Bill Gates might be the most prominent high-level Microsoft (s MSFT) exec to focus on energy innovation, but he’s certainly not the first. A decade ago its chief strategist and chief technology officer at the time, Nathan Myhrvold, left the software giant to found Intellectual Ventures, a firm that invests in inventing technology, and which this week made news when its nuclear power spinoff TerraPower raised funding from the likes of venture capitalist Vinod Khosla and Charles River Ventures.
Unlike traditional investing, Intellectual Ventures focuses on creating the invention itself (like an incubator) and Myhrvold tells me that a third of its inventions are now in the area of greentech and energy innovation. Not all are as ambitious as TerraPower — it’ll take a decade and several billion dollars to build its nuclear reactor commercially — and Myhrvold says that he’s also excited about energy efficiency tech and electrical transmission. Just don’t expect to see ideas like TerraPower land first in the U.S., as the U.S. is “stuck in the mud,” by regulation and politics.
While you might think the innovations behind TerraPower and Microsoft are vastly different, when you put a software guy on an energy problem it becomes a software problem, says Myrvold, and TerraPower relies heavily on super computing. The problem with today’s nuclear plants is that they were designed using computers with the same amount of computing power as our current cell phones, he notes. Here’s an edited excerpt of 10 questions for Myhrvold on how to create energy innovation:
Earth2Tech: Intellectual Ventures is not a traditional investment or VC firm, and has been described as a Intellectual Property firm. Can you tell me about how and why you founded it back in 2000?
Nathan Myhrvold: I considered going into venture capital, but I would have been the 20,000th venture capitalist in the world. I thought it would be better to be the first invention capitalist. Our idea is to invest in invention. Venture capitalists invest in companies, plans and teams to form organizations. We invest in the process of inventing something. Sometimes its an existing invention and other times we doing the inventions ourselves.
Earth2Tech: TerraPower was a company you brought in or you invented?
Myhrvold: We invented TerraPower. We had a series on energy and one on nuclear energy. Some of the people involved in that had worked on nuclear at government labs, including Lawrence Livermore Labs. We invented around this idea and we created TerraPower.
Earth2Tech: How much of Intellectual Venture’s projects have been focused on energy innovation?
Myhrvold: A good chunk. A third of our inventions are focused on energy and cleantech in someway. We try to look broadly, from conservation technologies, which aren’t as dramatic as nuclear, all the way up to TerraPower which is stunningly ambitious. One of the things we decided early on, was key to the energy problem is how to provide energy, in a carbon-free way to the billions of people in China, India and Brazil that are becoming way more prosperous, and raising their standard of living?
There is no existing technology that will not emit enormous amount of carbon emissions and can accommodate them. Renewables are great, but we don’t have the technology yet. Coal isn’t going to work. The one we like best is TerraPower, and it’s the only technology that could conceivably get you to this goal.
Earth2Tech: The TerraPower nuclear reactor will cost around $4 billion to commercially produce and take a decade to develop?
Myhrvold: Nuclear is like that. Any important technology is like that. Gigawatts of power needs giga-sized dollars.
Irrespective of the funding, we need to partner with others. Our organization doesn’t have the expertise, but there are a lot of companies that do. It is very likely that we will work with a commercial nuclear power plant company. We will also likely partner with some other part of the world to build the new reactor in their country. One of the problems of any new type of energy, is that people don’t want this in their backyard. The U.S. isn’t particularly good and doing something ambitious and new. Once we were, but now we’re not hungry enough.
Earth2Tech: Given the difficult regulatory framework do you think TerraPower will ever build nuclear reactors here in the U.S.?
Myhrvold: Ever is a big term. The U.S. will not be the first. I love our country but we are not taking a leading role in developing new energy techniques. There are companies that are working at the forefront of solar and other renewables, but in terms of deployment we’re a stuck in the mud and very regulated. We’re a law suit kind of country. Are we moving quickly to solve our energy problems, and carbon emissions? The answer is no. A lot of people think we need to move faster, and I agree. But I wouldn’t bet the future of this project on it.
Earth2Tech: Have you been inspired by Bill Gates and his recent attention on energy innovation?
Myhrvold: Absolutely, I’ve discussed it quite a bit with Bill. In order for us to solve energy problem we need new ideas. It is an expensive proposition to fund it at every stage. But if we really want to have an energy future, we need to do some forward-looking work now. It’s that simple. It’s amazing how little the world has invested in energy given how big a problem is now. One reason is the price of energy fluctuates so much. When its cheap people care less, when it’s expensive they invest.
Earth2Tech: In terms of creating the needed energy innovation, there’s varying approaches from the VC model, to your model of creating invention, to the federal government. Do you think your model will work best?
Myhrvold: Ultimately we need all of them. The advantages for government funding is that the basic needed investigation is expensive. The government is the only one that can fund basic exploration. It’s not a smart thing for private investors to do. Venture is good, but the problem with the venture world, is that it assumes that there are enough ideas out there to latch onto. We actually help create the idea itself.
One approach you didn’t mention is that we need to raise money for new energy infrastructure. Most of the existing energy companies, whether its utilities or oil companies spend almost all of their money on the here and now. If we want to create new power plants, we need to develop new financing mechanisms.
Earth2Tech: What is the business model of your invention process?
Myhrvold: When you’re the founder, you own 100 percent of the company, at the beginning, then that percentage goes down, and the value goes up. The point of the business model is not to own larger percentages, its if you fund the creation of an idea, you can do that in a cost effective way. We invent for a living. In case of TerraPower we created it and hopefully get stock down the line. In other cases we might license the technology.
Earth2Tech: What’s next for your energy innovation after TerraPower?
Myhrvold: There’s a ton that we’re excited about but not a lot we are speaking about publicly. Most are generally not as far along as TerraPower, which we spun out as a separate company. We’ve got some striking energy efficiency, and electric transmission ideas.
Earth2Tech: Are there lessons from the software and computing world for energy?
Myhrvold: When you put a software guy on an energy project he turns it into a software project. One of the reasons were innovating around nuclear is that we put a huge amount of energy into computer modeling. We do very extensive computer modeling and have better computer modeling of reactor internals than anyone in the world. No one can touch us on software for designing the reactor. Nuclear is really expensive to do experiments on, so when you have good software it’s way more efficient and a shorter design cycle.
Computing is something that is very important for nuclear. The first fast reactors, which TerraPower is, were basically designed in the slide rule era. It was stunning to us that the guys back then did what they did. We have these incredibly accurate simulations of isotopes and these guys were all doing it with slide rules. My cell phone has more computing power than the computers that were used to design the world’s nuclear plants.