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The Quest for the Next Big Thing


Every day on my commute, I pass within yards of a monument to technology's failed dreams. It's a sprawling office complex along Silicon Valley's main highway that once housed Internet portal Excite@Home. Drawn to it one day last year, as if to a haunted house, I parked and tiptoed up to peer inside. Utterly empty. Spooky. I remembered catching glimpses, as I whizzed by at 65 mph, of people bustling inside the green tinted windows, and I wondered where they all went. The collapse in 2001 of Excite@Home ended the bid of what was once a strong contender for tech's Next Big Thing.

The complex is still empty today. But a few blocks away, another startup has taken residence in Excite's original headquarters. Ingrian Networks (SUNW) is a promising software security startup backed by the high-powered likes of Sun Microsystems Chief Scientist Bill Joy. That set me thinking that technology innovation works a lot like a forest: Fires periodically sweep through, seeming to destroy everything. Yet before long, grasses and wildflowers sprout from the ashes in a timeless cycle of renewal.

Today, tech is poised between the dying embers of the bust and the first green blush of the upturn. It's in fallow periods like these that the seeds of tomorrow's Microsofts and Ciscos sprout. Out of the deep tech recession in 1985-86 came a burst of new personal-computer applications that recharged a sputtering industry. During the downturn of 1990-91, researcher Tim Berners-Lee invented the World Wide Web, which led to the spark of the Internet boom: Netscape Communications' Web browser. Says serial entrepreneur S. Jerrold Kaplan: "Bad economies are the breeding ground for great leaps in technology."

Sick of writing about losses, layoffs, and liars, I was ready for such a leap. That's why, early last year, I joined thousands of curious researchers, hungry entrepreneurs, intrepid investors, and laid-off tech workers on the elemental quest of techdom. Notebook in hand, gas tank full, eyes wide open, I set out in search of the Next Big Thing.

My quest led me into every hallway and alleyway of tech. I tracked down entrepreneurs in mansions, cubicles, and garages, flew to Microsoft's gleaming research labs in Redmond, Wash., and probed visionaries coast to coast. In all, I talked to more than 100 people and heard dozens more at industry gatherings. My journey went from the ridiculous to the sublime: One morning, I watched a startup pitch a high-tech contraption to make fertilizer from cow chips. That afternoon, I visited Xerox' legendary Palo Alto Research Center (PARC) and saw computer chips whose microscopic circuits were literally printed using inkjet printers -- a breakthrough that could produce disposable cell phones or ultracheap PCs.

Did I find the Next Big Thing? Truth be told, not exactly. But maybe, just maybe, I unearthed some trends that seem likely to produce something big. It will spring, I believe, from the proliferation of single-chip computers, tiny sensors, ubiquitous Internet connections, and even new tech-driven social movements envisioned by futurist Howard Rheingold. Together, they're forming a global digital nervous system whose potential impact seems almost limitless.

Regardless of whether all of that produces a blockbuster product or service anytime soon, my journey itself was the real reward. Sure, it was meandering, often leading down blind alleys. But it shed light on the process of tech innovation and exploded a lot of myths. For one, I discovered that many venture capitalists aren't so much visionary risk takers as sheep in wolves' clothing. No one else can so quickly build on a trend, and so quickly abandon it -- leaving behind mass bankruptcies, layoffs, and a dearth of money for new startups.

I also learned that even the whizziest technology takes a long time to seep into our lives. GO's handheld computer went nowhere in the early 1990s, for instance, creating one of the Valley's biggest implosions. Yet only a few years later, Palm (PALM) had a winner, and mobile digital devices of all kinds are among the hottest tech products today. In tech, says Paul Saffo, director of the think tank Institute for the Future, "it takes 20 years to become an overnight success."

Above all, I was struck by how many people at every stage in the tech development process, from entrepreneurs and researchers to the best VCs and savviest customers, are diving into the fray again. The spirit of innovation lives.

TOUGH TIMES FOR ENTREPRENEURS. One bright late winter morning last year, I start my search at what seems just the right place: startup incubator Stanford University and its annual Conference on Entrepreneurship. Some 300 students and young startup-wannabes have come to network and attend panels on what's hot and how to raise money. But the real lesson begins after lunch. The keynote speaker is Nolan Bushnell. He's the ?ber-entrepreneur who founded video-game pioneer Atari and Chuck E. Cheese's Pizza Time Theater in the 1970s, plus nearly 20 other startups since. "Venture capitalists are people looking for innovation -- until they see it," he thunders. "If you have an innovative idea, your chance of getting funding is virtually zero."

