Editor’s note: This is a guest post by Vivek Wadhwa, an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Executive in Residence at Duke University. Follow him on Twitter at @vwadhwa.
Everyone seems to be waiting for the next great discovery which will change the world. But, believe it or not, the next Internet, semiconductor, or breakthrough in MRI technology may already have been discovered. It’s just languishing on the shelves of the university research labs you drive by on your way to work every day. University researchers don’t know how to commercialize their discoveries and smart, hungry entrepreneurs looking to meet the next Larry or Sergey don’t know how to find them. These parallel universes rarely meet (well, except sometimes at Stanford).
In 2007, U.S. universities performed $48.8 billion of research and filed 17,589 U.S. patent applications. In that same year universities received back revenues for licensing and royalties on patents of less than $2 billion. Those revenues include ongoing royalties from all of the research licensed over the past 40 years. The implication is clear. An astonishing amount of promising research is left in the lab.
When I say this to university administrators, they get incredibly defensive (almost like the VC’s I pissed off with my last post.) They rightfully argue that the role of the university is to teach and to add to the world’s knowledge base. The real benefit comes from the students who universities educate, who go and start the Apples and Microsoft’s. No argument there. But we have a goldmine of knowledge and potential innovation locked in our research universities. This goldmine could fuel the next two decades of economic growth. It is time to mine this goldmine.
I’ll sketch out a little treasure map for you in part two on this topic, posting later this week, but first, you need to know more about the inhabitants of the other dimension. Some of the brightest people in the universe work in our universities. After getting a science or engineering Masters degree (which could earn them six-figure salaries in Silicon Valley) they slog it out for 4-6 years at close to minimum wage to get their PhD’s. Then they wait another decade to *maybe* become a full professor, usually by working at a series of lesser university jobs in less than optimal cities or towns. Even those PhDs who get tenure usually don’t make anything near what senior tech guys make in industry.
Clearly they are not in it for the money. Rather their twin desires are often to acquire knowledge for knowledge’s sake and to do good for the world. I know these are foreign concepts to some of you, but this is the academic world. And by the way, they often see the business world as the “evil empire” that robs their discoveries of purity and puts a dollar sign on anything it can.
For those reasons, they are usually more concerned about disseminating knowledge and publishing academic papers than creating patents that limit how this knowledge can be used. (I have known many academics who refuse to file patents because they don’t believe in them). These purists worry about the conflicts of interest that can arise when taking money from industry might be perceived to color their research. And they want to ensure that their teaching activities are not adversely impacted by the time spent on commercialization efforts.
To make things worse, the funding which universities received from the government usually only covers the cost of writing some papers. They don’t get enough to build a prototype or prove their technology. This is what most VC’s want to see at a minimum before investing in technology, to make sure they are not investing in a “science project,” the industry term for leap-of-faith investments in lab science discoveries. Not surprisingly, the vast majority of university technology withers on the vine. This chasm between promising benchwork and investable prototype, between what professors and VCs can and are willing to do, is also known as the “Valley of Death”.
The challenge is to create a bridge between these researchers and the VCs or idea-seeking entrepreneurs who know to turn an idea into an invention. Many of the ideas and breakthroughs are easy to exploit and just require enterprising minds to come together with inquiring minds. But others require the investment and support which only VC’s can provide. (Hey, I never said that venture capital didn’t serve an important purpose – just that VC’s don’t innovate.)
Taking these types of hard science discoveries from bench to fab or factory is sometimes very, very hard work that often does require VC capital, fat Rolodexes, and regulatory and industry specific operational expertise. But someone has to take these discoveries into a stage beyond “science project” – and this is where the entrepreneurs need to step in again—to hand VC’s the “technology on a platter” that they expect.
I asked a colleague at Duke University, Barry Myers – who is considered to be one of the leading biomedical researchers in the world and also happens to work part-time at a VC firm (weird, isn’t it?), to help me create a guide for the adventurous entrepreneur. I must warn you that this isn’t going to be easy. In my next post, I’ll walk you through what Barry said.
Yes, we’ve got a cliffhanger.
(Photo credit: Jon Sullivan)
Pneumonoultramicroscopicsilicovolcanoconiosis (cough) Congratulations @BillPrady on Big Bang Theories Huge Ratings #cranbrookkingswood
Bless you.
“adventurous entrepreneur”
Is this redundant? Seeing as most entrepreneurs are under capitalized and overworked from the start, they are undergoing an adventure the minute the get started. (Who said all adventures are fun? Famous proverb and curse “May you live in interesting times”.)
Entrepreneur: “I only work half-days. Any 12 hours I want”.
