Bob Metcalfe, Professor of Innovation, University of Texas


I've just started my fifth career and these are not fly-by-night careers, these are ten-year careers. And so, um… I don't count the 23 years that Ispent as a student, that's not a career. But I started out as a uh… after that as a scientist/engineer, and that's when I led the team that invented Ethernet. And then after that I went off and started my own company, 3Com Corporation. And that took about 13 years. And then after that I spent, uh… another ten years or so as a publisher journalist, a trade journalist, for Info World magazine. And then after that I was a venture capitalist with Polaris Venture Partners for ten years out of Waltham, Massachusetts. And now for a year I've been a professor of innovation at the University of Texas at Austin. I've been answering Ethernet questions for thirty or forty years, and uh a lot of people think that there was a "Eureka" momentm, or there should be a "Eureka" moment — their conecption of invention is there's "Eureka!" Ehternet was built on years of prior work in developing the early phases of the internet packet switched network, then we needed the LAN version of the internet so it was a small step building on what had gone before and now there's been thirty- eight years or more of building on that invention.

I'm an engineer and an entrepreneur and what I'm good at is communicating about those things, that's where I tend to add value. I mean, I can write computer programs and build hardware and I've done a lot of that. And I can start companies, I started on e big one, but the way I do that — you asked what I was good at is communicating about all that. And would like to know my secret? The secret of communicating is listening. I'm a really good listener. Say something interesting. Metcalf's Law began its life as a sales tool. We uh… We sold a bunch of three-node Ethernets to early customers and after about a year they all came back and said this three-node network did exactly what you said it would do, but it wasn't very useful. And I was head of sales and marketing at the time, so i needed an answer to that question.

So I made this slide up that showed that the cost of the network goes up linearly with — as you buy my Ethernet cards. But the value goes up as the square, which means it starts small and then it gets big and there's this point at which the square passes the linear and that's the critical mass point. So if your network is too small, it doesn't really do enough for you, but if you can get critical mass, then suddenly it takes off. So, I made up the slide, gave it to my twelve-person salesforce and we went out to our customers who had bought trials and we presented them with this concept. And they — so they bought more. Our recommendation was they needed thirty-node networks, they only had three-node netwoks, they had to go to thirty before they stood a chance to experiencing this critical mass. So we sold a bunch of thirty-node networks and the good thing happened: they proved to be useful, and the next we knew, we were selling millions of them. It was very exciting.

But then many years, in 1995, a man named George Gilder saw this slide and he's the guy, one of the guys, who made Moore's Law famous, so he decided to make Metcalf's Law famous, so he decided that slide that we — that sales tool should be called Metcalf's Law and who am I to argue with him. And so I've been defending the law for twenty, thirty years now. In my experience, ideas are a dime a dozen. So just having an idea is great, it's fun to have ideas, and you need to have ideas and it's great. But don't, don't make the mistake of thinking that have a good idea is really the cat's pajamas because they're a dime a dozen. So one of the uh… inditia of a good idea is do you know anything about the field in which you have this idea? Do you have some expertise that it's built on, some experience it's built on? Otherwise you just have a ideas and they're a dime a dozen.

accommodation The name that comes to mind on my heroes lists of course is uh… Steve Jobs. He helped me start my company 3Com. He tried to recruit me to Apple. I stupidly resisted and then we he got that I was starting a company, he helped start the company and he was sort of a friend for big hunk of the '80s, so he's uh… he's on my eternal heroes list and I defend him every time someone attacks him. But he was a difficult person. I'm very humble, I think people should be very humble about how good they are at starting companies. Because I don't think anyone's very good at it. And we're struggling to know more about it and we're struggling to share our lessons but we don't know shit about starting companies. It's one of the reasons I like to say startup — the middle three letters of the word "startup" — A-R-T. It is art that we're practicing here..