MOUNTAIN VIEW, Calif. – The innovation pipeline could run dry from a lack of federal funding in basic research and the decline of big corporate R&D labs, said a panel of experts at an event celebrating the 40th anniversary of Ethernet.
They lamented the loss of AT&T Bell Labs that gave birth to the transistor and the decline of Xerox PARC, the birthplace of Ethernet. By contrast many of today’s largest tech companies, such as Apple—accused by Congress this week for failing to pay taxes on billions in revenue—conduct virtually no basic research, they said.
“When I was at Xerox people were not preoccupied with raising millions in VC funds-- we had free reign to make breakthroughs come true,” said Yogen Dalal, a managing director at the Mayfield Fund who wrote a seminal paper on Ethernet in its early days. “You have to have breakthroughs, but today who will fund them,” he asked.
“The thing that concerns me the most is we have lost the lead in big industrial research—we would never have had the transistor without Bell Labs,” said Bill Spencer, former head of PARC and Sematech. “The U.S. still has the best university system in world, and it’s still the best place to bring new things to market, but the middle missing,” he said.
Bill Spencer led PARC in the early days of Ethernet.
“We’re missing the role the labs played which was less basic research than a translation of applied research,” said Judy Estrin, a serial entrepreneur in communications and chief executive of JLabs LLC (Menlo Park, Calif.).
“They took research and invention and tried it at scale—PARC created proofs of concepts so startups called Bridge or 3Com could make them work with a small amount of funding,” Estrin said. “We are missing this translational piece, so it’s falling on universities to handle it or large corporations that tend to focus only on the short term bottom line,” she added.