TerminatorTech stocks are always a wonder. We wonder which few new tech firms will explode onto the scene reaping billions in future sales. The net benefits of injecting thousands of significant new improvements into the world economy each year in enormous. New technologies and innovation are more than enough to strengthen the sinews of market economies that each year must carry heavier burdens of parasitic taxes, predatory litigation, and monopolistic regulation.

These new technologies don't roll out on cue from government research labs. Though billions are spent each year by governments chasing politically-correct technologies, little fruit emerges from this politicized spending. Half a billion will be "invested" this year in West Virginia, thanks to earmarks from Senator Byrd. (Federal research labs and other such projects are called "Byrd-droppings" by West Virginians.) The World Health Organization is now complaining that its political funding is overmatched by malaria research funded by the private Gates Foundation. Who would you rather trust malaria research to, a team assembled by Bill Gates, or the United Nations?

Next year's national high school debate topic calls for the federal government to expand alternative energy use. Now that the billions poured into ethanol mandates, regulations and subsidies have been show to be wasted (recently published studies in Science magazine), the federal government can cast around for nifty new ideas that will help them win votes, win the Iowa caucuses, generate special interest donations, and…. have at least the potential to generate tax-funded alternative energy. But real progress with alternative energy will follow a very different path.

The history of technology and innovation is fascinating. There are endless examples of technology breakthroughs coming from unexpected sources. I was reminded of this while watching an episode of The Sarah Conner Chronicles. Like most guys, I have been a Terminator fan since the first movie. The first Terminator was a huge success for some of the same reasons technology advances come from unexpected places. Big corporate, university, and government research labs have money to hire the leading researchers in any field, buy the best equipment, and pour money into the most promising theories and technologies.

But tomorrow's leading researchers and technologies, like tomorrow's leading actors and directors, are mostly scrappy unknowns today, and they push the envelope chasing new and less popular theories, technologies (and scripts). The first terminator used mostly unknown actors. Before Terminator in 1984, Arnold had starred in Conan, Stay Hungry and Hercules in New York–but mostly he was a former Mr. Universe learning to act. What better role than a futuristic robot? Terminator lacked a big-budget for special effects, so it relied instead on path-breaking creativity and innovation. The $6.5 million production budget didn't even allow for filming in stereo, for example. But the film was a huge success. Human creativity always trumps big budgets in movies as well as research labs. The most recent Terminator movie had a $170 million budget and the next (Terminator Salvation) has a budget "in excess of $185 million." Sequels are usually stale for similar reasons heavily-funded research labs headed by leading scientists are usually stale. They are sequels too, attracting funding only because earlier innovative research work was a success. This was the theme of an earlier Schwarzenegger movie, "Stay Hungry."

A key technology breakthrough from an underfunded and unknown researcher can be seen in the new Terminator series, The Sarah Conner Chronicles. (Interestingly, the robot in the series, Summer Glau, who was in the great Firefly series, also is said to lack certain acting skills). In the new series, Summer Glau is the "good" robot from the future and has eyes that shine blue in the dark. The older model Terminators from the future (Arnold Schwarzenegger in the movies) had eyes that shine red. The future, looking ahead from 1984, did not include the then-impossible blue Light Emitting Diodes (LEDs).

When the first Terminator movie was made in 1984, the blue LED had not been invented. The top electronics companies and research scientists in the world spent tens of millions trying to develop a blue LED. But they could only figure out how to make green and red ones (and without blue, no while-light LEDs could be produced).

Then Shuji Nakamura, a scientist in Japan, not even with a major company, but an unknown working in a small lab away from major research centers, figured out how to make blue LEDs. The Japanese government, with it's reputation for funding new technologies, failed to find Dr. Nakamura. Working alone, he tried materials that top researchers never dreamed could work. (Read more in "Dream of the Blue Laser Diode"). This story is more the rule than the exception in technology, and has been far more common than progress from government-funded research. John Jewkes' study of twentieth century technology breakthroughs reports on the ways and reasons that private-sector interdisciplinary research so often yields major technology advances (see his essay: "The Sources of Invention", a short summary of his book of the same title).

New advances in alternative energy will come from similarly unexpected sources: from researchers, tinkerers, and investors far out of the mainstream. The challenge for investors is to separate the charlatans and crackpots from inspired and visionary inventors. I often recommend to students they look at a picture of Albert Einstein. We know him to be a genius. But if you didn't know him, he looks more like a crackpot.





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