Current value capture mechanisms are crude

The direct ways to capture the value from research are to patent^1 it or build a product around it (and leverage trade secrets.) Other possibilities are more indirect and ‘credit based’: consulting, speaking fees, or leveraging reputation to get more lucrative positions later.

Patents

Patents require an expensive application that can take years to process, lawsuits to enforce, and effort to monitor for violation, and lead to an extremely illiquid market. On top of that, there is tons of valuable work that just isn’t patentable.

Capturing value with a patent is often inefficient. In an ideal situation, someone building a product that incorporates the patented process comes to you, the two of you negotiate a licensing deal, and they send you a check every year. The world is not ideal. Often, you need to findpeople who are violating your patent and threaten to sue them if they don’t pay up. Standard lawyer advice when building something is to not look for prior art because it decreases your liability in case you happen to reinvent something. Even if someone does come to license your patent, the negotiation over licensing terms can be brutal - there are no standard terms and especially for a startup it can create a drag chute on a product’s profitability that makes an already hard job even harder. Once the licensing agreement is signed, you still need to make sure that the company is paying you the royalties you’re due and sue if they’re skimping you. Many inventors have spent a lot of their lives in court over patents and sometimes wind up dying in the gutter in spite of that.

It’s worth noting two historical facts about patents that shed some light on their limitations. Patents have become more BS over time. On top of all of that, patents weren’t even created as a value-capture tool for discovery or invention. Instead, patents started as a way for monarchs to increase their income without going through Parliament by granting temporary monopolies.^2 Of course, the modern patent system is explicitly meant to incentivize innovation so this might be nothing more than a cool anecdote.

Additionally, Patents inherently prevent a piece of IP from being combined with other knowledge. The combination-preventing nature of patents is particularly problematic if you want to use them to try to fund work to address gaps in work on processes and systems (which naturally require technological combinations). <In the past, corporate labs filled a particular niche in the innovation ecosystem>

Products

The first reason products are a crude way to capture value from research is that most modern products are an amalgamation of different technologies and designs. So while a piece of research may have vastly improved a component, that doesn’t necessarily translate to a vastly superior product.

Second, products are inherently coupled to companies, so the success of a product (from a value capture standpoint) is inherently tied to the success of a company. This coupling means that there are many other factors that affect the product’s success besides the product itself (let alone the research-based piece of it). Markets, sales channels, margins, fundraising, perception, etc. all make or break companies independent of their products. The best technologies don’t always win is an adage for a reason.

“But unique new technology creates a moat that will make the company successful!” Jerry Neuman’s article,Productive Uncertainty argues convincingly against pure-technology with the idea of “excess value” an invention would produce for a startup.
If a moat exists prior to the startup being founded (say, a patent) then, absent uncertainty, this patent could be sold for at least as much as the startup could garner from it.

More broadly, value capture through products force innovations to be subject to either §Startup Constraints or §Corporate R&D Constraints. None of this is to say that products are a bad way to capture value, only that they are subject to many constraints and contingent requirements that mean that the correspondence between valuable technologies and technologies whose value can be captured by a product is weak.

Related

^1: I’m going to just talk about patents but the same arguments apply to both
^2:Anton Howes <Age of Invention- How to Build a State >