Thanks Mr Wadhwa. I like this approach a lot, and seen it in action: Proteus environmental technologies LLC is a company founded on this concept. Tony Michaels one of the brilliant minds left academia after a full career as a marine biologist (USC, director of Wrigley Institute), and started Proteus Env. They take transformitive ideas from the academic realm to the market.
http://proteusenv.com/about_us
Off topic, but all those academics you suggest that “are usually more concerned about disseminating knowledge”
have no problem publishing their research in “walled gardens” – prestigious journals inaccessible to the public for anything under than $20 / article. money or fame, they equally worth fighting for.
lol, agreed.
Academics are not in it for the money, but prestige is everything in their game. Prestige gets you recognition, grants, tenure… They mostly don’t care where their work gets published, as long as it’s prestigious. These “pay-per-view” publications make the most of their academic standing by charging for access.
Give these guys a free, open-access journal that is just as prestigious, and my guess is they’ll try just as hard to get published there.
Plenty of quality journals out there:
http://www.plos.org/ http://www.frontiersin.org/
What do you mean ‘prestigious’? these are never going to become prestigious unless reputable scientists start publishing in them.
A great insight into the gems that are likely lingering in academia. The amount spent vs. amount of licensing return on patents screams of the mis-alignment of the U.S. academic system.
A really enjoyable post, thank you!
Great article…especially good challenge for us entrepreneurs & human routers:
But someone has to take these discoveries into a stage beyond “science project” – and this is where the entrepreneurs need to step in again—to hand VC’s the “technology on a platter” that they expect.
Can’t wait to read what Barry has to say…many out there up to the challenge!
Indeed, a very intriguing article. You’ve tantalized me with the prospect of the Next Great Thing that’s just waiting to be seen in the right light sitting on a dusty shelf (or a dusty notebook) far from “prying” eyes!
I can only imagine the vast array of things that are routinely researched, discovered, designed, and written about that has never gotten any further. Bring on Part 2!
“The real benefit comes from the students who universities educate, who go and start the Apples and Microsoft’s.”
Didn’t Steve Jobs and Bill Gates both drop out of college? It doesn’t seem like these are good examples of the benefit of university education. They did just fine without the university education.
Being a refugee from academia myself (Berkeley), this article isn’t congruent with my experience.
For just one example, one patent application was rejected, but UC won’t let it go. They want someone else to pick up the patent development fees in exchange for a license from UC.
The problem is that since the application was rejected (in part for insufficient novelty), nobody really needs to license the IP from UC.
From my point of view, impasse… because no way I would take on the opportunity costs with the might of UC hanging over my shoulder ready to pluck the profit away should I succeed. And this would have been a serious development effort, non-trivial at best.
Still, I’m curious where the author is going to go with art #2.
Your depiction of academics fails to mention another major reason that drive them: prestige. The academic world can be as cutthroat as the business world in that regard. Conversely, many business persons strive to make the world a better place too, with the added difficulty of having to achieve that sustainably in a highly complex and unpredictable world.
Anyway, the gist of your article is right, which is that we need to be always better at bridging the two worlds for the betterment of both. Now, let us keep in mind that some research “withers on the vine” for a reason, e.g. if it has no clear value for the consumer at that particular time.
Fourth Annual International University Startups Conference in Washington DC Dec 2-4, 2009 that deals with the creation of startups and their funding by Fortune 500, angels and VCs. See http://ncet2.or...ivStartupConf09. Each year with deal with these exact issues.
Excelent article, it clearly depicts why great ideas never see the light. I have myself been forced to go to the “dark” side after finishing university. We founded Corvalius (http://www.corvalius.com) to try to get those hidden gems from academia into the wild.
We started out with what everybody told us was a weird idea, an Operational Transformation engine based 2007 research. We knew that had the potential to be a game changer. Now after Google unveiled Google Wave, well people just see it
…
My job at the Labs+Academics division is to look out for those hidden gems, and as you said take them out to an stage beyond the “Science Fair”. We are doing that already with beWeeVee a technology similar to the one used at Google Wave (http://bit.ly/hjJmF).
We are in this to make those bridges and we would like to connect to others that are doing the same.
Greetings
Federico Andres Lois
Manager Labs+Academics
Corvalius
Great post! Curious to learn more about how universities rank in tech transfer? Check out the report here: http://www.autm...vity_Survey.htm
So here’s my take: Why not band together a few entrepreneurs and marketing people (like me) with start-up experience and start a for-profit company that contracts with university research departments to assess their portfolios and choose inventions to bring to market? I’d be in.
Most research universities have tech transfer departments but they are notoriously bad at bringing things to market. Scientists don’t trust marketing people, academics compete for things that make no sense to business people, etc. That’s why I suggest that a for-profit start-up that is independent of the research departments is the way to go.
