Board Of Technologists: Start-Up Your Engines!

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PRESTON: M.I.T. is generating two inventions every day. We are licensing two a week. That is pretty impressive. But we do have more inventory than we know what to do with, than we could reasonably part with.

GAVIN: Our limitation on company formation is not technology, and I am not even sure it is capital, though there are some stages of companies that are probably short on capital. It is really a shortage of management.

RIESCHEL: A lot of investment overseas is based on technology that is way ahead of the laptops or desktops that we use. I don't travel with a laptop anymore. My shoulder is two inches lower than the other one after 15 years of traveling with it, but it is not necessary anymore. I carry a device made by Danger that has e-mail, a keyboard, phone, camera, calendar, games and instant messaging. Only a venture-backed company could be named Danger.

Everyone in Japan uses their cell phone for data; in China, about 70%. Cell phones are fashion statements, and people buy new ones every six to nine months. Shanda Interactive, which operates online games, went public last week in New York. It generates $33 million a year in profit just three and a half years into its existence. The funniest example of a niche market is Neowiz, which sells virtual clothing for the virtual person you steer through cyberspace. That's a $100 million-a-year market. Profit margins are pretty good on virtual clothes. Ring tones for cell phones is now a billion-dollar business. Technology is fashion.

We talk about how great it will be to have high-speed-Internet connections across the U.S. For the moment, the average connection for broadband here is under 300 kilobits per second. Compare that with average connection speeds in Korea of 4 megabits per second and up to 8 megabits per second in Japan. Those speeds are driving innovations that we can't compete with here. So when you begin to fund an information-technology start-up here--and you won't know if you're successful or not for four or five years--it is incumbent on us to understand what is happening in China.

TIME: Wi-fi [wireless Internet] is big and getting bigger in the U.S. But have mobile devices just rendered it totally irrelevant outside the U.S.?

RIESCHEL: Yes.

TIME: What doesn't get as much venture attention as it should?

PRESTON: I sort of lament the fact that less than 1% of all the VC investments go into energy.

HEESEN: It has tripled in the last year.

PRESTON: It's gone from zero to three times zero. [Laughter.] There are barriers to entry there. It costs a lot of money to get started. The big energy companies have made those barriers pretty severe.

HEESEN: Talk about wasting energy. More energy is lost in buildings than anything else--cars, you name it. "Smart buildings"energy-efficient buildingsis a hot area.

TIME: Average investors--who by the way shouldn't try any of this high-risk investing at home--watch their portfolios quarterly, daily, even hourly. How long does it take you to know if you have made a good investment?