Notice: We are in the process of migrating Oral History Interview metadata to this new version of our website.
During this migration, the following fields associated with interviews may be incomplete: Institutions, Additional Persons, and Subjects. Our Browse Subjects feature is also affected by this migration.
Please contact [email protected] with any feedback.
This transcript may not be quoted, reproduced or redistributed in whole or in part by any means except with the written permission of the American Institute of Physics.
This transcript is based on a tape-recorded interview deposited at the Center for History of Physics of the American Institute of Physics. The AIP's interviews have generally been transcribed from tape, edited by the interviewer for clarity, and then further edited by the interviewee. If this interview is important to you, you should consult earlier versions of the transcript or listen to the original tape. For many interviews, the AIP retains substantial files with further information about the interviewee and the interview itself. Please contact us for information about accessing these materials.
Please bear in mind that: 1) This material is a transcript of the spoken word rather than a literary product; 2) An interview must be read with the awareness that different people's memories about an event will often differ, and that memories can change with time for many reasons including subsequent experiences, interactions with others, and one's feelings about an event. Disclaimer: This transcript was scanned from a typescript, introducing occasional spelling errors. The original typescript is available.
In footnotes or endnotes please cite AIP interviews like this:
Interview of David BenDaniel by Orville Butler on 2008 October 20,
Niels Bohr Library & Archives, American Institute of Physics,
College Park, MD USA,
For multiple citations, "AIP" is the preferred abbreviation for the location.
In this interview David BenDaniel discusses topics such as: family background and his education; attending the University of Pennsylvania; going into the United States Navy; doing graduate work at the Massachusetts Institute of Technology (MIT); Herb Callen; Will Allis; Rensselaer Polytechnic Institute (RPI); electrical engineering; General Electric Company research laboratories; Henry Hurwitz; Stephen Crandall; Chauncey Guy Suits; Art Bueche; Henry Ehrenreich; hydro-magnetic stability; thermonuclear containment; solid-state physics; becoming a manager; being a fellow at Harvard University Business School; Howard Kurt; Exxon Enterprises; venture capital; Harold Craighead; Cornell University School of Management.
I’m Orville Butler and I’m here today with David BenDaniel. We are at Cornell University Johnson School of Business. Today is October 20, 2008. Dr. BenDaniel, I’d like to start off by asking you a little bit about growing up, how it is that you decided to go into physics, what sort of intellectual influences you had in your childhood, family? Things like that.
Thank you for coming here to interview me. In answer to your question, like some of the other people that you’ve interviewed, I was viewed by my parents as a wunder kid of some form or another. I decided, however, I wanted to be a physicist about the age of ten. I continued to maintain an interest in physics thereafter in junior high school, which at this point was about 1945, I was able to explain the atomic bomb and all that sort of stuff, and atomic energy, to my colleagues at school. I continued to want to be a physicist. I went to the magnet school in Philadelphia called Central High School where many other people who have gone into science have gone to. There, actually, I was relatively interested in writing. For some reason or another, in my high school yearbook, of which I was the editor, as my ambition, to be an author. A non-fulfilled ambition, except for texts and that sort of stuff. But I was also editor of the literary magazine as well in high school and won the English prize. So, went from there to the University of Pennsylvania, with a state of Pennsylvania scholarship. I actually gave up that scholarship to become NROTC (Naval ROTC), which also provided a full scholarship. Did that because this was now 1950, and we were in the Korean War by that time, and if I was going to go into service, which I had every intention to fulfill my obligation to do, I preferred to do it as an officer. But during the four years that I was at Penn, not unlike some others, I accelerated my course so I actually ended up with a master’s degree in 1953 in physics. Undergraduate was in physics, but at that point, I took a lot of courses in liberal arts. Again, this tension between the liberal arts and the sciences still continued. Also passed the doctoral qualifiers in physics. Went into the Navy for three years. But when I came out, I decided not to go back to Penn. Penn’s physics department was in a bit of a dip at that point. It had been very prominent 15 years earlier and became very prominent again 15 years later, but this particular period, I think, was a somewhat dry period. So I was advised, actually, by my favorite professor at Penn to go to MIT or Harvard. I had the opportunity to make the choice; I chose to go to MIT, which I think was a great, great experience for me and I’m a great supporter of MIT as an institution. I actually ended in the department of nuclear engineering. Since I had done a lot of work in liberal arts and in physics and I had no engineering background, I actually ended in the department of nuclear engineering. I also took courses in seven different departments. A little unusual, but not that unusual for MIT; certainly it’d be unusual for most other schools. And enjoyed all those courses. Then ended up doing my thesis in the physics department — which you could do, again, moving around — in thermo-nuclear research. But in particular, I did a rather different thesis in the statistical analysis of high-temperature plasmas in complicated magnetic fields, which was the thermonuclear containment problem, really. But the thesis was well received. It became an invited paper at an American Physical Society meeting. It also is being taught, or was being taught for a number of years as the work on containment in thermonuclear devices, at least at MIT. I don’t know where else, but I was aware of that. At that point, the thought was either to become a professor —
Before we get into the professor, were there any major figures in your childhood, high school years that pointed you in the direction of physics?
You mentioned a favorite professor at Penn.
Yeah, Herb Callen, but he was just one of a number of professors that I had at the time. Gaylord Harnwell Arnwell [?], who sponsored me in a couple of things. I was not overly impressed by the department at the time. Herb Callen was the most — But that was, no, we’re talking about graduate school. At the age of, whatever you want, less than ten, I didn’t know any physicists. My understanding of physics probably came originally from some magazine like Popular Science or something of that sort. But I knew a good bit about nuclear energy by the time I was in junior high school, which, of course, was a subject that few people had any comprehension of at the time.
When you were in high school, were there any people that played mentor roles?
One guy, Mr. Lester but he was in the English department and taught Shakespeare. I argued with him all the time. At least he appreciated that. I still remember the course that he gave on Hamlet. I was not a pleasant person in high school. I mean, I wasn’t wild. I just was impatient. In fact, I think that that is still somewhat true. So, no, there were no particular mentors in high school except for this one English professor. He always thought I wasn’t working hard enough and I always thought I was, so we’d have dialogues around that subject. The only heroes that I had during this particular period that I can recall were guys like Einstein and Fermi, of whom I was aware, at least, in high school.
What sort of work did your parents do?
My father ran a couple of well-known stores of furniture and appliances. So in other words, sales, retail sales. My mother, who probably was a fairly strong influence because she was a very strong-minded person, retained her maiden name even during that particular period. She had gone to Curtis Institute in Philadelphia in music. And again, I haven’t mentioned it, but I was very interested, and still am, in music. Studied harmony and composition, again, during the junior high school and high school years. I would study with a professor from Penn privately. Composed some pieces and stuff and played the piano. My parents were not particularly in favor of my wanting to be a physicist because they thought a physicist has to work for somebody. They preferred if I were the owner rather than the worker. So, I had no specific person mentoring me into physics at all except for what I was doing in reading, which I did. As I said, my hero to this very day was Einstein. At MIT, on the other hand, but this is now after the Navy —
You were working on your doctorate.
Yes, I did a good job in the Navy, and they offered — again, as part of the nuclear submarine program — to send me to MIT, but that would’ve meant four years, and then three for one. In other words, I’d have to make a career in the Navy, and I decided not to do that. I got a scholarship anyway, and I didn’t need the GI Bill at this point. I am, at least on paper, a Korean War veteran, though frankly, I spent it in the Navy and in the Atlantic fleet. So I had nothing to do with Korea in particular, but at least it was contemporaneous with the Korean War. At MIT, I had a superb thesis professor, who didn’t bother me in the sense that — I told him what I wanted to do. He said, “That’s a very difficult problem. Aren’t you biting off more than you can chew?” I said, “Well, I’m going to try it anymore.” He said, “Well, out at the University of California at Radiation Laboratory, they’re working on containment problems at Livermore and Berkeley. Maybe you ought to go out there for the summer.” So I went out there for the summer and didn’t come back. I didn’t come back until January, and I handed in what I thought was going to be my thesis.
Who was this professor?
Will Allis. Professor Allis, who, again, was professor of the old school. Also very wealthy. He was one of the sons of the Allis of Allis-Chalmers. Very cosmopolitan and worldly. Very inspiring to me. I did my thesis more or less independent of him, he just agreed to it, and then he saved my ass in that when I came back, I handed him my thesis. He said, “You know, you can’t hand in a thesis for which you got paid working on it.” I’m sure those rules are somewhat relaxed these days, but they weren’t at MIT at that time. So I said, “Well, I didn’t know that.” So he went to the graduate committee and got me an okay to… it wasn’t exactly to hand in a thesis because he had a few things to say about it that he wanted improved upon. But I was able to get my degree that June. He appreciated the work that I had done. Now, frankly, at the time, and I’m a little hesitant to really talk about this much, I really did to solve this very complicated and difficult problem, and I solved it five different ways, starting from the most thorough solution, which had to be numerical, all the way to simpler, simpler, simpler ways. When I brought to him Professor Allis the problem at — this is, I think, a very important juncture at least — I had all the terms of the equation that I wanted to solve on this great big sheet of paper, which was about two feet by a foot and a half. Sixty terms, as I recall, or something like that, when you expanded it all. He looked at that and he said, “It’s inconceivable to me that all of these terms are the same order of magnitude.” And that was the key to my thinking because I first solved it with all 60 terms numerically, and then I figured out which of the terms were contributing more and which less. Then I removed some, solved it again, still numerically, but now with about 25 terms. Looked at that carefully. Finally got it down to four terms, which gave a very good approximation and could be solved analytically. Very simply. In other words, I found the regime in which just these terms were dominant. Well, that helped in the design of the thermonuclear devices. They’d have to go through this tremendously complicated — at Livermore, they had the fastest computer in the world at the time, and it required that to solve all these terms in six different dimensions — three regular spaced and three phase spaced. Anyway, the thesis worked out fine. Professor Allis helped me over that procedural hump of which I had been, I think, relatively unaware. Does that answer your point?
He was definitely a mentor in graduate school. But I ran into other professors whose style I liked at MIT. And to this day, I find myself in some ways imitating their style as a teacher.
Who are some of these?
