Super Cities №213—DoD's $15 Billion Silicon Valley Exit

Brendan Hart

Buried deep in Tableau's website are three sentences that tell the story of how a $15 billion-plus exit was seed funded by the Department of Defense:

Working with Professor Pat Hanrahan, Stolte developed VizQL as the core invention of his thesis project, Polaris. Funded by a Department of Defense (DOD) project, Polaris aimed at increasing people’s ability to analyze information visually. In 2003, Stolte, together with Hanrahan and Christian Chabot, decided to commercialize Polaris under the name Tableau Software.

Tableau - like Google before it - started as a defense-funded research project at Stanford University. This arrangement is not unique. With an FY 2018 budget that includes $117 billion for research and development (R&D), government funding is typical for university and lab researchers.

The three-way dance between federal agencies, universities, and individual researchers gets more complicated when research has commercial value. Ownership and fee structure are significant factors.

As VizQL became Polaris, and Polaris became Tableau, its founders had to reach licensing terms with Stanford University. Each side had to agree on intellectual property protections, trademark and brand usage, and what would happen should Tableau – and its DoD-funded, Stanford-owned technology – get acquired.

Here are the post-acquisition financial terms from 2004:

“(a) If TABLEAU receives less than $1,000,000 for the Acquisition, TABLEAU shall pay to STANFORD $40,000 due 90 days after the date of Acquisition; or (b) If TABLEAU receives $1,000,000 or more for the Acquisition, TABLEAU shall pay to STANFORD $80,000 due 90 days after the date of Acquisition.”

Fifteen years and fifteen billion dollars before Salesforce bet on Tableau, the American defense community financed the research and development that underpin today's mega-exit.

It's a good story that should be told – from the beginning – because, no matter how much Google's workforce complains or Ayn Rand's fanboys pick up her anti-government mantle, history is clear.

Silicon Valley sits atop a foundation financed by the American military.