Research done by professors and their grad students in U.S. universities labs are being turned into commercial products and life saving drugs and devices thanks to an act of Congress - and the efforts of technology transfer offices in schools like Stanford and Columbia.
How this research is transferred outside the university, and why this "tech transfer" process is important was the focus of an interview with two of the latest guests on Entrepreneurs are Everywhere, my radio show on SiriusXM Channel 111 (airing weekly Thursdays at 1 pm Pacific, 4 pm Eastern).
The show follows the journeys of founders who share what it takes to build a startup - from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.
- Kathy Ku, executive director of Stanford University's Office of Technology Licensing
- Orin Herskowitz, executive director of Columbia Technology Ventures
Listen to the full interview with Orin and Kathy by downloading it from SoundCloud here.
(And download any of the past shows here.)
Clips from their interview are below.
As executive director of Stanford University's Office of Technology Licensing, Kathy Ku oversees the licensing of Stanford-developed technologies.
From 1994-98, Kathy was responsible for Stanford's Sponsored Projects Office. She took a break from Stanford in 1990 and 1991, as VP of business development at Protein Design Labs, Inc. Prior to that, she spent 12 years at Stanford; worked at Monsanto and Sigma Chemical as a research scientist; administered a dialysis clinical trial at University of California; and taught chemistry and basic engineering courses.
Kathy has been VP and trustee of the Licensing Executives Society (LES), and was president of the Association of University Technology Managers (AUTM) from 1988-90. She received the AUTM 2001 Bayh-Dole Award for her efforts in university licensing, and is currently a member of the NIH Advisory Committee to the Deputy Director of Intramural Research.
In addition, Orin has served on boards or as the Principal Investigator for the NYC Media Lab, PowerBridgeNY, and the Columbia Coulter Translational Partnership. Prior to joining Columbia, Orin spent seven years with the Boston Consulting Group's New York office.
Tech transfer is about far more than simply licensing technology, Kathy and Orin explained:
Kathy: Tech transfer has a broader mandate. ... it's helping entrepreneurs, it's creating the culture, the ecosystem for fostering entrepreneurship and startups. I think our mandate is just getting broader and broader.
Orin: ...The rap on tech transfer used to be that it was about picking the winners. The offices would only focus on (licensing) the one or two things that were going to be blockbusters. That is certainly not the case (anymore) at all. The mission of tech transfer is to get as much out of the (university) labs and into the market as possible, because you never know what's going to be a hit.
You never know what's going to transform the world. I think what you've seen is an increasing effort among the tech transfer offices to professionalize, to try to make (the tech transfer process) as transparent as possible, as fast as possible, and as predictable as possible, so that the negotiations don't drag on for years, you're not asking for exorbitant rates, it's just easy and fast.
Steve: Kathy said a phrase I thought was pretty important for the future direction of tech transfer, and that is "tech transfer offices are helping to create an ecosystem around our universities." That is, instead of just looking inward, thinking that your job is to create the most amount of money for the university, it sounds like you're also now thinking your charter is to actually build the ecosystem around the universities.
Kathy: For sure. I think many universities are feeling this pressure (to create a broad entrepreneurial ecosystem). I think there's ... pressure to do more applicable research with results that are useful to the public. The tech transfer mission has broadened, and it really literally is technology moving from the university sector out for the public good. ... it typically moves out with the smaller companies I would say.
(Smaller companies - startups) are more risk-taking organizations. They don't have to worry about the quarterly report (or other) financial reports that the big companies have to do. Also I think that whole revolutionary technologies are hard to get into an old established company with a product to protect.
Kathy and Orin provided a brief overview of what tech transfer does and how it works:
Kathy: The federal government funds most of the research at universities ... (to the tune of) tens of billions of (dollars a year).
(In the 20th century) the U.S. government research agencies (the National Institutes of Health The National Science Foundation, The Department of Energy, etc.) ... all had different patent policies (on what universities could do with the research that the government funded). ...
Steve: Meaning if I was a government agency and i gave your researchers money, you had to follow my agencies rules; there was no national standard of what I could do with that technology. Is that correct?
Kathy: ... The law at the time said the government (not the university) owned these patents.
Steve: (This was true) even though these were university researchers, because they got government money, the government owned the rights to this stuff.
Orin: ...You can imagine what a priority that would have been for the government at the time ... to actively market these technologies and find venture capitalists and all that. (The government had no interest and/or ability to market these technologies and find venture capitalists.)
Steve: Congress passed a law, which was called Bayh-Dole to solve this problem... what did the Bayh-Dole Act do?
Orin: ... Essentially what the Bayh-Dole Act does is transfer the right to own these assets from the federal government, to the university that receives the research funding.