Well, one guy was in the mechanical engineering department, for example. We were designing a heat exchanger. This was a first-year graduate course in mechanical engineering that I was taking. There was a heat exchanger, and we all came in with different designs. He was sitting on a windowsill, a larger window than this, but he was sitting with his legs up on the windowsill and listening to all these different ways of solving the problem. We were turning to him student-like and saying, “Which do you think is the best?” And he said, “I don’t know. I don’t know.” That’s the first time I had ever heard a professor say, “I don’t know.” And so to this day, I’m not reluctant to say “I don’t know” when a student asks me a question. I think of him frequently. His name was Crandall. I still remember him. So I view MIT as the place that is really — at least at the time that I was there, and perhaps still, I hope so — a place that was really in pursuit of truth. I just enjoyed and, I think, flowered. I stopped being disruptive, more or less. So then I could be a professor, I guess. I had an offer to be a professor from Case and a possible invitation from Penn. I didn’t pursue it too much because I didn’t want to jerk their chain. But I decided to go to the GE Research Laboratories and work with somebody who really was a mentor, a guy name Henry Hurwitz, who is a very prominent physicist. He won the Fermi Award, and that sort of stuff. I really went there to work with him. He was very happy that I came there, so he made sure I had this freedom that I described to you earlier, namely to work with anything I pleased. And I worked with him on a couple of projects, and worked separately. Wrote lots of papers. Had a fairly enjoyable experience. At the same time, having sort of, again, an abundance of energy, I ended up teaching at RPI in the evening, which is down the road from Schenectady, in their electrical engineering department, of course, in electricity and magnetism, and another course in plasma physics, which had two people in it. But that’s okay, I guess. Advising some students. Enjoyed that a lot. And then was very active in the community. Became, for example, the chairman of the Schenectady County Human Rights Commission. I certainly was swept up in those issues at that time. This was in the ‘60s. So I was known for doing lots of different things in addition to the theoretical physicist thing. I remember one particular instance, which you may find amusing, but again, I was working on a problem with lots of different terms in it, and I had lost a minus sign somewhere in there. I was looking for the minus sign in one term after another, looking for the minus sign. All of a sudden, I looked out the window and said, “My God, they’re starving in India, they’re rioting in the Middle East, and in Watts, and here I am looking for a fuckin’ minus sign.” I just felt, all of a sudden, the irrelevance of the quite rarified type of stuff that I was working on at the time, in this lab, or in this office. Though I was involved in other things. So shortly thereafter, I got an opportunity to take a managerial position.
Were you looking to go into management?
Probably at that time, I felt it was the way one gets ahead in life. Undoubtedly, if I had lived 30 or 40 years later, I might never have gotten a Ph.D. in physics. Even though I had started out to do it, I would’ve ended up being one of these guys becoming a Quant on Wall Street, or an investor at a still earlier age. It’s a shame. I wrote some good papers, and those papers would never have been written if I had done that, and I have the feeling that some of these guys that are going into the finance community right now could, in principle, be writing some good papers if they weren’t out there simply pursuing derivatives and Black-Scholes models and all that stuff, which are highly mathematical and very close to equations in physics. That’s why they can get jobs easily in Wall Street. When I was offered this job in management, I thought, “Yeah, I guess that’s what I got to do,” and I was actually looking forward to it at that age.
Before we go into that, talk a little bit about what research was like at GE Labs at that time.
Oh, well, this was the most interesting transitional period. Quite characteristic of what was happening in American industry in general, about which one could talk a great deal. First of all, it turns out I was hired in 1960 for 1961. I graduated in August of 1960, something like that. But I was the last guy to be hired at the Research Labs before they froze the hiring. And then during the first couple of years that I was there, while I was working on this research I’d be asked questions about business issues they were busily working on studies to send to the front office of General Electric on why the Research Laboratory had been, and therefore would continue to be, financially relevant to the General Electric Company. All sorts of staff people were involved in producing these types of justification studies. And the justification was not that there was this immediate, continuous development of stuff that makes money from it, but there would be these big things that would make a lot of money, and then ten years later, another big thing that would make a lot of money for the General Electric Company. The prime example of this was Langmuir’s development of ductal tungsten. When he developed the ductal tungsten, it enabled the development of very large pieces of machinery to make light bulbs, and therefore light bulbs could be made much cheaper with this process. And so GE made an absolute fortune billions, even for that time, in light bulbs because of the development of ductal tungsten. He was the poster child for this type of research success.
Now, assuming that they were making all of these studies, trying to justify the economic return on investment that suggests that there are some people that were saying that they needed to justify it.
Unquestionably. That was obvious. As a matter of fact, it became more obvious — and this is why I said I actually had a non-negligible part in this. In 1965, the vice president of research, Guy Suits, who had been vice president of research for 20 years, head of the Research Lab, retired. The rumor (and I think correct rumor) was that they weren’t going to make any changes in the place until he retired. And he resisted making those changes. When he retired, he was replaced by Art Bueche. Bueche was only the fourth director of the Research Laboratory. There was a little jingle that went around: “As Archimedes cried ‘Eureka,’ Whitney, Coolidge, Suits, and Bueche.” And his role was completely obvious. His role was to change the labs from a research laboratory to a research and development organization.
When did he become director?
’66. ’65 or ’66. There had been very little hiring between ’61 and ’66. I think I was the last, but probably not the — they might have hired a couple of people there, but really, I was just as the spigot was being turned off. Well, because I had this reputation of being…Do you know any German? [Yes] Of being something of a Kochlöffel. Do you know the term?
Well, a Kochlöffel is German for a cooking spoon, and you put it in this pot, and then you put it in that pot, and then you put it in another pot, and then you put it in another pot. So I was involved in lots of things teaching or RPI, with heading the Human Rights Commission, I was involved in a coffeehouse that was devoted to dialogues around difficult subjects of the day and age. And Bueche decided that in addition to its highly siloed structure, the Research Laboratory would have another organization called Programs and Systems going across like [?]. In other words, he was setting up the rudiments of a matrix system. Somebody was asked to head it and I was asked to be part of it, and when he left, I ran it. So this was now the new organization at the Research Laboratory, and relatively unpopular. The world was ending for the people involved in pure, undirected research... It was my role, and I pursued it honestly, to sit down at lunch, among other things, and talk to the other colleagues... “Look, the world isn’t ending. What Art is doing is basically saving the Research Laboratory by, to some extent, bending to the wind. But if we didn’t, we would break.” I don’t believe I ever used that analogy, but that was certainly the point I was making. Well, it scored with some people because I did have something of a reputation as a longhaired theoretical physicist, and I had done some respectable work in several fields at that point. I was also working in solid-state physics a bit and bio and physical chemistry a bit. So I had moved across fields already, and I was known as someone who did that. This was a natural role for me. But some guys left. Henry Ehrenreich went to Harvard to be a very prominent professor of solid-state physics. Peter Auer went to Cornell in aerospace physics. Several people came to Cornell because, obviously, the closest Ivy League school. So, some hopped off the ship at that point, figuring that, in some sense, that — certainly, an era was ending. Whether the world was ending or not is another issue.
Now, these earlier studies seeking to justify the economic return on investment, I take it then that they either had not been successful or there were other arguments that were more convincing.
Corporate executives, in many ways, especially at the top, are rather like sheep. Just as investors are; just as venture capitalists are; just as we all are, to some extent. And all sorts of companies were beginning to abandon their pure research, which had started after World War II, after the Manhattan Project, and the radar and all that sort of stuff, and the aerospace thing. So it was just the fashion. GE, IBM, and Bell resisted changing in the 60’s this because of their significant traditions. But sooner or later, they had to move into this as well. So I think that the discussion was not that these justifications didn’t cut the mustard in the management committee. It was just, “Well, everybody’s doing it. We ought to do it, too.” And the studies were not sufficiently powerful to stop that, to resist that.
Why do you think everyone was making this transition about this time?
Because the fundamental point was probably right. That the era of pure industrial research, which was producing a great deal of knowledge for the world — you know, we published just as freely as anybody publishes here at Cornell now… Perhaps a bit more freely than now, where companies sponsoring research want 90-day delay on publication. It’s another story. At GE we published freely. I didn’t need anybody’s permission to send anything to the journal, or if it was, I didn’t know about it.
So you didn’t have any intellectual property reviews, or things like that.
Look, I got five patents during this period, too. Sure, that was reviewed. Yes, I knew what was commercially useful. I wanted to get a patent, you know, as a matter of personal prestige. I submitted five, got four. Something like that. One didn’t go through. The point is that, whatever, the world was changing. Whether this shift to commercialization was right for the country is an interesting issue, and to this day, I would probably say, marginally, yes. You did lose a great deal of pure research. Some very good stuff had been done at these research laboratories, work of a very high-minded nature. So I think if the shift was really debated in some extremely thorough way — which, for all I know, it may have been, I wasn’t part of it — it probably would’ve fallen in the direction of a shift toward commercialization — In fact, that’s the vision that I had at the time, was that there was still going to be pure research at GE. But it wouldn’t quite be pure research in absolutely anything you wanted the… was I was hired. It would be pure research in the areas that one could make a reasonable argument, that it had some consequences within the fields of activity of which General Electric was a participant.
And of course, General Electric was spread pretty widely in its business activities.
