Inspired by The Idea Factory, I decided to delve deeper into the history of the computer
industry. Dealer’s of Lighting gives a great perspective on some key personal computing innovations which emerged from
one of the most influential labs in early Silicon Valley, Xerox PARC.
Xerox first entered the computer industry with the purchase of Scientific Data Systems (SDS), a struggling computer company with
state of the art (room sized) computers. Xerox, a billion dollar company built on analog printing and copying products,
was clearly ahead of the curve forecasting that the future was going to be digital.
Following their purchase of SDS Xerox decided to open up a second research lab across the country from their headquarters,
the Palo Alto Research Center (Xerox PARC). PARC went on to implement many key innovations that
would become linchpins for the success of the personal computer, the briefcase-sized descendants to the machines that SDS
was selling. From the early days Xerox’s executive managers worked against PARC. PARC’s staff
wanted to purchase a fully loaded computer from DEC, but because DEC was an SDS competitor, Xerox’s
executives quickly shut down that effort. PARC was forced to build a DEC-like computer from scratch.
To attract some of the best some of the best minds in computer science PARC was created a salary scheme that was
20% higher than comparable jobs and universities. Over the next 15 years these smart young engineers were able to invent
many of the fundamental concepts that transformed the “computer” from large time-sharing
monstrosities to smaller distributed personal machines. The transformative ideas spanned from hard technical advancements to
rethinking how we interact with computers.
During that time there were custom chips to do nearly anything. These Chips added a lot of complexity and pieces to a computer.
PARC pioneered efforts to move the logic encapsulated by those ships onto the central processor
(the recently launched Intel 4004), vastly simplifying the architecture of computers. They continued their innovation:
implementing an early version of a local area network, graphical user interface (GUI), built a what-you-see-is-what-you-get text editors,
created the first mouse cursor control, object oriented programming, networked printers, and the laser printer.
After many false starts bringing these innovations to market, many finally saw the light of day with the release
of the Alto. The Alto was an overpriced, feature-bloated product that ultimately betrayed the novelty of it’s design. Though
PARC’s laser jet earned the Xerox back many times their initial investment, the rest of PARC’s innovations
were monetized by other companies with Apple being the most brazen example of such a company. Steve
Jobs famously visited PARC multiple times to “borrow” ideas for Apple’s upcoming Lisa Computer. Despite the commercial success of
the Laser Printer, historians view PARC as a flop largely because their leadership in innovation contrasted so heavily
with Xerox’s flounder in the personal computer industry.
Since I recently read about Bell Labs, I can’t help but compare Xerox’s PARC to Bell Laboratory. To start, both
attracted top-tier talent and aligned the effort of those talented researchers toward the mission of the
lab and the company. “Enabling communication” for Bell Labs and “creating the office of the future” at PARC.
I think the combination of a clear mission, along with smart people, and a market ripe for innovation is what lead to
the success of these two labs. Perhaps the starkest difference is that Bell Labs was able to commercialize a much
larger portion of their innovations than PARC. Perhaps it’s simply because Ma Bell had
regulatory capture, thus allowing them to implement discovered technologies without the dirty business of marketing or
The ability for Xerox PARC to go from total obscurity to a leading research lab
over such a short time period can be attributed to their ability to hire world class
talent. This talent, in no small part, seems to have been lured away from their current roles by the
20% pay premium that PARC was able to pay. A key lesson is that for enough money, you can buy innovation.
Xerox funded PARC to success but then let those innovations languish with ineffective paths to market, a case
study in how not to monetize a corporate research lab. Though the causal relationship was not explicitly drawn out,
I believe that PARC’s failure resulted from poor managers, managers with misaligned incentives, or managers who simply did not
have well operating teams. If you are going to fund a research lab to the extent of Bell Labs then you should certainly make sure to
fully fund the departments that will be responsible for productizing, commercialization, and marketing that lab’s technology.
The Alto’s failure exemplifies a common problem I see throughout the technology world.
The product was packaged with all of technical bells and whistles. Every engineer’s project saw its day. There was no editor, noone with a
a holistic perspective and responsibility of the product. Engineers love to build the next new and fun technical innovation, but
without oversight and a holistic perspective, these innovations can quickly pile on top of each other and make a product feel bloated and confusing