NEW YORK (FORTUNE) - In January the four original founders of Sun -- Andreas Bechtolsheim, Bill Joy, Vinod Khosla, and Scott McNealy -- appeared publicly together for the first time in decades, at the Computer History Museum in Mountain View, Calif. But beforehand, FORTUNE conducted an exclusive joint interview.

The circumstances were a bit chaotic. More than one founder was late. Cellphones were not extinguished. Photographers and friends popped in and out. But we had a great conversation.

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Of the four, only two are still at Sun (Research) -- McNealy, CEO from the beginning, and hardware expert Bechtolsheim, who rejoined the company in 2004. Joy, for years Sun's chief scientist, recently joined Khosla at the Kleiner Perkins venture capital firm. -- David Kirkpatrick

Fortune: What has most changed in the technology industry since Sun started?

Joy: We went from desktop computing to really mobile computing. Cellphones and PDAs are now explosive. Now everybody has a cellphone, and you never leave it behind. That's become the most personal device for most people. Either that or their iPod. The thing that's always with you is the device that matters the most

McNealy: I think several things are different. I give Bill credit for inventing open source. The first big community-developed project with a licensing model was BSD [The Berkeley Software Distribution, a version of the Unix operating system which Joy individually, and later Sun, distributed to all comers in the late 1970s and early 1980s. Today it's the basis for much software including the Mac OS.]. We were the Red Hat of BSD back before anybody thought about that stuff.

The second thing is that now the network really is the computer. Now everything is connected to the network in an unbelievable way.

Thirdly, we actually have compatibility across devices that we never had. There's a massive consolidation now in the [Sun] Java and [Microsoft] dotNet Web services world. That's kind of your choice in writing software, whereas back then you could have done Data General or Bull operating systems or many many others. Now we actually have two sides of the road. You can drive on the right or the left. You're either in the Microsoft country or you're in the free world.

Khosla: When we started it was not very conventional or acceptable to go into startups, period.

McNealy: ...especially for young kids. Steve Jobs kind of blazed that trail. We were lucky he did that because we were four 27-year-olds. I had three years business experience, which was more than the other three founders combined.

Khosla: There is much more of an ecosystem or culture for risk-taking now. It's much more acceptable. At that time you couldn't get anyone with a serious career ambition to join a startup. It just was sort of unheard of.

Fortune: The Web itself was a fundamental change in the environment, isn't it?

McNealy: The web didn't just start with the browser. It existed before, it's just gotten better and better and more robust and could do more things. Web 2.0? We're on Web 43 in my view, with all the new enhancements and capabilities. We're the only computer company I know of that had IP [Internet protocol software] in the first and every computer we've ever shipped. It was the first company built for networking

Fortune: What was the hardest thing about starting Sun? Give me one hard thing.

Joy: The hardest thing was when we were trying to ship these high-resolution monitors and they were all exploding on the factory floor like flashbulbs. That almost put the company out of business.

McNealy: They worked great in the factory but as soon as we shipped them the phosphor would break off and short them out. But we actually got good at it. We would know where we shipped it and would have three ready. And we'd get a phone call and they'd say "We just got our shipment." And we'd immediately say "We'll be right there. Click." And they'd say "IBM doesn't give us service like this!"

Fortune: Did you guys all get along at the beginning? It's a distinctive group of personalities.

Joy: Scott and I always got along. Scott's very even and steady, at least inside the company. His public image is something else. I'm serious.

That's the reason Scott has been CEO for so long and been so successful. It's all because he's very good at managing and working with people and very steady on the tiller. And despite the quotability of some of the things he says, that has served the company extremely well over a very long period of time.

Fortune: What specifically has Scott and the management team in general at Sun done to allow the fertility of new ideas?

Joy: It's the old creative destruction stuff. You have to be willing to start new programs that threaten your existing business or don't fit in, and a lot of times they don't make any sense to the antibodies that the organization has. And to allow that kind of intrapreneuring takes a certain kind of leadership.

Fortune: Do you think about cannibalization of Sun's own stuff?

McNealy: I don't even think about that. That's like, do I think about breathing? All this technology has the shelf-life of a banana, and if you don't...

Joy: I left a banana in my car, and I could smell it the next day.

McNealy: That's true of this stuff out here [points at museum exhibits]. What other industries have museums of stuff that is thirty years old? it's funny looking stuff. But the other thing that we did and I give Vinod a lot of credit—we put an enormous amount of faith and trust in Andy and Bill and people like [ex-Sun top scientist and now Google CEO] Eric Schmidt and James Gosling.

Fortune: Should we all be worried about innovation today? Is the US being left behind?

McNealy: One of the dumbest pieces of legislation in the world was constraining H1B visas. All we've done is trained the people now to come over here, get their education out of our great institutions, and then go back and create all the jobs and all the rest of it. I mean, James Gosling is an immigrant. Vaughn you weren't born here, were you?

Pratt [Vaughn Pratt, who had been Bechtolsheim's professor at Stanford pre-Sun and joined the company as a consultant at the very beginning.-: Australia.

McNealy: Andy was born in Germany. And Vinod where were you born? We're getting the reverse brain drain. They're all going back now.

Fortune: So you're worried about competitiveness?