Right. So it didn’t bother me at all. And I didn’t quite understand why it bothered other people to the extent that they were Henny Penny, the sky is falling down. I mean, it made perfectly good sense that GE might someday be in the thermonuclear power generation business. I was working on some rather abstract problems in thermonuclear containment, but you have to solve those problems to be commercial, I began to believe that all these containment problems could never be solved. In fact, I wrote a paper with Henry Hurwitz to that extent and got out of the field. That’s why I got out of the field. Here’s an example, at least in my own thinking of pure research affecting commercialization. The history of that paper was that I was working on a problem on, again, hydro-magnetic stability issues in thermonuclear containment. And I started extremely fundamentally. I have to give some background on this. [Ok] My work had been on collisional losses. The type of losses that occur in a gas, the ions bumping into each other in this case. Long-range forces bumping into each other, and leaking out the loss cones of these, let’s say, magnetic mirror systems. These magnetic fields that, in the simplest case, would look something like this. Two coils. So, the long-range collisions would gradually bring particles into what were called the loss cones, and they’d go out. So you had a finite containment time. The containment time is, in fact, to this day, still the central problem in the research that they’re going through. So, I calculated, as exactly as anybody could, what those losses were in a simple system like this, which was complicated enough because, three spatial dimensions, and three phase-space dimensions as well. I was dealing with very abstract unusual functions, so unusual that I had to tabulate them myself; it didn’t exist in any table. Anyway, so that was the work. I then went and, a couple years later, found there were also some electrostatic effects, which made containment even a little bit worse. Then, a couple years later, I decided to start from the most fundamental of all equations, hydrodynamic equations, and try and build up the case for containment in the most complex possible twisting and turning of magnetic and electrical forces’ and magnetic forces’ possible configuration. Not just this simple configuration. Twisting and turning into a stellarator, for example. Whatever. Okay? All right. I couldn’t solve the problem. And I worked on it for a couple of months. I went in to see Henry Hurwitz. Said, “Henry, I can’t solve the problem.” He had a way of mumbling. He’d go, “Yeah, I’d see what you mean. Yeah, [mumbling]. I don’t know anything about it. [Mumbling]. I’ll think about it.” Next day he comes into my office, says, “You know something? You can’t solve the problem.” Okay. So what I had shown appeared as a letter to the Physics of Fluids on the nonexistence of isotropic containment in hydro-magnetically stable systems. So what this, in fact, says is that no matter how much twisting and turning of the containment system that you do, no matter what magnetic or electrical forces that you do, even if they’re time-dependent in some crazy way or another, there will always exist loss cones. And that whereas my thesis, it was a simple situation, you knew where the loss cones were. There was clearly a place in phase-space where the things would flow into, and therefore flow out of the system. In these other complex systems, there may be little loss cones all over the place. Who knows? Swiss cheese or whatever it is that exists in phase space, but there were still going to be losses. You could never get rid of them. That means you really can’t have long containments in this hydro-magnetically and even electro-hydro-magnetically stable systems. [OK] That means that the physics problem associated with thermonuclear containment is impossible. Or extremely difficult, to be precise, because I suppose you could push and push and push and push with higher magnetic fields or something like that. Forget about the engineering problems associated with thermonuclear containment. These also are considerable. So I concluded, pure and simple, you can’t do it. So I stopped publishing papers in containment and I stopped doing work in thermonuclear research. Then I worked with a guy in solid-state physics, another guy in physical chemistry, did some work with guys over in the math area. You know, published papers in all these areas. Became kind of a pet theorist, in some sense for these guys. So there was an example of where, at the micro level, I decided that what I was doing wasn’t going to have a commercial exploitation. Presumably, the company was making more macro decisions about this. It’s obvious that the macroscopic level, as it was to me in the microscopic level, in detail. But getting back to the point where this transition was occurring, I had the vision that what the Research Laboratory was going to become was not just pure research in silos, but something that had a component which would be more practical, more developmental in this nature. Art Bueche used to refer to this as that we would have wall-to-wall responsibility. Soup to nuts, okay? I mean, there were various jokes that were made. And I didn’t see that this necessarily ruled out doing good work in basic work, but the basic work had to have some component in the direction of possible exploitation. That’s all. And I think, at the corporate level, they probably reasoned the same way. At least I was hopeful that they were smart enough to reason that way. And at no time did I feel particularly restricted in the work that I was doing.
So if you had decided to continue to try and solve the problem of thermonuclear containment…
After I was convinced that thermonuclear containment is a pretty damn insolvable problem, then I would’ve been the type of person that, way up at that corporate level, were they even aware of it, they would say, “Hey, I think we’re wasting our money on that one.” But I moved into an area of, for example, electron tunneling in semiconductors and in superconductors. That proved to be important and also proved to be commercially interesting. I did some work in physical chemistry on surfaces with a physical chemist that proved to be commercially interesting in fuel cells and stuff. These were tough, intellectually challenging problems. And I didn’t feel as if I was being exploited in any way, if that’s even an appropriate term. Others might have. Maybe some guys were h hearing, “No, you can’t work on that. You’ve got to work on this,” and they would’ve felt very badly, but it never happened to me. Perhaps that an exceptional situation, but… I guess I always had the kind of feeling that, were the guys at the head of the company aware, in detail, of what was going on at the Research Lab, I was the type of guy that they’d want to have there. Now, that may have been pure rationalization.
You’ve talked about a shift where, when you first came, you were given a lab and told, “Do whatever you want.”
Right. Well, they had the general understanding I’d continue the type of intellectually direction that I had done my thesis in or something like that, but otherwise, yes.
And now there’s a shift where you could still do pure research, but it has to be in a field that may have economic relevance for the company.
Right, and the word “may” is the most important word there. What does that mean? What’s the probability? I don’t know. The probability just shouldn’t be zero, as I viewed it. Ten percent, I would’ve felt would be acceptable in my own thinking. A hundred percent is a development laboratory, right? And at no point did I feel I was I was working, at that time, in a development laboratory.
But now you came to this point where you decided to shift from being a lab scientist to being a manager. Talk about that shift.
Well, the shift was exactly in this direction. Since I did have these applications-oriented instincts, I ended up being in charge of the program and systems that were the way things would move out of the laboratory into the business departments of the company. And these would be cross-disciplinary programs for which I had good credentials.
Was there any change in the financial structure at that time on how the labs were funded?
How the lab as a whole was funded, I don’t recall. I was not privy to that. Internal to the lab, my biggest adversaries were the managers of these silos because they had the feeling that money would flow from the stuff that was pure physics, pure chemistry, to programs. So I was, in their eyes, a threat. And I knew it. That led to the next thing that I did. It was a tough three years. Can I go on to that one?
Then Art Bueche sent me to Crotonville, General Electric’s in-house general management program, which was, as I recall at that time, a four-month program in which you would spend most of the time there. It was kind of a 90-day wonder MBA program type of thing, but with a strong General Electric flavor. All sorts of top people, the chairman of the board, would come by and exhort us onward to General Electric and all that stuff. The teaching there was done by professors from various business schools. One night in the bar — this all was hail-fellow-well-met and all that jazz….
Typical grad school.
Yeah. Well, even more than that. It was a typical corporate… You were learning not only the graces of financial accounting, but also the graces of cocktail parties. [Ok] Anyway, three of the professors from the Harvard Business School approached me in the bar and said, “Would you be interested in coming to the Harvard Business School to take over a course in the management of technological innovation?” It was a course that had been taught by… Jim Bright, a professor that had absconded and gone to Texas, which was building up a fine MBA program at that time. They were left in the hole for somebody to teach that course for the next fall of next year. So, I was of course flattered, but I told them I couldn’t do it because I was right in the middle — You don’t give up your responsibilities quite at the Research Laboratory or wherever else you came from while you’re there. You don’t disconnect completely. And there were things that were going that I was still responsible for back at the Research Lab. But about two months later, I went in to see Art Bueche, and I remember the little speech I gave him. I remember it vividly. “Art, there’s blood all over the floor here, and most of it is mine.” I had been the point man in this set of changes that he had been required to make on the Research Laboratory. “You know, I got an offer to be a professor.” Maybe I should’ve been a professor in the first place. “So, I got this invitation to come to the Harvard Business School.” And he replied, “Whoa. They didn’t offer you to come to the Harvard Business School to be a professor. They offered you to come there to babysit a course for a year that they had been left in the lurch with.” This was hardly a permanent appointment or anything like that. So I said, “Yeah, I guess so.” He said, “Why don’t you go there for a year? And we’ll pay your expenses. In fact, you’ll stay on the payroll here. The Harvard stipend you’ll turn over to General Electric, and we’ll call it a special assignment.” It worked out, so this became the first of what became known as a Coolidge Fellowship. I didn’t have that title at the time, but I provided a model. I went to Harvard Business School and took courses, and had a ball. I rattled all over that place and I taught a course that was given very high ratings and all that sort of stuff. At that point, I got an offer to go into the government as a… well, there were several possibilities, but the specific one was Deputy Director of the Federal Aviation Administration, in charge of research. I went down to Washington and it didn’t smell right to me. To this day, Washington doesn’t smell right to me. Maybe you have a better view of Washington than I do, but I viewed it as what I think it seems to have become even worse of, which is just an institutionalized form of corruption that we have where money is…. The laws are not being done necessarily in the best interests of the people, but the various power groups or lobbying groups. I could see it. You’d go out to dinner and you’d see all these lobbyists talk with all these people. I talked to a guy… What was his name? He had just come back from Washington to the Harvard Business School, and he reinforced my opinions. He said, “Don’t go down there.” So I didn’t do that, but part of the deal was that I would come back and make a pitch as to what I wanted to do next. I came back in the January/February timeframe, I don’t remember which, and I made a pitch.
Would this be 1966/1967?
No, 1969-1970. 1966-1967 is when I took this job. This was two years later. The pitch that I made, which I still have a copy of in my file, of course it was a great pitch, was that, look, we’re producing a lot of stuff here that we are kind of pushing on the divisions in the company. I know it because I’ve been one of those doing the pushing from those programs and systems. That’s where it’s going. Some of it works and some of it doesn’t. “Well, why don’t you turn over the ones that don’t to me?” I said arrogantly, “and I will set them up as businesses on the outside of General Electric. And General Electric, instead of having 100% ownership of these things;, will end up with, say, 30% or 40% ownership. We’ll offer the employees associated with this thing out there.” See, it’s now a unit out here somewhere that isn’t particularly going to survive. “Let them become the entrepreneurs associated with this. In addition to that, we’ll bring in venture capital,” because I was now familiar with venture capital. It would almost be like a Chapter 11 reorganization of these things out here. But instead of owning 100%, you’d bring in other parties and sell off equity and all that sort of stuff. And we can also structure certain types of buyback arrangements, such that if these things succeed, we can sell the shares, or we can bring them back into the company by buying the other 60% back or whatever it happens to be. And if it fails, we’ll write it down, but you’ll write it down three years later, and what you’ve done is postpone the write-down that you would’ve had this year for three years. And the write-down wouldn’t occur on the division’s books; it would occur on my books. I had to have books, so it had to be a division-level type function. So they would be out from under it. And they’ll love to hand this thing over because they know if I write it down it’s going to book a loss under books for the year in which they write it down. So it had all the elements in it that made sense financially and politically, so to speak. Art went to the board of directors of General Electric — believe it or not, you’d have to go to the board of directors — because I was taking stock. The bylaws of the company say any stock that’s being taken had to be approved by the board of directors. And they assigned it to a particular member of the board of directors by the name of Jack Parker, who happened to be also on the advisory board of the Harvard Business School, and he became a strong advocate of this thing. He was saying that I was the only guy over at the Harvard Business School that knows anything about business. I mean, he would make complimentary assertions of that sort, so he made this thing happen at a board level. The thing was set up, and it was called the Technical Ventures Operation. That began by spinning off certain business — they’re called sponsored spinoffs. Now it’s a much more common practice. This was the first. And it got written up all over the place in Fortune magazine. There was an article on it in Wall Street Journal. They got their money’s worth and publicity, if nothing else. They also made money out of the deal because some of these businesses actually survived.
Now, these were businesses that you were spinning off because you didn’t see them as viable within GE.
That’s right. They were either fated not to be large enough so that they would fulfill the appropriate criteria for a GE business section, or strategically not in the same direction as the division to which they had been sent. Or the division to which they had been sent is having hard times and had to do some pruning, and this is one of the prunings it had to do. But I didn’t automatically take these things. You had to negotiate with me for us to take them.
