Universities around the country are launching initiatives to promote “commercialization” and “entrepreneurship”. But those terms cover a lot of ground. Initiatives that fail to tease out the differences between them are likely to fail, disappointing critical constituencies and leaving important opportunities fallow.
At Research Bridge Partners, we developed a framework that captures the topography of university commercialization and entrepreneurship. It is useful in making commercialization decisions, especially early in the process when path dependencies and lock-in occur. You need to know where you are starting to know where you are going.
We look at the commercial activity at a university along two axes: who creates an innovation at a university, and who owns that innovation. Here is our 2x2 university entrepreneurship topography framework:
Who innovates: as a university leader, you have different duties to students and faculty, duties that contextualize your relationship with them regarding commercial matters. In our framework, the left two examples were launched by students and the right two examples by faculty.
Who owns: the university has different claims on the innovation that gets commercialized on its campus depending on a number of factors – most importantly who funded the innovation, where the innovation happened, and what contractual relationship(s) the university has with the innovator. In our framework, the bottom two examples are owned by the inventor and the top two examples are owned by the University.
The stakes for you, as a university leader, are higher in some boxes than others. In particular, faculty-generated/university-owned innovation can be especially high stakes. Commercialization activities in this box have outsized potential to:
(Despite the institutional criticality of the upper-right box, it seems that a disproportionate amount of university effort goes towards supporting the lower-left box: student innovators/no university ownership. We are puzzled by this … but then again, we were not early investors in Microsoft, Dell, Facebook, or Snap.)
Let’s go more deeply into each box of the university commercialization landscape framework. As examples, because they have been well publicized, we will use company examples from Stanford’s entrepreneurship experience.
Lower-left box: Student inventors, non-university-owned IP
When it comes to students, most of us involved in commercialization and entrepreneurship seem to agree: the university’s education obligations are paramount. It is wonderful that Evan Spiegel and Bobby Murphy could come up with and evolve the idea for Snapchat while at Stanford, but Stanford’s core duty to them was pedagogical, not commercial – to the students, not to their innovation.
This box is filled with good news. Your campus and your local ecosystem probably offer an abundance of solutions and support. National partners, such as Blackstone and MassChallenge, can provide best practices, links to mentors, and potentially institutional startup capital. Also, alumni are waiting to be asked to mentor your students. There is a pretty good playbook here, including both curricular and co-curricular initiatives: entrepreneurship classes, incubators, business plan competitions, etc. Our advice is to implement as much of that playbook as possible, package these initiatives with success stories from your campus, and send the resulting student startups special delivery to the Development office for fundraising wins. (Be careful, though: this playbook doesn’t work very well for the other segments in the commercialization landscape.)
Lower-right box: Faculty inventors, non-university-owned IP
In the 1990s, Paul Romer, an economist, had an idea for an education tools company. Although this idea grew out of his work as a Stanford professor, the university did not have a claim on the underlying intellectual property. Romer formed the company, Aplia, in 2000 and raised $10 million of launch capital, which allowed Aplia to hire a strong team. Aplia grew quickly and was eventually bought by Thompson Learning.
Aplia is a great story – not only was it successful, it was successful doing something that advances the mission of universities (education), and the faculty member who started it went on to win a Nobel Prize!
However, this box can be dangerous. Here is why:
We love this box for its opportunity and flexibility, but as a university administrator, you need to make sure you gate it properly. Administrative conflict issues should be narrowed down early, and this won’t always be collaborative. When it comes to commercial work, most conflicts between a university and its faculty are due to ownership and use of IP. Calling out these conflicts is important. But when you do this, reach out as a colleague rather than with a reprimand.
When faculty who we work with seem to be roaming down this path, our message is: “Engage the university, because if you don’t launch this company well from the start, you’re killing your options. The world of autonomy you are picturing probably does not exist.”
Upper-right box: Faculty inventors, university-owned IP
One of us, Isaac, grew up on the Stanford campus, and he remembers dinner table discussions when Norm Cohen (Stanford) and Herb Boyer (Berkeley) were launching, based on their recombinant DNA and restriction enzyme technologies, what became Genentech … and with Genentech, the entire biotechnology sector. At the time, patenting the IP from basic research, not to mention putting that IP into a startup and spinning it out, was extremely unusual and not universally approved. Fast forward to now, and Genentech is the poster child for university spin-outs.
The university – not the inventor – owns innovations in the top row. This ownership creates hard obligations formalized in the Bayh-Dole Act and soft (but real!) expectations from other key stakeholders that the university will move innovation rapidly and effectively into the public markets. It also creates compliance, conflicts management, and other oversight obligations.
Unfortunately, this ownership position can put the university into an adversarial relationship with the faculty inventor. Although there is no way around these difficult conversations, some universities seem to have them more productively. These universities emphasize support over compliance in their relationships with faculty – acting as colleagues rather than cops.
