TEDxAcademy - Kostas Mallios - The Value of Ideas

Uploaded by TEDxTalks on 23.10.2011

I want to talk to you about ideas.
Ideas are a new currency,
they are valuable.
When I grew up as a child in Greece,
I remember the word "patenta"
It was used quite often,
actually to show ingenuity,
to talk about the work-arounds that the previous gentlemen also talked about.
It was used to solve problems,
and I still love that.
I think Greece,
the Greek people are very, very creative
I think they have a lot of ideas.
I want to propose a new way of thinking about those ideas to you this evening.
Two gentlemen, you might recognize them,
Thomas Edison and Henry Ford,
have actually changed the world we live in.
Ideas, a lot of people think, are actually a Eureka moment,
something that happens, a burst of inspiration,
something that comes to you when you are asleep and you wake up
and you are energizing, you know, you are going to go do something different.
In reality, most really good ideas that make it out
and impact people, impact the world, make it a better place,
are deliberate.
Thomas Edison ran a lab.
In his lab worked Henry Ford as his chief scientist.
You'll see the vehicle and you'll see the light bulb.
Both of the gentlemen actually had a lot to do with both obviously --
Thomas Edison invented the light bulb and that created a problem.
The kerosene that was used to light the homes of the 1800s,
was no longer needed,
and that actually caused a major clot of kerosene on the market.
So Henry Ford's job was to figure out what to do with all this kerosene.
So he said Ok, let's turn it into gasoline,
and let's use it to power the control combustion engine that we use in cars.
So you see both of those ideas and these two gentlemen
actually have impacted the world for the following century.
The gasoline that Henry Ford was formulating
ended up powering Ford to the company that is today.
It is a big theme,
this is not a sexist statement,
it's just these two guys and a garage theme,
two guys in a lab,
I wish there were more women participating, I encourage you.
The two guys here were Packard HP, Hewlett & Packard,
in the front of their garage in California
you might recognize the other two guys, I used to work for one of them,
Alan and Gates,
and you might recognize these other two guys -- anyone recognize them?
Ok, I'll call them the 20s,
so these were two guys, but maybe they were three,
the point is we are not really sure --
but it's not for me to figure out, I thought it was a fun thing to say.
Each of these people had an idea, they had a mission
they had a set of ideas that turned out to be businesses based on technology.
The great part about it is that the value of the idea is increasing
it's actually incredible what is happening particularly in the last few years
and even frankly in the last 3 or 4 months.
Each of these businesses get to $50 billion of market capitalization
in those years -- 59 years, 19 years,
and staggering only 6 years to $50 billion of market cap.
What does that tell you?
Ideas are the currency of the future.
They are the currency of the 21st century.
Ideas -- that's a LED light bulb.
It's the new idea.
It's actually going to revolutionize the way we light --
just like Thomas Edison did -- our homes.
And there's a shield,
an idea is only as good -- for me anyway from an economic perspective --
as good as protection --
that's called a patenta or a patent
-- goes back to the Greeks doesn't it?
Light bulbs are great ideas,
they inspire people.
Ideas now have a couple of modes of going down a path.
Traditionally what you would do is
you would built a technology from an idea,
you would create a business strategy,
you would hire employees, people to work in your great new company,
you would invest in buildings,
acquire customers, build supply chains,
and that's a great way to build value,
to build economic value, to build social value,
it's a really good thing to do,
and it works, it works great.
The problem is that it requires some time
and it requires a lot of capital.
And if you have both excellent!
But as an inventor if you don't want to go down that path,
but are really prolific and have some great ideas,
now there's a new opportunity.
And that new opportunity frankly is just to sell or license your idea.
It lowers the barrier to entry in the idea space tremendously.
The cost of an EU patent I think right now should be
€30 thousand or so,
so it's dropped by 90% in cost.
People recognize that you don't cut your way into growth,
like we're experiencing a little bit in Greece,
that you have to innovate,
and you have to invent your way out of it
where we are today.