What sort of criteria did you develop for deciding what spinoffs you would take and which ones you left?
Whether it was a good business or not. Same as I’m doing to this very day. Which is a fairly complex question and it doesn’t have an algorithm for an answer. What’s a good business and what’s a not good business when looked at the early stage is not a simple thing that can be ground out on the computer. There are certain attributes. I have certain questions I ask the students. There’s no stock method for doing it. There wasn’t then, and I don’t believe in those methods anyway. Maybe somebody else can do a better job of systematizing or making this into some sort of didactic, but not I. Even to this very day when I teach it.
One of the characteristics, if I recall from the article, of that time was that you retained some investment for GE, but you also empowered the employees that were being spin off from the company.
Absolutely. There was a very nice article in Fortune magazine. Did you ever see that? [Yes.] Okay. That article really did describe it rather very well. I didn’t quite take everything to make ventures. In fact, I took very few things, just like a venture capitalist does. So I had more division general managers calling me, saying, “Will you take this?” than I was willing to accept. Of course I looked very carefully at it, and find some reason not to offend the guy. But I wouldn’t take it from their books to our books until the day of the closing. All the preparation time and everything else would be done on his books, not on my books. I generated negative goodwill, which is great. Negative goodwill is gain. Because the sum total of the amount of money on the books at General Electric would buy this stuff at their shares at, say, something like one dollar a share. The employees would buy something of the order on ten cents a share, and the venture capital would come in at maybe three dollars a share. So by the time you were finished, the General Electric shares would go up, in a sense, from one dollar to one dollar and twenty cents, which would be on the books at General Electric as negative goodwill.
What happened to the operations that you turned down?
They shot them in the head, which they were going to do with all of them. And fired or moved the employees somewhere. So in some sense, these employees had no alternatives since they knew that was likely to happen, other than saying, “We’re going to be entrepreneurs,” and get themselves out of there at least on something like this rather than… And the human resources people at the division were absolutely delighted. They didn’t have to fire any of these people. The people marched out the front door with their heads up. So it was to everybody’s benefit. It was politically very carefully crafted.
How did this affect the research operations?
My offices were still at the research operations. I would still sit in the lunchroom with these guys and talk physics. I developed, at that point, another interest, which is an interest I carry to this very day, which is in the foundations of physics. Philosophical, but more than philosophical, formal. I became familiar with things like Zermelo-Fraenkel axiomatic theories. Well, I began at that very early day — I’ve been working on it for 30 years — to try and formalize the fundamentals of physics on the basis of an axiomatic approach that was based on the same axiomatic approach as mathematics, or at least close to it. Because I was intrigued by a question that has intrigued Wigner, for example, say, something like, how is it—Physics is based on observation, on empiricism. Mathematics, on the other hand, is based on a set of axioms with no recourse to observation whatsoever. How come one has anything to do with the other? In fact, he wrote a very well-known essay entitled, “The Unreasonable Effectiveness of Mathematics in the Natural Sciences.” That’s a very profound question, and I’ve been working on that question for 30 years. Written several papers on it. Think I’ve solved the problem, but that’s being rather presumptuous. I can give you a copy of the latest version of that paper, but it’s highly abstract— my problem is, certainly, who understands it but me? [Laughs] I have difficulty communicating it. But some people at least appreciate what I’m trying to do. If I’ve ever done anything abstract in my life, this is the most abstract thing I’ve ever done, and the most fun.
So you’re having lunch, talking physics in the research operations.
And then going to my office and starting businesses. Everybody knew I was over there starting businesses, but I was still conversing with them on the physics subjects. I had been known as somebody who moved around the place and could talk in various disciplines to people. People would have ideas for businesses. I’d sit down at the table, you know, “Start any businesses this week?” or something like that. “Yeah, I was doing this important sort of thing.” “That’s interesting. Why don’t you do it this way?” They actually enjoy that contact with the outside world and trusted me that I appreciated what they were doing, as opposed to being a philistine of some form or another. I was only a part philistine.
So did you have scientists coming to you saying, “Hey, I’ve got this project that I don’t think is going to go anywhere in GE. Is there something you can do with it?”
Yeah, and I’d say, “I can’t do anything with it.” I’d say, “The businesses that I would start would not be from ideas at the Research Laboratory. Would be from units that had been moved out into the divisions of the company already, one or two or three years later, that weren’t cutting the mustard out there. So they already formed these businesses. They would have people associated with them and a manager and everything of the sort, and they were trying to do something. An example of this was a superconducting business. It was out there in the systems division under Howard Kurt. He was the division general manager. He was having a tough time. He hasn’t making profit. The Research Laboratory was really hot on superconductivity, and this was the place to push it into the company. It was out there, and he didn’t care for it, and he had other problems. He wanted to turn it off. The people here would’ve taken the gas pipe if he had turned it off because they were so proud of having done extremely good work in superconductivity. So the natural solution was to spin the thing off. He got rid of it, off his books. The people were dedicated to it. The Research Laboratory, for a while, kept sending some research to these guys. Not forever. These people could talk with pride over here about this business that was started, as opposed to being depressed about the fact that their research had been shot in the head out there. Everybody benefited. The company ended up making about $15 million or $20 million out of that particular deal, so we even made money. That was just the right thing to do. But that’s a perfectly good example of what happened. It’s not somebody working in a lab with a new idea. What I did was reorganized a unit something already formed as a business. You understand the distinction.
Are you familiar with technology readiness levels? [Yes] Rather than taking something that’s at a two or a three, you were taking something that’s at an eight, nine, or ten.
Something like that. Yeah, sure. I would refer to it as six phases. I was taking at Phase Six. It’s interesting. I would give lectures on this thing. The profile was a business that was set up as a business out there in which a fair amount of money had been put both in research and out there trying to make it in the business, but wasn’t cutting the mustard. So I would refer to the fact that the statistics are: 1 in 60 of the ideas that come from a research laboratory actually made it in the company. That was a well-known statistic. Well, I was interested in the 58th and the 59th, the ones that weren’t just quite making it, as part of a division of a large company, but could make it as a freestanding entity in which the people were compensated differently, including having stock, in which the expenses were different. They didn’t have all the period costs associated with it. They didn’t have the overheads associated with it. So I would refer to it, in this sense, as the 58th and 59th out of the 1 in 60. You know, it was a perfectly reasonable idea. In fact, was very proud of it. The head of GE’s strategic planning, the vice president of strategic planning once made a very nice statement that he thought I was the best strategic planner in the General Electric Company. It was really beautifully constructed to everybody’s benefit. The one thing that began to happen was, naturally, that since the first few of these I got out there and they looked good when they were out there, some of these division general managers that were thinking of shooting some of these things in the head were kind of reluctant to turn them over to me the way they had been earlier because they felt that if I had made a success of these things out there that they hadn’t made a success in the division, they might look bad. So it got harder to pull on these things, if I had to pull on them. The negotiations got harder. These guys were like running a shop, and you’d come in the shop and you’d say, “I want to buy that thing,” and they’d say, “Well, if you want to buy it, it’s got to be worth more.” Okay. “BenDaniel wants to grab this thing. What does he know that we don’t know?” That type of stuff. It became a joke, but it was a serious joke. So it got harder that time and it had a limited life. I even made a proposal which GE did not accept, which was to spread this out to the rest of American industry. It’s a perfectly viable concept. I showed exactly how it could — that GE could, in fact, do this for other companies as well as its self. But the particular guy who the gatekeeper on being able to do this didn’t want to do it. I tried for over a year to get him to do it. He and I ended up not getting along, so I left GE and went to Exxon.
If I understand this right, you were going to move this program —
Set it up as a separate company in which General Electric itself had a significant ownership. I didn’t care whether it was the majority ownership or not. But doing it for companies in general. Same mechanism would’ve worked perfectly well.
Now, you mentioned just a little while ago that this concept had a short shelf life.
In General Electric because it got to the point where guys were a little reluctant to turn it over to me, fearing that if I made a success out of it, they may look bad. They gave it a second or a third look, and then negotiations became harder. Or, since I was fairly judicious about what I accepted, I had mined the best, and the mine played out. But companies are doing this to the very day. I made lots of talks to lots of boards of directors who are thinking about spinning off a business or something. It was a very public relations-filled period. Had my fill of that.
So, you ended up not being able to move this to industry as a whole through GE. [Yes] How is it that you decided to go to Exxon?
They offered me a very nice job which led to a vice presidency and it was attractive. They had this huge new business development operation called Exxon Enterprises. Lots of money with which to work. It was an alternate path, and I chose it. Perhaps because I was myself more conservative than some of the entrepreneurs that I had been working with. I don’t know. It’s hard to say. I mean, it was a balancing act during that particular period. I didn’t like the new guy I was reporting to in GE, [?]______. I kept trying to get him to agree to this thing. It looked as if things were paying out, that the mine was being exhausted inside GE for a variety of reasons. He didn’t want to do this. and he had a what he felt was a reasonable argument. The argument was as follows: General Electric is a $60 billion company at that time. I think that was the figure. What you’re doing is at the $100,000 level. Whatever risks you taking, doing that, GE shouldn’t be taking. I still don’t buy the argument, but I didn’t even understand that much of it at the time. I just thought he was an idiot, which was my fault, probably. I didn’t handle him right or however you phrase it. But we had a falling apart over this. I kept going down to Fairfield and trying to get him to do it. Maybe he wasn’t smart enough to be able to handle me at that particular…Who knows. Whatever, it was. That was a tough period because I had this red-hot idea, I knew it would work, and he wouldn’t move.
On to Exxon, what did you do there?
I ran their alternate energy business development and ultimately some electronic devices as well. Had a number of divisions that were small businesses, but were developing wonderful things like page-sized LCD displays, which now are in every laptop. Like floating magnetic heads, which are now in all sorts of readers. Like oxide stripe lasers, which are this big, which are now used in CD players. This was 35 years ago. We developed all sorts of stuff and set up little businesses with which to do it, and then the oil shock hit.
