Andy Elder isn’t from Seattle originally, but he’s accustomed to the rain, having grown up in England. As a kid, his favorite rainy-day pastime was chess, and he still plays to this day — as evidenced by the partially finished game sitting on his conference table in Bellevue one recent afternoon.
“One of the things I love about chess is it is a very good game for testing people intellectually,” he explains. “You can see they’re involved, they have a system, they have a process. Very, very clever people play chess.”
Meet the guy who gets the deals done at Intellectual Ventures, the 800-person patent licensing company and invention house run by former Microsoft technology chief Nathan Myhrvold.
Elder, a 43-year-old former Cisco executive who has worked around the world, has been the executive vice president in charge of global licensing for Intellectual Ventures since the middle of last year. His team of 60 has completed a string of patent deals with companies including American Express, LG Electronics, Wistron and others — leveraging IV’s massive portfolio of 35,000 patents and patent applications.
Just yesterday came news of another big deal, with Cypress Semiconductor.
Myhrvold has said he hopes to create a new market for “invention capital,” but in the meantime, patent disputes and litigation have been testing the patience of the industry and the legal system. Intellectual Ventures, already a lightning rod for criticism, has shown an increased willingness to file lawsuits of its own — taking on the likes of Nikon, AT&T, T-Mobile, Sprint, Motorola and others.
Adding to the controversy was the “This American Life” piece last year that likened Intellectual Ventures’ business tactics to a “mafia-style shakedown.”
I sat down with Elder recently to talk about all of this in his office at the Intellectual Ventures headquarters. Continue reading for edited excerpts from our conversation.
What do you do?
Elder: I’m responsible for all of the licensing business. So every time a company wants to have a license to anything in our portfolio, it’s my team that comes along and helps to make that happen. That is essentially my job. It sounds wonderfully simple, doesn’t it? If only that were always the case.
Why did you join Intellectual Ventures?
Elder: First you look to see, is this company well-positioned, relative to its competitors and peers? I think by a very long way, I would say it’s way out in front. Secondarily I’d say, does it have a really good executable capability, is it big enough, is it financially strong? Has it got all the things you want from a good corporation? And I would say, absolutely. And then I would say, what’s the market like, is there a good market for what IV has, and yeah, absolutely, as well. So I looked at these things, and I thought, yeah, that’s the kind of company I want to work for.
Are you in a sales position?
Elder: For me, really, selling is less about the stereotype of a used car person — unfairly for used car people, but you know what I mean. For me, it’s very much about how do I understand what would be valuable to you in your company, and how do I make sure I overachieve on that. When I think about selling, I really think about mapping that desired state of a company to what we have to offer. I see it very much as a sales role, but not in the stereotypical sense.
Are people licensing Intellectual Ventures’ patents to create things, or to defend themselves from claims?
Elder: Both. This is why I love Intellectual Ventures, because it is a company that is able to have such a wide view of intellectual property of not filling any one silo of demand. It’s not just about licensing IV’s portfolio today. It is about licensing it in the future. It’s also about helping with some of those research and development challenges that are kind of tricky, as well.
Companies have invested billions of dollars in the most amazing brains, but the chances of you inventing everything yourself are pretty slim, mathematically. So having access to some of the world’s best inventors, to look at your problem from a different angle, is hugely valuable. More and more of our companies in these engagements are saying, huh, I have a problem, I can’t seem to solve it fully today. Let’s throw it out to IV’s invention network and see if we can get some ideas back.
[As case studies, Intellectual Ventures points to customers such as LCD display maker Chunghwa Picture Tubes, which is collaborating with IV on prototypes for new display technologies; and BlueCat Networks, which licensed patents from IV to successfully combat a lawsuit from a competitor.]
What’s the invention network?
Elder: We have this product, which is a request for invention, so companies can come to us and say, here’s a problem, let me frame it for you like this, and we will bring together our network of thousands of inventors and we’ll start to brainstorm this problem, and we’ll think about different ways of solving that problem. And we’ll take it right the way through, maybe we’ll take that and file some patents on it, maybe we’ll do some other things with it. But again it’s complementary services.
If you filed a patent on it, the person who submitted the request would be part of your network, so they would have rights to it — but then other customers would, too?
Elder: Well, then we would look to license those rights, if it was appropriate. We could also look to do it exclusively. Perhaps they want to use it as a competitive differentiator for themselves. A lot of these companies that are very forward-looking are having much more comfort with recognizing that they can’t solve everything themselves, and thinking about, well, how do I bring in the talent to solve these problems for different areas.
There’s another side of the business that can be litigious. How do you interface with that side of the business? If you’re negotiating with someone and they say, “Hey, we don’t want your patents,” do you just hand it over to the lawyers?
Elder: This really comes down to that sales piece. Often that disconnect happens when either we don’t understand their need properly, so we can’t articulate the value, or we’ve done not as good a job of articulating the value. That’s always a possibility. Or sometimes people are really thinking about history and the way that people used to engage around intellectual property from a litigation point of view. So they want to be in a litigation conversation before they start active discussions. Sometimes you just have to go down that path.
There’s also a second part to that, which is, from our point of view, making sure that we stand up for what we believe in. We believe in protecting those invention rights, the rights of the inventors and of IV. So for those that won’t enter any dialog at all, when we really think we should, that’s always an option for us.
