Russ: Welcome back to The BusinessMakers Show, brought to you by Comcast Business, built for business. And this is the fourth episode of the Digital Leader Series, our quarterly event where we bring in a world class technologist and interview him in front of an audience of digital leaders; live audience. And I’m very pleased to have as our guest internet pioneer, inventor of Ethernet, Founder of 3Com and today Professor of Innovation and Murchison Fellow of Free Enterprise at the Cockrell School of Engineering at the University of Texas at Austin, let’s hear it for Dr. Robert Metcalfe. So Bob, let’s start at the top; Professor, do you actually go in there and teach? You’ve been doing this now since 2011.

Robert: I do. I profess innovation. I have students and yes.

Russ: All right, well talk a little bit about it. I mean what motivated you to take on that cause and has it evolved over time?

Robert: Well we were living in Boston and my wife decided that it was time to move. She’s an ultra-triathlete and works out a lot and the winters got too cold so we started looking for a warm city. It had to have a top ten engineering school and they had to want me, that was the third requirement; so we moved to Austin 4 years ago.

Russ: Wow, triathlete, I’ve done a lot of research; I didn’t know that but I know that you like won second place in the Pflugerville 5K run in the 60 – 99 category right?

Robert: So my wife’s trying to increase her speed. So she generally does 250 kilometers but she does that relatively slowly so she’s been entering us in a bunch of 5Ks to get her speed up and there’s ten of them every weekend in Austin and this weekend we went to Pflugerville – I’d never been to Pflugerville – and we joined this beautiful little 5K and I came in second in the 60 – 99 category.

Russ: Congratulations man.

Robert: And Robin won in the 60 – 99 category.

Russ: She won.

Robert: The guy who beat me by the way – I ran 16 – I walk, I don’t run – I walk 16 minute miles, the winner was doing 7 minute miles and he conceded that I was older than him.

Russ: Well there you go. So you’ve been – you spent most of your life up in the Northeast – Boston, you had a stint in Palo Alto.

Robert: 23 year stint.

Russ: In Palo Alto?

Robert: Yeah.

Russ: A short stint.

Robert: Yeah.

Russ: And then – and now Austin.

Robert: Stint – 23 years is longer than a stint.

Russ: Okay, and so now 4 years in Austin, in the People’s Republic of Austin, are you aware that you’re surrounded by Texans in that town?

Robert: So the snobs in the Northeast, when they hear we’ve moved to Austin they say well, if I had to live in Texas it would be in Austin to which Robin and I both say we like all of Texas, not just Austin.

Russ: All right, so let’s go back to the 1970s; there you were, you qualify to become part of the Xerox Parc Palo Alto Research Center which was just an unbelievable focal point of innovation that changed the world. I mean laser printing, the GUI, the mouse and of course Ethernet – did it feel like at the time while you were there that you and these people that were with you were changing the world?

Robert: Xerox made a wise personnel decision and recruited a person who had run the Advanced Research Projects Agency computer science research program, so as soon as he had left ARPA and went to Xerox – Bob Taylor is his name – he went to Xerox Research, he then recruited what he thought were the best people from each of the computer science departments and good people make all the difference in the world.

Russ: Did you all know each other before you got there?

Robert: Some but not all.

Russ: But what did it feel like? I mean did you feel that some of these things were going to be as big as they turned out to be?

Robert: Well we were having fun; we were building our own tools. We all had a mantra; we did transcendental meditation every week.

Russ: What was your mantra?

Robert: I don’t remember.

Russ: Okay, that’s not good.

Robert: I wasn’t that much into it actually.

Russ: Okay, you were faking it.

Robert: And we had one meeting a week which was a requirement. Every Tuesday at lunch time there was a thing called Dealer. It was at this meeting that job talks were given for perspective and everyone was obligated to come. But that was the only obligational meeting and it kind of disrupted my schedule because I used to just work until I got tired and then I would sleep until I woke up and then pre-sessed around the clock, so it’s kind of hard for me to show up at that Tuesday meeting because it was often in the wrong time frame.

