“Invention is a flower. Innovation is a weed.” Tech legend Bob Metcalfe explains his famous quote in this special bonus episode. Metcalfe also shares his experiences as a founder at 3Com, the company culture that allowed him to invent the Ethernet networking protocol, and why big companies should work with startups.
Kaitlin Milliken: Hey, we’re hard at work on the next season of our show. But we need your help. We’re doing an episode where we answer all of your questions about building teams, starting an incubator, creating a network of champions — really anything you need to know. So please, ask us anything. And don’t worry, you can be anonymous, or use your name and get podcast famous. So record a voice memo on your phone, or write down your question, and send it to firstname.lastname@example.org. That’s K-A-I-T-L-I-N at innovationleader.com. My email will also be in the notes for this episode. Now, on with the show.
You’re listening to Innovation Answered, the podcast for corporate innovators. For this bonus episode, we wanted to peek inside the mind of a founder, inventor, and innovator. So we sat down with Bob Metcalfe. Bob invented Ethernet in 1973, at the Xerox Palo Alto Research Center. So if you’ve ever plugged that cable into your laptop, when the WiFi horribly fails you, he made that possible, you can thank him. Bob went on to co-found 3Com, a computer networking company. He was the CEO, president, and chairman of the board at different points in time He left the company in 1990.
Since then, he’s been a thought leader, mentor and publisher. Today, he’s a Professor of Innovation and Entrepreneurship at the University of Texas at Austin. We asked Bob about his experience in his roles, starting with the difference between innovators and inventors.
So let’s get started. A lot of people think that innovation and invention are kind of the same idea. You often differentiate the two. So, can you talk about that difference between innovation and invention?
Robert Metcalfe: Well, it’s important never to get bogged down in semantics, and this is a semantics question. So we shouldn’t spend too much time on it. But I do make that distinction. I choose the word invention to describe what goes on in labs and involves tinkering and putting ideas together. And innovation is the harder activity — that’s actually taking something new and arranging for it to have impact ina the world, get out into markets, and to have commercial impact.
And so innovation…invention is the fun easy part where everyone loves you. Innovation is the hard part where you begin to try to change the world and the status quo is there. The status quo has many resources, and is nasty and determined to thwart your efforts.
Kaitlin Milliken: So one of your famous quotes is, “Invention is a flower. Innovation is a weed.” Can you explain what that means?
Robert Metcalfe: Well, a flower grows in a hothouse is my model. And everyone goes through a lot of effort to take care of you and shelter you from the world and to celebrate every little progress you make. And it’s fun being an inventor, and I was at the Xerox Palo Alto Research Center, such an inventor. And I was encouraged and supported in every way. And I’m grateful for all of that.
But then I left Xerox and went out into the world to start a company and to take my invention, which happens to be Ethernet — networking system, plumbing of the internet. And as I brought it into the world, I started running into the status quo. Principally AT&T and IBM, but many others too. And they weren’t supportive, and helpful, and loving — like the Xerox Research Center was.
I survived. So I wasn’t killed by it. But I had to develop some thick skin. And so I teach that. I warn people that when they get into the innovation business, they should expect to be attacked, and need to be defensive, and know how to, you know, roll with the punches, and deal with the hostility of the status quo. Because people don’t really like being innovated upon. You know, it’s such a glamorous thing, innovation, but it’s not glamorous when they’re trying to innovate you.
Kaitlin Milliken: So let’s dive a little deeper into your time at Xerox, can you talk about what aspects of the company culture encouraged innovation, and invention, and your new idea?
Robert Metcalfe: Well, the Xerox Corporation of the early late 60s early 70s was a booming copier monopoly with huge gross margins and lots of latitude as to how it conducted his business because it was a monopoly. And so the management there decided to create a research center, yet another Research Center, this one in Palo Alto, California, adjacent to Stanford University.
And I wasn’t around when they did this, but they made some good personnel decisions. And one of them was to recruit a guy named Bob Taylor from ARPA, the Advanced Research Projects Agency at the Department of Defense. ARPA was, at the time, the principal source of funding for computer science research at universities. So Xerox PARC, as it was called, became a university-ish supported by this very wealthy monopoly, adjacent to Stanford. So in a way, we were a Stanford laboratory. Most of us had appointments at Stanford. I was consulting associate professor at Stanford University, teaching a course every semester and dealing…
There was this professor there, Vint Cerf at Stanford. And he and I worked together. He is known as the father of the internet. So I lucked out there I got to be at near Stanford around the time that the internet was being devised. So Xerox — in emulating the research university, leveraging off of that idea — encouraged its researchers to pursue their interests, encouraged us to publish our results like professors, as opposed to keeping them a secret.