Steve: That's a big idea. The government says, even though we've paid for this, even though we funded this research, here Stanford, Columbia, and any research university getting a grant, you guys go make money on this if you can figure out how. Is that what the Bayh-Dole Act said?
Orin: Essentially. The idea was ... (to) give the incentive to transfer the rights and obligations to do this to the people who have an incentive to try and make it work.
Kathy: ...(Bayh-Dole) was a huge deal. (At Stanford) we had individual agreements with a few of the agencies, the NIH and NSF notably. We could take title (ownership) too those inventions funded by that agency, but the rest of them we had to go and fight each time and say, we wanted to take title or not. The agencies were all of differentiating ilk, and so they may or may not give us title.
Orin: The thing to keep in mind, too, is that ... this initially was only relevant for the faculty members that were working on federally funded research.
... What most universities have done since then... is extended (tech transfer to include) to any research done on campus, that uses university funding, or university labs.
Steve: (So it means today a university will try to license and commercialize more than) just the stuff that gets money from the federal government. Anything that the university would have claim for, now says we're happy to license and whatever, but oh by the way, if you did it on campus, we own it.
Kathy: Right. ... Bayh-Dole was not necessarily created to have the universities make money, but to incentivize universities to do this tech transfer thing. The government realized that all the patents that they had filed on, just sat in some repository, and never got used.
Here's how Columbia and Stanford universities market their technologies:
Kathy: Right now, what Stanford does is ... market our technologies to ... anybody who might be interested.... We put (these inventions and patents) out on the web or we contact companies etc.
Steve: That means you have an invention that one of your professors have done that does x and y. Here's the description, is that what you mean by market?
Kathy: ... and it might do this and it might be cheaper, faster, a better something ... (We basically say) come and tell us if you're interested in it (whether you're a startup or a large company). (But) The reality is most times nobody is interested. ...It's really too early. That's the sad thing. We have lots and lots of good technologies but it seems that our system is such that many of the large companies can't either recognize that or don't want to invest in this early stage stuff.
Orin: ... (The problem of getting someone interested in University technology is even tougher than it sounds) ... take the role of a venture capitalist. ... In the average VC portfolio ... 1 in 10 companies (they invest in) will turn out to be a big hit. ... And if you're in the pharmaceutical industry, 1 in 100 compounds that start life with a big pharma will actually make it to market and be a big success.
Our science (we license) is early (for VC's and companies) because unlike a corporation, when the faculty members have a new idea, they are going to publish it in a journal (that's how academics get credit and recognition for their research.) So we file our patents very, very early on (often before the ideas get published.) The most successful moments for us, when we pop the champagne, is when we license something to a venture capitalist for a startup or to a pharma company to become one of those 100 things that might make it to market someday.
Orin shared Columbia University's recent Eureka moments:
Last year, we had roughly 200 faculty members who interacted with our office and (those 200 faculty members) created 400 new inventions. (Think of those as) roughly 400 Eureka moments by the faculty.
Steve: These faculty say, we think this idea is worth patenting or licensing?
Orin: (Nods.) (For) some of them it's very clear. They say, "I have a new compound that has never been seen before that I believe is relevant for this specific disease." In other cases, they might say, "I've observed this cool interactions between two things. I don't really know how it's going to be used yet."
... 200 faculty labs, 400 inventions... at Columbia at least, we file patents on roughly two-thirds of those, so 200 some odd patents get filed. We, last year, did 117 licenses with companies of which 27 were startups.
Kathy offered insight into the process at Stanford:
(At Stanford) here are close to 500 (new inventions that my office sees). I would say we file patents on about 60 percent of them... and we license about 25 to 30 percent.
(Non-exclusive licensing of any invention is essentially) "you go over my bridge, you pay my toll." We offer a mix of what we call non-exclusive licensing (we will license the same invention to multiple companies)- -- (We also offer) exclusive licenses (we'll license the invention to just one company. We do that as an) incentive for the company to invest the resources (to further develop the technology into a product). ... I would generally say (we do) 50-50 (exclusive and non-exclusive licenses.)
We have a strong engineering school, strong medical school, but we're way more successful in licensing in the medical side of things. I think (it's because) the medical industry believes and realizes the importance of patents patents. They also understand the long R&D phase, much more than high-tech. High-tech is just trying to get a new product every 18 months out. Their patents are just a piece of their picture.
Next on Entrepreneurs are Everywhere: my interview with Grant Warner, director of innovation and entrepreneurship at Howard University's College of Engineering Architecture and Computer Science, and co-founder of ConnectYard, in part 2 of this post coming later this week.
Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111.
Want to be a guest on the show? Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to firstname.lastname@example.org describing your entrepreneurial journey.
Steve Blank's blog: www.steveblank.com