Russ: What were the Tuesday meetings like? I mean everybody had such diverse areas of expertise.

Robert: We sat in a room full of beanbag chairs, not regular chairs, beanbags which the first thing you learned when you went to Xerox Parc was how to get up out of a beanbag chair, which is very hard. Well as I mentioned, these would be job talks mostly, so these would be PhD candidates coming through giving their PhD dissertation talks; I did one of those also. And then we would discuss them and decide whether we wanted them to join us.

Russ: And that was the only meeting was just seeing who might

Robert: It was called Dealer, it was the only meeting. It was also a time to exchange news. I would watch – it was my first run in with scientific lying.

Russ: It’s much more common these days.

Robert: Yeah, it’s very common. But each of us would stand up on Tuesday and explain what we had done and I could just hear the – like, I’m sitting next to this guy, we’ve just finished spending two solid days without sleeping – working – and he stands up and he said I did this project in 3 hours. I remember sitting next to him for 48 hours but to him it only seemed like 3 hours, so there was a bit of exaggeration. But that’s what Dealer was like; news and then the job talk.

Russ: Was there competition? Was there any disagreement that took place amongst the people?

Robert: Yes there was. The one I was involved in was a guy named Chuck and I and we didn’t like each other.

Russ: Okay.

Robert: The unfortunate thing is he sort of almost approximately ran the place; he was the like senior technical guy. The reason that he and I didn’t get along I figure – and you’d think after all this time we would’ve gotten over this but we have not – see I got this PhD and he, although he was way smarter than me and a little bit older, he never go this PhD and it was a little [hissing sound] between us in the lab and he almost killed Ethernet.

Russ: Well you didn’t know this, but I tracked down Chuck and we’re going to bring him in now because…

Robert: No, Chuck and I know that we don’t like each other so it wouldn’t – hi Chuck – it wouldn’t be a surprise, no. But we don’t yell and scream or anything.

Russ: Okay.

Robert: We do exaggerate each other’s faults.

Russ: Okay. So take us back to your invention. I mean were you brought in to connect the computers like the IT guy – were you the IT guy at Xerox Parc?

Robert: No, I was not the IT guy, I was a research scientist, but I was the networking guy. I had done my PhD – which I finished at Xerox – on the ARPANET internet; I think of that as the early internet. And so I was the networking guy which was my stroke of luck because Xerox Parc built arguable – let’s not get into this argument – but the world’s first personal computers. We had the idea, believe it or not, of putting a computer on every desk. Which in 1972 was – no one could figure out why you’d ever want to do that.

Russ: Right.

Robert: And so then you turn to the networking guy and say okay it’s your job to hook them all together. So then I had the job of connecting them together and I could’ve used the existing standard then which was called RS232 and does anyone remember RS232? But on a good day it would run at 9800 bits per second or 4800 or 300 bits per second and we were building a laser printer. So I was working on this laser printer that ran at page per second 500 dots per inch, 8.5 x 11 that’s about 20 megabits per second.

So if we used RS232 as our network the printer would be idle most of the time so the network had to be faster. And we wanted to – if you’ve ever seen an RS232 network it all goes back to one room where there’s a rat’s nest of cables, so we decided we were going to build a network that did not have a rat’s nest. So we decided to run a cable down the middle of the corridor then each PC that wanted to connect into the network would tap – literally puncture and tap into the cable, and then through that cable they would be able to exchange data packets upon which we would build protocols that would do various things.

Russ: And you did it.

Robert: Well Dave Boggs and I built it starting in 1973. May 22nd, that’s the birthday.

Russ: So it’s almost 42 years old, right? On May 22nd?

Robert: That’s right.

Russ: Congratulations.

Robert: My wife asks what have you done for us recently.

Russ: I suspect there’s people in our audience who don’t even know what the world was like before Ethernet. You know, I mean if you’re under 35 you didn’t experience it right?

Robert: Well pretty much most computing in 1972 was done with punch cards.

Russ: Right, right.

Robert: There’s no one here that old.

Russ: Well I did some FORTRAN.

