“Intellectual property has the shelf life of a banana.”
Over the years, universities, government agencies, hospitals and alike have developed massive amounts of IP aimed research, defense, medicine, among other areas, without specifically targeting commercial purposes. Over time, some of this IP has made it to market helping create new products and industries. Many of the technologies and innovations we take granted today came from such research. And many more should.
There has been a trend over the past several years to proactively commercialize, monetize, and otherwise create companies using this IP. Results have been mixed. The policy of most such institutions ensures that the ideas, discoveries, and technologies arising from such research are used in the best interest of that institution. And that is short-term thinking.
As it has been demonstrated in Israel and parts of US, such technology transfer can indeed work, and the benefits can be broad and long-term. However, company creation is not the same and can’t be treated as research, as IP has to be monetized while delivering a specific value with competitive, market, and macro conditions in mind. I have had a number of discussions with technology transfer offices in the US and UK over the years, and have encountered a series of common challenges:
1. Investment & Commercialization Selection Criteria. Investment selections are often made by academics, university staff, and boards, and not by professional investors with experience, domain expertise, and industry networks.
2. Pivoting the Business Model. Academics and researchers seem inflexible in pivoting, repurposing, or redefining the idea to meet potential market demand. Being in love with the technology sometimes supersedes reality.
3. Bureaucracy, Conflicts, and Politics. Bureaucracy makes it too difficult to make decisions in a timely manner, or at all. And there are always conflicts and politics to be dealt with, which take time and resources away from creating a company.
4. Reliance on the Idea. Focus, emphasis, and reliance are more on the idea and not on the team. The best ideas without the right team have no chance.
5. Fear of the Stolen Idea. Some insist on keeping their ideas to themselves, sometimes for years, in the fear that someone else may steal or copy the idea. This level of insecurity and lack of realism always results in failure, as there is no validation of the idea, its market demand, or commercialization prospects.
6. Revenue. Revenue is not always deemed important and monetization mechanisms are not thought through due to a long history of reliance on seemingly never ending grants, without any need for demonstrable results.
7. Market Intelligence. Ideas are often deemed “the best” in absence of any evidence, market validation, or competitive intelligence. Furthermore, little time is given to understanding the landscape and examining if others may have tried and failed, investor appetite, or customer demand.
8. Focus. Plans are too broad and do not address a definable target market or product set, or vertical, demonstrating a lack of focus and inexperience in go to market strategies.
9. The Network. There is a material lack of external partnerships with the appropriate individuals and institutions. Such relationships are needed to help validate the business model and adjust the go to market strategy.
10. Monetization Mechanism. There is sometimes a lack of understanding of market preferred monetization mechanisms, suitability for the target market, and valuation ramifications.
11. Ownership & Independence. Questions including equity ownership and participation, voting rights, board selection, raising capital, among other can be quite difficult to address.
12. Access to Talent. The selection of the team is often based on the availability of existing staff versus hiring the best people for the position. Many private sector professionals also shy away from such jobs due to slow decision making, politics, and lack of exit or liquidation opportunities.
Having discussed the challenges, it is important to point out that if implemented properly, there are significant advantages to this strategy. As Larry Ellison said, “When you innovate, you’ve got to be prepared for everyone telling you you’re nuts.” [click to continue…]