Monday, January 29, 2007

Column: Lessons From The Segway Guy

Forbes.com

Letter From Silicon Valley

Burlingame, Calif. -Most of the business press these days is spellbound by Apple's iPhone--the upcoming Steve Jobs creation that he says will shake up the mobile phone business. Pundits, citing the gadget's beautiful design, cool features and clever marketing, have already declared it a triumph of innovation.

The iPhone, when it's available, may well be a dandy product. But anyone who's really serious about understanding innovation should disconnect from the hard-to-replicate iPhone launch and spend time studying the career of long-time inventor Dean Kamen.

Kamen holds several hundred U.S. and foreign patents. He was inducted into the National Inventors Hall of Fame in 2005 in recognition of the "ambulatory infusion pump"--a way of administering drugs that can move with a patient. Countless patients and their caregivers have benefited from the pump and the other ideas it inspired.

What drives Kamen, 55, is the satisfaction of solving a genuine problem. He doesn't try to analyze markets or predict revenues. He looks for stumbling blocks: The debilitating, unglamorous problems that stop people from going about their daily life. For most of his career, Kamen has hoped that people won't have to use his inventions. "You don't say to someone, 'I can't wait for you have to end-stage renal failure,' " so they can try out his latest dialysis technology, Kamen says wryly.

Kamen's one big effort to develop a product that would create buzz has yet to really take hold, five years after its launch. That was the Segway "personal transporter," or what the rest of the world calls a motorized scooter. Kamen still insists there's a need for the Segway: City streets are clogged with traffic and pollution, and Segways can reduce both, Kamen contends. But in spite of the energetic efforts of some of the Valley's finest venture capitalists, most people are happy to make do with cars, bicycles or their own foot power.

Kamen has been confronting problems head-on since grade school. At the time, one of the biggest problems he had was a familiar one: He hated to make his bed. His mother insisted. He analyzed the problem: He needed a way to straighten the sheets and covers automatically. Kamen affixed pulleys to the corners of his bedclothes and strung them with ropes. By standing at the foot of his bed, all he needed to do was tug on the ropes and the bed would make itself. "It was a great invention," he says, with satisfaction.

School frustrated Kamen. He focused instead on building things, including lighting systems for everything from museums to rock bands. His older brother Barton, in medical school, complained about challenges of delivering drugs to patients, including premature babies. Dean got to work. He invented a pump that delivered precise doses of medicine at precise intervals. "We put it in an isolet for tiny babies," Kamen recalls. "Then someone said, 'Bet you could stick it on a belt.' " Kamen soon delivered the first portable insulin pump for treating diabetics.

Kamen started a company to manufacture and sell medical pumps, but his heart wasn't in running a business. In 1982, he sold the company to Baxter Healthcare. He continued to work for Baxter and helped build its portable dialysis machine for people with kidney failure. Hundreds of thousands help patients every day.

He wound up starting an invention business: DEKA (for Dean Kamen) Research & Development, which is based in Manchester, N.H., and employs a couple hundred engineers and scientists on a broad portfolio of devices. Among their inventions: the iBOT wheelchair, which climbs over curbs (and was the core technology underlying the Segway), intravascular stents and irrigation pumps used in medical procedures, to name a few.

I asked Kamen what he believed was his team's "core competency." Building pumps? Fluid flow technology?

He scoffed at the question. "Oh, that's all business-speak that people use to make things look consistent in hindsight," he says. "We think we work hard. We try to understand fundamental science, and we try to stay current with technology."

And he looks for problems.

About 15 years ago, Kamen was bemoaning how few American students were interested in technology and invention. He started an engineer's version of the 4H Club, a nonprofit organization called FIRST which hosts robot-building competitions for high school students. The initial FIRST competition took place in a New Hampshire school gym in 1992; since then 100,000 kids have taken part around the world.