Robert: Whoa. And then we went through this interactive time sharing thing with dumb terminals. So I had a dumb terminal in my Xerox office, it ran at 300 bits per second on RS232 right into my office. And then the next day on – well, a month later it then had 2.94 megabits per second coming in, which is 10,000 times faster; which is a big step forward. And there was no requirements document; there was no document that said you need 2.94 megabits per second, we just – we sort of began a tradition and we built Ethernet as fast as we could reasonably as we could with the available semiconductors.

Russ: So let’s skip forward a little bit, I know after a while you became more tuned into people and how many were accepting Ethernet and you did some contemplating and came up with Metcalfe’s law. Tel our audience – does anybody in here know what Metcalfe’s law is? I got 2, 3.

Robert: That’s a disappointing show of hands considering how old this law is. Well Metcalfe’s Law, which I’ve been defending sconce 1980, so don’t anyone and attack it because I’m really good at defending it. I was the head of Sales & Marketing at 3Com Corporation and we had just finished selling a bunch of starter kits – Ethernet starter kits – three cards that you would plug into your PC – Ethernet was not in the PC in those days, they are now. So we sold three cards and a diskette for $3,000.00.

Russ: What a deal.

Robert: And then you’d build a 3 node Ethernet and it would have a printer and a disk – huge disk in 1982 they were typically 20 megabytes disks that no one knew how to use so we shared them among the 3 computers over the Ethernet – and then the printer, like a laser writer by 1984 costs $7,000.00. You get to share the printer and the disk with these 3 cards. So we solved all the – oh, I’m getting to Metcalfe’s law.

Russ: I know

Robert: Wait patiently. So we send out the trial – we sold the trials, the $3,000.00 trials and the customers said they work just like you said, it’s just not very useful. Well if you’re head of Sale and Marketing that’s a problem. So I sat down – but I knew that Ethernet was useful because I had lived at the Xerox research center and we filled Xerox with Ethernets and – there was a Xerox internet before there was an internet – and we knew that it was useful, but it’s just a 3 node network wasn’t showing it.

So I did a slide that said the growth of the – the cost of the network grows linearly with the number of my cards that you buy for $1,000.00 each, but the number of possible connections you can make goes up as the square because each node can talk to all the other nodes and that’s n x n – 1n^2 so that this n squared curve would catch up with this linear curve at a point which we call the critical mass point, and after that the value would exceed the cost. So the reason that all my customers’ networks weren’t useful is because they were too small. And the way to solve that problem was to buy more of my product. So that was a sales tool an incidentally the slide I hasten to add was not a PowerPoint slide because I was on the board of the company that sold PowerPoint to Microsoft in 1987 – that was for $14 million – this slide in 19 early 80s was a 35mm slide.

Russ: Oh wow.

Robert: So I hand drew it, took a picture with a camera and then had slides made and put them in the carousels and gave them to the sales force. And by the way this worked, so lots of people believed the slide, they bought it and we went public in March of ’84 as a result.

Russ: Congratulations, good story.

Robert: I’m sorry, it wasn’t Metcalfe’s Law until 1995 when George Guilder – George Guilder’s the guy who made Moore’s Law famous, in ’95 he decided to make Metcalfe’s Law famous.

Russ: And there was some overlap kind of between the two isn’t there?

Robert: Well both Metcalfe’s Law and Moore’s Law begin with M.

Russ: All right so I also heard that none other than Al Gore has mentioned Metcalfe’s Law in speeches he’s given, you mentioned the ARPAET and you were there, it must have been you and Al Gore that invented the internet, would that be right?

Robert: That would not be right. Al Gore and I have met and I briefed him at the National Academy of Sciences on what the internet was in 1987. The internet began working in 1969, so ’87 was kind of lateish, and Gore’s bill passed in 1991 which is even later. So I generally like to say that Al Gore did not invent the internet, he invented Global Warming. This is a great city to tell that joke in.

Russ: Yes it is. Well so I thought maybe he just suffered from that same thing that Brian Williams at NBC does, he just thought he was there he had been around it for so long. But you knew him, right, Al Gore?