This box is where Research Bridge Partners does most of our work. We have developed some counterintuitive perspectives. For example, we think that the trend is for universities to create too many spin-out companies, that many EIR programs are wastes of money, and that fast-track licenses can be a disaster. We will cover these perspectives more deeply in other blog posts.
In general, though, our core view of this segment of commercial activity: if done right, it should be a powerful tool to attract and retain outstanding faculty and directly advance the university’s mission.
Upper-left box: Student inventors, university-owned IP
Alphabet, Inc. (Google)
Alphabet, Inc., is one of the world’s most valuable companies, with a market cap pushing $1 trillion. Famously, though, when Brin and Page disclosed their search ranking algorithms to Stanford’s TLO, they were greeted with no fanfare and (if anecdote is to be believed) did not even make the office’s “top 10 list” for the year.
This box is hard:
A lot of value gets left on the table, here. Since, in our experience, few university programs are tailored to these inventors, and few administrators understand how to value the importance of these co-founders in licensing deals, undervalued or lost opportunities are common.
We handle this box by making the lab – not the IP – our unit of analysis. We look for IP-plus-post-doc combinations as the core of the spin-outs that we will help catalyze and invest in. This is not a natural act for most universities; in fact, it’s part of the value that good VCs with deep experience in academic spin-outs bring to the table in the markets where they operate.
One last point, about people. Our university entrepreneurship topography framework emphasizes that the most important action that a university can take to support entrepreneurship and commercialization, is to curate the university community. The common action that Stanford University took in all four of the example cases discussed above? It got those people onto its campus. It takes Cohens to make Genentechs. If you want Snapchats, admit Spiegels. For any university administrator, that’s job one.
by Dr. Lydia McClure, Isaac Barchas
When I was a sophomore in college, I was diagnosed with melanoma, an aggressive form of cancer. Within 24 hours, I was on a plane home, and 24 hours after that I had surgery to remove the tumor.
That initial whirlwind of activity stood in stark contrast to what happened next: nothing. As my doctors explained, melanoma doesn't respond to chemotherapy, radiation, or any other therapy they had to offer. After surgery, my only option was to wait and hope the cancer didn't come back.
But it did. Three months later I found a lump in my neck. The disease had returned and progressed to stage IIIc. At age 20, survival statistics gave me a 40% chance of making it past my 25th birthday.
However, those statistics couldn't account for a groundbreaking development during the brief window before my cancer returned. Just weeks before I found the new tumor in my neck, a team of researchers published a paper revealing that a drug called ipilimumab improved survival in patients with advanced melanoma. For the first time, oncologists could offer melanoma patients a pharmaceutical therapy.
Although ipilimumab (which is now branded as Yervoy) wasn't approved until the next year, I was able to access the drug through a clinical trial - a development that very well may have saved my life. Had I not received the drug, there's a one-in-five chance that I wouldn't be here writing these words today, according to the study's results.
The movie-like appearance of ipilimumab in my life was the culmination of a multi-decade process that started when I was a toddler. The drug's development is rooted in university research James Allison performed in the early 1990s. (Allison shared The Nobel Prize for Physiology and Medicine 2018 for that work.)
Most accounts of ipilimumab's development fast forward to the successful large-scale trial that led to its FDA approval, overlooking the decade and a half of heavy lifting that is typically required to develop a life-saving drug. Researchers like Allison need to find a corporate home for their breakthroughs (or build one themselves.) They also need to raise capital and negotiate licenses before they can even begin to solve manufacturing challenges and run clinical trials.
These are formidable challenges. Allison told NPR that he was "depressed" by his initial failure to find a company willing to commercialize his research. Fortunately, he worked at Berkeley, in the middle of a major technology startup hub, where he was surrounded by the resources required to overcome those challenges.
Because I survived cancer, I was able to finish my degree in math at Yale, and I went on to work at the Boston Consulting Group and then Google. I'm married now, and I'm able to support my wife as she trains to be an oncologist. (This frequently takes the form of sending her pictures of our dog and cats while she's working in the hospital.)
Unlike my wife, I don't expect to work directly with cancer patients. But as the lead data scientist for Research Bridge Partners, I'm doing my part to identify and commercialize breakthrough treatments. Our non-profit has built a one-of-a-kind data model that lets us search for future James Allisons - only those who don't happen to be next door to Silicon Valley. We use data to find the researchers whose science could save lives, but who might not get the chance to do so because they work in the wrong part of the country.
We use a lot of math and a lot of domain expertise to find these men and women. Then we do our best to ensure that the science behind the next ipilimumab gets bridged to the resources and people who can turn it into Yervoy-calibre impact in the lives of patients - like me - throughout the world.
by Max Rosett