So what's interesting about this is
inventors today with valuable ideas
have a couple of paths that in the past didn't exist.
And that is because invention capital is a new thing,
it is being thought of and being valued very differently than the past.
This is my neighbor --
this is not really a picture of my neighbor --
I'll call him Bob,
but this is a great story.
Bob is basically a scientist,
and he basically invented an algorithm,
something like that.
But here's the best part of the story,
he is a single individual without a company
and he sold an algorithm -- we'll call it that --
for 20 million dollars.
I'm still trying to figure out why Bob
-- that's not his real name --
needs a couple of Lamborghinis and a Rolls-Royce
to pick up babes at the super-market.
I still can't quite figure it out.
The point is there's a play,
there's an opportunity here
for an individual without a ton of money,
without a big company,
to still take a valuable idea
that solves issues for people,
identifies opportunities,
creates value,
and now he can actually participate in this new invention economy
that we're experiencing.
Let's take a different example, I'll mention three of them.
This is Nortel,
this is not really Nortel, but this is the story of Nortel.
The story of Nortel is that for a long time
Nortel was the pride and joy of Canada.
It had a market capitalization of $250 billion at one point.
Unfortunately Nortel fell on hard times,
it's a very competitive industry,
and the board of directors of the company decided that
they were going to sell the company off,
they basically were going to liquidate the company.
So what traditionally people associate with a huge and successful company
are buildings.
You look at the office tower and you say 'wow, what a beautiful building'.
And then you hear
'oh, they have 20, 30, 40, 50 thousand people working there'
and you go 'boy, that's a big successful company',
and then you think about it
and they say they have fleets of delivery cars,
or they have, you know -- I don't know --
huge customer lists, and so forth.
It turns out all that was only worth $2.8 billion.
Now for a market cap of $250 that's not a lot of money,
but that's the way business goes.
And then about a year or two later
the board, same board, decided that
they actually wanted to sell the intellectual property of Nortel.
And they decided to hold an auction.
The intellectual property,
a stack of patents, if you will,
was sold for $4.5 billion at auction.
Highly competitive, unprecedented,
this happened only four months ago.
This is why I think what's happening
is very, very germane to some of the conversations we are having here.
If you do the math that's $725 thousand per patent,
it's actually quite incredible.
So if somebody would say to me, 'Are ideas valuable?,
can you monetize them?,
are they useful to the economy, to companies, to the market?',
I would say the numbers show that they are incredibly valuable,
and invention is a great way to participate.
Let's take another view of it of what's happened since then,
this is only two months ago.
Google is a strategic acquirer of intellectual property,
different than the other two cases.
Google made a bid for Motorola Mobile
for $12.5 billion.
That sounds like a lot of money.
So I did some back of the envelope math,
and I am trying prove out what I am thinking is happening here
which is invention capital is just becoming this new currency,
and I did some quick math and I think --
it's just my envelope math --
it's about $2 billion worth of hard assets, tangible assets that
normally you would think are the value and the crown jewels of a company.
That only leaves about $10 billion for intellectual property.
So if you look at this trend and you believe in the numbers,
then you have to start thinking there's a huge opportunity here
for all the way from a small scale individual inventor
all the way to large corporations
to participate in this new invention capital space.
So I've been thinking a lot about what are inventions,
I mean do they really add value,
can I come up with a couple of interesting ideas to explain to you.
So I came up with barbed wire.
Barbed wire was actually patented in 1868.
It was a series of 9 patents,
and it changed the American West.
Before that people had all kinds of feuds and problems with cows
jumping over in other people's land
you know, running away,
they used to get shot by cattle rustlers,
stolen, sold, and so forth, it was quite interesting.
This little invention, barbed wire,
transformed the American west and many other parts of the world.
And it has lasted, well, almost 150 years.
If you think about how simple that is,
that has actually changed the world that we live in,
a simple little wire with some barbs on it,
but that's interesting.