Andy Elder’s personal preference? I’d love to solve business problems around IP. It’s a no-brainer. I think Nathan has said on a number of occasions that litigation isn’t a very efficient means of having a business relationship.
Just thinking back to your used-car lot example: If I walk off the lot without buying a car, I’m not going to get sued. How does that dynamic play out in your discussions?
Elder: Well, I’m not sure if we can use this analogy, but if you drove off the lot in one of my cars, you would probably have a consequence. If you said, well, I don’t want to buy it, but I’ll see you later, vroom, vroom — OK, well hang on a second. Call me old-fashioned, but perhaps, if you want the car, there will be a fee for it. And I think that is perhaps where the analogy stretches to its furthest.
Elder (laughing): I’m not sure if that will work out to be a good analogy, but I think you know what I’m saying.
But does that impact your licensing discussions?
Elder: Some. Fortunately, what I’ve discovered with any customer engagement is that this is all about people. There’s corporate culture behind it, but when you have the connection with the right people, you can solve problems. And I think that’s true whether it’s in intellectual property, or any industry, or in government or world leadership. When you put people together that have the right approach and are really thinking about how we mutually solve a problem, we have a better outcome.
I think when you go into it thinking, how do I have a confrontational engagement with somebody, you do have a different sort of outcome. So what I’m trying to get to with all of these engagements is to do a bit of a reset, and say, OK, well, what is your problem? How do we help solve it?
Before Intellectual Ventures existed, those problems still existed. So Intellectual Ventures was created to solve a problem. It was really built to go out there and fix a challenge that CEOs were having, and also to create an invention capital marketplace that works. It’s a living, breathing machine, if you will. And that’s where we are. We’re at the very beginnings of that happening, and we’re seeing a lot people now start to understand that and grasp it, and think of this not as a risk thing, but as a competitive differentiator.
Did the ‘This American Life’ piece make your job harder?
Elder: Candidly, for me personally, I would say no. It’s been a source of much conversation, of course, within the company, as you can imagine. But at the same time, it’s one of those things that depending on your perspective, it could be quite helpful, as well. For those people that are not having a conversation with us about their invention rights, well, it’s not all bad.
They’re now aware of you, is that what you’re saying?
Elder: They’re now aware of us. I think the reality is that this sort of thing will ebb and flow through life, and my job is simply to do the very best thing I can do, which is to meet with customers, have a conversation with them, understand their problem, and see the role IV has in solving it. And as long as we stay true to that, we’ll be great.
What do you say when customers ask about the radio program? I imagine that a lot of the people you’re talking to listen to that show. What do you say when they say, “Hey, Ira Glass doesn’t like you guys”?
Elder: Well, the number of people that have asked me that is currently zero.
Really? Now it’s one.
Elder: You know, again, I would just continue to focus on the specifics of that company, and say, let’s have an experience together, let’s build something together, let’s have a constructive dialogue and see how we can help you. And if we manage to achieve that, well, then you form your own opinion. I think that is going to be the way we’ll find an answer.
It sounds like you weren’t wary of joining IV because of any public controversy about the company.
Elder: No, when I looked at the company, I was fascinated by a number of things. First of all, the talent here is unbelievable. There are some of the most amazing people that I’ve ever met in this company. Fantastic inventors, just great business people. And of course, the founders themselves are just fascinating to sit and listen to and learn from. I also would say that IV is best positioned to really drive this marketplace and create this marketplace in a very positive way. And it’s a matter of time. It’s a journey, not an event.
[On the table is chess board with one piece moved, and a note to Elder from someone named Marcus, telling him that it's his move.]
Tell me about the chess board. Who’s Marcus?
Elder: So Marcus is actually on my team. He’s one of my team members. He’s ahead of me at the moment.
Growing up as a child in England, we have a lot of rainy weather, so we would play chess in the school break, and I became a huge fan of it. One of the things I love about chess is it is a very good game for testing people intellectually. I think it’s really good for checking the intellectual capability of people. You can see they’re involved, they have a system, they have a process. Very, very clever people play chess.
One of the things that really upsets clever people are people with a very high EQ (emotional quotient), who don’t care about the game of chess, and they’re willing to make a move that they don’t even know is wrong, because they’re not working on a preconceived idea of what the best systematic move is. So why I love chess is, if you’re a high EQ person, you can still be very successful and win against somebody with a high IQ. And it shows to me the balance of those two parts of the brain.
I like to play very clever people and do silly moves, and watch them get so frustrated it throws them off, and you can win. It’s a wonderful game.
Do you apply that strategy to your business negotiations?
Elder: I’m a big EQ person. I really love people. I think people are what makes a difference on the planet. And I love engaging with people. I think the EQ part of all of this is a very interesting part, because this is about how do we make companies, investors and people successful in what they want to do. And that’s an emotional thing as much as it is a logic thing. … I’m looking for those things that positively move people emotionally, as well, and drive them to be better at what they want to do.
That was not at all what I thought the chess board was going to be. I assumed this was some tycoon, and you guys were doing some sort of remote video camera setup. That was the story I was spinning up in my head.
Elder (laughing): You know what, that would have been a better story. We must remember that. We could have had somebody from the lab dial in. … No, Marcus is in a corridor down the hall. He just runs over and moves a piece.
Previously on GeekWire: Nathan Myhrvold sees ‘vindication’ in growing importance of tech patents