Imagine for a moment what it would be like to have the time and capital to explore new technologies and launch startups.
That life is a reality for former Microsoft Chief Technology Officer Nathan Myhrvold, who founded Intellectual Ventures in Bellevue nearly 20 years ago and, with the help of a team at the company’s Invention Science Fund (ISF) Incubator, has spun out more than a dozen startups that specialize in fields such as Artificial Intelligence, blockchain, metamaterials, nuclear energy, and satellite communications.
But this is not your traditional startup incubator. Nor is it Shark Tank or Dragon’s Den, popular television shows where aspiring entrepreneurs pitch their latest business ideas to potential investors.
During a tour of ISF’s 87,000-square-foot building — a tinkerspace of sorts with a five-ton, 11-foot-long Gothic-like Babbage Machine, which is comprised of a daedal assembly of 8,000 parts and is widely considered the world’s first computer, on display in the lobby — company spokesperson Kyle Mahoney noted the ISF Incubator staff develops technology in house, then hires entrepreneurs and technologists to prove out the technology, develop a business plan, and raise venture capital.
To date, companies created and spun out at ISF Incubator have raised more than $700 million in venture capital, with Microsoft co-founder Bill Gates investing in a number of these companies (see “5 Successful Spinouts,” pg. 23).
Leading much of the work at ISF Incubator, which employs 50 people, is Conrad Burke, the company’s vice president of new ventures, who was hired in 2017.
“What really separates us from undifferentiated incubators is our lab, which has everything from wet chemistry to electrical to biomedical devices — you name it, we can do the testing,” he explained. “We’ve got substantial working capital to put behind building the first prototype. We have an extraordinary depth and range in IT, which is available to build a company. When you put all those things together, it’s a pretty amazing recipe for getting a company launched. It’s very unique in that regard.”
Burke, who splits the bulk of his workweek between Silicon Valley and the Eastside, recently discussed three key insights into how Intellectual Ventures’ ISF Incubator develops its technology, scouts for leadership talent, and spins out startup companies.
Building a Business
Burke noted two companies that embody the process of creating new companies at ISF Incubator.
Lumotive, which was founded in 2018 and is backed by Gates, develops high-performance Light Detection and Ranging (LiDAR) and Liquid Crystal Metasurfaces to enable the advancement of autonomous vehicles.
“We recruited a brash, intelligent, technically brilliant co-founder (in CTO Gleb Akselrod) from Duke University, brought him out to the West Coast, and put him on this project,” said Burke. “In addition, we went and found a professional (in CEO and co-founder Dr. Bill Colleran), built some early prototypes, raised some capital, and the company spun out. They are doing tremendously well.”
Another company, Lexset, uses AI and machine learning to allow an individual to come up with interior design ideas by scanning a room in their home using a tablet or smartphone. Lexset will offer suggestions for furnishings — including color, texture, tone, and even where to find the products — that aim to improve a home’s decor.
According to Burke, the company’s roots date back to a lunch meeting with Leslie Oliver Karpas and Francis Bitonti. The pair had an idea for an interior design tech startup and tapped into technology at ISF Incubator to spin-out Lexset.
“That all happened, funding and spinout, from that lunch date and in less than nine months,” Burke said. “It was extraordinarily fast … It’s a classic example of where truly getting the right people is really what counts at the end of the day. (Lumotive and Lexset) are two examples of many examples where it comes down to just the type of people we bring in.”
Wantrepreneurs vs. Entrepreneurs
Finding the right CEO to lead the next spinout company at Intellectual Ventures involves a mix of luck, timing, and serendipity, according to Burke, who is hyperaware of potential tech entrepreneurs who might be between jobs, recently sold their companies, or are at a certain point in their careers where they are looking to embark on a new project.
“We are not looking for wantrepreneurs,” Burke explained. “There are a lot of those out there, and we dismiss that class pretty quickly.”
Instead, Burke looks for entrepreneurs with strong technical backgrounds — “diamonds in the rough” who are ready to dive in and make anything happen.
“Ultimately, we are looking for very smart people to come in and start businesses with us, and hopefully we can be good mentors in doing that,” said Burke.
What’s next for ISF Incubator?
Burke is excited about eQuility, a company creating nondrug technologies that can modulate the body’s neural system.
“It looks like a very sophisticated wireless earphone, but it’s not for music,” he explained. “It’s actually stimulating the vagus nerve system behind your ear.” The device creates a micro-stimulated electrical current that, according to Burke and clinical data, stimulates the vagus nerve system and can treat depression and mood disorder.
EQuility is still in a fundraising mode and has yet to spinout from the ISF Incubator into its own standalone startup company.