University of Utah President Michael Young helped make his school a star at parlaying inventions into products. As he departs for the top job at the University of Washington, folks in Utah say they hope Young will add visibility and stature to similar commercialization efforts in Seattle.
When Michael Young took over as president, the University of Utah was a bit player at parlaying inventions into products.
As he departs for the top job at the University of Washington, Young’s old school is a star.
A recent national survey ranked Utah tops in the nation at spinning off new businesses, ahead of such perennial powerhouses as MIT and Stanford University. Officials from scores of other universities and a few nations have flocked to Salt Lake City for pointers on harnessing scientific discovery as an economic driver.
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Among those making the pilgrimage were UW representatives. Though it receives more federal research money than any other public university — and twice as much as Utah — Washington’s flagship university spun off only half as many companies in 2009, according to the survey released this year by the Association of University Technology Managers.
UW officials say they’re already well on their way to improving performance, but they hope Young’s hiring will add visibility and stature to those efforts.
“Dr. Young is very enthusiastic, and supportive, and even emphatic that this has to be part of the university’s mission,” said Linden Rhoads, vice provost of the UW’s Center For Commercialization (C4C). “We couldn’t be happier” with his selection.
In Young, the university is getting a nationally recognized leader in commercialization. But UW already has “made leaps and bounds in the last few years” to improve its success at commercializing its inventions and spinning off new companies, Rhoads said.
Birthing baby businesses is only one measure of a university’s economic contributions. UW far outpaces Utah on others, including income and royalties from university discoveries. But spinoffs are a major goal of commercialization programs. Since Young overhauled Utah’s approach in 2005, more than 100 companies have sprung out of research labs.
Also during Young’s tenure, Utah doubled its research funding from private industry, which helps foster ties with the business world, said Jack Brittain, the former business dean Young picked to lead a new, high-level office called Technology Venture Development. Fledgling firms were able to pull in $300 million in venture capital over the past five years.
Working with business leaders and the Legislature, Young helped secure funding for a program called USTAR that is luring entrepreneurially minded scientists from across the country.
Out of ivory tower
“In a lot of places,” Brittain said, “commercialization is an outside entity that is deemed kind of evil. Here, it’s integrated fully with the university mission.”
Historically, universities held themselves aloof from the business world out of concern that profit motives would pollute the pursuit of knowledge and lead to conflicts of interest. With most university research paid for by the federal government, it wasn’t clear who could legally profit from inventions. The development of Gatorade by University of Florida researchers in the mid-1960s set off a lengthy legal tangle before the school was awarded a share of royalties.
The modern era of “technology transfer” got off the ground in the 1980s, with a federal law that allows universities to patent and license discoveries, share the proceeds with faculty inventors, and plow the rest of the money back into research and education.
But many universities have been slow to embrace technology transfer and clumsy in its implementation.
Superstar biologist Leroy Hood, whose DNA-sequencing machines made it possible to decipher the human genome, bailed out on UW a decade ago partly because of restrictions on business startups and partnerships.
Universities since have scrambled to up their games.
One of the keys to Utah’s renaissance was to stop squeezing nickels and focus on dollars, Brittain said. Universities traditionally charge hefty licensing fees to companies that hoped to commercialize inventions.
But few startups could afford the fees. Big business could, but the university usually ended up reaping pennies on the dollar. And any jobs created weren’t likely to be local — a sore point in Utah, the creative birthplace of Adobe and scores of other firms that fled to California.
So Utah now prefers to take an ownership stake in spinoff companies and negotiate royalties on future products — a strategy UW also employs.
“They made it so reasonable we could start the company with virtually no assets,” said Vicki Farrar, CEO of Catheter Connections, a Utah spinoff based on a device that sterilizes the type of IV lines responsible for nearly 500,000 infections every year. “Ultimately, when we are successful, [the university] will be successful.”
To nurture startups, the commercialization office helps with everything from logo and website design to writing business plans and providing meeting rooms. The university offers grants of $5,000 to $50,000.
Catheter Connections rents space in a new Medical Accelerator building, complete with laboratories and equipment, Farrar said. Two doctoral students in biomedical engineering worked with the company to help engineer and test the devices.
Providing business experience for students is a major goal of Utah’s commercialization program, and another change from the old approach.
“There used to be a very hard line in the sand between university research and anything that was like a company,” said Chris Johnson, director of Utah’s Scientific Computing and Imaging Institute. “You couldn’t use any university resources, and no students were allowed.”
Now, professors who want to dip their toe in the commercial pond can do so right on campus, without having to rent space in an office park, hire a staff and do everything else it takes to get off the ground.
In 2008, the UW hired Rhoads, a Seattle entrepreneur, to revamp commercialization programs and foster a more creative, business-friendly culture. Many of the university’s changes mirror those at Utah, including a focus on the long-term profitability of spinoffs and helping novice entrepreneurs craft business plans. Later this year, the UW’s Fluke Hall will be turned over to fledgling companies for laboratory space.
Not much to fix?
The restrictions that were so frustrating to faculty inventors in the 1990s are largely gone. The university also successfully lobbied for changes to the state ethics law to allow professors and graduate students to work together on startups and other ventures.
In fact, Ron Howell, CEO of the nonprofit Washington Research Foundation, doesn’t think UW has much to learn from Utah’s experience. “They don’t have anything down there that we don’t have up here,” he said.
It’s true that Utah spins off more startups per year, but the number of jobs created by them is relatively small, he said. “I think President Young will come in and find there’s a lot here that doesn’t need to be fixed.”
Utah last year pulled in about $37 million from license fees, royalties and other income, compared to $69 million at the UW.
Not much of that money actually flows back into universities’ general coffers after the cost of running the commercialization office is covered, along with shares for faculty inventors and their departments, Brittain said.
But spinoffs can employ graduates. Alumni who get rich in business often give back to the college that helped them get their start. And job creation can create political goodwill, as happened in Utah.
Young worked largely behind the scenes with business leaders to build the case that universities are crucial to the state’s economic vitality.
Those leaders helped persuade the Legislature to spend nearly $80 million over the past five years on USTAR and to issue $160 million in bonds to fund new labs at the state’s two research universities.
The initiative has allowed Utah’s universities to hire three dozen faculty members away from other universities, including Harvard, bringing along more than $100 million in research funding. Most still are settling in, but several have launched spinoffs, Brittain said.
Other side of the coin
Not everyone welcomes the growing emphasis on commercialization across university campuses.
Science is at its most creative when researchers can pursue knowledge and understanding even if there’s no obvious way to make money from it, UW atmospheric scientist David Battisti said.
A system that rewards researchers who create widgets could penalize those who don’t and skew the perception of what’s important, he said. Patents and industry funding impose secrecy on a system that thrives on a free exchange of information.
“If you start changing what you do based on what’s going to make money, it’s a different value system,” Battisti said. “When you have intellectual freedom, you don’t know exactly how it’s going to be used, but there are always payoffs down the road that you can’t anticipate.”
Even those who support commercialization say it can give people the wrong idea about a school’s priorities.
Howell says he worries that, if the public comes to believe that universities can turn themselves into cash cows through commercialization, there could be cutbacks in public funding, already slashed to the bone in recent years.
“The university doesn’t exist to do spinoff companies,” he said. “There is a danger in overselling this.”
Sandi Doughton: 206-464-2491
or firstname.lastname@example.org; Katherine Long: 206-464-2219