From frustration to break even

Then-new PARC director Mark Bernstein flogged the joint ownership concept to potential investors for almost three years - years that saw PARC waste time on show-and-tell exercises. "That was a really frustrating period for a lot of us here. We were spending a lot of time doing dog-and-pony shows," Bernstein recalled.

Bernstein and colleagues realized that finding another investor would take more time than they could afford. And as that realization dawned, they also felt they'd developed enough contacts during their time meeting potential investors, and had seen enough different industries, that they could start to generate business as a stand-alone subsidiary.

Working as a stand-alone subsidiary has paid off. Xerox is no longer PARC's single biggest client - the tipping point was in 2004 - while PARC's been squeaking by on a profit since 2005, Bernstein claimed. Revenue is $60m on expenses of $58m, with revenue coming from clients through business creation, licensing of IP, and government funding. PARC announced earlier this month it's been selected by the National Science Foundation to receive a grant of up to $8m with three other projects to work on CCN to build a "more trustworthy and robust internet."

PARC has also received grants for its work on hydro-dynamic separation, work that separates particles from fluids and is used in developing nations to purify water and that came out of PARC's earlier work on particles in printer inks. Government funding under the Obama stimulus was also forthcoming from the Department of Energy to work on carbon dioxide capture, efficiently taking it out of the environment for the production of liquid fuels.

While independence from Xerox has provided greater freedom and finally allowed PARC to follow projects that made sense according to its own business agenda, the shift from protected funded and protective boffins to a commercial entity has not been easy - or quick, given St. Claire was appointed seven years after the PARC's vaunted spinout.

Deep inside PARC, where innovation is workshopped (photo by Gavin Clarke)

"There was the recognition when we spun out that this was a pretty abrupt change for us," Bernstein admitted. "Internalizing the reality we were not going to be able to rely on Xerox and would need to be valuable to people other than Xerox in the world is a stark reality for researchers who are used to being taken care of - I'll be blunt about that."

PARC's director reckoned the transition is still not finished. No kidding, given St. Claire's a relatively recent appointment. "The notion we had to develop is an understanding of how we'd build a business from the research we are doing - it is a journey, and we are on that journey, and we are making progress," Bernstein said.

Eight years after the 2002 reset, challenges and questions remain as PARC celebrates its first 40 years and prepares to face its next 40.

PARC might have the mice of the future under development with CCN and ubiquitous computing, but there's a really big question over its ability to woo the boffins that can staff its multidisciplinary teams and help build out these - and successive - technologies.

Back in the analogue days of the oil crisis and Trimphones in the 1970s, it was possible for an institution like PARC to round up big thinkers and woo new graduates from nearby Stanford on the promise of prestige, freedom in research, and the ability to "own" the critical thinking.

It's not hard to see why PARC gave us the modern PC with the Alto in just four years based on the team it assembled. Besides Metcalfe, PARC brought in Warnock, who devised the InterPress graphics language for controlling printing; Simonyi who helped develop the WYSIWYG document preparation program Bravo; Kay, who created the object-oriented language SmallTalk; and Charles Thacker who led work on the Alto.

The internet has made collaboration and delivery easier and cheaper while the philosophy and technology of open source have destroyed the ability for a single company to even remotely claim a monopoly on innovation or thought leadership. Ideas and innovation now are unpredictable and more spontaneous than when PARC started, originating from individuals, start-ups, and organic communities as well as big tech companies.

How relevant is PARC's institutionalized, "invented here" model of research?

Challenge of the single innovator

We asked Ubuntu founder Mark Shuttleworth whether he thought the PARC model is relevant today. Shuttleworth is a prime example of innovation coming from an unexpected source and an individual: he founded Ubuntu to make Linux simpler for non-techies. Before 2004, nobody could have anticipated such a popular and exciting new distro, as Linux seemed to be settled into a safe but boring duopoly of sorts run by Red Hat and Novell.

Shuttleworth acknowledged PARC's past as an ideas hothouse. It brought people form diverse backgrounds together and gave them hard problems to solve. The diversity of backgrounds led to what he called "non-linear insights" that were cultivated by the institution of PARC.

Today, the internet has changed the drivers of innovation and teams are more easily formed so there's no need for them to be gathered under one roof any more.

"It's hard to imagine a single institution dominating the industry quite in the way that PARC defined the computing industry," Shuttleworth told us.

We also spoke to Doug Cutting, the father of open-source search engine Lucene and creator of large-scale, data-processing architecture Hadoop. Cutting also spent time at PARC as a researcher, working on information retrieval - before he worked on Lucene.

Next page: Where do all the Simonyi's go now?