Cranky as he is, Bushnell has a point. Great ideas often look trivial to most people. In fact, Harvard Business School Professor Clayton Christensen has noted this pattern among many great technologies. The chip, for instance, started out suitable to run only lowly digital watches but eventually revolutionized all of electronics. Still, Bushnell's latest venture -- kiosks for barflies to play online games -- seems an especially unlikely spark for a revolution. Anyway, I'm looking for less jaded entrepreneurs.

That's why, a few weeks later, I'm at The Gong Show. Hosted at a Palo Alto hotel by the entrepreneur support group Asia-Silicon Valley Connection, the event lets 12 prescreened startups give presentations to a panel of investors -- two minutes sharp, or a gong rings them off the podium. A couple, including a firm whose technology speeds drug discovery, look promising. The rest deserve (but don't get) an early gong. Lawyer Bob Kohn pitches Laugh.com, which aims to get cell-phone subscribers to pay a buck a month for George Carlin's recorded joke of the day. Isn't cell-phone service enough of a joke already?

Like the lottery player who hopes the next ticket will be a winner, I keep attending these dog-and-pony shows over the next few months. But I can't find a pony among the dogs.

INNOVATION INSIDE. It's time to go to the well: the scientists and researchers. Their ideas, after all, are the fount of innovation. AT&T (T) Bell Labs invented the transistor, and Xerox' PARC designed both the modern PC that Steve Jobs commercialized at Apple Computer and the Ethernet computer network that's the standard today. In early spring, officials at IBM's venerable Almaden Research Center in San Jose, famed for breakthroughs such as the disk drive, invite me to sit in on a presentation to venture capitalists. It's about one of the hottest things around: nanotechnology, the engineering of materials down to the atomic level.

We take turns using the scanning tunneling microscope in IBM Fellow Don Eigler's lab to move molecules of carbon monoxide around a copper plate. Intriguing: It's proof of a path to overcome the big problem of nano, how to manipulate matter this small. Indeed, IBM would later announce that this technology has allowed them to create the tiniest circuits yet, a development that could keep electronics on its smaller-cheaper path for decades to come. It sounds promising. But nano still feels like the next Next Big Thing -- something that might blossom in 20 years, not two.

Maybe a place that produced one of the last big things might provide clues to how the next will emerge. That's what sends me to PARC in the hills of Palo Alto late last spring. It has a reputation as a place that invents Next Big Things, such as the PC, but fails to capitalize on them. So I'm surprised when they actually knock my socks off. What grabs me most is a project working with the tiny radio-equipped sensors called smart dust. Right now, the pieces of "dust" that PARC Principal Scientist Feng Zhao shows me in his cluttered lab are as big as a matchbox. But in a few years, they may well be shrunk to 1 square millimeter, small enough to deserve their hopeful name. Ultimately, he says, there will be hundreds of times more of these than there are computers on the Internet. "It will be like a digital skin on the face of the Earth," he says.

For Zhao, that's just the start. His group aims to create a sort of World Wide Web for sensors, because, like computers, they're most useful if they can communicate with one another. With a search engine he calls a "Google for the physical world," a store manager might log on and type in, "How many rolls of Charmin are left?" and get an instant answer from the sensor network. They might even be embedded in roads to measure traffic or in building materials to detect flaws.

It sounds pretty futuristic. Except I later find it's almost here, thanks to a startup called Dust Inc. Founded by Kris Pister, the professor at the University of California at Berkeley who coined the term smart dust, it has just started shipping its first products. Dust's contribution is technology that lets the tiny devices create their own network -- allowing them to pass along data like a bucket brigade, and thus they require very little power and range. It already has sold some to Textron (TXT) for ground sensors to monitor troop movements and to Honeywell (HON) International, which will sell them to supermarkets for monitoring energy use in refrigeration units. Cool.

It doesn't take me long to realize that most of the groundbreaking research in information technology came from the largesse of monopolies, such as AT&T and Xerox. So it's obvious where to go next: Redmond to visit Microsoft Research. It's spending $100 million on research by some 600 top programmers, engineers, and scientists. When I fly up for a tour, I'm treated to a series of pretty interesting projects. One researcher is creating ways to control computers and electronic devices through gestures. Another group is creating communications systems that seamlessly meld phones, voice mail, instant messaging, and e-mail.

Yet I can't shake the feeling that most of it will never see the light of day, simply because the research so far hasn't produced a big, disruptive winner. "It's hard to put a stake in the ground and say Microsoft Research did this really big thing," admits Senior Researcher Henrique Malvar. Microsoft Research isn't alone in this.