McNealy: It's going to have a damaging effect on the strength of our country but it's not necessary going to change the planet.

Fortune: Is Silicon Valley going to stay the center?

Khosla: The answer is we have the pole position and we could lose it. If we don't get the right people here we will lose it. And that's sort of a policy choice we have to make.

Joy: We have a flywheel here because of the many disciplines we've stitched together to make it possible to do a lot of things more quickly in the Valley. But the Indian IITs and others are extremely strong. People are very hungry and very smart all over.

Khosla: But Bill, this is the environment which extracts the most out of those people. And they'd all rather come here if we let them.

Joy: I don't see that level of motivation in our high school students. If you take the collectively most-motivated people in the world, they're probably pretty well distributed. Innovation will go with the people. We have a higher multiplier on that innovation because we have more opportunity to turn it into business.

Fortune: So where do you two VCs look for your opportunities?

Joy: Vinod and I have been looking at green energy-efficiency ventures together, and we have to look at technology from Europe. There's a lot of stuff being developed there because they've had more encouragement for that as a market. And you have to look to Asia for costs, to be competitive. Go to Google and google the thing and see what you find. You find stuff all over the world.

Fortune: What technology should we be most excited about looking forward?

Joy: There is a lot of great stuff happening in biotechnology, personalized medicine, the digital era in medicine, genomics, proteomics. There's also really good stuff that happening now in energy and materials.

You can't sequence and analyze the genome quickly without using computers. And systems biology is a new field that might be emerging in this decade or the next decade, as a way of simulating the network relationships within living organisms.

Fortune: Bill -- are you still worried as much as you were about the possibility of technology disaster?

Joy: Isn't everybody? I thought that was what Homeland Security was about. Sam Nunn and Ted Turner working on loose nuclear material have a good point. And people worry about emerging diseases like avian flu and about biodefense. The use and abuse of technology -- the double-edged sword there -- is much more apparent to everybody than it was five years ago or so.

Khosla: I'll agree with Bill that the use and the abuse of technology go together. I'm actually much more optimistic that this is going to be warfare and counter-warfare, and the good guys will do relatively well. You can't just relax about it and say it will all be OK, but I'm a technology optimist. It's going to be the single most important thing in addressing most of the issues we're dealing with, whether it's environment, or energy, or food or education -- name your favorite. It's probably the only real multiplier solution we have, where resources get multiplied by orders of magnitude

Bechtolsheim: I'm worried about the bird flu issue. It has potential devastating impact on the whole planet. I'm more optimistic about what one can do with computers and hardware software technology than how to avoid nature itself taking a left turn at the wrong moment.

Fortune: So this sharing thing that Sun is talking about. I saw one of your ads on the Internet with John [Gage, who was Sun's first marketer and salesperson] holding hands with people. Why is a giant company like Sun talking about sharing?

McNealy: Like I said, Bill invented open source and community development. And this company really figured it out. I remember the meeting long ago when Bill Joy walked in and said we've invented NFS [a set of software for managing files on a network] and now we're going to donate the source code and open the interface up for free, and all the ex DECies thought Bill was wacko.

And we kind of said it seems to make sense that if you don't share, nobody's going to use it. And if nobody uses it, who cares? Sun actually lost a little bit of that sharing focus during the bubble, because we started growing so fast. But after the bubble we kind of got hit upside the head by a two-by-four. So we got back to thinking about how it's easier to monetize a large community than to monetize a little one. It's also doing a good thing for the planet too, by the way. That's a good cause. And people care about causes.

Fortune: How about Google? You're the funder, and Sun and Google has a partnership now. [Bechtolsheim gave Google founders Sergei Brin and Larry Page their first $100,000 to start the company.]

McNealy: The beauty of our Java community process is we've partnered with just about everybody around the planet. No one single deal is the company make or break.

Bechtolsheim: But I think it's fair to say there's a lot of shared interests in open standards and open software that the two companies have.

McNealy: Google believes in software as a service, in utility computing, in grid computing, in open source, in community development and all the rest of it. So it makes a fairly natural partnership.

Fortune: Did you see in a recent interview Gates called your deal with Google a fraud?

McNealy: There's real dollars changing hands between the two corporations. I just can't talk about it because Eric [Schmidt] gets mad and if he gets mad then he might not buy anything from me.

Fortune: Andy, do you see innovation in crisis?

Bechtolsheim: Well, this society is certainly more innovative and optimistic than other societies on the planet. The natural thesis or belief in Silicon Valley is that you can always innovate yourself out of any situation, in contrast to other countries where people believe it's a zero-sum game. It's fair to note that some people in Asia have been working pretty hard to innovate even faster. So there's certainly a new element of competition that didn't exist a few years ago.

McNealy: Like Samsung cellphones--who would have thought ten years ago we'd be looking to Korea as the big innovators in handsets? One other thing that's different. Remember when we started Sun how scary Japan Inc. was?

Khosla: Now they're fighting to survive, even in the chip business, against Korea and others.

McNealy: And even at CES, [Microsoft's upcoming operating system] Vista is a niche desktop story. It just wasn't that interesting. It's like a fairly yawnful desktop niche play. That's very different from how Gates basically owned Comdex ten years ago.