More recently, Kamen got interested in the need to provide clean water and electricity to villages in the developing world. "Now here's a real problem!" he says with relish. To solve it, Kamen turned to a very old technological idea--the Sterling Engine, which uses an external source to heat gas contained in a chamber; pistons move as the gas heats and cools.

Kamen says his improved power generators and water-purification machines are rugged enough and affordable enough for even remote villages. Two villages in Bangladesh are experimenting with the machines now, which run entirely on cow dung. Kamen has put tens of millions of dollars of his own money into developing the equipment--not because he's looking for a profit, but because he wants to solve a problem. "Now, there are three entrepreneurs running these machines," essentially establishing a mini power company for a village, he reports.

The final constant in the Kamen equation is patience. "It took 15 years for the diabetes pumps to take hold--and 20 years before the government started reimbursing for them," he says. FIRST has been in operation for 15 years and is finally getting worldwide attention. Segway? Still in its infancy, Kamen says. "The 'ah-has!' happen in an instant," he says. Winning acceptance in the marketplace, however, seems to take a decade or two--even when the need is palpable.

So here's to the inventions that so many in our community need: wheelchairs that let the disabled venture confidently onto a grassy field for a picnic; dialysis machines that quietly wash poison from a body overnight; low-cost machines that can make dirty water clean or power lights with cow dung.

I will be discussing these and other topics with Dean Kamen onstage on Feb. 8 at the Computer Museum in Mountain View, Calif. (The event is hosted by the not-for-profit Churchill Club.) Tickets are $70; the only pay Kamen and I get for the evening is a T-shirt. Join us for a discussion about the nature of invention and the kinds of problems that still need to be solved.

Burlingame, Calif. -

Most of the business press these days is spellbound by Apple's iPhone--the upcoming Steve Jobs creation that he says will shake up the mobile phone business. Pundits, citing the gadget's beautiful design, cool features and clever marketing, have already declared it a triumph of innovation.

The iPhone, when it's available, may well be a dandy product. But anyone who's really serious about understanding innovation should disconnect from the hard-to-replicate iPhone launch and spend time studying the career of long-time inventor Dean Kamen.

Kamen holds several hundred U.S. and foreign patents. He was inducted into the National Inventors Hall of Fame in 2005 in recognition of the "ambulatory infusion pump"--a way of administering drugs that can move with a patient. Countless patients and their caregivers have benefited from the pump and the other ideas it inspired.

What drives Kamen, 55, is the satisfaction of solving a genuine problem. He doesn't try to analyze markets or predict revenues. He looks for stumbling blocks: The debilitating, unglamorous problems that stop people from going about their daily life. For most of his career, Kamen has hoped that people won't have to use his inventions. "You don't say to someone, 'I can't wait for you have to n-stage renal failure,' " so they can try out his latest dialysis technology, Kamen says wryly.

Kamen's one big effort to develop a product that would create buzz has yet to really take hold, five years after its launch. That was the Segway "personal transporter," or what the rest of the world calls a motorized scooter. Kamen still insists there's a need for the Segway: City streets are clogged with traffic and pollution, and Segways can reduce both, Kamen contends. But in spite of the energetic efforts of some of the Valley's finest venture capitalists, most people are happy to make do with cars, bicycles or their own foot power.

Kamen has been confronting problems head-on since grade school. At the time, one of the biggest problems he had was a familiar one: He hated to make his bed. His mother insisted. He analyzed the problem: He needed a way to straighten the sheets and covers automatically. Kamen affixed pulleys to the corners of his bedclothes and strung them with ropes. By standing at the foot of his bed, all he needed to do was tug on the ropes and the bed would make itself. "It was a great invention," he says, with satisfaction.

School frustrated Kamen. He focused instead on building things, including lighting systems for everything from museums to rock bands. His older brother Barton, in medical school, complained about challenges of delivering drugs to patients, including premature babies. Dean got to work. He invented a pump that delivered precise doses of medicine at precise intervals. "We put it in an isolet for tiny babies," Kamen recalls. "Then someone said, 'Bet you could stick it on a belt.' " Kamen soon delivered the first portable insulin pump for treating diabetics.

