How $500,000 can save the world

"Prodigy of invention in service of the world community."

Saul Griffith testing the aerodynamics of high tension string.

Squid Labs Headquarters in a converted naval base in Alameda, Calif.

Enjoying childhood.

On a kiteboarding adventure.

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The caller ID on Saul Griffith's mobile phone read "unknown number." He answered it anyway. "Experience has taught me that many good things come from unknown numbers," says the high-tech inventor and serial entrepreneur. This call was no exception: The 33-year-old learned he'd won a 2007 MacArthur Fellowship, the no-strings-attached "genius grants" of $500,000 over five years.

Declared a "prodigy of invention in service of the world community," Griffith was honored for his work as co-founder and lead inventor of several flourishing start-ups he spun out of Squid Labs, an R&D institution the MIT graduate and four partners created in a converted naval base in Alameda, Calif.

Griffith has birthed companies developing low-cost eyeglasses, pull-cord generators for electronic devices, and even science-experiment comic books. But his latest endeavor, Makani Power (Hawaiian for "wind"), is devoted to harnessing high-altitude wind power and has raised $10 million in venture capital from Google (Charts, Fortune 500). Its plans are closely held, but anyone looking for clues should see Griffith tearing up San Francisco Bay, sailboat racing with catamarans powered by giant kites. "We can outrun anything on the water," he says.

Griffith spoke with Fortune Small Business while riding his customized bicycle from his San Francisco home to Squid Lab's headquarters within a converted naval base control tower. Genius calls.

FSB: When the MacArthur Foundation called to notify you, what was the conversation like?
SG: It was a very Mission Impossible phone call. The voice said, "Are you Saul Griffith." I said, "Yes." Then they said, basically, "This will be our only contact. Your mission, should you choose to accept it, is to spend half a million dollars doing good things."

FSB: How do feel about the "genius" label?
SG: I hate it. I don't believe in the concept of genius. I think there are a lot of really smart people in the world, and a few of them work really hard. I'd be a lot more comfortable if they called it the "manic idealist smarty-pants grant."

FSB: Why did you choose the entrepreneurial path rather than just go to work for a think tank?
SG: Think tanks seem to do exactly too much of that. Thinking. While I love thinking, I like doing more. At Squid Labs we toyed for a while with describing ourselves as a "Do-Tank." The entrepreneurial path seemed to be a good way to move forward with a different set of constraints to working for large companies or within Academia. It is by its nature fast moving and impact and action-oriented.

FSB: What advice do you have for other entrepreneurs?
SG: Learn to live cheaply. Learn to live like an animal. One thing we had going for us is we all spent a lot of time in grad school, and long periods of grad school teach you how to live well on a low budget. That's good training for becoming entrepreneurs. It's easier to have a high-risk tolerance when you know where the dumpsters with free food are. Also, I definitely think you need to focus on a specific project in the market that you're going after.

FSB: How did you start Squid Labs?
SG: We boot-strapped old-fashioned style. We slept in workshops, ate cheaply, and financed ourselves through consulting and other work while we nurtured our own sets of projects. As we "grew up" we realized that our own projects needed more funding and more focus. At that point we were ready to take venture funding and other financing sources to grow new companies from the technologies we underwrote ourselves at Squid Labs.

FSB: How would you describe the Squid Labs business model?
SG: Well, you can never tell anyone that you're an incubator, because that's pretty unpopular, but in many respects that's what we were. Our model was basically just put a bunch of smart people in a room and eventually you'll figure out some cool things to do. We definitely did the struggling start-up thing for a few years while we got our act together. But if you listen to the world it tells you what to do, and all indications were that to grow up and get serious we had to have some single-focus companies, so essentially Squid Labs fractured into a number of start-up companies that are single-product focused, and that's working out quite well.

FSB: How close is Makani Power to unveiling a prototype?
SG: We're still in the research phase, looking at high-altitude wind energy, and meaning above the typical 300-foot height of normal wind turbines.

FSB: What are you going to do with the $500,000?
SG: Right now I'm toying with a whole lot of ideas that otherwise wouldn't become reality but are pretty cool and should exist. For instance, I'd love to see a CAD program that allows you to enter folding patterns for origami and paper airplanes. Imagine an online application where every kid in the world could upload their favorite design for a paper plane or origami crane...that would build this wonderful rich library of paper folding objects. That's one beautiful possibility I'm contemplating that might be a little whimsical, but highly useful in an inspiring sense.

FSB: What inspired you to create "Howtoons," the upcoming series of illustrated science experiment comic books for children?
SG: When I was in grad school I came across these compelling books published near the turn of the last century with titles like The Boy Mechanic that taught children how to make gliders, and bows and arrows, and all sorts of cool things. But these books are not really transferable to the modern age because their instructions are like, 'Find two eight-foot lengths of straight-grain spruce and four 12-inch strips of leather thong.' Hard to find at Home Depot. So there seemed to be an opportunity for me to find analogous modern materials like soda bottles and bicycle inner tubes and chop sticks and show step-by-step how to build things like the Infamous Marshmallow Gun. The underlying philosophy is that it's critically important in this technological age to teach kids to see the world for what it can be, not for what it is, to have them question why they can't make the world better by experimenting, and to teach them not have a fear of the physical world. That failure is fun, and that the physical world is a really cool computer game if you want it to be.