Tech innovation is under threat

… what to do and so we were caught up in the frenzy. Palm went public on the day the market peaked, but it was more of a curse than a blessing. At some point, it was worth more than Ford and General Motors combined, and it was a lesson on how crazy the markets had become.

But I wished I'd known that it could only go down, that reason would prevail and the people who got hurt would probably be staff and investors. I didn't feel responsibility for the investors because that was their decision, but I felt bad for the staff because all their stock options on the day of the offering were worthless. For years after the IPO, we were a different company. We've now bounced back and become profitable again, but for the first two or three years afterwards, it was very difficult and it hit people's motivation.

How do you see the IT industry developing over the next few years?
In general, I feel that the last few years have been pretty good for the IT industry, although the general pace of innovation has slowed down compared with the 1990s — certainly in the networking industry, anyway. Instead I feel that there's quite a lot of business rather than technical innovation taking place. The next generation of web companies are attractive, not because they're breaking new technical ground, but because they're creating new business models and services. Areas such as social networking, for example, are figuring out new ways of leveraging the web.

The only pessimistic note, I feel, is that technical innovation is not as healthy today as it was a decade ago because we don't have the right policies to nurture it. We haven't maintained adequate funding for research in universities such as Stanford, but it's not just in the US. The education system is also continuing to have problems attracting enough interest in scientific disciplines, so there aren't enough smart, competent scientists and engineers. So other countries such as China and India are progressing faster, which is another sobering note.

I feel that many of our policies in the US are hurting young innovators. So much energy has been put into destroying stock options by regulators and accountants that we've lost a precious tool to motivate entrepreneurs. People are waging fights, but they're unaware of the unintended consequences. They're probably going after ridiculous compensation packages for chief executivess, but it's hitting IT entrepreneurs. Sarbanes-Oxley is also very onerous for small companies. The motivation was to improve the trust and integrity of the business community, but it's not a very enlightened policy from a high-tech point of view.

So I'm doing what I can, which is not very much, to try and give a voice to the high tech sector in this area. I'm active in the TechNet lobby group created by John Doerr because young entrepreneurs don't have a voice loud enough to be heard over that of politicians and accountants. The slowdown in innovation isn't obvious to non-experts because they see successful companies such as Google and think everything must be all right. But if you're an insider and see how the pace of innovation has changed, you understand that the ground isn't as fertile as it once was

You've done a tremendous amount in your life — what is it that drives you?
I enjoy what I do — that's essential. Your motivation is high if you do the things that you enjoy doing. I was also fortunate enough to be in Silicon Valley for the last 25 years, which has been a centre of innovation more than any other place during that period. The final thing is that I have a great ability to compartmentalise. I don't carry stress from one situation to other things I do, and I can focus on things in different parts of my mind. So I can take on tasks that to other people might seem large.

How do you manage to fit so much in? You must be good at time management.
The key is to ensure your portfolio is balanced. What you learn in one environment can be helpful in another. So a lot of case material from the course [at Stanford] is pulled directly from my professional experience, which makes it more interesting and means that my students learn things from situations that have taken place in real life. I also learn things from questions that the students ask and I haven't necessarily thought about before.

But many governance issues I have to deal with on company boards also help me to set new governance frameworks in a more informed way, for the organisations I work with through Benhamou Global Ventures. And that way, I learn what small companies do to be innovative, fast and nimble, which helps me to keep the large companies I work with honest regarding bureaucratic matters.

It can all be managed if you stay away from conflicts of interest. But I am very busy, although I do find I work better if I have a full schedule and I'm under stress. I don't play golf though, so I don't need a lot of leisure time!

Why did you set up a venture capital fund?
I created Benhamou Global Ventures a few years ago to give me an investment vehicle to work interactively with IT companies. It's a venture fund, but it doesn't have limited partners. I invest my own money. The reason I made that choice was to preserve personal flexibility so I organise it as a portfolio of activities.

When you invest in other companies, that responsibility has to be taken very seriously and the people investing generally want a very high return. When I make an investment, it's not just about that. It's also for the pleasure of working with entrepreneurs to learn a few things and discover new technology. Benefits like that don't necessarily accrue to limited partners so to invest in that way, I have to invest my own money.

But in general, I don't make passive investments. They're only active and so come with an opportunity to, at the very least, operate at board level and build close working relationships with the founder. I sometimes play the role of mentor to try and help the company become more successful because, at this stage of my life, I'm trying to both learn and teach at the same time. So being at the forefront of IT, I can discover new people and things. This means that I can learn, but I've also made enough mistakes that I can teach some of the pitfalls to a new generation.