But there was a virtualization efficiency advance that got an impressive number of companies to actively jump into the project (with time and money) which (along with it being free) made it explode, mature, and eventually make things like commodity computing rental via EC2 possible to implement just years later.
I agree with him that there is so much established infrastructure/standardization out there that doing something completely game changing is hard if not impossible. Which is why I think weighing things against such a behemoth industry, Xen's story is impressive.
It did what he wanted: "Make the industry want your work." But it's because it is useful, not just because it is cool. As for grant money's role in all this, it's the same issue. Like arts and humanities vs. energy/science, the lion's share of research funding is always going to go towards what will most likely advance the country's economy/technology.