Lock-in and Value-add in University IP Management

John Gruber at Daring Fireball points out a new article by Dave Winer, the developer of the RSS feed. The article is about “lock-in”–the effort to capture users to a particular technology product (and its infrastructure) as a way to monetize a commercial position. Winer wonders if young entrepreneurs focused on lock-in understand their situation (my emphasis):

They worry that, if they provide open access to the data their systems accumulate, no one will come to their website, therefore no one will be able to enjoy their lock-in, thereby justifying their multi-million dollar valuations. Why should we care? Problem isn’t that they’re young, the problem is they have a too-thin value-add to support the kind of investment they’ve taken on.

This is precisely what is happening with university startup bloat, when administrators try to take monopoly patent positions and force more “startups” through their big black hose of process. They create “startup” companies–and if they are honest and competent, they don’t even have to fake their counts!–that don’t have the “value-add.” Perhaps this is why a university administrator can make the straight-faced argument that his startups will have to sit in incubator space for two or three technology generations (what? a decade, perhaps?) before they have developed a technology that can escape the chains of university administrative support. 

Winer points out that when venture capitalists invest in startups, “they are really testing the value of lock-in.” That is, the startup puts on a show of a monopoly position, and if VCs invest, the fundamental question is whether the monopoly can create a viable revenue stream by preventing users of the product or service from having a choice about vendor or features and the like. University administrators plumping startups as a way to make money (and save the world) also love monopoly positions. They cannot imagine a research environment in which there is choice (other than their choice). They certainly are unwilling to act to restore such an environment for its own sake. To put it edgily again, it’s like a slave owner demanding an economic reason to free his slaves, unwilling to accept a moral reason to do so. University administrators have created a plantation of innovation, in which the output is startup companies with such thin value-add that even with monopoly positions the VC community is not even interested in testing the value of their lock-in.

Thus, university administrators now appeal for government funds to seed their startups and test the lock-in. It may be that the government should support startup efforts, but giving government money to nil-value-add monopoly-based startups (or worse, to university administrators to give to such startups, or even worse, to the so-smart buddies of university administrators–the folks who can’t even raise investment funds on their own–to give to such startups) is not the way to do it.

Winer, again, on what motivates his development of technology:

I think the VCs do a disservice to young technologists. When I was young, I would have said no thanks to lock-in. I’m not going to be so dishonest as to create tools that offer users no choice. I want to win because my stuff is deep and powerful and performs fantastically and has the features users want. Why? I chose my profession because I love what I do. There are lots of ways to make money. I’m not looking for scams and shortcuts.

To a university administrator, this kind of talk is rank naivete. They cannot imagine such statements to combine both idealism and real-world experience. Yet Dave Winer has lived such a life, and makes such statements, and these statements carry a moral force, even if it does not work on some university administrators. Unlike university startup bloat machines, which are nothing but scams and shortcuts run by folks playing out what they have been told is the shortest way to institutional riches and doing good in the world, there is a way for universities to support discovery and its positive influence in the broader community: love what you do, give people choice, go for the stuff that is deep and powerful, and say “no” to lock-in.

[The lock-in/value-add distinction works more generally, too, with patent rights. With an exclusive patent license, the company taking the license gets “locked in” to a business model that requires a monopoly. Even if the company taking the license does not require a monopoly on the licensed invention, the university licensing office requires that monopoly. If the first company showing up at a university for a patent license requests a non-exclusive license, in all likelihood the university response will be an offer of an exclusive license or nothing.

In a value-add mode, university technology is available for the asking–there might be a charge to bundling things up or to provide help in understanding and implementing the technology, but the general mindset is that the technology is proprietary-available (like a library) rather than proprietary-exclusionary (unlike a library).

Even if commercial product is desirable, why exclude all uses of an invention (research uses, DIY uses) to get there? Even in the special case of pharmaceuticals, why not allow research uses and DIY uses–if these aren’t possible without “development,” then offering the licenses for use won’t interfere with commercial product development. And if companies are willing to develop an invention for research and DIY uses without a monopoly position–well, then, it’s clear that the offer of a patent monopoly doesn’t carry much value for those uses.]

This entry was posted in Freedom, Policy, Startups. Bookmark the permalink.

Leave a Reply