Kamen started a company to manufacture and sell medical pumps, but his heart wasn't in running a business. In 1982, he sold the company to Baxter Healthcare. He continued to work for Baxter and helped build its portable dialysis machine for people with kidney failure. Hundreds of thousands help patients every day.

He wound up starting an invention business: DEKA (for Dean Kamen) Research & Development, which is based in Manchester, N.H., and employs a couple hundred engineers and scientists on a broad portfolio of devices. Among their inventions: the iBOT wheelchair, which climbs over curbs (and was the core technology underlying the Segway), intravascular stents and irrigation pumps used in medical procedures, to name a few.

I asked Kamen what he believed was his team's "core competency." Building pumps? Fluid flow technology?

He scoffed at the question. "Oh, that's all business-speak that people use to make things look consistent in hindsight," he says. "We think we work hard. We try to understand fundamental science, and we try to stay current with technology."

And he looks for problems.

About 15 years ago, Kamen was bemoaning how few American students were interested in technology and invention. He started an engineer's version of the 4H Club, a nonprofit organization called FIRST which hosts robot-building competitions for high school students. The initial FIRST competition took place in a New Hampshire school gym in 1992; since then 100,000 kids have taken part around the world.

More recently, Kamen got interested in the need to provide clean water and electricity to villages in the developing world. "Now here's a real problem!" he says with relish. To solve it, Kamen turned to a very old technological idea--the Sterling Engine, which uses an external source to heat gas contained in a chamber; pistons move as the gas heats and cools.

Kamen says his improved power generators and water-purification machines are rugged enough and affordable enough for even remote villages. Two villages in Bangladesh are experimenting with the machines now, which run entirely on cow dung. Kamen has put tens of millions of dollars of his own money into developing the equipment--not because he's looking for a profit, but because he wants to solve a problem. "Now, there are three entrepreneurs running these machines," essentially establishing a mini power company for a village, he reports.

The final constant in the Kamen equation is patience. "It took 15 years for the diabetes pumps to take hold--and 20 years before the government started reimbursing for them," he says. FIRST has been in operation for 15 years and is finally getting worldwide attention. Segway? Still in its infancy, Kamen says. "The 'ah-has!' happen in an instant," he says. Winning acceptance in the marketplace, however, seems to take a decade or two--even when the need is palpable.

So here's to the inventions that so many in our community need: wheelchairs that let the disabled venture confidently onto a grassy field for a picnic; dialysis machines that quietly wash poison from a body overnight; low-cost machines that can make dirty water clean or power lights with cow dung.

I will be discussing these and other topics with Dean Kamen onstage on Feb. 8 at the Computer Museum in Mountain View, Calif. (The event is hosted by the not-for-profit Churchill Club.) Tickets are $70; the only pay Kamen and I get for the evening is a T-shirt. Join us for a discussion about the nature of invention and the kinds of problems that still need to be solved.


http://www.forbes.com/home/columnists/2007/01/28/segway-iphone-gadgets-tech-cz_ec_0129valleyletter.html



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Monday, January 15, 2007

Column: Follow the talent

Forbes.com

Letter From Silicon Valley

Burlingame, Calif. -Some people watch Wal-Mart sales to track the economy's health. Others believe they can divine the harshness of the winter by measuring the stripes of the woolly bear caterpillar. (There is some lingering disagreement over whether the woolly bear is a leading or lagging indicator.)

“Talent” is a hand-wavy way to describe the people every company dreams of hiring: folks with powerful instincts for technology or marketing, or industry trends who are willing to work insane hours to tackle seemingly impossible tasks. A decade ago, all roads seemed to lead to Microsoft; more recently, of course, they end at Google.

