Los Alamos and Sandia: R&D Treasures

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All of these companies were founded by former Sandia scientists or rely on technology licensed from the lab. Los Alamos has helped spawn 54 spin-offs since 1997. A recent one, APJeT, is trying to commercialize an ionized gas known as atmospheric plasma, which was first developed by Los Alamos to kill anthrax spores. The company now uses the process to make fabrics water-resistant. Another of Los Alamos' affiliate, CNT Technologies of Seattle, is turning tiny carbon nanotubes into strong yarns that can be woven into sporting goods, aircraft parts, and artificial limbs.

Goodyear and Sandia have been working together since 1993, when the Akron company enlisted the lab to help design and test new car tires. At the time, the company was running through at least four physical prototypes for each model of tire, which then would have to be tested over thousands of miles—a process that took three years on average. In exchange for fees that can run several million dollars a year, Sandia gave Goodyear access to supercomputers and software code it had developed to simulate explosions, design weapons systems components, or model the stresses on a bridge. Over the next decade more than a dozen Sandia scientists worked on software to assist Goodyear engineers. The code helped them to accurately predict how each design tweak would affect traction, pressure, and rubber wear under a range of road conditions and speeds. "It all adds up to a fairly nasty problem you have to solve," says Benjamin Spencer, a Sandia software developer who works with Goodyear. But there's a side benefit, Spencer says: The collaboration is "making our code more robust."

The Goodyear project culminated in the Assurance TripleTred, which launched in 2005. It's a tire with three different treads for driving on icy, wet, and dry pavement. The program also enabled Goodyear designers to make use of such materials as volcanic pumice and glass microfibers, which aid the tire in gripping slick surfaces. The Assurance became one of Goodyear's best-selling tires, and the company has adopted virtual design for each of the several hundred new tires it develops every year for vehicles ranging from sports cars to garbage trucks to earth movers. The development cycle, which now often requires just a single prototype, has shrunk to as little as eight months, says Surendra Chawla, Goodyear's head of commercial tire research. The portion of the company's annual R&D budget consumed by testing and building molds for tire manufacturing has dropped from 40% to 15% since 2001, he says.

Despite the obvious benefits that have flowed to Goodyear and P&G, however, only a handful of corporations have forged this sort of long-term collaboration. Companies complain that it takes too long—up to a year—to negotiate a joint R&D project or license technology from a federal lab. Officials at the labs have their own complaints: They say U.S. companies mainly want off-the-shelf technology they can use immediately, as opposed to investing in research that won't pay off for three to five years.

Bureaucracy also is slowing the spin-off of startups. Unlike at universities, scientists at federal labs are barred from serving as paid consultants. And as long as they're on the government payroll, they can't hold equity stakes in companies that license their research. Moreover, few hard-core scientists want to trade secure posts at premier labs for risky jobs in industry. This is a stark contrast to Silicon Valley, where "people are spring-loaded to leave and begin their next startup," says Gary Ebersole, a serial entrepreneur from the San Francisco Bay area who moved to Santa Fe and licensed software from Los Alamos to start a social networking company.

The National Labs want to lower the hurdles to entrepreneurship. They're offering staff two-year "entrepreneurial leaves" to give them a taste of life outside. They also understand that Congress wants to see scientists and their spin-offs succeed. So Los Alamos set up a fund that doles out $350,000 a year in seed capital to startups. Both Sandia and Los Alamos are experimenting with ways to let departing scientists maintain access to their facilities while working at startups. They even offer courses to familiarize their staff with entrepreneurship. "We don't yet have a model that is tuned to the nation's needs," says Sandia Chief Technology Officer Richard H. Stulen. "But we're getting better."

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Engardio is an international senior writer for BusinessWeek .