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 sixth 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.
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 7--down 30%
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.]
Ah, but in that context we are not going to sit on those accomplishments. We are today committing ourselves to over the next few years doubling the number of uh disclosures and um companies that will be spun out of the technology of this university. We do uh this last year a billion and half dollars worth of extramural research funding came into this university. Uh, each of those dollars represents some sort of transformative work that’s going on, that’s second highest in the nation, um and compared to Stanford’s I don’t know what Stanford’s one point one billion, one point two, um, and we’re delighted to help Stanford become a better university [laughter] as soon as we tell them how to do this.
[Comment: Here Mr. Young makes the commitment to double not only startups but also disclosures and (below) licenses. C4C in 2013 and 2014 has issued press releases claiming that they have indeed doubled the number of startups. Public records, however, indicate that C4C in FY13 and FY14 is averaging 6.5 startups per year. Fewer than when Mr. Young made his commitment, and significantly fewer than the program Linden Rhoads dismantled to create C4C. As for licenses and disclosures, there has been no doubling, and no mention of these commitments by C4C. The FY13 splits are 258/12/410. These numbers are up over FY11, but not doubled or anywhere close to it. It looks like FY14 numbers for startups and licenses will be lower, based on what C4C reports through three quarters. In other words, the program is doing about what it has been doing, but now with disclosures piling up and fewer deals and startups getting done.
I do not know what to make of the reference to Stanford. Stanford's FY11 splits are 101/ 8 / 504--fewer licenses, more disclosures, comparable startups--on a significantly smaller research footprint.
Here, of course, is the graphic from Stanford's FY11 annual report for which Mr. Young has no reply:
UW can produce nothing like this little chart.]
Um, uh, that is, that is an enormous amount of exciting energy at work that is, that is reposed in this university. And our commitment ah is to over the next, the next few years double the number of uh, of, of companies and licenses and disclosures that reflect moving that technology out. And when we’ve done that then we are going to announce that we are going to double it again. Um but today we are announcing that that is our goal and uh we uh, uh ask for your help, your assistance, and your continued engagement in this enterprise to help us reach that behalf on behalf of not only this great university and our terrific professors uh but also our state and indeed our nation and all the people who benefit as well as very importantly our students.
[Comment: At this point, Mr. Young's hesitation becomes pronounced. Multiple pauses and repetition of words. Mr. Young adds that once UW has doubled its metrics, it will double them again. That would be something of an exponential growth. But it hasn't happened, and it is unlikely to happen, and it is unlikely that such a doubling of these particular metrics--agreements, startups, disclosures--would mean anything at all to Washington state's economy.
These metrics, indeed, are utterly irrelevant to the economic vitality of the state. They stand for bustle, of a sort, but not productivity. As the guys in Ghostbusters said, in the private sector, you have to produce. The metrics that matter, to make a case for economic impact, are new products on the market, net positive job growth in the state, and sales activity. For UW, if the administrative process is dedicated toward doing well, with the by-product being public good, then the metric that matters is that "bizarre foreign language" called return on investment. UW has put about $100M of public money over the past five years into its effort to flip companies to the investment community for the equity return. It will take a lot of flipping--or a great deal of luck--to dig out of that $100M hole, which is getting deeper faster than it is filling.
As it stands, both Mr. Young and the Center for Commercialization have put out public numbers that make it appear that UW has met his challenge to double the number of startups. The figures don't hold up. If anything, C4C has started half the number of companies per year that UW TechTrans started per year in its last three years of operation, and at more than twice the cost. Mr. Young can make it out that C4C is a roaring success, and we are all entitled to our opinions, but Mr. Young is not being honest with the numbers. ]
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