Bob Taylor knew how to run a group. We had one meeting a week, Tuesdays at one o’clock is called dealer. And we would sit around on beanbags and tell everybody what we were doing. The rest of the week was ours. And there was plenty of money to buy things, materials, and tools, and so on. So it was heaven on earth.
Kaitlin Milliken: So abundant resources and that healthy distance can be a breeding ground for new ideas. What are the things that kill innovative projects or new inventions at big companies?
Robert Metcalfe: Well, the immune system. Companies got to be big because they’ve figured something out. And they’ve recruited the people and organize themselves in order to deliver that value and make those revenues and profits. And so there’s a machine there that knows how to do that. And then when you try to innovate near such an activity, it naturally has an immune system to protect itself from being destroyed. And its that that immune system that quashes innovation, and nip it in the bud, because it’s a threat.
So even at my own company 3Com. I became division manager of the hardware division at one point. And I actually did this, and I’m embarrassed to admit it. I made 110 percent of the profits of the company, which meant everybody else was losing money. And so me and my people in our division, swaggered around the company. We were profitable, and we made all the profits, and all these other people were frittering away the resources of the company on their silly ideas.
So I became eventually a anti-innovation monster.
Kaitlin Milliken: Was there any way that you fix that situation and remedied it, to let the monster fall away?
Robert Metcalfe: The single biggest thing I did to reestablish innovation in my company was to leave. So after 13 years, eventually, I got a ran for CEO, I was the initial CEO. And then my board chose someone else to be the second CEO. And then my board chose. Ten years later, I ran to be CEO again. And I didn’t win that race, either. And this is a board, by the way, that I created. So I had very little complain about. So I left. And I’d left to clear the way for the new, the new thinkers. It’s always good for founders to leave their companies, not hang around near the new people. Because there…it’s just irresistible to fight with them. So I cleared out in 1990.
Kaitlin Milliken: That’s really interesting. Since a lot of the big tech companies that we see today, were either considered at their most innovative when the founder was around, like Apple with Steve Jobs, or are considered innovative because there’s one founder with the vision that everyone kind of falls in line with, like Amazon and Jeff Bezos, what do you make of those situations?
Robert Metcalfe: Well, some of that is marketing. So there is a really good marketing principle that when you have a company that’s high performance, Silicon Valley startup growing kind of company, you want to personify it. That’s a marketing technique, so that when you say Apple, who do you think of? Steve Jobs.
Kaitlin Milliken: Steve Jobs.
Robert Metcalfe: Of course, you think of Dell, who do you think of? Michael Dell. That’s a marketing technique, though, because people like to relate to people. So when I think of Apple, I think of Steve, and Steve shapes my view of the products. So some of this effect of the founder…is like in my company we had “n” founders. It depends on who you call a founder. I think we had 35 founders, the Securities and Exchange Commission decided we had two founders. But I was the personification of 3Com. And poor Greg Shaw, who was also a founder, no one has ever heard of Greg Shaw because the company decided to put all of its marketing energy behind me as the person, the personification, analogous to Jobs. So some of that is a marketing, the notion of the founder is the key innovator.
And so one thing people don’t give Steve Jobs credit for is that he understood the notion of adult supervision. And he was smart, because he understood that he needed adult supervision from day one. You probably never heard of the adult supervision, but you know, it was Markkula and Scotty and a series of adult supervision and help grow that company into the billions while Steve was wreaking havoc.
So the adult supervision doesn’t get the credit, in the public way, doesn’t get the credit that it deserves, often, certainly in the case of Apple. So we’re all waiting for this new CEO of Apple, to prove that he’s as good as Steve Jobs. Poor guy. Those are big shoes to fill.
Kaitlin Milliken: So you kind of touched on some takeaways from your time at 3Com, and the ideas of making that company really innovative. Are there other takeaways from that experience as a founder and CEO, you’d like to share?
Robert Metcalfe: Startups are traditionally, wrongly viewed as competition to established companies. And sometimes that’s true. And sometimes it’s mostly not true. So the really smart startups and the really smart big companies play ball with each other. Because there’s something about a startup that is a packaging of an innovation. And there’s something about the power of a big company, and its scale and brand. So there’s an idea, the idea that startups are not the enemy. A big company can buy their products, can copy their products, can steal their people, can buy the company, all sorts of relationships. And so that’s in my practice as a purveyor of the startup ecosystem, I recommend that to both startups and big companies is they should not view each other as adversaries.