But there’s refreshing news in Silicon Valley. Google is still a hot ticket. But lots of talented young people are widening their horizons. Chat with current M.B.A. students from top schools--as I’ve been doing lately--and it’s clear that their dreams involve lots of other companies, including spunky little start-ups that most of us haven’t heard of yet. Going to work at those outfits will be risky indeed. But it’s that kind of risk-taking that helps the Valley rejuvenate itself.

This winter, swarms of graduate business students have been visiting the Valley to check out opportunities for summer internships and jobs. About 85 students made the trip from MIT’s Sloan School of Management in early January.

In three days, the visitors from Boston enjoyed a whirlwind of introductions and sneak peeks. They talked with executives of fledgling start-ups and toured companies with market caps in the billions. They chatted with venture capitalists. And of course, they lunched at Google.

A number of students have an eye fixed on the very long horizon and so hope to land jobs in organizations that will build skills they expect to use for decades. Garrett Dodge, a first-year student, says Symantec and SAP are high on his list. “I want to see how great organizations are run--and if it leads to a start-up down the road, that’s all good.”

Others found inspiring signs in companies that the conventional wisdom had once dismissed. “There was a sparkle in the eyes of the people at IBM's research facility,” observed Donna Pitteri, another first-year student.

And plenty of the students--some of whom have already run their own businesses--are lured by start-ups. “The point isn’t just to get a job--it’s to do something you’re passionate about,” says Antonio Sosa-Pascual, a first-year student who helped coordinate the Sloan tour. The commonality is that there is no commonality.

Sosa-Pascual is intrigued by professional networking ventures and alternative energy. That drew him to oDesk, which is serving as a clearing house for engineering talent around the globe, as well as NanoSolar and Miasole, which aim to build cheaper solar cell chips. He gave good marks to the oddly named Fat Spaniel, which uses Web-based software to measure energy savings too.

Chris Johnson, who has a background in aerospace engineering, was thrilled to look under the hood of Tesla Motors, the start-up building a powerful, all electric car. Also meaningful: Conversations with one of the more hardcore start-ups, a semiconductor company called Cavium Networks.

Sloan students who have already started companies on their own savored their venture capital time. “You hear that most people have 20 seconds to give an elevator pitch on their business ideas,” says Ryan Tseng, a 23-year-old who has already founded a company that makes wireless power systems for consumer electronics. “Many of these people gave us a couple of hours of their time.”

Ted Hamilton savored the back story behind Pandora Music, a seven-year old company that’s beginning to find some traction after navigating through some choppy economic times. “I was really impressed with their persistence and passion,” he says.

Just as good: A reception at San Francisco’s panoramic Carnelian Room atop the Bank of America building, where Hamilton got a warm reception from some big company executives when he described one business idea he has been nurturing. “Now I need to see if I can get the business off the ground while I’m at school.”

It’s easy to look around the Valley and see signs of a bubble, but all those companies and choices are signs of health. And these students--and plenty of other smart people--are picking their spots based on what ignites their passion and where they feel they can learn the most.

So what about Google?

Before the Silicon Valley trek, none of the well-known Google perks--the gourmet food, the onsite laundry, the pay or the stock options--seemed to tweak the interest of the Boston students. This made them rarities, because the Googleplex is teeming with applicants: The company says it gets 3,000 applications per day.

And it has places for many of them--Google expects to double its 10,000 headcount by the end of 2007. To put those numbers in context: Microsoft passed the 10,000-employee mark in early 1992 but kept growth to about 3,000 a year until 1998. Last year, it employed more than 71,000 people.

In theory, that kind of growth should deter ambitious applicants--how do you make your mark when there are 19,999 co-workers hired ahead of you?

But Google’s “managed chaos” atmosphere--more collegial than corporate--helped sway some of the visitors. So did talking to a dozen or so former Sloan students who talked about their experiences after signing on with the search giant. “The students got to talk with people with the same values and intellectual horsepower that they have,” says Kenneth Morse, who directs Sloan’s entrepreneurship program.

