How the Wright Brothers Blew It (2003)
forbes.com
forbes.com
I mean, sure, if establishing a monopoly and aiming for maximum monetary extraction from a market is the primary goal - which it seems to be for many people (here and otherwise) - then yeah, they "blew it" so to speak. Still, first in flight, history remembers this, and all pilots must speak English if they expect to land in the United States and most well-to-do nations. Oh, and this tidbit:
>In October 1915 Orville sold the Wright Company to a group of investors for a reported $1.5 million.
...a quick calculation makes it look like in today's value that'd be around $35 million. Might not sound like a lot for the Forbes business crowd, but that's a good chunk of change in my opinion.
Their secrecy surely didn't help them, but trying to apply that to today's environment is just stupid. The likelihood of being 'ripped off' is more of a concern now than ever - if the idea can make it to China, it can be made in China without recourse. Try playing whack-a-mole with lawsuits while trying to do business as the originator? Sounds like a terrible business plan.
I'm going to be writing an essay about 'Why I keep secrets as a struggling inventor' soon, and will submit it here for discussion. In it will be one design from years ago that I feel comfortable showing in public. Grand scheme of things I know I have to pay for protection in the patent game, but even with the patent, there are still risk factors in the global scene.
- https://en.wikipedia.org/wiki/Starlite : An amazing material, apparently. There was a BBC show where it protected an egg from a blowtorch. Unfortunately the guy who made it was extremely protective, so we'll never know quite what it was or whether it was really as effective as it seemed.
- I had a long discussion with my old partners about whether trading models should be kept secret. The big problem is that once you've decided you've got something - and over short periods, it may well look that way - you start to think you can walk on water. I still wonder which way round the causality is. Did we keep everything secret because we thought we'd found a goldmine, or did we think we were brilliant, and the secrecy was a way to flatter ourselves? In any case, once people develop the attitude that they are better than everyone else, it becomes very hard to get any new ideas in there.
- Once you decide your edge is in some kind of knowledge, rather than some kind of execution of a business plan, you are going one way only. Sure, you need some knowledge, but you'd better believe other people have that knowledge as well. There's only one principle involved in steering a plane: change its shape. But there's a HUGE number of ways you can do that, and a huge number of ways to shape your business to explore those ways.
- It seems the patent system was broken a hundred years ago, and it hasn't been fixed. For me the main issue is it causes people to have idea fixation: the idea that ideas are somehow more important than everything else in a business. There's a whole list of interesting things to say about patents as well, but I'll stop here.
For any chunk of knowledge, except for very unlikely ties, there was a first person who had that knowledge, and for that person, then, the claim is false.
It really is possible to do research that is genuinely new. Indeed, the usual criteria for publication are "new, correct, and significant". Criteria for a Ph.D. dissertation are sometimes "an original contribution to knowledge worthy of publication". Each each paper published in a peer-reviewed journal of original research is supposed to be an example. When the US NSF or NIH give research grants, there is supposed to be research that will be publishable in a peer-reviewed journal of original research, that is, new, knowledge that did not exist before.
In computing, we write software. It takes in data, manipulates it, and puts out data.
For my startup, I wanted some software that would take in some available data, do some powerful manipulations, and put out some valuable data. So to get some powerful manipulations, difficult to duplicate or equal, and to know right away that the manipulations were correct and likely powerful, I wrote out some original applied math. I have to doubt that anyone else in the world has written out anything really the same. Then I wrote software to perform the data manipulations specified by the math.
The software and the math are my proprietary intellectual property, and I intend to use trade secret protection. Tell the world the details? Heck no.
Am I able to do such original math derivations, "original contribution to knowledge", "new, correct, significant"? Yup, as demonstrated by my Ph.D. dissertation and published, peer-reviewed papers.
For practical purposes, if you want to make anything resembling a business out of your knowledge, you are going to need time. And chances are people in the field would have been aware of what interesting things there are in that field, and would have some idea of what you've come up with. They may not have some very specific things like particular implementations, but they will nonetheless have a good idea of what's up and down in the field.
Obviously you are the only person writing your code, but should you assume that someone with a similar background could not come up with something quite similar if he wanted to research it?