So, let’s start one.
Vivek, what do you think of the UW Tech Transfer program? http://depts.wa...n.edu/techtran/ The university acts as somewhat of a VC arm and they have been a major force in the Seattle industry in terms of startups and innovation.
Having great ideas is the worst curse you can put on someone. The VC want 99.9999%, then cash out, first, and you are left paying everyone back. I know this first hand. Me? Oh, no, I’m not bitter. I call it hard experienced.
This is what I want to read on Tech Crunch.
My experience has taught me that most professors could do more in helping students apply the material being taught.
bridges people, bridges make the world go around and this is what vivek is preaching. bring on part 2. i think this is way past due and if it’s not happening/ocurring at a rate that it’s now considered the norm, is really unfortunate. i don’t think the non-altruistic part of these professors/teachers was pointed out here, but it’s probably because you are right and a large portion of these people aren’t teaching because of the money, or researching because of money/fame…but like another commenter pointed out, some people are in it for prestige. i hope part 2 isn’t the end of your authoring on/for this website because these seeminlgy opposite parts need to be melded. if you stop posting on tc, i hope you keep writing about this because it is of interest to some readers and it really benefits us all because not all of us have feet in all these professions. THANKS!
As far as I know, professors, especially ones in medical, engineering, business field, earn decently. With tenure, it is a very rewarding career, not mentioning summer break, sabbaticals, external deals (books, lectures, etc). It is really a risk and reward thing. Professorship is a good career path for most professors, and entrepreneurship is a brutal one for most entrepreneurs as 90% fail in 3 years, and could bear bad names as well.. So you see Microsoft, Dell, Yahoo, Google, all were founded from students, rarely from professors. And you saw only a glimpse of those failures
I found the following real salary data for Stanford http://www.sala...-university.htm
University of Washington (close to Microsoft)
http://www.sala...-washington.htm
I VERY MUCH understand this Valley of Death, and the fear the academics have with entreprenuership…
I really want to see part 2.
Many universities have tech transfer offices and incubators that are supposed to identify and develop commercial opportunities for the IP and research being created at academic institutions. In addition there are VC firms (Redshift Ventures and Oxantium Ventures come to mind in DC) that specialize in Tech Transfer investments. This leads me to infer that (1) much of the research and IP being developed doesn’t have commercial application and isn’t fundable or (2) this is an underserved market for angel investors and VCs. I look forward to the next post to see if Barry Myers has some insights. Would be great to see what the folks at MIT, CalTech, CMU and Stanford have to say as well.
“The real benefit comes from the students who universities educate, who go and start the Apples and Microsoft’s. No argument there.”
These are probably flawed examples. Apple’s Steve Jobs audited Calligraphy classes at Reed College (Weed College to some locals) and Microsoft’s Bill Gates took a leave of absence from Harvard (never to return).
Google would have been perhaps a better example. Given the wondertwins post-grad work.
Also, “Apples and Microsoft’s”. One of which is probably misuse of apostrophes. But I’m no academic.
Professor, why not just invest research money in more innovation centered design schools like the Institute of Design and the Stanford D.School, where we are essentially *driven* by the need to create cheap prototypes, and iterate repeatedly? In fact, a design school combined with a business school that pumps out profit seeking entrepreneurs that have the capability to be “scrappy” in Paul Graham terms and grow from nothing is exceptional.
Luckily, I got the chance to research, design, and iteratively prototype a project that I am deeply passionate about and excited about create a business that probably needs to take some lower-risk VC (and thus equity dilution) at this point to become profitable.
What I’ve discovered is that VC and capital is plentiful: Investors and **mentors** that can truly add complementary skills and lots of value in connections and networks is tougher.
My opinion is that the Ycombinator (or something like that) model wedded to academic research will lead to better ideas taking off. (More people swinging for the fences and changing the world, like entrepreneurs are supposed to be).
I dont quite believe that the smartest scientists are dumb enough not to realize the commercial importance of their work, so some starry eyed MBA can come and “save” them from their poverty stricken lives. VCs dint find larry and Sergey btw, they found Google.
Academics attend conferences and are well aware of the impact of their research, and they know that the next internet is not there yet, and when it is there, they will tell you.
Interesting subject, I’m glad Prof. Wadhwa is writing this series.
Most technology advances are made pre-war or during wars.
Man on the moon, nuclear energy, Silicon valley (http://www.yout...h?v=hFSPHfZQpIQ) … all relates to wars and government spending – afterwards great innovations and products get roled out into mass market productions.
Currently US has got no more money to engage in wars.
