Feeding the 6,000

Posted on September 17, 2014 by Gerald Barnett

[Updated with new figures for the figure-challenged]

In his thoughtful interview with University of Washington president Michael Young, Benjamin Romano asked about what will happen to C4C now that the Hall patents have expired, something everyone has known was going to happen.

X: Do you think commercialization and tech transfer activities—the doing good with the research that’s done here—should that be a financially self-supporting activity or should that be something the university subsidizes the way it subsidizes libraries?

MY: With what would I subsidize it? Tuition dollars? My guess is the students get a little antsy about subsidizing with tuition dollars. I think it’s a really good thing, and if I had world enough and time, I’d be happy to do it for nothing, but it costs money, and we’re in a time where we’ve had a 52 percent decline in our state funding. We’re 49th in the nation of state dollars per [full-time equivalent] student.

UW has one of the largest budgets for non-instructional activities in the nation. Notice that Mr. Young does not tell us where UW ranks on actual spending for undergraduate instruction–the core mission of even a research university. What is UW spending on undergraduate instruction per undergraduate student? It may be less than $8,000 per student per year–but students are paying $12,000 (in state) and much more if non-residents. Throw in state support for instruction, and UW is making out like a bandit with student tuition! Maybe “bandit” is too generous.

If you want to see what high tuition/high financial aid approaches do for students from families with low to moderate incomes, read Chris Newfield’s recent article here.) Between 2006 and 2012, US public universities slipped their spending on instruction as a percentage of total budget–from 25.4% to 24.7%–nearly 3%. According to this report, Washington state is about at the average when it comes to state spending as a percentage of tuition. Here’s an article that explains where the universities have chosen to spend–on administration, which has grown at twice the rate of faculty and student enrollments. Universities might not be getting richer, but they are getting fatter.

Now for the 52% decline in state funding mentioned by Mr. Young. In 2010, according to UW’s Office of Planning and Budgeting (the numbers are budget allocations–actual expenditures–those are likely lost in the dark art of university accounting), the state provided about $321M. In 2014, the figure was $254M, a decline to be sure, but only 21%, not 52%. At the same time, tuition income increased from $331M to $557M, an increase of 68%. Add the numbers–the combination of state support and tuition dollars has increased 25% in only five years. UW has 25% *more money* per year now in 2014 than it had in 2010. So what is this about crying poor by Mr. Young? For 2015 UW is expecting $855M–another 5% increase or so. The state dollars per student may be down, but UW is not spending all its state dollars on students, so the comparison is inapt, if not misleading, if not deliberately misleading. Continue reading →

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The University of Washington’s book full of (bullshit) metrics

Posted on September 17, 2014 by Gerald Barnett

Xconomy editor Benjamin Romano interviewed University of Washington president Michael Young with regard to UW’s technology commercialization program. The conversation is enlightening and worth the read.

Mr. Young is adamant that UW has started all the companies he claims, and explains how UW goes about squaring the difference between claiming to “start” new companies and licensing UW IP to them. The argument apparently is that until UW licenses something to them, they are not real companies:

If I’m saying 18 started this year, next year, say 18 start again, some of which may actually have been incorporated this year, what we’re looking at is that kind of trajectory. Over time, that smooths out. That is to say, if they started four years ago as a company and actually became a real business this year, four years from now there will be a company that started this year and became a real business four years from now, and I’ll count it four years from now, I won’t count it this year.

The use of the first person here is fascinating, as if Mr. Young personally has counted the startups claimed by the Center for Commercialization and determined when they have become “real businesses.” If we go with the AUTM definition of a startup, it is a company formed expressly to take a license to a university’s IP. According to AUTM’s instructions, the startup is counted when it is formed, not when the license is granted. There is nothing about deciding when it becomes a “real business” and no banking of startups to roll out later to help smooth the numbers four years from now into a trajectory that paints the picture one intends the public to see. Continue reading →

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University of California proposes its own venture fund

Posted on September 17, 2014 by Gerald Barnett

The University of California has announced a $25oM venture fund drawn from its endowment, which UC proposes to invest in new companies in the “UC ecosystem.” Chris Newfield has an insightful comment on UC Ventures at Remaking the University. I’m posting a comment here. I expect to add more, but this is a start.

PitchBook, which tracks the VC industry performance, shows what UC Ventures faces. It’s not the money in that makes money, but the money at “exit”–that is, when others buy out the investment, presumably for greater value than that investment.