So, do some research that others are not likely to do. Then carry that research all the way to a successful business.
My research is some math, based on theorems and proofs, based on some advanced prerequisites. Sure, at least in principle, there are some university mathematicians who could duplicate what I derived.
It's been a while since I was a teenager. Since then I've spent a lot of time around low end business, and high end research mathematics, business, startups, and computing. Sure, a lot of that experience has just junk quality information, but the experience does let me have some understanding of the people and cultures. Based on that understanding, there are at least three bottlenecks that help protect me:
(1) To duplicate my research, the university research mathematicians would mostly need a relatively clean formulation of the the math part of the real business problem as a math problem. That formulation requires also understanding some of my business model, which is not mathematics, in particular, what data to get and how to get it and, then, what the heck data to give the users/customers that they will like, a lot, and why.
E.g., first cut a lot of people will say that I will need ballpark 10^27 bytes of data. Nope! Just why not is a bit clever; although the basic reason is some solid math, it's a bit novel; also need to understand and keep in mind the business model; only a small fraction of research mathematicians have all the math prerequisites; and, net, only a small fraction of people in pure math would think of it.
Some of what I'm doing most people who are close to such things will say I can't do that. For things close to what I'm doing, they are right. For exactly what I'm doing, they are wrong. I found a narrow path through the woods that works for just what I'm doing. If my path were broad instead of narrow, a lot of books would have to be revised.
(2) The research I did is relatively applied, i.e., would be regarded by the research mathematics community as a niche; then such mathematicians would have to do the work of focusing on the niche; that would take them away from their main stream of research, get them few or no academic promotion points, and is something they wouldn't want to do.
(3) Even among good university research mathematicians, some of the crucial math prerequisites are not well understood.
For a human, there is little so obscure as some math theorems and proofs where the human is missing the important prerequisites.
Outside of university research math departments, the chances of anyone even being able to duplicate my work is much smaller.
Then there is the issue of business: The university research mathematicians are a very long way culturally from a startup in information technology; they don't have nearly enough background in the basic computing; e.g., they don't really know in any good detail how a Web server works, or TCP/IP, know an appropriate programming language, understand server farm system management, etc.
Then in business, they don't understand information technology startups. E.g., they haven't been reading Hacker News, VentureBeat, AVC.com, Mark Andreessen, etc.
They couldn't, and even if they could likely wouldn't, do the work alone (too big of a distraction from their university research career) and with just the math wouldn't be able to attract a team without some significant bucks. Further, for a VC, a professor with a math paper and a dime won't cover a 10 cent cup of coffee.
My effort is yet another example of something classic in innovation -- field crossing. So, for the fields, there are some advanced math prerequisites, some understanding of some niche topics in pure and applied math, the particular, niche math research I did, the computing, and, to tie it all together, the whole business model I have in mind.
So, early on, no one will bother trying to compete with me. Later I will have some barriers to entry from the data I've gathered, some viral and network effects, some happy users who won't t want to try something else or pay switching costs, and will have some publicity, and a brand name.
Or, until I'm quite successful, people who could do the math couldn't easily and wouldn't do the rest; the people who could and would do the rest won't do the math; and no one with a suitable checkbook would cough up enough money to put a team together that could do all the required field crossing. Later? Mostly too late unless someone wants to buy me out and I'm willing to sell.
> Obviously you are the only person writing your code, but should you assume that someone with a similar background could not come up with something quite similar if he wanted to research it?
The "code" is not the point. The crucial, core point is the math. Given the math, nearly all the code is quite routine, and the rest is not much more difficult. The real, core technical challenge of the code is the math in the design and specifications document for the code.
Saying that I did some math research doesn't give away much; it just puts one in the QA section of a research library with racks and racks of books and journals where one can easily get totally lost for many lifetimes. And, for the rest of the news, my work is very likely not in the that library at all.
Can I do original math research? Done it often enough in the past!
But dammit, some things are revolutionary!
Well, I can't explain that one; here we don't want NSFW material!
So, I'll give a SFW version; I'll concentrate on information technology since biomedical is at least a little different:
(1) The investors are not very technical people. Often we're talking people with backgrounds in business development, marketing, routine software, former CEOs of startups that were largely non-technical, etc.
