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(CNN) -- Six geeks + one laboratory + 24-hour workdays = success.
That's the formula at Squid Labs, one of a growing number of small businesses generating innovative new products for complex scientific problems. Working increasingly on small teams, companies like Squid Labs, Intellectual Ventures, Mom Inventors and Walker Digital are trying to turn training, intelligence and ingenuity into profits.
And many larger companies are only too happy to send them the business.
According to Fortune magazine, corporate demand for the expertise and imagination found in such small invention firms has risen to unprecedented levels of late, in part because many large companies have slashed their own research and development budgets since 2000.
Without outside investment, companies like these often have to rely solely on their wits and hard work to establish themselves. And yet the the challenge can be intoxicating. With just a handful of chemical, mechanical and computer engineers, the Squid Labs office in Emeryville, California, is abuzz with science and innovation at all hours of the day and night.
"We want to be considered a place that people can go to when they need a unique invention or new ideas," said founding partner Saul Griffith.
Growing up, it didn't take long for Griffith to break his holiday toys into pieces. "The legend in my family is that no Christmas present lasted past lunchtime, before I'd taken it apart and built something new with it," he recalled.
This obsession with deconstruction, understanding, and creation is fundamental to the Squid Labs culture, where team members are encouraged to experiment, think out loud, and try novel approaches to problems. Current company projects include a portable eyeglass-lens cutting machine that is fast and inexpensive, a rope that lets people know when it's about to break, a functional three-dimensional map, and a cartoon designed to give children hands-on experience with physical science concepts.
But this is not an easy business. The market for inventions is both international and fiercely competitive.
Of the record 409,532 patent applications filed last year, more than 45 percent came from abroad, continuing a steady trend that has seen U.S. inventors lose ground to their overseas counterparts. While fewer Americans are studying college science relative to the rest of the world, the study of science is exploding in the rest of the world and growing numbers of international high-tech experts are marketing themselves and their companies as inventors.
While international students who pursued degrees in the United States and remained after graduation may have once closed such gaps, this is changing. Emerging Third World markets and communication technologies that allow professional people to work together from all over the globe are leading many foreign students to go home after graduation.
Still, small American firms are leading the way in this new arena and Squid Labs, at least, plans to stay ahead of the curve."The list of people we want to associate with is long and growing," said Griffith. "We definitely want to attract the best minds to be able to take on the hardest projects."
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