The problem with research projects from corporate labs or universities is that "they come out of the womb with big heads and little arms and legs," says David Liddle, general partner at U.S. Venture Partners and a former PARC veteran who later ran the defunct incubator Interval Research. When I press Rick Rashid, Microsoft's senior vice-president of research, on why Microsoft hasn't been able to bust out and invent something really big, he says that's not their job. "We need to make sure that when something big does happen, we have the technology to respond to it," he says. I know this "fast follower" model has served Microsoft well. But I'm looking for something big enough to challenge Windows, not make it even more dominant.

NOTHING VENTURED, NOTHING GAINED. It's time to meet the folks who put wheels on new ideas: the venture capitalists. Yet when I start my interviews in mid-2002 at the VC enclave of Sand Hill Road in Menlo Park, it looks like a ghost town. And when I sit down with Yogen Dalal, a PARC and Apple Computer alumnus who's a managing partner at Mayfield Fund, it turns out he's a little adrift. "Quite frankly," he says, "I don't think anyone is proposing anything fundamentally new." Great.

Then he launches into a list of things that sound, well, big: He's interested in fledgling computer networks like Cisco Systems' that can host phone calls. He thinks instant messaging will blossom from an Internet party line to something like a digital concierge. And just-emerging voice-activated information services could make Internet services easily available over the phone, anywhere. In fact, I had just met a leader here, Tellme Networks, founded by entrepreneur Mike McCue. But Dalal's just not sure. That's one reason he's about to take a three-month sabbatical to reboot his brain.

Months later, when I check back with him, it turns out that instead of hitting the labs at U.C. Berkeley, as he had intended, Dalal tracked down old friends and visited art galleries. The break worked: He has funded a new company, PacketHop. Its technology lets people and companies create ad hoc networks by turning any mobile device into a data relay station. It sounds like yet another piece of my puzzle: something that lets people take network technology into their own hands and run with it wherever they will.

My next encounter with a venture capitalist, however, knocks me down out of the clouds. When famed Sequoia Capital partner Don Valentine, whose wins include Apple and Cisco Systems, returns my call, it's largely to dump on my quest. He thinks tech wrecks like the one we've just experienced are the direct result of amateurs and outsiders he calls "extraterrestrials" searching for the Next Big Thing. Still, it's hard to resist asking what he thinks it might be. After a long pause, Valentine finally answers, very slowly, as if to a child: "I wouldn't tell you that if you were my mother."

THE NEVER-ENDING JOURNEY. Finally, by early fall, after struggling to weave all these threads together, serendipity lends a helping hand. Surfing the Web, I happen upon an article by Howard Rheingold. The veteran tech observer and author has a new book, Smart Mobs: The Next Social Revolution, that links nearly all the things I've been tracking and much more: eBay's community of 30 million-plus buyers and sellers; the runaway song-sharing movement; even al Qaeda's sophisticated use of Internet communications. In all of these, Rheingold sees a new social phenomenon driven by the collision of computing and communications in mobile devices such as digital cell phones and handheld computers.

In early fall, Rheingold's idyllic backyard garden in Mill Valley, north of San Francisco, presents a stark contrast to the ferment he sees coming. Propping up feet clad in exquisite hand-painted shoes, he says these new devices and services will upset entire industries, from telecom to entertainment, and pave the way for new social institutions. Or at least some pretty big crowds. Activists in the Philippines, for instance, relayed instant text messages via digital cell phones, marshaling hundreds of thousands of people within hours to rallies that toppled President Joseph Estrada.

It's not difficult to imagine this same dynamic transforming how companies organize supply chains and how consumers find the best prices on cars. Says Rheingold, who thinks this wave will be as big as the PC and the Net: "The killer apps of tomorrow will not be hardware or software, but social practices." It sounds a little scary. But maybe that's a mark of something big.

All this hasn't yet jelled into something as fully formed as the chip or the PC or the Web browser. But what I found convinced me there are both new technologies bubbling up that could transform our lives and a hunger by people to use them. To make a real difference, ultimately, technologies must transcend gadgetry and become part of the social fabric.

By the time I sit down to write, it feels like the tech industry is finally starting to turn around -- and that maybe what I discovered has a chance to produce something big. Indeed, the journey itself made me realize things weren't as dead as they seemed. It's possible the catalyst for tech recoveries is really the collective efforts of these kindred souls, all striving to zero in on what's next. Maybe that quest never really ends. By Robert D. Hof


Steve Ballmer, Power Forward
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