“I saw my freshman counselor from MIT,” says Johnson. “He likes it. Google still has that start-up vibe--the opportunity that people can contribute outside of their prescribed roles.”

The visit turned a few more heads. Post-visit, an informal poll found 42% of the Sloan students were upbeat about summer internship prospects at Google and 26% would consider a full-time job.

Where those students and the other three-quarters of Sloan’s entrepreneurial program wind up, I’d be willing to bet they will make a difference. And as Bill Gates always warned, it’s the little company you don’t suspect that can change your world.

http://www.forbes.com/home/technology/2007/01/12/valley-mba-google-tech-cz_ec_0115valleyletter.html



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Monday, January 01, 2007

CALIF. magazine: history of venture philanthropy

January/February 2007 | VOLUME 118, NO. 1

WHAT: Venture Philanthropy
WHO: John Colligan, Jerome Dodson, Bill and Melinda Gates, Pierre Omidyar, Jeff Skoll
Compassionate capitalism

Best example of San Francisco family values: Gay marriage For one month in 2004 San Francisco's City Hall hosted one of the biggest parties in the city’s history. More than 4,000 same sex couples, some arriving from all over the world, were issued marriage licenses in defiance of state law. An appellate court shut down the party while legal debates were waged on equal protection under the Constitution and the even more bewildering question: What exactly is "marriage" anyway? The state Supreme Court upheld the lower court’s decision to invalidate the licenses without answering the marriage question.

Money isn't everything—at least, not to those in the business of venture philanthropy, an offspring of centuries-old socially responsible investing that Jerome Dodson modernized in San Francisco in 1984.

In 1999, John (Bud) Colligan, a partner at the Silicon Valley venture capital firm Accel Partners, working with long-time business executive Penelope Douglas, created a venture fund—now called Pacific Community Ventures—to bring capital and management expertise to modest-size companies that pay decent wages and benefits to people in depressed neighborhoods. Colligan was among the first wave of people who changed the definition of social philanthropy by bringing capitalism into the equation. Along with giving money, these executives wanted to give their time, their expertise, and their connections. They aimed to do good by teaching the disenfranchised how to make a better living. In return for doing good, they expected a return on their investments, or at least a sustainable enterprise.

Around the same time, eBay founder Pierre Omidyar began investing in operations with a "double bottom line"—a social agenda and enough profits to become self-supporting. Jeff Skoll, eBay's first employee, set up a foundation in 1999 to foster "innovations that will benefit humanity," with more than $90 million committed to social entrepreneurs so far.

compassionate capitalism
Rewarding waste management: Ciudad Saludable, a non profit that trains municipal workers throughout Peru to redcue waste in landfills and generate income through recycling, is receiving $615,000 over the next three years from the Skoll Foundation.
Courtesy of Ciudad Saludable
In addition, he started a socially responsible film production company that has turned out features such as Syriana, Good Night, and Good Luck, and An Inconvenient Truth, starring former Vice President Al Gore. In 2000, Microsoft founder Bill Gates and his wife Melinda set up what swiftly became the world's largest foundation, zeroing in on neglected diseases and education. Through 2006, the foundation had issued more than $11 billion in grants worldwide. Again, unlike classic philanthropies, the Gates foundation emphasized that it expected to see organizations meet milestones, achieve measurable change, and, in many cases, eventually finance themselves.

What all these efforts share is a belief that donors and grantees are exchanging far more than just cash. "We believe we can help close the gap between rich and poor in California by creating good jobs and increased stability for the state's working poor," says Douglas.


http://www.alumni.berkeley.edu/calmag/200701/id_philanthropy.asp

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CALIF. magazine: history of venture capitalism



WHAT: Venture Capital
WHO: William Draper, Eugene Kleiner, Armas Clifford Markkula, Jr., Tom Perkins, Arthur Rock, Don Valentine
Connecting dots and dollars

venture capital
Mark Matcho

Venture capital took root in Northern California thanks to one thing: connections. That web of connections has turned out to be the most powerful renewable resource that California has ever had, spawning a business phenomenon in the late 1980s that relied on private investment and merchant banks, that at its height in 2002 produced 7,812 deals worth $104 billion and made Sand Hill Road in Menlo Park America’s most important startup hub.

