Nathan Myhrvold loves the business of ideas

Like it or loathe it, his Intellectual Ventures now owns more than 40,000 intellectual 'assets' and has raised $3 billion in licensing revenue from that portfolio. Yet, he supports proposed patent reform. Here's why.
Written by Heather Clancy, Contributor

Depending on your perspective, Nathan Myhrvold is the world's most evil patent troll or a brilliant, eclectic disruptor whose impact on the U.S. patent system could rival the legendary Thomas Alva Edison. Either way, the former Microsoft innovation chief is reinventing intellectual property protection and creating a new framework for stimulating innovation across a very wide spectrum of disciplines.

"One of the things that's made Silicon Valley so successful is that when you get a critical mass of people doing new things, willing to think differently, willing to take risks, that makes it easier for the next one, and the next one, and the next one," Myhrvold told me during a phone interview this spring. "Five years from now, technological entrepreneurs will be even more successful more quickly than they are today, because it's easier to plant in a garden that's already plowed and in fields that have already been fertilized."

If that prediction holds, Myhrvold's controversial 14-year-old company, Intellectual Ventures (IV), is poised to benefit substantially. It currently owns more than 40,000 intellectual property "assets" categorized into different funds. According to recent research, it bought 16 percent of all the patents sold during the first half of 2014, many for wireless or semiconductor technologies. Although some tech execs discuss IV with distain – at least publicly – its model has champions in the form of more than 30 licensing customers including Nest Labs, SAP, Samsung and Salesforce.com.

"Nathan Myhrvold is a very, very, very smart man," Jonathan Schwartz, CEO of startup CareZone and former Sun Microsystems CEO, told CNET in August 2012. "He may be the wealthiest man on Earth when all is said and done. Congratulations on arbitraging the patent system."

So far, IV has generated more than $3 billion in licensing revenue from patents that it has acquired or that have been created during internal invention sessions it uses to develop its own intellectual property. There are three IV spinouts so far: TerraPower, the nuclear energy technology company where Myhrvold and his former boss Bill Gates are vice chairman and chairman, respectively; Kymeta, a next-generation satellite communications company (Gates is an investor here, too) that names the chairman of Airbus as one of its advisor; and Evolv Technologies, which is working on image detection systems that could be used in places such as airports. (And, YES, Gates is on backer list here, too.)

You can debate the motives, but IV came out in late July as a supporter of the TROL patent reform legislation currently meandering its way through the U.S. House of Representatives. The aim of the bill, called the Targeting Rogue and Opaque Letters Act, is to end the practice of sending "deceptive" and frivolous letters alleging infringement. Critics don't believe it's enough to discourage trolls but IV's executive team calls it a positive step.

"We know from experience that a vibrant patent market makes applied research a profitable activity, resulting in vastly more private investment in applied research than occurs today," wrote Myhrvold and the four other executives in an IV letter dated July 23, 2014. "Specious demand letters targeting America's small businesses are not a naturally occurring feature of a well-functioning marketplace for invention."

I didn't request my interview with Myhrvold to grill him about patent litigation. Rather, the bulk of our conversation centered on what he seeks in project collaborators, how IV hires researchers, and how invention sessions are structured. Here are some highlights of his thoughts about those themes: 

Being smart isn't enough.

First and foremost you want somebody who's smart. Smart is hard to define, but if someone isn't very mentally agile, able to learn new things quickly, mentally flexible, it's gonna be hard to work in my world. So that's certainly one of the most important things. But you also want someone that you can get along with. There are some people who are smart, but they have such a big ego, or they have some other set of characteristics that makes them very difficult to get along with other folks. It doesn’t work really for me either, because I don’t have the time and energy to deal with trying to make everybody play nice.  If they won't get along, kind of doesn’t work.

Hiring homework assignments are important.