The innovation could easily happen somewhere else in the world as anywhere in the world people are educated and intelligent.
“In 2007, U.S. universities performed $48.8 billion of research and filed 17,589 U.S. patent applications. In that same year universities received back revenues for licensing and royalties on patents of less than $2 billion. Those revenues include ongoing royalties from all of the research licensed over the past 40 years. The implication is clear. An astonishing amount of promising research is left in the lab.”
…or perhaps it implicates that the research isn’t worth that much.
As I was an academic researcher for 8 years, and still participate heavily in academic research … and I am also an entrepreneur for the last decade (Novamente LLC and Biomind LLC) … I definitely understand what you’re talking about.
But, it’s not a simple matter.
My experience is: It’s generally not clear — either to academic scientists nor to entrepreneurs eager to find the Next Big Thing — **which** academic research ideas are going to be commercializable within a reasonable time and cost frame.
And often the time frame involved in successfully performing the tech transfer is longer than investors and entrepreneurs are comfortable with.
It’s not so hard to tell which academic research ideas have real-world application potential. And you’re right that there are a LOT of these … and that most of these die on the vine due to lack of investment $$, attention and willpower to create the applications….
But it’s a lot harder to tell just how much work is going to be needed to take a given idea from the academic-research phase to the real-world-deployment phase.
My experience is that investors generally want an idea to be commercially launchable within 6 or 9 months. Even if they will spend 12 months negotiating investment with you, after the negotiation is done, the idea is supposed to be turned into a finished product in 6 or 9 months.
This is just not the way it goes if you’re commercializing academic research. Rather, in computer science for instance, investors would need to be comfortable with a vaguely-defined period of say 1-3 years to transfer an idea from the lab into a useful product.
So, I think it’s not just a matter of entrepreneurs waking up to the potential of academic research and going out to meet the right professors and partner with them.
To exploit the potential commercial value implicit in academic research, is a matter of investors changing their way of thinking about early-stage investment … changing their expectations.
This kind of cultural change seems hard to engineer, though I agree it would be awesome if it happened.
– Ben Goertzel
Vivek, excellent piece. Having been on both sides (biochemist prof turned physician/enterpreneur), I agree with much of your thesis except we don’t want professors’ salaries and promotions based on how their research can be exploited for practical applications and this is what will happen if we are too aggressive with these ideas. We will discourage scientists who are simply discovring secrets of the universe and who know that their research almost certainly has no near-term application. Usually Nobel Prizes are awarded for research done decades ago for that reason. Also, placing a dollar sign on basic research will have negative implicaitons for free flow of scientific information and ideas across the world, which I believe is essential for all of us.
As a person doing translational academic research with bio-medical applications I can say that this is very difficult.
VC require innovations that target +500 million dollar markets with a return horizon within 5 years.
The vast, vast majority of academic research is not prioritized based on market valuation, time to market, but based on areas defined by National funding agencies such as the NIH and the NSF. For immediate ROI, I do not think that there are billions of recoverable innovations.
Most academic research targets markets that on onset seem to have very small valuations. This eliminates 90%+ of research from any VC consideration. Companies on the other hand, do license much of this research, but the research is incremental, and therefore, is of little value, and licensed for small numbers of dollars.
Currently, I believe value of the 48 billion dollars is mainly swallowed up in the training of the students, postdocs and faculty. The 2 billion in licensed IP is icing on the cake. Later on, this training goes on to create large amounts of value for companies that hire these people. For example, we don’t ask what the immediate ROI is on the cost of all undergraduate education in aggregate. Most of the funding is paying the tuition and salaries of graduate students and postdocs. On our research grants, personnel costs are 80% of the grant.
My suggestion is to create federal funding mechanism that uses the same metrics that VCs do to value a deal:
Technical risk, Market Risk, Market Valuation, Time to Market
Therefore, this funding would look more like Federal Angel Investors. This would drastically increase the ROI on the invested research dollars.
Problematically, it is almost impossible to value early innovative research, as the applications are not known. Therefore, highly risky, early stage basic research would be strongly penalized in such a system.
The best system is one that has is a hybrid, that has a component that funds basic research, and one that funds translational research. If you go to the NIH you will find that both of the mechanisms are in place for bio-medical research.
What may be missing is translation funding available outside biomedical research.
Vivek — you should check out http://www.academia.edu, a social network for academics. Perhaps there are ways that this emerging community can be part of the bridge b/t entrepreneurs and valuable uncommercialized research.
Then again, perhaps the reason that 48B of research is spent and only 2B in revs are generated is because a lot of what the academic community works on doesnt have much commercial value. Is the valley of death really that wide b/t entrepreneurs and academia?