But what has been happening lately is sort of impressive.
So I've been looking,
and in Africa it turns out,
and in a developing world in general,
it turns out that about 4 million infants die
before they reach one month old.
One of the tools for keeping them alive
in the developing world are incubators.
You know, baby incubators, I am sure you've seen them in hospitals.
What's interesting is that they are very sophisticated and they brake.
And when they brake you need real skill to fix them.
You need parts, you need service know-how, and so forth,
that just doesn't exist in the market.
So what this one person had this great idea,
he said, 'what do they know what to fix in the developing world?'
and someone said 'they know how to fix cars,
they know how to fix engines,
they know how to fix things around motorized vehicles, and so forth.'
So what they actually did is they built an incubator,
and as you can see this, out of car parts,
there's the two head lights that actually create the heat,
and there's other car parts there.
This is a patent pending idea,
and is now actually in use in the developing world saving babies.
So ideas can really have a broad spectrum of both
ingenuity, simplicity and efficacy
in terms of actually helping save people's lives.
And those are actually the best ones.
Because humans love invention.
I think now more than ever,
the human race needs to get really creative.
Not because of the local issues that you are facing here in Greece,
but because of the macro issues that we are facing as a society,
and as a planet.
When you look around you see all kinds of demands on energy,
you have biohazards, you have an environmental contamination,
you have waste problems,
health care is becoming very dauntingly expensive for governments,
these huge, huge problems that have lots of scale.
So where I work at Intellectual Ventures,
we've actually figured out a way and we're working on this problem,
to combine broad swaths of IP
to address large global issues.
We believe that invention capital is what needs to be deployed,
to solve some of the world's biggest opportunities and biggest challenges.
So we're working with governments and companies
because it turns out that one entity,
either a multinational corporation,
or a government or intellectual ventures,
or one of any type,
can solve these issues.
It takes a team and it takes a cross-disciplinary approach.
We call this innovation megaprojects.
We have a lab just like Thomas Edison,
we learn from history so we don't repeat the mistakes,
we have a lot of space,
and we have over 100 scientists,
including lots of PhDs
that invent on a daily basis.
I wanted to share with you some of my favorite ideas and inventions
that we've actually created recently.
I mentioned the energy problem,
you can call it the energy opportunity for the right solution.
So we are actually building a brand new type of nuclear reactor,
I think there's a mix of technologies that need to be deployed
to solve our energy needs as a planet.
I think nuclear has a place there.
So this nuclear reactor uses spent fuel
from other reactors
it's actually much safer,
it's much easier to deploy,
it has so many other benefits that we're very excited about it.
This company is called TerraPower
and it has now spun out of our company
and it is out there operating as a single entity.
It is very exciting because unfortunately
our energy consumption is just increasing not decreasing.
We're just not very good at saving energy.
About 250 million people a year die of malaria across the world.
It's a serious problem.
And one of the tools that we've discovered
that we can utilize to fight malaria
is what we call the photonic fence
and it's a series of technologies
that uses a laser to shoot down a mosquito.
You see mosquitoes carry malaria
and only female mosquitoes actually carry the disease.
This laser's just shot down subject 5.642
and now it's been eradicated.
So this tool itself is not going to solve malaria.
But it takes open minds and brand new approaches
to solving some of these daunting human problems that we're facing.
It's a fun video, I hope you enjoyed it.
The mosquito didn't.
So this technology actually discerns between male and female,
between mosquitoes and bees and flies and other insects.
It has to do with the frequency of the wings among other things.
So I am here to ask,
I am here to implore you,
I am here to encourage you
to think about what can you invent.
In a time like this I think invention is needed more than ever.
There are huge minds in this room.
This society has invented its way
out of a series of challenges in the past.
So I ask:
Help yourselves, help our world,
come up with a great idea,
and finally you need to protect it
in order to get the most out of it.
So I ask, what is your idea?
Thank you.