In the late 1950s, East Coast banks were flirting with the idea of making investments—not just loans—in new companies. (Digital Equipment Corporation got started with a $70,000 investment in 1957.) Meanwhile in California, a group of blisteringly smart young scientists needed $750,000 to launch a company in the new area of semiconductor electronics. Where to find the money? One of the group—Eugene Kleiner—knew his father had an account with a solid investment firm in New York City. Kleiner wrote a polite letter to the banker who managed his father’s money, describing his friends’ diverse experiences in electronics, metallurgy, and chemistry, and asking for help in securing funding.

In 1972, Kleiner and Perkins raised the largest venture investment fund the world had ever seen: a whopping $8 million. Amazon, Sun, Genentech, Intuit, Verisign, Google all owe their starts to KP.

The letter wound up on the desk of a colleague, Arthur Rock, a recent Harvard MBA with a keen interest in technology. He flew to California to meet the group. During the summer of 1957, Rock and his colleagues called nearly three dozen companies to try to raise more than $1 million to launch the firm. They were stonewalled. At last, they met millionaire Sherman Fairchild, the single largest shareholder of IBM Corp. With his support, the group started Fairchild Semiconductor Corp., as a division of Fairchild Camera and Instrument, in September 1957. Within 18 months, Fairchild would file for a patent on the integrated circuit.

Fairchild marked the beginning of Silicon Valley, and the first venture deal in Northern California. "If there hadn’t been this deal, I think the [men] would have gone their separate ways and ... I don’t think there would have been any silicon in Silicon Valley," Rock recalled during a 2002 symposium at the Computer History Museum.

The Fairchild incubator would give birth to virtual dynasties of silicon companies and investment firms. Among them: Don Valentine, who worked at Fairchild for seven years, helped start National Semiconductor—and later became one of the Valley’s leading venture capitalists by placing early bets on Apple, Atari, Cisco, Oracle, and Electronic Arts. Eugene Kleiner teamed up with a Hewlett Packard manager, Tom Perkins, to start the venture capital firm Kleiner Perkins. In 1972, Kleiner and Perkins raised the largest venture investment fund the world had ever seen: a whopping $8 million. Amazon, Sun, Genentech, Intuit, Verisign, and Google all owe their starts to KP.

When Berkeley grad Gordon Moore and Robert Noyce, two of the cornerstones of Fairchild, decided to quit in 1968, they called Rock. This time, it took Rock fewer than 48 hours to raise $2.5 million to fund Noyce and Moore’s new company, which they eventually named Intel.

In the 1990s, Kleiner Perkins began promoting the Japanese concept of keiretsu, an interlocking network of companies funded by KP venture capitalists, which share experiences, insights, knowledge, and information. That concept took hold as the zeitgeist of Silicon Valley, as more and more companies were created to complement each other. The populizer of the idea was John Doerr—who got his start at Intel.

Not all webs are perfect, however. Tom Perkins once skipped a meeting with an unknown entrepreneur who seemed to be promoting a "computer kit." Venture capitalist William Draper sent a colleague to check out the same entrepreneur—and was told that the young man was "arrogant" and late for the meeting. Draper passed on the investment. Instead, it fell to another Fairchild alumnus-turned venture investor— Armas Clifford ("Mike") Markkula, Jr.— to have the pleasure and the profits of making the pivotal investment in Apple Computer and Steve Jobs.



http://www.alumni.berkeley.edu/calmag/200701/id_venturecapital.asp

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