D6

  • Moving on …. Walt: This kind of company you’ve set up, is there a precedent for it? Sure is, says Myhrvold: You need only look back to Thomas Edison. A charismatic inventor-genius with an invention-oriented company.
  • One thing Myhrvold is good at inventing: new buzzwords. Drawing parallels between venture capitalism and what he does, Myhrvold, it seems, is an “intellectual capitalist.”
  • Walt asks about the patent system, specifically with regard to software. Is the patent system broken? Myhrvold acknowledges that the patent office has granted some patents that it shouldn’t have, but notes that it’s been doing a pretty good job of vetting them recently. He says that historically the software industry gas given the patent industry a bad rap.
  • Big boys play rough, says Myhrvold. They play rough with copyright and with patents.
  • Walt asks, “What do you think about this multi-touch stuff?” Myhrvold says it’s an interesting idea, but not a huge one–it’s a medium-size idea. Gestural interfaces, on the other hand, are a big idea.
  • What’s the current state of R&D? Myhrvold says there’s a lot of great work being done at places like Microsoft and Apple, but adds that the current environment isn’t as rich as it was back in the day at PARC.
  • Will gestural interfaces inspire lots of patent litigation, asks Walt, noting that Apple CEO Steve Jobs specifically mentioned the company had filed a number of patents around the iPhone’s IP. Myhrvold says that’s tough to say, but he bets that a lot of the early work done on multi-touch was done at places other than Apple and Microsoft, and may well be in the public domain.
  • “Don’t let the secret recipe die with the inventor,” Myhrvold says.
  • Moving on to the Q&A: First question from Jason Calacanis, who notes the distaste some entrepreneurs have for Myhrvold’s business because of the number of patents he files. Would Myhrvold ever considering winnowing that list down to, say, 250? Myhrvold dismisses that assertion, noting that very few of the patents he files ever amount to anything. Calacanis says that the media has made it appear that Intellectual Ventures has been filing thousands of patents a year. Myhrvold says that’s not the case. Walt jumps in and asks how many patents Intellectual Ventures buys each year. Answer: thousands.
  • On to another question about how corporations look at inventions, Myhrvold answers: “No CEO ever says, ‘Damnit, we need to increase research!’ I want to encourage them to do that.”

For more coverage, see The Wall Street Journal and Barron’s Tech Trader Daily.

A note about our coverage: This live blog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations expeditiously written and posted to the Web as quickly as we were able. It was not intended as a transcript and should not be interpreted as one.

Nathan Myhrvold Session Photos

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