In contrast, the people in high end research university STEM field research know how to evaluate technical work, e.g., as reviewers and editors of good peer-reviewed journals. And if some paper is outside the field of some prof, then he will still know how to get the work reviewed by others, e.g., as the editor in chief of a journal gets the editors and reviewers to do the work.
Then, just think a little about what is involved in such peer-review and, then, begin to see how hopeless it would be for the usual investors to do such work. For the VCs, such technical review work is hopeless, and they don't do it.
Or for your description that they hear hype, that's not really the problem; instead, hype or not, "revolutionary" or not, they just ignore anything like research.
Or look at the bios of the VCs: Could hold a convention in an airplane wash room for all of them able to do or even able to direct peer-review of STEM field research.
(2) Evaluating research is something the VCs just won't do. Likely if one of their limited partners (LPs) caught one of their VCs using an evaluation of some research, then the LP would make sure that VC never got another dime, at least not from that LP.
(3) Sometimes VCs make money, and sometimes they don't. On average the don't make very much. In any case, they don't try to make money with the results of research.
(4) Mostly VCs don't evaluate the technical work. Instead, for early stage investing, their criteria are fairly simple: (A) Look for traction significantly high and growing rapidly. (B) Be sure the work is for a really large market. (C) Usually be sure the CEO and company HQ will be a short drive from the VC's offices. (D) Look for anything that is really wacko that would be a disqualification.
If (A)-(D) look good, then contact the CEO and argue that a check of equity funding would help their growth rate enough to more than pay for the stock dilution.
Have a term sheet that for the CEO is just onerous and puts the VCs in solid control, e.g., able to replace the CEO with someone loyal to the VC.
For seed funding, the VCs look at the product, although not at any technical internals, and try to estimate how the target users/customers would like the product.
For later stage funding, the VCs look mostly just at what an accountant does.
And for any VC funding, they look at what they know about the market: Commonly VCs claim to have "deep domain knowledge"; in terms of anything technical, that is a wild belly laugh; could break a bone slapping a thigh over that one. But they do have at least a cursory, from 10,000 feet up, view of the markets. So, they have heard of viral, social, local, mobile, sharing, photo apps, own both an iPhone and an Android, have used Google, Facebook, PInterest, SnapChat, InstaGram, and Uber, have heard about tablets, laptops, Windows, Apple, Linux, have seen articles on Apple's watch, have gotten a lot of pitch decks, attended a lot of pitches, and have listened for a few minutes each to a few.
For more, they know most of the other VCs on, say, Sand Hill Road, and attend morning what's hot pick-up seminars in coffee shops. For exits they know about acquihires, pitchforking, M&A, and maybe even IPOs.
While in some sense the VCs understand that the need to find companies that are new and exceptional, they look for patterns they have seen from the past, patterns that must reject most new and exceptional companies.
Really, they dream of a CEO of a company they funded calling them and telling them about the next SnapChat.
Sometimes they make money, and sometimes they don't, but that's what they do.
The VCs commonly say that their funding is not for everyone, and that is very true. While what the VCs do sometimes makes money, in no way are the VCs a broad source of innovation funding.
For revolutionary technology, the VCs couldn't care less. Actually, they would prefer that anything technical not be important -- the don't want to get involved in anything technical.
Where do you look for funding for actual revolutionary technology, or are you just as frustrated as I am?
Have you done consulting to see how well 20fold works in practice yet?
B2B infrastructure is a hard area in which to run a bootstrap startup. I'm not really sure how to fit 20fold into a consultant mold. I am interested if anyone has any advice on how to do this, though.
So, I started with the business idea, the really short, simple one from 50,000+ feet up. Right, John Doerr, that idea by itself is worthless.
I'd like to say that I did the planning for the math next, then the business model, then the user interface/user experience (UI/UX), then the computing, all in some such order, but no such thing would be correct.
Instead I did a fitting, did the planning of the whole by planning all the pieces so that they all fit together; e.g., the math fits because it is the crucial core, enabling technology that lets the rest work and the whole be valuable.
Or, I don't want to do research without good plans for a happy trip to the bank.
