Pennies From Heaven Have Innovators Looking Up
All in one quick motion, the nurse placed the instrument just inside the sleeping patient’s ear, then withdrew it and read the temperature. Sensors in the thermometer had taken two seconds to measure the infrared radiation emitted from the patient’s ear canal and convert it to an accurate reading of the body’s temperature.
Call it earthly reward. The infrared sensor, a considerable advance from earlier thermometers, is now in widespread use because the space program years ago developed an Infrared Astronomy Satellite telescope to determine the temperatures of planets and stars.
And Jet Propulsion Laboratory, the Pasadena research center responsible for unmanned space exploration, passed on key technology for the thermometer to Diatek Corp. of San Diego, a small private company that participates in JPL’s technology affiliates program.
Diatek, a 22-year-old company that also makes conventional thermometers, found a ready market for the $400 infrared model in the treatment of children, as well as critical care and geriatric patients.
It’s a good example of the government’s gold mine of technology yielding commercial opportunity--and it’s not an isolated example, either. There are 53 companies in JPL’s technology affiliates program. In return for a small investment, they get a chance to work with advanced science and scientists to develop new products and processes. Other government labs have similar programs.
Private industry, too, is trying to boost innovation: Xerox Corp. set up Xerox Technology Ventures four years ago to develop bright ideas that were being smothered inside the $16-billion-in-sales company.
What’s going on is sometimes called technology transfer or defense conversion, usually referring to big projects that never quite work--aircraft factories trying to make trains or buses, for example.
But on a smaller scale, technology transfer is working, thanks to a blossoming of entrepreneurial attitudes in both industry and government. Exciting things are happening.
At JPL, a complex refrigeration system developed for ballistic missile sensors is being adapted by Aerojet, the Downey rocket propulsion company, to air-condition Los Angeles’ forthcoming Green Line trains. The environmentally sound process will convert heat from the train’s braking system.
JPL, which pioneered the science of re-creating computerized pictures from outer space, is also working with two Los Angeles start-up companies, American Digital Imaging and Principia Optics, on a digital movie camera and projection system that could revolutionize filmmaking and exhibition. Stanford University and the Sarnoff Institute have joined the effort. Laser technology for the projection system comes from the Lebedev Institute, a major laboratory of the former Soviet Union.
The technology has always been there, but a new approach has sprung it loose.
“We used to be passive, put the information out there in scholarly papers and hope someone would use it,” says James Rooney, a physicist who manages JPL’s affiliates program. “Nobody did. So we have an outreach program. We ask companies about their problems and see if we have technical capabilities to address those needs.”
Xerox Technology Ventures was also born of frustration, following publication in 1989 of “Fumbling the Future,” a book relating how Xerox Corp. had let basic technology of both the personal computer and the laser printer slip out of its research lab and benefit other companies, notably Apple Computer and Hewlett-Packard.
As Robert Adams, Xerox Ventures president tells it, David Kearns, then Xerox Corp. chairman, and current Chairman Paul Allaire, were determined not to lose out again. So they gave him $30 million to set up a venture capital subsidiary. Employees with good ideas who were getting turned down for funding within Xerox were encouraged to go to Adams.
One who did was Dennis Stemmle, a Xerox inventor with 60 patents and an idea for a portable copier that could be converted to a fax or printer. Stemmle was able to develop the copier at Xerox Ventures with the help of $3.5 million from Adams, who also raised $3 million from other U.S. venture capital firms and $3.5 million from Taiwan business people.
The result is Quadmark Ltd., a Rochester, N.Y., company that began selling the portable copier in April. Quadmark predicts sales of 250,000 copiers in the first 12 months and ultimately a market of 1 million copiers a year, worth roughly $200 million in sales.
And that’s only one of Xerox Ventures’ start-ups. Adams, now 62, has invested the $30 million and has nine companies, in businesses ranging from computer software to document binding, with sales of more than $100 million and a total value approaching $250 million. Values will become clearer in the next few years as the companies go public.
The essential element, more important than technology, was risk. “I made them sign statements acknowledging they had no job to return to at Xerox,” says Adams. “In each company, I told them if this effort sinks, you sink with it. They yelled at each other, but they worked together and made the companies fly.”
People are the key at JPL as well. “Nobody in federal laboratories knows markets,” says Rooney. So JPL is reaching out to entrepreneurs. James Foster, chairman of American Digital Imaging, put up $500,000 of his own and raised $3 million for the camera’s development from Stanford and the Sarnoff Institute. Michael Tiberi, president of Principia Optics, raised $350,000 from relatives and private investors and has secured $200,000 in backing from Sony.
To work with JPL, companies invest $25,000 to $50,000 in the affiliates program, then pay expenses.
But do such investments and payments constitute an adequate return on, say, the $1.2-billion cost of the infrared astronomy telescope? No, and they are not meant to. We finance a space program to explore space. The affiliates program is a way to get a further dividend for the taxpayer by giving a helping hand to U.S. industry.
The greatest dividend, however, is not in the speed of the infrared thermometer or the ingenuity of digital cameras. It is in this new pattern of decentralized, innovative product development. It is a pattern that spurs drive and ingenuity and plays to real strengths of American business.