Robert: No, I met him; I wouldn’t say I knew him. I don’t like him much.

Russ: All right. Who all doesn’t like Al Gore? All right, so let’s move now to your entrepreneurship and 3Comm. You’ve touched on it a little bit but did everybody at Xerox Parc – did the GUI guy, did the laser guy – did they all go start companies with their technology or were you the…

Robert: Eventually. I was the leading edge; I was the first to leave. It’s funny, I graduated from the last good class to graduate from my high school and then I graduated from the last good class to graduate from MIT. It’s funny how you view the history. So Xerox Parc immediately started falling apart when I left in 1979.

Russ: Just in time.

Robert: And then a bunch of other companies spun out like Adobe and Sun and others. You could argue Apple, Microsoft, all of them were descendants of that.

Russ: Okay. Well so I was sort of in the business. I was with IBM and left and was running a Computer Land so I was seeing Token Ring and Novell and all these people – and Ethernet – and the competition. What I think is amazing about 3Comm, and I’ve heard you talk about this before too, is that you won that battle, and from what I remember you didn’t win it overnight. I’ve heard you talk a little bit about how important persistence was in your venture. And then I heard what to me is even more amazing as an engineer, you’ve really developed a major respect for sales – the process – even wrote the cover article for Technology Review in 1992, The Zen and the Art of Selling. Share that – persistent selling, all this stuff – that happened while you were at 3Comm.

Robert: So 3Comm raised venture capital and was developing Ethernet products and we were burning through our cash so a fume date was always in sight and it turned out I was wrong about how rapidly Ethernet would be adopted, so eventually my board – my board which I carefully hand built with the top people in Silicon Valley decided I shouldn’t be CEO anymore. So my parent Bill Cross became CEO – incidentally he grew us from 12 people to 12,000 people so he did good and they were obviously right in this decision – but as a measure of our desperation they made me head of Sales and Marketing on that day not having been one of those. So I had to learn fast and I put my heart into it and I succeeded. I got us from 0 to $1 million a month and a public offering by learning how to sell, but it was on the job training. Startups generally can’t afford on the job training so this was not a repeatable event but I happened to succeed and got us to a million a month.

Russ: Well now you teach a sales class to entrepreneurs.

Robert: One of the 4 skills that I teach, you know, the question arises can you teach entrepreneurship? I think yes and it’s mostly business but there are 4 skills that I promote and one of them is writing, speaking, selling and planning and I give those 4 lectures to our class.

Russ: And I’ve heard you explain the secrets of sales, I know there’s a few sales people in here that might need a little brush up course.

Robert: Well there’s one word which is the secret to selling.

Russ: What’s that?

Robert: Listening.

Russ: But what about your deal with no and…

Robert: Well before that, there’s a few single words I use. There is the word which deters most people from selling which brings me to Lynn Seth. Lynn Seth and I won – I became President of my Junior High School and Lynn Seth was the Secretary and then at our tenth high school reunion there she was. And she turns to me and she says how come you didn’t invite me to the Senior prom? And the answer was I assumed she would say no. And no is the big deterrent in sales. People are afraid to ask or to sell because they’re afraid of getting no.

Russ: Okay, let’s bring in Lynn Seth right now.

Robert: She married the captain of the football team, Joe Malchusky.

Russ: That’s too bad.

Robert: And I – but she would have gone to the prom with him even if I’d have – anyway, what that taught me is you’ve got to ask. And then the word – the anecdotes – you steal yourself to no and the then anecdote is to ask why. And then with why you get a list of objections that you get to work with. And then you’re working toward the next magical word is yes and then the secret to getting the yes is, as I’ve already revealed, listening.

Russ: All right.

Robert: And to listen – and it’s amazing how many people don’t get this – to listen you must leave silence. You talk and then you stop talking. So listening is the answer to your question.

Russ: Have you found many engineers, entrepreneurs that learn this lesson from you?