I derived some math, but I'm not trying to be a math researcher. I wrote some software, but I'm not trying to be a programmer. Instead, I'm trying to be a businessman, that is, to make money, the green kind, and there the math, computing, Moore's law, the infrastructure software, the Internet, mobile, the software I wrote, etc. are all business advantages, that is, make my chances of getting rich better than, say, running a pizza shop, being a math prof, or being a programmer.
But there was another criterion: I needed to bring my project to nice profitability just from my checkbook where I did all the work.
It was in that context that I derived the math and wrote the code.
If you have some good technical work, then maybe you'd like to turn it into a business. To do that, it can help if you can do all the work to good profitability alone funded just by your own checkbook. And it is crucial that the technology can help you get to the necessary happy users/customers.
A model is the guy who did the Canadian romantic matchmaking service Plenty of Fish. He was long just one guy, two old Dell servers, ads just via Google, and $10 million in annual revenue. He grew, hired a staff, and recently sold for $575 million in cash. Maybe for his matchmaking he had some clever ideas -- maybe.
Some good, new technology can be a big advantage, maybe even crucial. But really you need a feasible path all the way to "The Pay Window".
From a background in high end work in the STEM fields, it's easy to guess that, when some high end STEM field work has some new results that clearly should be the crucial, core of a valuable new business, there is some funding for that. In a word, nope. Exception: Some guy with a lot of background in fusion has a plan where as little as $500 million equity might get to a prototype fusion reactor that generates energy, and get one on one with a dozen or so billionaires who will pull out their personal checkbooks. Otherwise, essentially nope.
VC? Sure, if look at their Web sites, can get the idea that they fund ambitious, change the world, brilliant, new, disruptive, ideas. Yup, and they also fund tall, short, thin, and fat people, too. But the reason they fund is to follow making money their way which is to buy, on terms onerous for the founders, a fraction of a business with traction significant and growing rapidly. That's what they do. Maybe their LPs make sure that that is exactly what they do, no more and no less, and no funding off the back of a napkin. In particular, it appears that almost universally VCs just will not fund software development. Instead, they want the software running and in use, with significant traction growing rapidly. As IIRC Sam Altman put it recently, VC funding is to let a growing business grow faster. Bringing good, powerful new STEM field research to market? Nope.
The idea that good technical work is valuable, etc. seems to come heavily from the massive funding of research for US national security of the past 75 years, some from the best work of Bell Labs, a little from Xerox PARC, and a lot from NIH.
Sure, I didn't pay even a dime tuition for my Master's or Ph.D. So, where'd the money come from? Sure, Congress via NSF, etc. And what was Congress thinking? Sure, the bomb, the hydrogen bomb:
"Now then, Dmitri, you know how we've always talked about the possibility of something going wrong with the Bomb. The Bomb, Dmitri, the hydrogen bomb."
and Sosus, passive sonar, much better jet engines, the submarines, GPS, the fighter and bomber airplanes, the high end radar and infrared systems, etc. It's a big system with layers -- the STEM fields of the research universities, the DoD laboratories, the Federally funded research and development centers (FFRDCs), the large aerospace companies, etc. And while that funding is definitely what built Silicon Valley, now Sand Hill Road is more interested in some clever, novel, viral, social, local, mobile, photo/video, private, in-group, sharing app. Or at least that is what they think.
The good news is the computing, storage, processing, data volumes, data rates, OS software, etc. that $1000 can buy. So, that can be a heck of an advantage. Heck, of you could have a robot mow a 1/2 acre lawn for $2, then you could make a big splash in the grass mowing business. Well, now there's a lot of data, and if can think of something valuable to do with it, then maybe can make a big splash, and fortune, in computing. Some good, new research in the STEM fields can be a big advantage.
they were unwilling to show the machine to anyone who
might steal its design, since enforcing their patent
rights could be a long, laborious, and very expensive
process. Having conquered flight, they wanted to cash
out before going any further.
These days you should promote any invention as soon as you get patent pending. But I can see why Wright brothers we're suspicious back then.
Other major failures we're early concentration to military sales and not taking competition seriously. Military sales are take it or leave it, you either win big or nothing. If some conservative major gets assigned to deal with the purchase and you are sellign something really new, the sale might be doomed before you start.