So this would be about…
Well, I went to Exxon in ’75. Back to physics for a moment. As a physicist, or at least as someone who is trained as an applied physicist, one of the things that I was able to do was to be able to gain with appropriate tutelage, some understanding of all these different technologies. In other words, the fact that I was a physicist, to the original point of your being here, was very instrumental, at least to me, in being able to span these other technologies and so forth. Now, admittedly, I’m something of a polymath or something like that, but the fact of the matter is I still believe that training in physics is very relevant to technical businesses in general. But it’s not just a default strategy. It’s a good way to be trained to be a modern technical businessman, which I think is happening whether I say so or not, but you know what I mean. I think it’s a very valid argument for the fact that, major in physics when you go to college, and then go to business school. If that’s what you want. The worst thing you do is major in art history and then go to business. But if you major in physics and then get an MBA or something like that — I’m talking as an undergraduate — then, indeed, you’ll be able to understand the type of math that these jokers at the business school do, which is elementary in comparison with what you need to solve with the fusion equation. But you’re better at it than anybody else in the classroom. And you’re able to understand the technical ramifications of things as they apply to business situations to a greater degree than the professor teaching strategic planning. Or at least be one of his better students. So, I think there is a very strong argument to this very day that if you have a good physics education, and then don’t get off into chasing elementary particles and lose track of the world, but if at the point of being aware of a wide variety of technical and mathematical solutions to problems and so forth, it’s a great training for a subsequent — certainly in finance these days, but also in technical businesses in general. Or investments. In fact, this of course is absurd, but I seem to think that everybody ought to major it in physics. No, I think it’s just a great… The world is becoming increasingly technical. A liberal education is an education in which to understand the world. So you’ve got to have an increased technical education in order to understand the world in which we live, which most people don’t because they don’t understand some rudimentary aspects of the technology or of the methods used in technological research. Well, in case you need to make an argument why people should major in physics, that’s quite a good one.
Okay. Getting back to your career, you’ve moved on to Exxon. You’re involved in managing their startups within Exxon.
Some of them. There were other people doing the same thing. I wasn’t in charge of everything.
Were you doing spinoffs there as well?
No, but I was heading the venture capital operation. I didn’t do spinoffs at that time. And interestingly enough, maybe should have. I was thinking about that this morning, as a matter of fact. Maybe there was something that I should have done at Exxon differently than I did to this point. There was the oil shock in 1973. Price of oil went up significantly at that time, up to $30 a barrel from $10 a barrel. Among other things, it made the inventories of Exxon three times as valuable, so Exxon booked huge profits, of which it was ashamed. They had to do something with it. So they started the world’s largest new business development program. I came there just as it was gaining its full momentum and got involved in all these different things. There was a second oil shock in 1978. Price went up again. At this point Exxon realized the following simple bit of MBA mathematics. They had all sorts of refineries all over the place that had been designed in 1950, or what have you. The design was optimized toward cheap energy. And so they saved on capital costs by doing things like running pipes with steam going from one end of the refinery to the other, without even wrapping them with heat insulation. Or, if so, only marginal heat insulation. Just by redesigning their refineries to be optimized toward high energy costs — in other words, putting in some more capital expenditures — they would save a great deal of money. The best example being the one that I just told you, this business of a pipe that was just losing heat, going from one end of the refinery to the other. It turns out that the return on investment of such an expenditure on their part. T, they calculated was of the order of 60% to 70%. The stuff that we were working on, these crazy things like LCD displays and diodes, we were promising 30% to 40%. For the life of them, they didn’t understand what we were doing at Exxon Enterprises anyway. There were a bunch of new types of people in Exxon Enterprises that may or may not be real Exxon types. Literally, this is what was going on. So they decided to start pushing down on the Exxon Enterprises part and diverting some of that money into projects, construction and other capital projects elsewhere in Exxon. There was also an additional problem that arose that gave Exxon Enterprises a black eye, which was Exxon Nuclear Fuels. At that point, there was a big expenditure made, with great hopes and great intelligence, into the nuclear fuels business. But all of a sudden, this became a liability rather than an asset, and Exxon lost two or three billion dollars in that endeavor because there was no place to put nuclear fuels because we weren’t building nuclear plants anymore because people were worried about radiation and all that jazz. We just haven’t built any nuclear power plants in 35 years, whereas the French, of course, have almost all their electricity, 70% or 80% of it, from nuclear power plants. So Exxon Nuclear Fuels was a white elephant. That was part of Exxon Enterprises. And as a result of that, to the top of the company, Exxon Enterprises didn’t look very good. On top of that, I and a couple of other executives sold to the top of the company an acquisition based on some of the developments that we had made, again, with great intelligence, of an electrical motor manufacturing company. As a matter of fact, they ran into an unexpected problem in that motor manufacturing company, namely that it itself had been acquiring other companies. So, people were talking about little fish being eaten by bigger fish and bigger fish being eaten by still bigger fish. Exxon ran into difficulty with the government in making that acquisition, justifiably perhaps, but it ultimately went through — I went down to Washington all the time, just talking to people and making sure that one of the agencies… I forgot which now. The understood the arguments in our favor. And then they ended up by finding out that one of the acquisitions that were being made by Reliance had been fraudulently faking its underwriter laboratory specifications on its electrical equipment. And all this stuff was in lots of apartment houses. Exxon lost $90 million, which it carefully kept as quietly as it could, just because this acquisition of this company became Exxon’s problem because Exxon acquired this company. And so they viewed it, I don’t think, appropriately as bad due diligence in the acquisition of this company. Could be I didn’t do the due diligence, but I certainly made the suggestion. So what they decided to do was to phase out Exxon Enterprises. I knew that, and so I decided I would leave Exxon. It’s a shame because I certainly had started enough businesses for them. So that was a glitch. That was the biggest glitch, as far as I’m concerned, in my career. I would have wanted to continue to build these things, but Exxon changed its mind about Exxon Enterprises. But I was all set up to go into venture capital and make some real money, and that’s what I did.
How long were you at Exxon?
Five years. Started a number of businesses. Four of them also initiated a $1.5 billion acquisition. Subsequently, it wasn’t negotiated as well as I would’ve liked, but I wasn’t involved in that. But that’s okay. Exxon paid a little bit too much for them and then ended up with this terribly uncomfortable surprise. So they got soured on that type of deal. They were making money when the price of oil went up. Their inventories went up. So I went into venture capital, which is the natural extension of what I was doing at Exxon anyway, again investing in businesses. But this time, money and not technology. Anyway, I told you I had three careers. One was a physicist, which I was very dedicated to and felt was the right thing at the right time. The second was some sort of executive or investor or financier or whatever you want to call it.
Did you have any involvement with R&D while you were at Exxon?
D. Not so much R. The development that led to this acquisition was definitely an example of D, but some people think of it as R. You want an explanation of what this was?
DC electric motors can be varied in their speed by just varying the voltage. But they’re very expensive motors and they’re very heavy. But they do have the advantage of being variable in their speed, which can be very important for certain stationary applications. They’re the appropriate thing to use in elevators. AC electric motors, induction motors, are very inexpensive, but you can’t vary the speed because they get their timing from the electrical sine wave that comes in. Sixty cycles. You want to change the speed? If you build a motor that goes at 440 cycles like they do in airplanes, it’ll go faster. Eight times as fast or seven and one third times as fast. If you could vary the cycles continuously, then the AC motor wouldn’t know the difference. It would just speed up and slow down. As long as you kept the volts per Hhertz constant. You changed the hertz, you changed the voltage, and it will speed up or slow down. Now, all through industry, for example, in the process industries like Exxon’s refineries, they have motors. The motors are attached to computers. For many reasons most of those motors are AC motors and they’re running at constant speed. But if the computer wants to slow down or speed up the flow of whatever it is, the fluid, either a gas or a liquid, you have to pat baffles downstream, which close if you want less flow — or open if you want more flow. This is the equivalent of running your car where you’re running the motor at top speed, and governing your speed with your brake. So obviously, the brakes are going to get hot and these baffles are getting hot. They had to cool the baffles all over the refinery and other process industries. You can save a significant fraction of the energy in that industry if you had a variable speed motor instead of an AC motor. So we developed a variable speed control for AC motors that used power transistors. The way it would be done is that, in order to build a sine wave, you’d build it like a histogram In other words, just like you’d do in your calculus class. So you’d have current being turned on and off very rapidly, and this would, in fact, enable you to build — if you wanted to have a different sine wave, you’d just turn them on and off in a different way. The key to the whole problem turned out to be power transistors. Power transistors are switches that turn things on and off, at current of three order of ampreres. That turns out to be a very difficult materials problem because a transistor is a transistor because it’s a resistor. But you have the law of Dulong & Petit, whatever it’s called, which says that things which are poor conductors of electricity are also poor conductors of heat. So you need to break that conundrum because you needed to be able to have good transistor properties, namely a resistor, but also a good conductor of heat because these are high power. Otherwise the thing would heat up and would change where the bands are, and you’d lose the transistor effect; they’d begin to overlap with each other. So, using an experimental Japanese transistor called the Toshiba giant transistor, we were able to build systems that did exactly that, and could run electric motors, AC motors, which are very cheap, at variable speed. The problem, of course, was now the cost of these transistors, which was exorbitantly high because they were very experimental. So I went over to Japan and I negotiated to Toshiba. I went over and talked to Toyota. I talked about hybrid cars. Of course, you’d use these things in electric motors in hybrid cars. It was just ahead of its time. But if we had such devices, we could save somewhere in the neighborhood of 10% of the energy being used in the American economy, mostly in industry, but also in other places — air conditioners, elevators. Hybrid cars would become possible. In fact, there’s a little aftermath on this story. In 1995, which is 15 or 20 years later, I was a visiting professor at Keio University in Japan, which is a private school. They have an annual convention of the key executives of Japan. I was one of those who were giving a talk on entrepreneurship — a separate subject. But, I went up to my room afterwards and the phone rang, and it was the provost of Keio. He said, “Can you come down? The CEO of Toshiba wants to talk to you.” All excited he was, of course. I said, “Okay.” It means more to him than it did to me at that particular point. So I came down and I recognized the guy, and he recognized me. Of course, that’s why he wanted to meet me. He was the guy in Toshiba that I had negotiated with 20 years earlier around these questions of power transistors. And of course, that was a very pleasant meeting. When that is over, I said, “I can’t help but ask — how has the materials problem been worked on by you guys with respect to your power transistors?” He said, “We’ve solved it.” I said, “Wow,” knowing that that opened up a huge market for the Japanese. He knew it and I knew because that was my pitch. I said, “Boy, I’d love to see that.” He said, “All right. Come by tomorrow. I’ll tell the people at the research laboratory, and they’ll show you what we’ve got.” So I came there the next day, and they treated me like a king because they had gotten this thing from the CEO of the company. And they told me everything they were doing. I mean, they sang like a canary. I could see that they had solved the problem. With solving that problem, it opened up things like hybrid cars. In fact, the Toyota Prius, the original version of it, was based on the type of designs that we talked about in 1979 with Toyota, using the type of transistors that were now being developed much less expensively by Toshiba. So it came full cycle, but it came full cycle 20 years later. Fascinating,. I was very pleased. Especially with the way I got treated over there. Boy. Anyway, that’s the type of stuff that we did develop, and which was the justification to acquire Reliance. But there were clear sets of issues that arose after that of a managerial and financial nature that I had no responsibility for. Well, except for having started the thing in the first place. Anyway, things began to be pushed down on Exxon Enterprises and they wanted me to divest the divisions that I had helped start as part of their scaling down. And I resisted that. It was on that issue over which I left Exxon. I didn’t want to do that. I had hired these guys. I had encouraged them. I had been the cheerleader for them and all that sort of stuff. When we had to cut our budgets, I got everybody together. We spent days chopping down the budgets like grownups. We didn’t just shoot things in the head. Exxon wanted something more wholesale than that. Now, we should’ve done it at that point, and this is what I thought about this morning, coming to breakfast. Maybe I should’ve talked Exxon into spinning those things off. I didn’t. Didn’t even mention it, even though it was only five years earlier in the… you know. I’m not sure why I didn’t at this point or whether they would have agreed to it or not. But I had some offers from venture capital. I know I can make more money out there, so I went to venture capital.
