The UW as Idea Factory

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Long admired for its world-class faculty and research prowess, the University of Washington at the turn of the digital age had failed to keep pace with universities like Stanford and MIT, which had emerged as major centers for entrepreneurship and innovation. The University District itself, filled with head shops, noodle joints and dingy apartments, reflected UW’s lack of direction.

Now, after years of slow but steady progress, the UW is poised to break out of the old clothing of the research-dominated institution and try on a new outfit as one of the country’s most entrepreneurially focused centers of education. Business incubators, encouragement for startups and curricular reforms embracing entrepreneurship are underway.

Last year, UW was rated the nation’s top university for the number of commercialization agreements and individual technologies under license. It moved to third in the United States in spin-outs, with 17 startups launched in 2013, and won an international award for the best emerging university business incubator. 

To accelerate the transformation, UW President Michael Young this summer appointed Vikram Jandhyala, a professor of electrical engineering and a startup founder, as vice provost for innovation.

With the university already showing strong success in encouraging tech transfer to private companies and in launching new startups, Jandhyala says, “Innovation 3.0 is about taking all that creativity and putting it back into the fabric of the academic institution.”  

Jandhyala wants to help create a new generation of entrepreneurs by nurturing innovation beyond the narrow bounds of the business and engineering schools. Starting next year, the UW will offer “gap learning modules” on leadership, communication and how to write a business plan. They will be available online and through short workshops for all interested students. A yearlong “capstone design” course that engineering students take to tackle real-world problems, such as designing a hybrid car, will be broadened to encourage interdisciplinary learning. Teams made up of students from diverse areas such as biology, public health, business and sociology, for example, might take on a problem with societal value, such as structuring a response to this year’s Ebola outbreak in Africa.

Jandhyala also envisions a proliferation of spaces in the University District where students, professors and entrepreneurs can meet, exchange ideas and launch startups. Creating such an environment would help prepare students to launch their own companies as well as attract more entrepreneurially minded students and professors who are the key to changing the university’s culture. 

Embracing that spirit of innovation, Schmitz Hall, a dormitory scheduled to open next autumn, will include a maker space on the first floor. Having a space and equipment where students can work on projects will “offer a lot of great experiences that support student learning, development and creativity,” says Pam Schreiber, director of Housing & Food Services at the UW.

“I’ve been told that one of the reasons we don’t have as much venture capital as Silicon Valley is that we don’t have as many students graduating who are capable of starting companies,” Jandhyala notes. He believes giving students an opportunity to solve real-world problems will better prepare them to work in startups.

With 13,000 students graduating annually from the UW and an annual research budget of $1.15 billion, even a modest shift in the institution’s direction could have a flywheel effect, driving innovation and prosperity on campus and through the surrounding University District and the broader regional economy.

“The university has incredible intellectual horsepower, but it has had a lot of pain around innovation,” says Chris DeVore, chair of Seattle’s Economic Development Commission and a general partner of Founders Co-Op, which provides seed funding to startups. In September, DeVore and cofounder Andy Sack moved their TechStars operation into the newly established Startup Hall in the University District, believing a strategic decision by the university to catalyze broader change would help to create “an ecosystem of entrepreneurs” in the area. (See story on page 31.)

While the UW is criticized by many as slow moving and overly bureaucratic, and many are skeptical about how successful Jandhyala will be in enacting broader reforms, recent history suggests significant change is possible. When Linden Rhoads, a former tech executive, was appointed vice provost for commercialization in 2008, UW’s tech transfer efforts were behind the curve. Rhoads identified early-stage funding, the so-called “trough of death,” as a key challenge to fledgling companies emerging from the university. Many would receive research grants and some angel backing, but they would lack sufficient financing to get products launched in the marketplace. In addition to beefing up university support and applying for outside grant applications, Rhoads launched the groundbreaking W Fund for early-stage investment, converted the School of Engineering’s Fluke Hall into a science incubator and doubled the number of patents filed.

In the beginning, lining up programmatic support for potential commercial ideas emerging from UW scientists and engineers represented a major hurdle. According to Ed Lazowska, the Bill & Melinda Gates Chair in Computer Science and Engineering at the UW, “Linden rebuilt the office and reestablished its tradition of innovation.” A key shift was UW’s embrace of commercialization as a part of its mission. “Commercialization, when understood properly in the university context, is a vehicle for doing good,” says President Young, who was recruited from the University of Utah in part because of his record for stimulating new enterprises. “That should be the animating principle.”  

When Young arrived in july 2011, he inherited an unprecedented drop in state funding for the university but has managed to supply air cover for the new focus on innovation and entrepreneurship. Young sees multidisciplinary education as a core component of driving change at the UW. Pointing out that 270 centers at the university already cut across traditional departmental boundaries, Young is encouraging every dean in his administration to integrate innovation and flexibility into their curricula and allow new minors. He hopes to attract more students with diverse interests and even an entrepreneurial bent.