According to PitchBook, the median time to exit is about 4 years for acquisitions, and over 7 for IPOs and private equity buyouts. The amount of capital raised prior to exit is $11M for acquisitions, $19.7M for buyouts, and $76.5M for IPOs. To play in the VC market, UC Ventures is going to have to put down some substantial money. $250M does not look at all that impressive, spread over ten campuses and how many years? Continue reading →

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Teaching Innovators to Innovate

Posted on September 12, 2014 by Gerald Barnett

Taleb in Antifragile, having commented on the invention of rollers on suitcases:

The simpler and more obvious the discovery, the less equipped we are to figure it out by complicated methods. The key is that the significant can only be revealed through practice. How many of these simple, trivially simple heuristics are currently looking and laughing at us?

. . .

Both governments and universities have done very, very little for innovation and discovery, precisely because, in addition to their blinding rationalism, they look for the complicated, the lurid, the newsworthy, the narrated, the scientistic, and the grandiose, rarely for the wheel on the suitcase. (190)

Consider this point in three contexts. The first is that if we have sophisticated research laboratories, complex theories offering nuanced hypotheses to test, elaborate and sensitive equipment–with all that apparatus, do we expect a simple result? Continue reading →

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Xconomy Looks at UW's Commercialization Record

Posted on September 11, 2014 by Gerald Barnett

Following on a piece in July by Kaylee Galloway for Catalyst that raised questions about UW’s commercialization program, Benjamin Romano of Xconomy has written an article that takes a look. Romano reports various perspectives, and lets readers decide what to make of the situation.

UW’s president says he wants to make the world a better place. The logic appears to be that by making a lot of money for the university and making the university a better place– that means the world is better, too, no? The problem is that the C4C program has fudged key metrics, withheld others, and deceived the public and perhaps also the president of the university along with others.

The advisory committee report that Romano provides at the end of his article is worth a read, too. Continue reading →

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Four approaches to university IP management

Posted on September 11, 2014 by Gerald Barnett

It may be useful to map out four approaches to university IP management:

  • Personal
  • Entrepreneurial
  • Institutional
  • Open

The discussion below does not advocate for one approach over the others, though compulsory institutional IP management seems not to have worked all that well for American universities. That does not mean there is not a role for institutional management, but as Jane Jacobs has one of her characters argue, “Whatever the justifications for monopolies to start with, they all end up dumbed-down, elderly, and hard to get rid of…. Worse, think about the struggles of conquered people to throw off monopolies on salt, matches, and everything else that their conquerors wanted to buy or sell” (The Nature of Economies, 36). In this case, university administrators have established a monopoly over faculty research results, in essence dominating faculty personal interests–and faculty choices about their professional and public engagement involving their work.

Continue reading →

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All Together Now

Posted on August 18, 2014 by Gerald Barnett

Here are the seven fitts of the university president’s speech, in order.

The talk itself was posted at Geekwire. My transcript retains various pause words, as these affect the meaning, which includes tone, hesitation, and searching for the right words or syntax, in addition to content abstracted for its paraphrasable elements.

Why are these speeches always about changing STEM faculty culture to something it already largely is–creative, curious, engaged, dedicated, opportunistic, public-spirited? Why is there such antagonism to faculty taking personal responsibility for their discoveries and developments? Why such an institutional willingness to subsidize venture investment but not faculty, staff, and students? Why such an institutional attraction to monopoly deals? And why doesn’t an incredible failure rate over the past three decades of trying change the institutional rhetoric? We can’t seem to get enough of this stuff, like a reality-TV addiction.

Here are some alternative bits of senior leadership rhetoric to consider.  Continue reading →

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Remarkable leadership

Posted on August 17, 2014 by Gerald Barnett

University of Washington president Michael Young gave a ten-minute talk in February 2012 at the opening of a business incubator on the UW campus. The talk is fascinating as a rationalization for the $100M effort to flip faculty and student startups to investors for UW profit. I am providing annotations to draw out the implications of the talk, in a series of posts. President Young’s talk is in purple and my comments follow in brown, in square brackets.

Here is the seventh and last installment.

So, thank-you for being with us today. Linden, thank-you for what you do and the remarkable leadership you’ve shown in this, in this entire enterprise. Uh, and we look forward to continuing to work with all of you, uh, in in all of this. Thank-you. [applause]

[Comment: Linden Rhoads, the subject of Mr. Young’s admiration in 2012, as of July 2014 no longer directs UW’s C4C, though she remains, apparently, running the W Fund (a private company that UW has invested in) and continues on UW’s payroll as a special advisor. A UW review committee found that C4C was not so happy a place. According to Xconomy, the committee’s report begins:

For the UW to become an entrepreneurial ecosystem, the culture of the institution needs to change to encourage commercialization, and the systems by which the university operates need to change to encourage rather than inhibit commercialization.