We’re coming up on two hours here. Why don’t we take a quick break and then we can come back. [Break] Let’s turn this back on here. Before our break, we had sort of just finished up at Exxon, which would have made it about 1980. How closely had you kept in contact at that time with various people at industrial R&D labs?
A fair amount of contact. In both cases, both at Exxon and in venture capital, I would go to MIT fairly frequently.
Okay. That’s fine
What I observed [That’s what I wanted to know] was that more and more universities were being brought in to do contract research to the detriment of industrial research laboratories, that instead of having a group of people like me and my colleagues had been in the ‘60s, the companies were funding research projects at places like MIT and Cornell and so forth and so on, with certain rights to the results. As a matter of fact, I had been part of that, too. When I was at Exxon, I helped negotiate a contract with MIT on combustion research. I was not the key negotiator, but I was part of it. I was in this discussion were the withholding of publication for so many days or months or whatever it happened to be, rights to exclusive licenses or publications, credits, and things of this sort. And MIT correctly resisted some of the push on the part of Exxon, and Exxon gave — at least, in that particular negotiation, which was a fairly early one, but it was fairly large.
About when was this?
’78. What I observe these days is that all the conditions that MIT resisted in ’78 are being far exceeded by the things that universities now are giving to industrial firms in order to get their money. Too far. I mean, too far in my view.
Why do you think there’s been that shift?
Golden Rule. You know that expression?
Mm-hmm [yes]. He who has the gold makes the rules. Certainly, you’ve had a reduction in state and federal funding for education and for university research, so they’ve had to go elsewhere to get the funding.
Mm-hmm [yes]. I think, irrevocably, can’t see this going back again. This, in turn, is changing some of the nature of research in universities. But I’m not so sure that that is necessarily a very bad thing. I think that what the universities are right now are not unlike something of the German model of 1900 where there was a very close connection, as you’re probably well aware.
Well, let’s go back to your career and talk about this right at the end of the interview.
Would you care to have lunch today? I don’t know what your plans are, but…
Okay. Well, I can too, but there will be a third person who is a guy who does evaluations for merger and acquisitions deals for a prominent accounting firm who will join us who wants to have lunch. So you can talk accounting with him.
Okay. You went from Exxon to…
ARD. [ARD] From ARD to Genesis.
And what did you do at those two companies?
Venture capital. Well, ARD was Textron. Genesis was freestanding. ARD was a very prominent past venture capital operation that had been started by General Doriot, but had been acquired by Textron.
We know why you left Exxon. How did you decide to go into the venture capital business?
Well, I was in the venture capital business of sorts for the past 15 years. [OK] Not quite 15. Twelve. I had been in the venture technology business but dealing with venture capitalists. I had run the venture capital operation, or been the guy to whom the venture capital operation reported at Exxon. I had perfectly good credentials in the venture capital community. They thought of me as a venture capitalist of sorts. So that was easy. Unfortunately, Exxon was a much better environment for venture capital than Textron was. Textron started to make some, I think… well, I’m not quite sure why, but whatever it is, they — For example, I brought to them Chiron. I don’t know whether you know the company. Chiron is an immensely successful biotechnology company. As an early investment, they turned it down. I had more freedom in Exxon to do a deal than I had in Textron. I sensed that rather strongly. And they turned it down; they thought the price was too high. Told them that that’s what you need to get into this deal. They thought differently, so I didn’t like it. So, I went with a group of businessmen, did some business deals. Way different from physics or anything like that. Straight business deals for a period of about three years. And then I got this offer from Cornell to become the first occupant of this chair in entrepreneurship. That was as a result of a dispute between the donor of the chair and the faculty of the Johnson — it wasn’t called the Johnson School at the time, but just the school of Management. He wanted somebody in this chair who had started some businesses, and he didn’t care “whether the guy had a 7th grade education or not, just as long as he had started some businesses.” The faculty, on the other hand, wanted somebody who had a Ph.D. and who had taught. To them, it wasn’t exactly as important as whether that person had started some businesses or not. I was sort of the compromise candidate in the sense that I was only one they both agreed to interview. And why the donor was even involved was a mistake on the part of the business school, anyway. They should have never given him that much power in dictating who held the chair, but he insisted on it and they bowed to his interests.
Yes. The net effect was that I was the candidate that they both agreed upon and the only one they seriously considered. I’ve been here for close to 25 years, I guess, at this point.
What attracted you to here?
Oh, I’ve always had an interest in academics. I had taught when I was at GE at RPI. I also taught at the state university of New York. Then during the subsequent period in which I was at Exxon, I had a lot of contacts with academics, but I didn’t do any direct teaching except for the time — no, essentially, not very much. And then, in venture capital, I would be the guy who would go through the offices, the labs at the universities, particularly MIT, who could understand what these guys were doing. As I say, in that one deal, I understood more what the guys at Harvard were doing and the University of California were doing in forming Chiron than the people at Textron did. So they were unwilling to make the leap and probably lost several $5 billion in the process. Chiron has been phenomenally successful. All throughout this whole period of time, even when I was at Exxon, I was working with the people in their mathematics department, and the computational labs, but that’s where the logicians were, on this problem that I described earlier to you. Namely, the axiomatic foundations, of physics and how that relates to the axiomatic foundations of mathematics. I maintained an interest in that rather very difficult problem throughout this whole period of time. I think that most people thought that I would make a good professor throughout this whole period of time. But there are these stages of life, as Buddha clearly pointed out, and there’s a stage in which you’re actively involved in affairs. And then as you grow older, you’re more involved in some contemplative, consultant, or professorial role or something of that sort. So I’m doing what comes humanistically naturally.
To a casual observer, you’ve moved a long way from physics.
Not as far as you think. I just haven’t talked about the physics. I still spend a lot of time doing physics.
Talk a little bit about the stuff you do in the physics, and then after that —
Well, I’ll do better than that. I’ll show you. I’ll show you the talk that I gave yesterday. I’ll be right back. [Retrieves paper] Some light reading for you. I printed that off the archive. This is just a talk. Everything I have to say is on the last page, the very last. I hope that’s not the last. Oh, that’s the last. You’re right.
Well, very abstruse, I can assure you. You can have that if you want it.
Give it to the next logician you run into. But this is physics. You asked what I’m doing or what connections I have with physics. The people in the physics department here are quite well aware of this. I’ve given an earlier version of this talk over there, and they’ve been very helpful in packaging it. None of them are an expert in this particular field. Getting back to Wigner, remember what I said about physics is empirical. Mathematics is axiomatic with no connection with empiricism whatsoever. How come the two have any relation with each other? Einstein was worrying about this problem. Gödel was worrying about this problem. Wigner was worrying about it. Von Neumann was worrying about it. All these people at Princeton during the late 1930s were concerned about exactly this issue. This is actually built — I say immodestly — on the work of Gödel. But in particular, one can take the usual axioms that underline mathematics, which is called the Zermelo-Fraenkel set of axioms. One can modify one to take out one of those axioms and replace it by an axiom suggested by Gödel. That’s all one’s really doing. Which end up by making that set of axioms constructible. “Constructible” is not as simple as it seems, but that’s the term for it. The net effect of this is to remove non-constructive aspects — because it’s now a constructible — from the mathematical formulations, from the mathematical foundations. This actually makes several important changes in mathematics. The reals, the real numbers are no longer unaccountably infinite. They’re countably infinite in this system. And a couple of other things, but just to give you an example. But otherwise, one can develop a mathematics that looks an awful like the mathematics that one learns in high school or one learns in a calculus course or, clearly, one learns in a course on the mathematical methods for physics. Are you familiar with the term “Sturm-Liouville problem”? [No] Almost all the fundamental equations of physics — the electromagnetic equations, the gravitational equations, and all those — can be reduced to a certain problem. Complicated versions of it, but it’s all the same problem, and it’s called the Sturm-Liouville problem. It gives rise to solutions like sines and cosines and Bessel functions and all those functions that you are familiar with. They all come as solutions to the Sturm-Liouville problem. Well, it turns out that one can get a mathematics which contains the Sturm-Liouville solutions, even though one started with a slightly different set of axioms, which are constructible as opposed to having any non-constructive aspects associated with it. As a result of that, one can get an equation known as a nonlinear sigma model. And essentially, all the solutions of the electromagnetic, gravitational, etc., can be reduced in their own way to a nonlinear sigma model of this form. But here’s what I’ve done. I’ve started with a set of axioms and derived solely by logic, with no empiricism whatsoever, this equation as the most general expression you can have, and this is precisely the equation to which the empiricism leads as well. So this is the juncture of the two, and that’s why mathematics is relevant to physics. Because this is a mathematical system that is essentially physical in its nature, but looks very much like the mathematical system that we have at the present. I can take this equation and then show that it inherently describes quantum theory: that you don’t have to assume the statistical basis of the world in order to get the quantum theory in this system. So, Einstein’s question of, you know, how come…
God playing dice with the universe.
God playing dice with the universe. You’re not playing dice with the universe. It’s the way the universe is constructive, literally. That’s the correct use of the word “constructability”. Namely, it has no non-constructive aspects. In which case, you end up by, well, you solve the problem. I’ve been working on this for 30 years. Let’s put it this way: If I’m wrong, it’s a problem worth being wrong at, if you know what I mean. In its own way, it’s entrepreneurial. Were this my job to write papers in physics, I’d be perhaps a little bit in trouble in my job since I only publish a paper once every four or five years. You have to do better than that, which means you’ve got to make smaller than that. But because I’m teaching entrepreneurship at the business school and earning my keep, I have the time off to, in fact, work on this problem, and that’s what I’ve been doing. So it’s not at all disconnected from physics. I’m working on a problem — to say it a little bit more grandiosely — so difficult that you can’t work on it as an academic physicist these days because you’d lose your job by not being prolific enough. But you can if you’re otherwise employed and not too far — and I love this — from the physics department. So I can go over there as a chaired professor from some other department. That doesn’t matter. I have all the couth of a chaired professor here. They pay attention to what I’m doing, even though they don’t fully understand it either. Some of the younger people do. One guy who has been very helpful over there is Kurt Gottfried, who was chairman of the American Physical Society at one point and chairman of the physics department and all that sort of stuff. He’s made me feel quite at home over there. So, to your point, I haven’t gone very far from physics at all. If that makes any sense to you.