The UW’s Foster School of Business was among the first to embrace the focus on innovation. Previously, undergraduates could not take classes in entrepreneurship in the business school and the university did not recruit students interested in founding companies. A $5.2 million gift last year from UW alumnus and Montlake Capital founder Artie Buerk supports operations and new programs at the Arthur W. Buerk Center for Entrepreneurship. The center’s Lavin Entrepreneurial Action Program, managed by Connie Bourassa-Shaw, annually recruits 25 to 40 students who want to work in early-stage companies, and provides scholarship support for summer internships.  

When the university established a new entrepreneurship minor for non-business school students last fall, 51 students signed up. Bourassa-Shaw says she would like to see 250 students per year participating and taking 31 credits at the business school toward their undergraduate degrees.

This new focus on offering courses relevant to what students hope to be doing after they graduate has spread to other parts of the university. The Foster School, for example, partnered with the School of Law to form the Entrepreneurial Law Clinic, which brings in local venture capitalists, attorneys and CEOs to mentor students on practical issues facing nascent companies, ranging from raising capital to protecting their intellectual property.

A growing interest in innovation has also brought new energy to the Foster School’s annual Business Plan Competition. “Students are not required to do this to graduate,” says Bourassa-Shaw, yet 92 teams from 10 different colleges participated in this year’s event, meeting with local business mentors to compete for a $25,000 prize and exposure to Seattle’s tech and VC community. Projected Talent, a help-wanted site where companies advertise for students to take on project work, won this year’s award. From 2009 to 2013, the Business Plan Competition has spun out more than 140 companies. Thirty-six percent are still in business, according to Bourassa-Shaw. A key feature of the competition is that it includes students from other universities and is judged and mentored by members of the business community.

Besides new companies and products, the biggest contribution the university can make to the tech community is to provide qualified workers to companies in the region. It’s less about “tech transfer” than about “people transfer,” says Lazowska. “The single most important thing that we can do is produce more people,” he asserts. On that score, Lazowska says there is far more that the university must do to respond to the huge demand for computer scientists. Even though his program has expanded from 160 to 250 graduates at the undergraduate level, it doesn’t begin to address the thousands of job openings for software developers in the Seattle area. Nor does it address the vast number of students interested in studying computer science. This year, 700 incoming UW freshman indicated they wanted to major in computer science, and that doesn’t include transfer students. Last year, more than 2,500 students took an introductory course in computer science and many “discovered their passion” for the subject, according to Lazowska.

However, the Computer Science Department can’t easily expand. Its 70,000-square-foot building, which opened in 2003, is now completely full. Recognized as one of the best computer science programs in the nation, the program receives 1,200 applications per year for the approximately 45 full-time doctoral students it can accommodate, competing for top students with  Stanford, MIT and Berkeley, which are investing heavily in new office space and lab facilities. By contrast, the UW has been relatively slow to shift resources and investment to respond to rising demand from the business community and Seattle’s high-tech economy.

“Top to bottom, from early learning to graduate education, we have an education system in this state that is geared for the economy of the 1970s,” says Lazowska. “We are a leader in innovation industries, but, as a state, we don’t have a set of policies that supports that. The UW is doing what it can and people are supporting that.” 

The problem, many insist, is that in spite of the important changes the UW has implemented, the perception lingers that it is not fully committed to innovation and entrepreneurship as a core part of the university’s mission. Madrona Venture Group Managing Director Greg Gottesman, who sits on the investment committee of the W Fund and teaches an entrepreneurship class in computer science, says that even if UW does succeed in making the change, it must then convince students that it is serious. Students choose colleges they identify as embracing a certain ethos, says Gottesman. “When you look at a place like Stanford, it’s not just that it is around Silicon Valley, it’s that the students who choose to go to Stanford are self-selecting to be entrepreneurs.” If the UW wants to incubate the best entrepreneurs in the world, he asserts, a “giant leap” is required to attract the type of graduate student and professor who not only think about writing significant academic papers but also about turning their ideas into companies that can change the world through innovation.

If we haven’t seen the giant leap many would like, others see lots of important small steps being taken. “There was a time when entrepreneurship was not a credible path for faculty who pursued scholarship and research,” says Bourassa-Shaw, but this has changed as the university has become more interdisciplinary and has begun to see itself as “having the potential to solve big problems.” Universities need to reinvent themselves in order to stay relevant. To do so successfully, they need to meet student demand for specific educational programs and degrees.

Lazowska frames the challenges for the UW in the broader context of Washington state, which has always been a “net importer of technical talent” but strives to enable every in-state child to get the education needed to participate in the local tech workforce.  

