Eyeing IT spin-offs through an R&D lens

Venture capitalist David Tennenhouse draws on his roots at Intel and DARPA

Venture capitalists hail from all different backgrounds. Many are investment bankers or entrepreneurs; some are even former journalists. David Tennenhouse, a recent entrant into the venture capital world, hails from the research and development trenches. Tennenhouse is a former vice president and director of R&D at Intel. He also previously worked as director of the Information Technology Office at the Defense Advanced Research Projects Agency and as DARPA's chief scientist. In addition, he has taught at MIT.

After most recently serving as interim CEO of A9.com, a subsidiary of Amazon.com that makes a product search engine and targeted advertising software, Tennenhouse joined New Venture Partners last March and opened a Silicon Valley office in California, for the venture capital firm earlier this month. New Venture Partners focuses on technology spin-off deals. Tennenhouse spoke with Computerworld last week about his role at the firm, his R&D background and some of the current research that interests him.

What prompted you to join a venture capital firm?

I love innovation. One of the things that has always concerned me is that you're always going to have projects in corporate R&D that are going to be successful -- but they're in the wrong place, they don't match the company's objectives or the company has changed directions. This always bugged me at Intel and DARPA, and [supporting such projects] is what New Venture Partners does so well.

You could say I'm exorcising my demons. In the past, there were cases where I've had great technical teams and they did everything you asked them to do, and for other reasons we ended up shuttering the projects.

What's your role with New Venture Partners?

I have a couple of different roles. One, being based out in the Bay Area, is to develop relationships with firms that are located here. I know a lot of the R&D directors out here. I'm staying in touch with those folks on a regular basis, staying close to projects that are in the pipeline and possible projects that might make sense for them to spin off. That's important because you really want the people on the technical team to know and trust you before the company decides to spin off the project or fold it up.

I'm also the guy who knows what it feels like to be on the other side of the table. Corporate R&D directors are under certain pressures to operate in a certain environment.

What types of spin-offs interest you the most?

The ones that are going to be really successful and have multibillion-dollar IPOs (laughs). Seriously, is there a technically compelling story, [and] is there an equally compelling business story? I really look for people, and a leadership team that is hugely committed to the technology and the project. That's really important in a spin-off scenario, because these are typically the most senior people in the organization that are helping to spin it off.

Do you use a technical barometer?

We're willing to look at whatever the corporate R&D team is willing to invest in. It's a different game for me personally. At DARPA, I would go and set the strategy -- the same at Intel. Here at New Ventures, we're following the projects that management has already decided to work on.

One area I'm interested in is proactive computing. In the '50s and '60s, computing was all batch-oriented. Since then, it has become more interactive. We're starting to reach a future where computers are proactive, anticipating what your future needs might be. I also look for better sensor networks and better uses of them. I was very involved in that at DARPA.

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