Yes, it does. It does.
And other people should be so lucky. When I was investing in technical businesses, then one could argue that I’m drifting away from physics. Or when, like some of these younger guys, I go to Wall Street and I spend my time buying and selling stocks using computational models based on diffusion theory, that’s getting pretty far from physics and I think that’s a little bit of a waste for a variety of reasons,. But this, to me, has been ideal. And one of the reasons why I chose to come to a university is because I love the university environment. I’ve never really been happier than having this ability to teach a bunch of bright students, even though they’re in business. The one thing that’s worrying me, and it’s not like physics, or not like physics should be, is that the ethical structure of both the business community and the business school — though I would never admit to this — is quite different than I feel comfortable with. Some of the recent problems that we’ve been having are as much ethical problems as they are financial problems, as you’re probably aware. Well, the business schools play into that. I mean, they don’t do it deliberately and say, “Go out there and be unethical.” As a matter of fact, they even have a course that says “Business Ethics” which talks about difficult problems — whether to throw your grandmother or your mother-in-law off the boat that’s sinking. Those types of ethical problems. They don’t really deal in what is what I view as some fundamental, corrupt aspects of the business community at this point. But I don’t yell and scream at it around here. Obviously, it’s not going to be very popular. But some people that I know have set up an annual lectureship here entitled, “David BenDaniel Lectureship on Ethics.” So at least there are people who appreciate that I have this contrarian view. But I don’t teach the ethics course here, and the students don’t take it anyway. Maybe if I taught it a few more would take it, but that’s because I’m a popular professor.
Yes, I read that you are considered one of the top ten professors of entrepreneurship in the United States.
Yes, twice. I emphasize “twice” in the following way. There have been two sets of determinations: one of them about ten years ago or a little bit more, and one within the last couple years. I was on both lists, and I was the only one on both lists, which is surprising. I don’t know what happened to the other guys. I knew a lot of them and they were good. I guess they’re not teaching entrepreneurship anymore. Or maybe they have followed a trend like the one that I followed to a less extreme degree. Namely, they’re no longer teaching entrepreneurship, they’re teaching private equity. So they’re not formally entrepreneurship professors anymore; they’re in the finance department or someplace like that. Well, I haven’t gone whole hog. My course is entitled “Entrepreneurship and Private Equity.” I combine the two in what I consider a reasonable thought package. The point is that an important aspect of my life as of this time is physics, and always has been. Even through this period of acquisitions at Exxon. I was told that I can probably get tenure in Maryland’s physics department if I ever move there. Of course, I’m getting too old to do those things.
Now I’d like to move away a little bit from your career, and to your knowledge technology in the business world today, and particularly R&D. You talked a little bit about your own role in what I see as one of the early transitions, trying to find the ways, how to make the “R” part of R&D pay in industry. How have you seen changes in R&D going on in industry since you became a professor?
I don’t want to go into that. I’m relatively disconnected from the major industrial research centers here. I’m both more abstract on one side and more financial on the other side. The stuff that’s going in laboratories, like specific development of new materials, I’ve had no direct contact with. Indirectly, I’ve sat down and kept myself apprised of the developments.
Did you, for instance, see in the late ‘80s and early ‘90s a shift in funding for R&D away from the corporate headquarters to the divisions?
Yeah, and that leads immediately to development. When stuff’s at the corporate level, you can afford to have some high-minded research. When you’re at the divisions, where they’re immediately responsible for profitability, quite clearly you can only accommodate a development laboratory, not a research laboratory. Yes, that clearly has happened. That happened not only to the central research laboratory, but also to the central new business development division. That got fractionated. So you have divisional new business development sections. But again, the way that happened was very naturally and unavoidable. If you had a central new business development section — now here’s new business development, right? And it’s supposed to develop new businesses for the corporation but weren’t being developed in the divisions. What would happen would be that this central new business development operation would have to ask the divisions, “If we got this, would you think it worthy to be marketed by you guys?” So the following thing would happen. They would either say yes, in which case they say, “Well, maybe we’ll do it ourselves, thank you.” Or they’d say, “No, you can do it.” So the only ones they got to work on were those that they got no, elsewhere in the company. Then people would say, “What are they doing at the development laboratory?” “They’re diddling in projects that, frankly, aren’t worth any of us doing.” You see? It couldn’t survive very long under those circumstances. The good things were being taken away and the things being left to them were being badmouthed. So, one after the other, these corporate centers got broken up. I’m talking about new business development, not research. As far as research is concerned, I think these guys are perfectly happy to have a central research laboratory that does pure research that they don’t have to pay for, that will be of relevance to them. I’m talking about the division general managers — the profit-makers in the company. They don’t object to a central research laboratory doing high-minded research.
So long as they don’t have to pay.
As long as they don’t have to pay for it. Meanwhile, at the corporate level, they’re squeezed for profits and so forth and so on, so they don’t want to pay for it. So these guys don’t want to pay for it and those guys don’t want to pay for it, so it doesn’t happen. Why should it? Rather than have this central research laboratory with all this grass and these people wandering around like in the island is the sky in Gulliver’s Travels. The third look at where the mathematicians are wandering around in a daze and followed by a bopper to prevent them from falling over the edge of the island. They’re working on projects like how to turn feces into food. As Swift points out, they haven’t yet succeeded in this, but they’re so optimistic that they’re now storing warehouses of feces in anticipation of their success. Well, that’s essentially the view within the divisions of what’s going on at the research laboratory. These guys are wandering around and so forth. Indeed, they are. They’re wandering in the grass on the outside, sitting on the lawn and thinking and all that sort of stuff. That’s what we did. Well, you know, the guys in the profit-making division have to get up in the middle of the night to fix the machinery. They don’t think that the research guys are working very hard. So they don’t want to pay for it. And the company doesn’t want to pay for it. And the only thing it does give the company, maybe if somebody gets a Nobel Prize, then it gives some couth to the company for having done that. But those days are over. The last guys to get a Nobel Prize from industry were the guys that did the three-degree radiation research from Bell Labs, but that was forty years earlier. They’re not doing that anymore at Bell Labs.
They’re not doing anything anymore at Bell Labs.
Yeah. GE has maintained a pretty good, if developmentally oriented, outfit.
Well, under Jack Welch, GE was nixing it as much as they could.
But under Immelt….
No, it’s better now.
But it’s still a lot more development than it is research.
It couldn’t possibly be these days the way it was in 1960 or 1961. The support was running out.
One of the things that we saw in our Physicists in Industry project was virtually a shutdown of research, and instead arguing that new ideas and new concepts ought to be out in the marketplace, their own lab could not possibly do all the research necessary. They couldn’t afford it, for one thing. And secondly, somebody else somewhere else is as likely to come up with the idea as one of their guys.
Especially if you publish it broadly and have these guys meet each other at conventions. But there is the argument that if we had somebody here who really understood this stuff, he’d be in the best position to give us early warning on developments that are going on in the outside world.
And that’s what we are seeing, is that the research division is being turned into a monitoring division for acquisitions, and that they’re looking for ideas being developed to a proof-of-concept stage that they then acquire.
Yes. Well, I discuss that in my courses. I point out that my definition of entrepreneurship is, this term may be familiar to you. It’s Schumpeterian. I defined an entrepreneur as an opportunist who capitalizes on economic disequilibrium. Now, well, if you’re in equilibrium, then large companies have the advantage. They have more money. They have more brand equity. They have the procedures that help them run their companies that are 50 years old and so forth and so on. But if you’re in disequilibrium, large companies don’t have the agility that smaller units have. So smaller entrepreneurial units only have the advantage in a disequilibrium situation, which may in fact be something that they themselves create by virtue of an invention, which is a dislocation of some form or another. I say the analogy, having been in the Navy, is in an aircraft carrier. When it has to turn to the right, it takes about five miles in order to make that turn. Whereas a destroyer, which is much smaller, can run circles around it while it’s doing that. Similarly, small businesses can run circles around large companies in periods of disequilibrium, in periods of change, which either they create themselves or which through social forces or economic forces or what have you, exist. So it’s a purely Schumpeterian definition of entrepreneurship. I said, “Guys, look for disequilibrium if you want to start a business.” Companies, keep their eye out on what venture capital is investing these days, and keep an eye out on developments occurring in small businesses. They can make propitious acquisitions that add to the product line of their company. It’s a perfectly natural thing. And — development is being funded by venture capital. It’s one of the reasons I’m interested, and have been, in venture capital, because it’s where the long-term thinking is really taking place. These guys are not investment bankers dealing in commissions. You understand the distinction I’m making? [Hmm hmmm. Yes!] In investment banking, it’s “Wham, bam, thank you, ma’am.” Right? But because they’re fee-driven. In venture capital, they are principals, not agents. So they have three to five-year time horizons. As a result of that, they can do some long-term research. There’s a small venture capital operation that operates out of this school for which I’m the adviser. Has a little more than a million dollars. The students run it. I’m their umbrella. They’ve made some pretty good investments in technologies that come from Cornell in which other venture capital firms have put much more money. Our students are, in fact, investing at a very early stage and trying to bridge the gap between University research and… you know. I don’t know whether you’re familiar with these terms? [Yeah, they are familiar to me] So they’re seed investors, in a sense. They are not investing in the research lab itself. They’re investing in a business to get started and our students help them be part of the business. As a matter of fact, they become, in some cases, part of the business itself. So we have a number of these investments now. Ten of them. Nine of them — one just failed. [Ok] Other venture capital firms of much greater stature, like Kleiner Perkins, have invested in some of these downstream. One of them who came from across the street now has several hundred million dollars’ investment in it in very rapid DNA sequencing by nano technological methods. So we’re in there with Kleiner Perkins. They have $40 million in there and we have $25,000. But the fact is …
You provided the pocket change.
We sponsored it in the first place. In addition to teaching the students how to invest in venture capital, the University gets brand recognition out of this.
Where do you see a Ph.D. physicist, who wants to go do research, going to do research today if industry is going to have him monitoring everybody else doing research?