The people you bring into a company also affect its innovative style. There was a time when I interviewed, at 3Com, where I interviewed everyone who was a candidate to be hired. I remember the day when I met this person who I had not interviewed who has started work that day, it was the first. But eventually, if you’re successful, your company gets too big. You can’t interview everyone. But it’s that interviewing and recruiting process that shapes the culture. The old motto, it’s a Silicon Valley motto, “B people hire, C people. But A people recruit A+ people.” There is a tendency for people to not recruit. And notice the word “hire” versus the word “recruit.” I try never to use the word “hire.” Because it suggests that you’re picking people who are dying to work for your company. But if you’re good at it, it’s nothing like that. It’s recruiting. That is these are people with many other options that are somewhere else, and it’s your job to go get them. So if you have the hiring mentality, don’t. And you should switch to the recruiting mentality. And there is where you bring the innovations into your company.
Kaitlin Milliken: So transitioning back to what you’re seeing out there in the world today, are there instances where you’ve seen organizational culture, stifling innovation?
Robert Metcalfe: Well, that’s the normal condition, stifling innovations.
Kaitlin Milliken: Are there any notable exceptions that you think are worth knowing about?
Robert Metcalfe: Well, I’m watching Dell Computer. There are a lot of randomness here. So it’s very hard to generalize it. So when you begin to generalize immediately, counter examples come to mind. Dell is definitely a counter example.
For example, its founder left, and then came back. Oh, a little bit like Steve Jobs. And was successful and is being successful, a little bit like Steve Jobs. So there’s a little parallel between Apple and Dell, by the way, those are arch enemies.
But Michael Dell is determined for his company to be like a start up again. And I think that means innovative again. Innovation is in constant decline as your company grows. He’s determined for Dell Technologies to be the biggest startup in Austin, Texas. He put a research center of his not in Austin. And the all the pro-Ausitin people like me were really annoyed at this. That he would put, you know, some of his best talent in Silicon Valley. And that’s because he knows there’s a lot of innovation.
So for example, the Xerox Palo Alto Research Center was in Palo Alto. Xerox was in Stamford, Connecticut, and Webster, New York, and it was time to open a new research center and somebody made a good decision and said, “Where would I put it all? How about Palo Alto next to Stanford?” So it’s where…you’re where the action is. So where you go, and whether you circle the wagons… So where you locate and the kind of associations, you have to, it’s like prospecting and then going there. So physical proximity is a factor. So you cannot, I’m gonna get in trouble now, you cannot innovate in Webster, New York. Winters are way too cold up there.
Kaitlin Milliken: So we had a really wide ranging conversation covering a whole bunch of different topics. But to close out, are there any takeaways or pieces of advice that corporate innovators should have in mind?
Robert Metcalfe: Innovation is a high calling. It makes the world go around. It generates freedom and prosperity. Freedom and prosperity are a feedback loop. Freedom encourages prosperity, and prosperity encourages freedom. And innovation is the engine that links them together. So being an innovator is a high calling. I encourage people to aspire to be innovators, because most of the good and all progress, all progress comes from innovation. So do it.
And in big companies, viewing startups as an innovation tool is very powerful medicine. So not viewing them as hostile attackers, but as potential partners in the innovation process is much healthier. And the real danger, which we’ve seen over and over again, in large companies, vis-à-vis innovation is the immune system. So if you’re going to innovate, you must be aware that your company — if it’s a good company — it has an immune system. And that immune system will rush in and try to kill almost any innovation. So you must see and must take care of… That’s why companies do spin-outs, and spin-ins, and all those structures. It’s in order to protect the innovation from the company’s immune system. Boy, that’s immune systems are powerful things so protect your innovations from your company’s own immune system.
Kaitlin Milliken: We hope you enjoyed this bonus episode of our show. Special thanks to Bob Metcalfe for chatting with us at our office. Be sure to subscribe to innovation answered wherever you listen to podcast. You can catch up on past episodes of the show, and get other great bonus content on our website, innovationleader.com/podcast. Our third season starts in September. But until then, stay tuned for more updates. Thanks for listening and see you next season.”Invention is a flower. Innovation is a weed,” innovator Bob Metcalfe explains his famous quote during in this special bonus episode. Metcalfe also shares his experiences as a founder at 3Com, the company culture that allowed him to invent Ethernet, and why big companies should work with startup