Continue reading →

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We are delighted to help Stanford become a better university [laughter]

Posted on August 17, 2014 by Gerald Barnett

University of Washington president Michael Young gave a ten-minute talk in February 2012 at the opening of a business incubator on the UW campus. The talk is fascinating as a rationalization for the $100M effort to flip faculty and student startups to investors for UW profit. I am providing annotations to draw out the implications of the talk, in a series of posts.

Here is the seventh and final installment, in which we get to the Put-Down of Utah and Stanford, and The Challenge to C4C to double the number of startups, disclosures, and licenses. As before, President Young’s talk is in purple and my comments follow in brown, in square brackets.

Um, concominant [concomitant?] with that, it seems to us that uh uh large uh opportunities should, uh, should, uh, uh, occasion large ambitions as well. And we are uh possessed of those ambitions. Uh we have seen tremendous progress uh over the past few years in uh our capacity to assist in the commercialization process. Uh, we’ve seen a rise in the number of licenses. The number of uh spin-off companies, the number of disclosures have all gone up and gone up just uh exponentially. I uh, uh, uh, was pleased to try to see Utah try to lead the way a little bit, but I think it, I think it has been lapped by the University of Washington and uh I’m even more proud of that.

[Comment: Mr. Young’s speech here becomes filled with hesitation, as if he is not certain what he wishes to say. It is as if Mr. Young has reached the end of his dedication in his previous remark, but like a certain Lynyrd Skynyrd song, Mr. Young has to go on. Was this part added to his talk? Did he keep this part back, wondering if he should really go through with it? Perhaps someone will ask Mr. Young. If he wants to comment here, of course, he is welcome to do so. 

Mr. Young’s claims with regard to licenses, startup companies, and disclosures are not supported from the public record. Certainly none of the metrics he cites has gone up “exponentially.” Here are the counts that Mr. Young would have had access to in February 2012, which I have drawn from what UW reported to AUTM:

                                  pre-C4C                                       C4C
Fiscal year      05    06    07    08                  09    10    11     
Licenses                101  141   190  199                 214  188   185  
Startups                   4    10     11      9                     10      7       9         
Disclosures          268  310   335  349               349  355    356 

The last two years pre-C4C average 195 licenses; C4C averages 195–no change
The last two years pre-C4C average 10 startups; C4C averages about 8.7–down 13%
The last two years pre-C4C average 342 disclosures; C4C averages 353–up 3%

At best the numbers are mixed. There may be some bits of growth, but it is not significant, and it is certainly not exponential. Perhaps Mr. Young was given over to hyperbole for the occasion or was given faulty numbers. For what it is worth, in FY11, Utah’s numbers are 78/19/237 on a research base of $400M and a licensing staff of 10.5 FTEs. In FY11 UW does 185/9/256 on a base of $968M and a licensing staff of 13.35 FTEs. Using research base as a scale factor, Utah’s numbers would become 189/45/569. That is, Utah arguably was outperforming UW on all three metrics, comparatively speaking. There is no rational way to justify the idea that UW had “lapped” Utah. Not even close.]

Continue reading →

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If we build it you will pay

Posted on August 17, 2014 by Gerald Barnett

University of Washington president Michael Young gave a ten-minute talk in February 2012 at the opening of a business incubator on the UW campus. The talk is fascinating as a rationalization for the $100M effort to flip faculty and student startups to investors for UW profit. I am providing annotations to draw out the implications of the talk, in a series of posts. President Young’s talk is in purple and my comments follow in brown, in square brackets.

Here is a fifth installment, a series of statements and comments, as Mr. Young moves to his dedicatory thoughts.

Uh, all of this is a very long-winded way of saying that this is a complicated process that requires deep, intimate and profound partnerships, and so today we really stand here thanking you for your willingness to be partners in this, in this enterprise. Um, we have made tremendous strides in our capacity to commercialize, and the work that has gone on under Linden’s office uh in terms of uh connecting to the business community, creating much uh smoother transitions, reducing transaction costs, being able to help people see what the possibilities are in terms of research has been nothing short of extraordinary. Absolutely nothing short of extraordinary. Uh, there is only so much we can do within the university because ultimately we have to connect with the business community uh to do the other half of this, of this operation.

[Comment: Mr. Young does not elaborate on what “deep, intimate and profound” partnerships might mean. Nor why the process has to be complicated–other than that administrators insist that partnering with business must follow a process run by administrators. While Mr. Young is willing to say pleasant things about the Center for Commercialization, as is suited to a ceremony of this sort, the actual metrics appear to point to the Center for Commercialization being less effective than UW TechTrans, the previous version of UW’s technology transfer operation. More on that soon. Continue reading →

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