It depends on the field. In elementary particle physics, well, it’s a hard time getting a job. Go to CERN, if you can get a job there. But there aren’t that many jobs. In general relativity, go to Kavli or go to Princeton. There aren’t that many jobs. So if you major in physics, and you major in any of those, you’re not going to get a job in industry. If, on the other hand, you concentrate in nanotechnology, then go to a startup in Silicon Valley. Very simple. You want to do research, go to a startup in Silicon Valley. You’ll have three to five years as a company to make something of it, or you’ll all be out of work. And you’ll probably get acquired by somebody, in which case you’ll end up in a large company. God knows what will happen to you after that. But certainly if you want to do research... Or you can get a job teaching nanotechnology at Purdue. We’ve got a great nanotechnology effort here, and probably is better than Purdue, so they would like some of our graduates as teachers, but not that many.
But a lot of people also aren’t that excited about doing university because if you do university research, you have to spend 50% of your time fundraising.
That’s right. That’s why I didn’t go into professorship in the first place. It was the same way then. We’ve got enough money in this business school so that practically none of us are working on a contract. I got a contract ten years ago that was offered to me by the Kauffman Foundation, which is an entrepreneurial sponsorship foundation, for $200,000. At tripled our contracts at the Johnson School. I mean that was it. That was triple the dollar value. That’s how little contracts we have in this business school. We are very affluent here in the school, lots of endowed chairs doing very basic work in finance and marketing. So basic that only some small group of people understand it. Teaching mostly MBAs, but some Ph.D.s. The MBAs that we’re teaching go to Wall Street or Procter & Gamble or some large company. And a few of them go into Silicon Valley to start- up businesses, the ones that do to take my courses. But it’s by no means a large fraction of the MBAs. Back to the physicists, first of all, physics is in tough shape in this regard. Period. There’s not that much money supporting these very abstract pieces of work. Maybe a few lucky people get a job at Perimeter maybe to do gravitational physics or something like that. Or if you’re involved in nanotechnology, which is probably these days applied physics more than it is regular physics or deep physics, then go to Silicon Valley. You’ll be able to do some really good work. In the process, you may learn that you’re a good businessperson and evolve away from physics.
In fact, that’s one of the trends that we are seeing, is that people are coming out with a Ph.D., you taking their university research into their own startup, and then taking it to the proof-of-concept stage and being acquired.
I’m an expert at that. It’s what I’m doing with the students here from Cornell technology. I know as much about that as anybody in the country at this point because we’ve done it over and over again with this venture capital fund. Works fine.
So, can you tell me some physicists who are doing that beyond the ones I already know about?
What do you mean? Young ones?
Young, old. I don’t care.
Turner. Harold Craighead’s student; he’s got a whole bunch of them. Harold Craighead over in the nanotechnology thing has a number of students, several of which are going into startups, one of which is the one that I told you about. He’s doing a wonderful job of sending students out into the startup world or industry. Very natural for him to do it. They’re doing very good research over here. The trouble I find with the research that is being done, not just by them, but even by the students in the physics department, is it’s not a thesis like the one that I did. The one that I did, I did. Even though they told me not to do it. My adviser helped a bit, but he really didn’t, except for that one extremely important comment and the encouragement to allow me to do it. That was it. But these guys are all part of a group. This guy is doing the left-handed monkey wrench and this guy is doing the right-handed monkey wrench and this guy is doing pliers instead of monkey wrenches, all directed at the same thing. I’m in a number of these committees. I enjoy being on committees for these Ph.D. students. I’m on committees everywhere from food sciences to computer science, and I learn something from them. It’s a chore for most other people that really don’t want to do it, but I’m perfectly happy to do it. But the fact of the matter is that what I see over and over again is. A successful Professor, like Harold Craighead, has a group, and the group is doing things in nanotechnology of various things, and they all interrelate to each other. This guy completes his piece of it and then goes off somewhere. And this guy does his piece of it and goes off somewhere else. But basically, these are all interlocked and dictated by the professor. That’s quite different and, I think, much less creative.
He gets the funding for that project, and that’s how he can fund his students.
Right. So the world’s changed. And it’s unfortunate. A hundred years ago or fifty years ago, when I was a kid, they were talking in terms of the fact that in the next century, we’d all be sitting around writing poetry. We’d be in the post-industrial day.
Or exploring Mars.
Or exploring Mars or doing something extremely ethereal. That hasn’t happened. The world’s gotten harder, not easier. Certainly, Western civilization is having a tough time keeping up with the standard of living in comparison to the rest of the world and won’t really make it. But the fact of the matter is that physics has gotten harder, too. Biology is in somewhat better shape. It’s more au courant than physics in some ways. But now they’re leading us down the path where, between nanotechnology and neurology and biotechnology, we’re going to end up that we’ll have so many replacement parts that we’ll be Borge. So maybe a century from now we’ll all be Borge or Borgized or something like that. I don’t know what’s going to happen to us. It’s a serious problem. The whole nature of the human race and evolution and a whole bunch of other things are changing rather weird. Not to mention the fact that the scale of human activity is no longer negligible in comparison with the finite size of the Earth. We’re going to run into that problem, too. So things are changing. Physics is getting square. It’s no longer poetry. It’s no longer something that one does for the love of it. The heyday for that was probably the 1800 and early 1900’s. But I’m writing poetry. I’m having fun. That’s because I am supported from other sources, I’m able to maintain myself.
In a sense, you’re more like the 19th physicist who had other careers and did the physics as a hobby.
Absolutely. That’s exactly the way I view myself at this particular point. But I’m serious about what I’m doing. I don’t think I’m a dilettante. I’ve been working on one problem and trying to crack it. Yeah, that’s exactly the way I view it. Somebody was a minor noble, LaVoisier and had enough resources to go and experiment with test tubes. Did some good work. So, maybe the point is that physics of that type has become more of a calling… how would I describe it? We have just raised a most interesting issue. If you’re interested in physics, what should you do? If you’re age 12 and you’re curious about physics and the nature of the physical universe, what should you do? I don’t know the answer to that question, and I think that’s the one that’s bugging you, actually. I think you should major in physics in college because of the way it teaches you to think, and its relevance to the commercial world of which you are inevitably going to be a part. But what you do after that, I’m not sure.
A physicist that I interviewed talked about the difference between the physicists and the engineers in industry. He said the physicists would get together and they’d be fighting all the time, and eventually they’d go back to first principles and derive the solution. He said the engineers would get upset at the physicists because their design was according to spec, so what was the problem?
[Laughs] Well, I don’t diss engineers. I have a very high regard for the people who built the George Washington Bridge, let me tell you. Every time I cross it, I’m in complete admiration of that thing. And I keep worrying, “Is it really as strong as they think it is?” [Laughter]
I think that we’ve pretty well covered the things that we wanted to cover. I suppose we can go back and talk a little bit more about your career development here.
Be happy to do that. [Sure.] But I mean. Just to show that we don’t have to sit here… We could talk about the Boston Red Soxs which I was sorry to hear didn’t win last night.
I don’t think that would need to go on tape though. Anyway, you came here in 1985.
I was 55 years old, so I’m 77 years old now. It’s been a wonderful twilight occupation, if you want to call it that, though I don’t feel very twilight, but that’s beside the point. By anybody’s standards, I clearly am, right? But I teach as vigorously as anybody does here, so nobody’s asked me to retire yet. I clearly use the analytical background that I developed as a physicist more broadly in teaching and in instructing students in rationalizing problems and systematizing — not overly, I hope, but systematizing. I don’t teach from notes. The students view me as logical, except on certain occasions which they view me as totally illogical. In which I say, “I never promised you I’d be completely logical.” The best utilization of the training and physics is sort of a field that is halfway between physics and business, a sort of operations research. The modeling of social issues. Well, I do that all the time in class, the modeling of various things for the student. Teach them to think in those terms that are natural to physicists when they approach a problem. I continue to assert that the training in physics is extremely important. More so than getting a training in electrical engineering, where you learn how to design circuits. That’s a nice card to have these days, or computer science where you learn all about these codes and stuff, but I think the meta-subject is physics. It enables you to think more broadly, but analytically, about business, where problems which aren’t just about the physical universe. That’s what I’m teaching here — how to think about these problems. I think it’s great. It’s great to have the opportunity to do this. And I say, I couple very well with the students in the class who are also majored in physics or — teach both undergraduates, graduates, advanced graduates (that’s post-graduates), and an executive MBA program. And the ones that I couple the best with are the ones that either have a Ph.D. in physics and want to change their careers into business, but at least I can communicate with them, and they come to me because they heard I’m a physicist by background, or the physics students that come over, undergraduates in the physics department. I don’t get too much of a chance to do this with engineers because we have a very intense engineering program here where their professors won’t let them take other courses than Electrical Engineering 605. You need 605 in order to graduate. You can’t afford not to take 605, whatever that is. So they come to me and say, “Can I audit your course? My adviser won’t let me take it because I have only required credits left.” I say, “No, I don’t take auditors.” It’s sad. But you see, the construction of my class is sufficiently hands-on so that there are things that they have to do that are prepared assignments for writing a business plan. Where they can’t do it without getting their hands on the problem. Anyway, I’ve enjoyed being a professor at this stage in my life, and I think it’s the right thing for people to do. And the fact that I’m in proximity of some helpful people in the physics department has been very important to me. Giving an example, I showed you an expression that I said is a nonlinear sigma model. I didn’t know it was a nonlinear sigma model. I just knew it was the maximum exploitation of the mathematics with which I was dealing. So I went over there and gave it to them and I showed it to them. The guy said, “Oh, that’s a nonlinear sigma model.” But I didn’t know that. So they’ve been very helpful on a number of occasions like that. Just my life. Been very lucky.
Well, I thank you very much for taking the time to tell me about it.
Very pleased to do that. Now, would you care to join us for lunch?
 Herbert B. Callen, 1919 - May 22, 1993
 William Phelps Allis, November 15, 1901 in Merton, France - March 5, 1999
 Stephen H. Crandall
 Henry Hurwitz, Jr., December 25, 1918 - April 14, 1992
Chauncey Guy Suits, March 12, 1905 - August 14, 1991
 Arthur M. Bueche, November 14, 1920 - October 22, 1981. Bueche served as GE’s VP for research from 1965 till his death in 1981. Bueche’s notion of the “R & D Triangle” foreshadowed Henry Etzkowitz’s Triple-Helix model of innovation and Government-Academia-Industry collaboration in R & D.
 Henry Ehrenreich, 1928 - 20 January 2008, began working at GE in 1955 and left for Harvard in 1963.
 Peter L. Auer
 General Georges F. Doriot, 1899 - 1987 was a pioneer in the development of Venture Capital. His firm "American Research and Development" or ARD. One of Doriot's mentees was a young HP employee, Tom Perkins, who co-founded the venture firm Kleiner Perkins.