Many at the UW have high hopes that Jandhyala will play a key role in accelerating change at the UW. A director of the Applied Computational Engineering Lab, Jandhyala embodies the type of academic-turned-business founder the UW wishes to advertise to the world. While he has authored more than 150 papers, he also cofounded Physware (now Nimbic Inc.), a cloud-based simulation software company that was acquired by Mentor Graphics this year. Rhoads, who decided earlier to return to her roots in the startup world, continues to manage the W Fund and serves as special assistant to Jandhyala. 
The UW is still a long way from enjoying the kind of entrepreneurial culture one sees at Stanford, but the region’s most powerful educational institution with a venerable history that goes back 153 years is making steady progress. 

Perhaps the most important advance is the dawning recognition that innovation and entrepreneurship, far from being incompatible with the mission of the university, are critical if the UW is to survive and thrive. Commercializing research brings benefits to society as well as revenues to the university. Nurturing students with a yen for entrepreneurship creates a greater likelihood that students will succeed and, perhaps, make contributions to help educate other students. A wealthier university would, in turn, support more research, provide a better education and participate more fully in the growth of the high- tech ecosystem that is vital to one of the nation’s most dynamic economies. 

Says Jeremy Jaech, a UW grad who cofounded Aldus and Visio and returned as a regent to make significant contributions to his alma mater: “It’s about culture and social good. The ultimate goal is the broad impact of inventions and commercialization on the community, not to make money.” 

Turning the U District into a Startup Magnet

The story of how Paul Jenny, the vice provost for planning and budget, launched Startup Hall to more closely integrate educational opportunities at the University of Washington with entrepreneurial activity in the immediate neighborhood, is a good example of how innovation is beginning to infect disparate branches of the sprawling university.

While real estate holdings in the University District are characterized by a patchwork of owners, Jenny and his staff found space at the old law school, Condon Hall, for a project that would serve as a magnet for emerging businesses to consider the U District as a place to situate. Jenny invited Chris DeVore, general partner of Founders Co-Op, to move his accelerator program from South Lake Union, which DeVore says is “no longer startup friendly,” to a 20,000-square-foot space in Startup Hall. 

Jenny and others at the university view the proximity of companies in formation at Startup Hall as increasing the chances for students, both at the graduate and undergrad levels, to work as interns and develop their business talents without having to take a bus ride across Lake Washington to Redmond or south to Pioneer Square. As downtown rents rise and occupancy for startups becomes challenging, a growing number of people see the U District as a potential incubation zone for new businesses, which will diversify the existing mix of retail and student housing.

“This is not about the UW in isolation,” DeVore says, “but about the city of Seattle and UW and U District working together” to create a new hot spot for growth. DeVore says South Lake Union, increasingly dominated by large companies like Amazon, no longer has the entrepreneurial ecosystem it once had.

Serial entrepreneur Jeremy Jaech, a UW regent, pioneered this move toward the U District when he headquartered SNUPI Technologies, the promising tech startup he cofounded with UW professors Matt Reynolds and Shwetak Patel, near the UW campus in 2012. The problem for most startups, says Jaech, who cofounded Aldus Corporation in 1984, is staging growth as they move beyond a 10- to 15-person unit and require more room to add staff to scale up customer service and manufacturing as they bring their first products to market. Jaech says there is a “real void” of this type of growth space in the U District and he hopes  SNUPI will point the way. SNUPI received an infusion of $7.5 million in funding earlier this year and began shipping its WALLY home security system in May. 
While the early signs of progress are encouraging, it’s still far from clear whether the university and its neighborhood have genuinely embraced the new vision of a thriving U District populated by startups and seeking to draw upon the UW’s research advances and talent pool. High-tech companies still prefer to be closer to downtown, where commuting is easier and more services are aimed at commercial enterprises.

 Proposals to rezone the district to encourage the emergence of a “vibrant, innovative, diverse” district are expected to be approved by the Seattle City Council by mid-2015, and there are still plenty of challenges ahead. Some landlords may opt to construct more housing as opposed to the mix of residential and commercial space suitable for startups and larger companies. And getting more companies to move to the district is no slam dunk.

But the opening of new light rail stations at Husky Stadium in 2016 and Roosevelt Way in 2022 should go far toward making the neighborhood more attractive to tech companies and workers alike. The two stations will add an estimated 71,000 riders, many of whom will zip under Montlake to and from the UW and Capitol Hill, knitting a closer nexus between the worlds of business and academia.

Says DeVore, “The U District is going to be the most exciting neighborhood in Seattle within the next 10 years.” 

New Contributor | Alex Alben worked as an executive in Seattle technology companies for 10 years before running for Congress in the 8th District. He consults to high-tech ventures and is the author of Analog Days — How Technology Rewrote Our Future.
Leslie Helm contributed reporting to this story.

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