Danny Hillis on the 4 Keys to Successful Innovation

Guest blogger Josh Dilworth works for the public relations firm Porter Novelli, and is one of the most highly regarded PR minds among the Web 2.0 community.

At the University of Texas at Austin’s Ready To Commercialize conference last week, supercomputing and parallel computing legend Danny Hillis gave a most excellent talk about the key ingredients necessary for successful innovation.

It was an especially relevant topic for those in attendance, as the conference-going crowd was mostly comprised of entrepreneurs and technologists in search of willing sources of capital for spinning out (or more often, licensing) the university’s many breakthroughs in areas as diverse as search, microprocessor design, cleantech and nanotechnology.

Before we get to our notes, a bit more about Danny.

Hillis wears several hats, but primarily spends his time at Applied Minds, where he is founder and CTO. Applied Minds is itself a fascinating company, and one whose front door (a password protected telephone booth with a faux back door opening into what John Batelle has called “nerdvana“) is stuff of legend. Danny also co-founded, with a few of his Applied Minds cohorts, the Semantic Web startup Metaweb Technologies (makers of Freebase, more or less an intelligent, data-rich version of Wikipedia). Finally, he is co-Chairman of the Board of Directors (with Stewart Brand, Brian Eno, Esther Dyson and others) of the Long Now Foundation, a non-profit dedicated to fostering long-term thinking – as opposed to today’s deeply engrained “faster/cheaper” mentality.

Danny led off by remarking that the context of the talk reminded him of his very first speaking engagement, in 1975 at the National Computer Conference. At the time there were very initial signs of microprocessor adoption and market potential.

Danny’s public prediction, almost 35 years ago, was that soon there would be more microprocessors than people, a notion that drew waves of laughter. Audience members remarked to him afterwards: “Danny, what would you possibly do with them all?”

And as Hillis pointed out to the audience here in Austin, he frankly didn’t have an immediate answer for his critics. His point: the business of technology innovation is puzzling even to those in the middle of it, even if you can see the big trends.

The key problem, therefore, is determining: what are the key ingredients in terms of adoption? What’s the magic combo?

As Danny noted, patterns of innovation go way back to the time at which the U.S. was founded – and he suggested that America in fact has a unique way of causing innovations to happen (though that’s a topic for another blog post).

His example? The telegraph.

Morse’s first message, from the White House to the Capital, was a system that fundamentally and immediately transformed the world. And indeed, we’ve forgotten what a profound paradigm shift that was. The transmission of information without physical travel changed everything.

But as Danny pointed out, there’s a problem with the story as it is commonly told.

The truth is that people were very interested in building a telegraph as early as 100 years prior to Morse’s breakthrough. Even as many as 6 years prior, similar prototypes had been built in Russia, Europe, and the U.S. – all of which predated Morse. In fact, William Cooke and Charles Wheatstone even beat him to the punch with the very first commercial effort.

So what made him successful over his competitors, of which there were many?

Well, the “stuff” that Morse invented turned out not in fact to be the critical “stuff”. His secret was rather in the people around him. It’s one of the best entrepreneurial stories on file, in fact, so pay attention.

Morse was a painter and an entrepreneur. And he’d already gone bankrupt with a fire engine pump company. But he met the right people at the right time, at NYU, where he was also a professor.

Morse’s co-conspirators were his colleague Leonard Gale (who had a good sense of the telegraph market and the efforts to date), an engineer named Arthur Vail (with a genius technical mind) and his financier Francis Ornand Jonathan Smith (a Maine congressman and chairman of the Commerce Committee).

All three shared jointly in the Morse venture. But more importantly, as soon as they got together, the team immediately went about completely redesigning Morse’s work to-date. For example, there were now dots and dashes instead of Morse’s original curvy lines, corresponding to a significantly scaled-down vocabulary – a pragmatic “less is more” approach that resonates even today.

They also drew on academic community to help with this redesign process (the team first experimented with a research-grade underground system, for example).

And finally, they secured additional funding, in what was essentially the equivalent of DARPA money — $30K from the U.S. government.

Meanwhile lots of other people were developing telegraphs too. It was getting to be a crowded market.

And yet, the following four pieces of the puzzle in perfect combination resulted in the story that we all learned in elementary school and continues to be held up as an example of American ingenuity even today.

In Danny’s words, they are:

First, the entrepreneur(s) – an individual with a vision tied to how it affects the world, not the technology. This person (and we loved the way Danny put it) must have an “unreasonable sense of determination”, as well as the ability to attract. . .

The engineer(s) – a person with a laser focus on execution and details, and someone with a deep connection to science (and for this reason it’s no surprise that most big innovations come out of universities in some form or another).

Next you need funders – but importantly, these individuals must not just be a source of money. Successful innovations have a source of capital that is simultaneously a source of experience, advice and relationships “with the powers that be”. That is, you need the smart money.

As Danny pointed out, Thomas Edison is a brilliant example of how to pursue the smart money. The first installation of his light bulb prototype was in JP Morgan’s home, and the first street with electric lamps was Wall Street.

But there’s one last variable that is more important than them all. . .

The market. You have to get the timing right. In Morse’s case, among other things, the budding railroad business established right of way and allowed the company a ready-made place to run telegraph wire.

Or Danny put it, there is “a moment inflection at which the impossible suddenly becomes almost easy.”

But it’s not rocket science, you say, to figure out that these are the important elements to bring together in any startup. . .right?

Indeed, Hillis readily admitted, but very few ideas hit all of these points at the same time, and that’s the key take-away from his talk. In particular, Danny cited readiness for VC dollars (lack thereof, in fact) as the primary driver as to why today’s innovation system is so unpredictable, even unreliable.

There are very few places like Bell Labs or SRI that can support longer-term development, which is often needed in order to properly sync up the entrepreneurs, the engineers, the funding, and the market timing. Bootstrapping, too, is certainly a way to begin work and make progress until everything is properly aligned and you’re ready to pounce.

But Danny feels like the future of innovation mandates that we begin to see more companies and organizations that try to bridge the gap between the inception of an idea and that perfect moment at which the founders, the technology, the funding and the market collide. In his mind these are companies like Applied Minds and Intellectual Ventures (as well as universities like UT and government mechanisms like DARPA and In-Q-Tel) that place longer-term bets — and, when the time is right, facilitate the process of putting the necessary elements in place.

Thanks to the UT Office of Technology Commercialization for giving us a press pass to enjoy the programming, and hopefully soon we’ll be bringing you news from the many Austin-based investors whose wares were showcased at the event.

Thanks as well to Danny Hillis for being. . .awesome (and highly quotable).