If there's a way in which you could work with someone on a project basis as opposed to a forever basis, that gives you a whole lot more confidence. Frankly, that's the best way to choose somebody, because you have an example of working with them that's pretty concrete. A job interview is very difficult, because there's very few people in a job interviewer who are going to say, "I'm kind of a jerk. I sort of have ego issues." I mean, nobody says that, right?  [Laughs]  

Sticking to long-term views is critical.

There's a guy I know who, for 25 years, was not terribly successful as a writer. And then he wrote this series of books that became wildly successful. And he used to say, "It's really easy to be an overnight success if you put in 25 years first. The homework, the background, the studying, the work that you do in trying to work on something, and trying it again, and trying it again, all of that is necessary for what might suddenly then come in a whoosh all at once. You had to put the effort in, or that wouldn't have occurred.

Myhrvold, 55, has been in the business of ideas for a very long time. He graduated high school at the tender age of 14. Instead of going away to someplace like MIT, his mother convinced him to enter a two-year program at Santa Monica College. Since then he has collected master's degrees in mathematical economics, geophysics and space physics, and a doctorate in theoretical and mathematical physics. He's also a paleontology professor and author of two highly acclaimed cookbooks on "modernist cuisine."

Myhrvold hasn't used any of his academic degrees professionally. He walked away from his postdoctoral fellowship at Cambridge University with Professor Stephen Hawking – ditching his research in cosmology and quantum field theory for what was supposed to be a three-month-leave of absence at a tech startup, one eventually bought by Microsoft. "I don't think he holds that against me, though," Myhrvold wrote in a blog earlier this year. "That's what made him such a valuable mentor. He encourages people to 'look up to the stars, not down at your feet.' "

The ideas being nurtured internally during IV's invention sessions are as eclectic as its cofounder – from new approaches to mosquito eradication to insulated containers for storing and transporting vaccines in developing countries. While he was cagey about the focus, a few days after we spoke, Myhrvold was excited about a scheduled daylong discussion centered on approaches for preventing force injuries related to professional sports. "People want to keep doing sports. The fans still want to see dramatic things happen on the field, but you don't want to see people's brains turn into jelly afterwards," Myhrvold says, explaining the motivation for this discussion.

The most important consideration for any of these sessions is convening a diverse set of perspectives. When IV issues a "request for ideas," it reaches out to 4,000 researchers, academics, industry experts and independent inventors. Many times, someone will offer a counterpoint to the problem at hand, which becomes part of the solution.

"An analogy I like to use is that we've got some chasm that we're trying to cross and we need a bridge," Myhrvold explains. "None of us has a bridge we can just lay across the chasm. We don't have a board big enough, but each of us has a whole bunch of different pieces and part of the idea of an invention session is to try to create an environment where people can conceptualize the problem in different ways. Maybe, maybe, we can take a piece from one person, a piece from another person and mash them together. Then, my God, we can cross the chasm."


What was the best advice you ever got?

When I first started off in business, I went to see this guy who had been an entrepreneur. He was sort of at the end of his career, and I was trying to get him to share some of his sage advice. He looked at me and he says, "There's just no negotiating posture quite so strong as genuine disinterest." [Laughter] So, of course, he's right. The trouble is, how do you engineer that genuine disinterest if you actually do care?  

What was your biggest mistake, if you could list just one?

That one stumps me, because the nature of the question is the idea that there are single big mistakes. One could always say something like, "Well, I didn't short Lehman Brothers." You can create weird counterfactuals like that. I don't think my life has turned on very many single, decisive decisions. So, I haven't had many opportunities for either great success or failure from a single decision. Does that make sense?

What would you tell your younger self?

[Editor's note: Myhrvold's answer refers to his decision to attend a junior college in California, rather than a university, which his friends and advisors thought would be disastrous for his career] Here's the funny thing: My younger self didn't think it was a hard decision at all. My younger self was not wringing my hands. … I would have told myself, "It doesn't really matter. Things are gonna work out fine." I probably would have had a very different set of experiences, but would it have been better? Who the hell knows? 

[A FINAL note: This story was updated Aug. 8 to add information about Evolv Technologies.]

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