I think the thinking was it would be difficult to figure how they made said thing, once it was out in the public. If you patent, everyone knows.
From a legal perspective this is not true. But the fact remains that to enforce your IP you will need to spend a lot of money and effort, which is not something a startup can/should do.
Sorry, I don't believe that.
Here's my guess at why people say not to keep an idea secret and, instead, to tell the world: By an idea they mean just a rough description of a commercial product/service as a user/customer might see it. The technology used for the product/service is just routine software and common, off the shelf (COTS) hardware. Any crucial, core, original proprietary technology is not expected and is just missing.
Instead, when there was some software for automatic trading and it appeared that a guy got a personal copy, the owners of that software started legal action to protect their technology and intellectual property -- they didn't tell the world the crucial, core internal details of just how their software worked.
In the text shows Santos-Dummont as a really applauded guy, recognized on the street, with incredible PR skills. He called the press before any presentation and even meetings, he did not applied for any patents and shared his prizes with workers that needed it. Just the opposite from the Wright Brothers.
Sadly, this special issue is in Portuguese only. But I do think it is worth the pain of the automatic translation if you are interested in comparing the stories. It really shows how important it is to share and to see science and technology as the social endeavors they are.
[1] http://infograficos.estadao.com.br/especiais/a-redescoberta-...
Dummont created the first motorized airplane, which is a look more like a real airplane than an ultra-light that can't launch itself.
And 100 years earlier there was an Italian that came up with a model airplane that would have flown if built to human scale.
I really don't understand why people care so much about the Wright Brothers. I can't see what they invented originally at all.
More information about Dummont vs Wright here: http://web.archive.org/web/20030820050506/http://www.thefirs...
Personally I don't think patents are worth it. It may help with a few innovations, but it's not worth the massive cost and bureaucracy, and for other innovations they may delay development by years.
I would highly recommend as a case study for what not to do if you reach a groundbreaking development.
They also flew publicly in France in 1906, thus demonstrating what they had.
They defended their patent when Curtis invented ailerons. Today Curtis would have been handed their own patent and won the battle, but back then they were given wide latitude.
In the end, they sold their patent for something like $1M. I don't recall if that was after Wilbur died.
In my opinion, they did most of it right.
My favorite story was the one where the army put it out for bids (required process) and there were 3 bidders. One of them tried to win by undercutting the Wrights price - he didn't have a plane but planned to buy one from them and thus make himself a middle man. When the Wrights told him that would not happen, he dropped out and they won the bidding process and indeed sold a plane to the army.
I see some misinformation in the article, and didn't get far enough to see any suggestion of an alternative path. There were hints that selling out would be a suggestion. Cave to "real" business people.
[1] http://idlewords.com/2003/12/100_years_of_turbulence.htm
The dawn of 1914 brought good news, as the U.S. Circuit Court of Appeals upheld the Wrights’ patent suit, agreeing that Curtiss had infringed. This would have been the perfect time to shut down the competition by re-establishing the Wright monopoly. But Orville did not make a move, as the company manager Grover Loening lamented later: “In no time Curtiss…could have been closed down or bought up, and we would have seen a totally different development of flying starting here and spreading to Europe exactly as the telephone monopoly did…"
If he had shut down Curtiss and his other competitors, the development of aviation would probably have stalled for a while, at least in the US. Perhaps Orville realized that his company was well behind the state-of-the-art by then.
I'd be happiest with a world without software patents, but 12-18 months from filing might be a reasonable compromise position for software/electronics patents. That is short enough that you might simply take the filings, assign each a number (do no review), immediately publish the claims, and then after the fact adjudicate any complaints that someone raises. (lazy evaluation for patents, basically)
IMO, that's enough incentive to get us the iPhone, multi-touch, Bluetooth / LE, NFC, etc, etc, without every startup being worried about a company-killing judgement hanging over their head.
Maybe the stakeholders should start a discussion about bifurcation of patent laws based on the field, because the one-size-fits all clearly isn't working.
"To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."
-Article I, Section 8, Clause 8 of the United States Constitution
https://www.youtube.com/watch?v=FgJiu3gr_LU
That these patents exist in and of itself is not necessarily bothersome. That someone can argue that stretchy scroll is worth billions is.