Robert: No. No, it is very difficult for engineers to become sales people because they’re different life forms; both carbon-based but different. And so the transition I made, perhaps incompletely, from engineer to sales is very unusual, hard to do, so that’s why we promote the formation of startup teams where you mix skills – the engineering skills, the sales skills, the marketing skills – and you make effective teams rather than relying on the founder to be all omni-skilled.

Russ: Okay. All right, so before I wrap this up I’m going to just sort of play a lightening round with you where I’m just going to share a couple of new technologies and get your perspective; not long ones but maybe 30 seconds. How important do you think internet of things is?

Robert: The internet of things is the next big thing. It’s happening right now. The way you’ll be able to measure progress is the word thing will disappear. We call it the internet of things right now because we don’t know what the things are, but it’s becoming clear what the things are. Like automobiles are going to be things, glasses, watches, pacemakers; these are all going to be things on the internet of things. It’s also a development that’ll be paced by semiconductors; that is it’s the availability of sensors and networking chips and so on that’ll pace the proliferation of the internet of things.

Russ: Okay, so you’ve already answered my second one which was autonomous vehicles because you’re going to say they’re just part of it.

Robert: Autonomous vehicles are coming and in my lifetime I will not have to go to the DMV anymore. And what’s amazing about cars is how many networks involved. They’re right now developing networks for your car. Well you know there’s already a network inside the car for the brake pedal to talk to the brakes and they’re doing an Ethernet standard for that; the Automotive Ethernet. Then there’s a network that the car uses to talk to the road so it can stay on the road and know where the road goes. And then there’s a network from the car to the internet so you can have Google Maps help. And then there’s a network from the car to the other car so you can avoid each other and those are all different network technologies that are now being developed and then eventually standardized so they can go inside these automotive cars; auto automobiles.

Russ: Okay, what about IBM Watson?

Robert: Cognitive Computing, that is the use of artificial intelligent software is another big thing that’s coming and IBM is making a play for the leadership in that with their Watson. And we just had a startup from our class go to New York to enter the IBM Watson competition and they won. Brie Connolly came home with a check for – she’s a Senior in Computer Science and she came back with a check for $100,000.00. She then came to my office hours and asked me how should she spend the $100,000.00 and I gave her the venture capitalist’s answer, don’t spend it, just cling to it. So Watson’s coming but it’s hard to predict, it’s a big thing and the idea of a cognitive cloud.

Russ: Cool. If you went to Comcast’s website you’ll see the word Ethernet showing up intermittently – frequently – if you go to Best Buy you’ll see Ethernet, you just sort of see your invention everywhere; how do you react to that?

Robert: Well it’s gratifying and you Google up Ethernet now and even though it’s 42 years old there’s more mentions of it than ever because the word has – the thing I invented is no longer sold but the name has persisted and it describes a general approach to networking one who’s principles is build it and they will come. So Ethernet just gets faster and faster and faster without a requirements document, gets faster and faster. The most gratifying part is – and I now this is one of your favorite stories – my daughter asked me to get her an Ethernet cable.

I went to Best Buy, there was a young woman standing at the front of Best Buy whose hair was purple and she had tattoos and lots of piercings and stuff; stuff which is alien to me. But I went up to her and I said do you have Ethernet cables here and she said oh yes we do. And she escorted me to the back of the store where there was a 20 foot shelf of Ethernet cables and she said what length would you like and what color would you like and would you like the kind that flip over for a polar reversal cable, which would you like? And I chose the regular 25 foot red cable for my daughter. So that was when I finally was convinced that Ethernet had caught on.

Russ: Did you tell her I have a little bit something to do with that?

Robert: I didn’t tell her but for a while I tried – you know when you check into a hotel sometimes on the desk there’s a little thing – there’s a little Ethernet cable and sometimes it even says Ethernet? So you check into the hotel and you’re escorted to your room and the bell boy puts the bags down and I would turn to him and I’d point at this little thing that said Ethernet on it and I’d say I invented that. And he generally would say sure you did.

Russ: Let’s hear it for Bob Metcalfe. And that wraps up my interview with Bob Metcalfe, the inventor of Ethernet. And this is The BusinessMakers Show, brought to you by Comcast Business, built for business. Thank you man, good job.