How Utah tops Washington: A university that spins out more startups with fewer dollars

Here’s the bad news: The University of Washington is not among the top schools for spinning out startup companies. Now, here’s the good news: The top school, according to a recent study by the Association of University Technology Managers, is the University of Utah.

That’s significant because the UW — the largest research university in the state — just hired former University of Utah president Michael Young as president.

The University of Utah spun off 18 startup companies between July 2009 and June 2010, ahead of schools such as MIT, Johns Hopkins and Purdue. Brigham Young University, which is also based in Utah, finished third with 13 startups.

By comparison, the University of Washington produced seven startups and Washington State University produced two.

What’s impressive about the University of Utah’s accomplishment is that it outpaced even MIT, doing so with one-third of the budget of the well regarded research institution.

Utah spent $450 million on research in 2010, compared to $1.4 billion at MIT. It also spent far less than the UW, which had $887 million in research expenditures. (See chart below).

And it is not just money where the UW leads. According to the report, the UW outpaced Utah in invention disclosures, patents issued, license income and nearly every other category.

So the question is: Why aren’t more raw startups coming out of the University of Washington? And what is Utah doing right?

Overall, the AUTM report found that 651 startup companies were formed from research at universities across the country during 2010, up 11 percent. The number of licenses executed remained flat, but total research spending was up 10 percent and federal expenditures increased by 17 percent over 2009 levels.

Michael Young

Since 1970, Utah has spun out more than 200 startups based on university research. More than half of those were founded in the past six years, following a restructuring of the university’s tech transfer offerings through the creation of the Technology Venture Development office. During his tenure at the University of Utah, Young made commercialization efforts a top priority.

The University of Washington has been going through a similar transformation under the direction of Linden Rhoads and others, rebranding the tech transfer department as the  Center for Commercialization last year.

Now, with Young at the helm of the UW, it will be interesting to see if the Huskies will get more competitive in the startup game.

Previously on GeekWire: What Seattle really needs: A world-class private tech university… Incoming UW president arrives with tech transfer chops

Here’s a look at how UW compares to the University of Utah. Click on image for full size:

  • Anthony Claiborne

    These are interesting statistics, but it should be observed that the University is not simply a machine whose input is tax dollars, tuition and donations and whose output is startups.

  • Anonymous

    Maybe I’m just being a curmudgeon but number of startups doesn’t seem like a particularly good measure.  Any university could spike that number by giving out, say, 10K “startup grants” to anyone that applies.  A million dollars would get you 100 startups.  woohoo.  How do you separate the good ones from the bad ones?

    The more important question to me is how much economic activity in the local geographical region (say radius of 50 miles) has the university driven.  Number of spinout employees, total revenue of spinout companies, total expenditures of spinouts, number in existence after 3 years would all be useful measures.

  • Ed Lazowska

    As a general rule, when you “count things” rather than “assessing them,” you get garbage.  As an example, there is no formal definition of a “startup.”  Suppose you set up a little shell S-corp to receive a National Science Foundation Small Business Innovation Research (SBIR) award of $100K.  Is that a startup?  Suppose you set up a little shell company to house your consulting activities.  Is that a startup?  These are very different from serious startups with multiple employees, multiple millions of dollars of venture funding, and adult supervision.

    We are all smart rats.  If the boss says “I will reward you for more X,” we give the boss more X.  You become what is measured.  It’s important to measure the right things.  And to be discerning when reading rankings.

    • johnhcook

      Good points. It is not just the quantity of startups, but the quality. And I agree with both you and Joe the Coder that there are possible ways to game the system. 

      But it is my belief that the more startups — either created out of the university, the venture capital community, the angel community, etc. — the higher likelihood of success. 

      Sure, all 18 of the startups created out of Utah could be duds. But, for that matter, so could 18 being backed by VCs. Or incubated at TechStars.

      The sheer volume of startups does matter, since the failure rate is so high among startups.

      I agree there are a number of things to look at here, and that’s why I included the chart above where you could compare line by line on various aspects. The UW is ahead in many ways, and I can dig into employment and other things too. FYI: Utah says that its startup spin-outs have created 15,767 jobs (7,160 directly); $755 million in personal revenue; and $76 million in tax revenue).

      Curious, whether you’ve seen a comparable study related to the UW? (I recall seeing one a while back).

      Now, I think the question remains: How does more of the research and innovative thinking that’s going on at the UW and other institutions find its way to commercialization. 

      The UW appears to have made strides in this realm in recent years for sure, but there’s still room for improvement.

      • Ed Lazowska

        I can’t argue with the last two sentences.

        The rest is way too complicated to deal with in a blog back-and-forth.

        The most recent major national study of university tech transfer, by the National Academies, was clear that licensing revenue and startups were among the least important technology transfer activities of universities.  They’re just the ones that get most of the attention, because there’s something there that’s easy to count, and counting is easier than understanding.

        • http://twitter.com/chrisamccoy Chris McCoy

          How are side projects counted towards grades in the UW CS dept? For example, side projects at entrepreneurial-campuses like Stanford are often funded and become companies. How can the UW compete? You are generally getting the most talented the state has to offer, after all.

    • http://twitter.com/chrisamccoy Chris McCoy

      Thoughts here, Ed?
      - How many UW computer science students are joining startups? (% of)
      - How many computer science students are encouraged (academically rewarded) by the dept to “build things” on the side? 
      - How many CS students cross-pollinate with CIE? 
      - Culturally, how are startups and entrepreneurship perceived department wide? 

      Challenge with any CS department as it relates to entrepreneurship is similar challenge Ivy schools face with investment banking, etc.: the most talented aren’t starting companies and solving problems, they’re joining Big Co where the a) rewards are obviously higher and b) Big Co’s have influence over the departments.

      This changes with culture, basically.

      Can UW CS improve in the area of entrepreneurship? How?

      • http://twitter.com/WhiiteSauce Nick White

        I agree Chris, and your points apply to many UW departments beyond CS.

      • Ed Lazowska

        Here are some slides with some national perspective, and some UW CSE examples:

        http://lazowska.cs.washington.edu/Lazowska.Entrepreneurship.2011.pdf

        Here’s the truth:  for all of its flaws, and for all of the potential for improvement, UW’s grade is at least B+ in tech transfer and entrepreneurship.  As I said, I hate counting stuff, particularly $, but the same AUTM study that John quoted had UW 8th in the nation in revenue from licensing.

        Ask the folks at Madrona how UW CSE does at entrepreneurship.  They have funded more than a dozen UW CSE companies.

        And, to repeat, the most important product of universities is people – ideally, people with an entrepreneurial spirit. For UW CSE, you can look at oldsters like Jeremy Jaech (co-founder of Aldus, Visio) or youngsters like Christophe Bisciglia (co-founder of Cloudera, Odiago).  You can look at faculty like Oren Etzioni (Netbot, Farecast, Decide.com) and Hank Levy (Performant, Skytap).

        Every day, we wake up and try to do better.  Those who know which end is up appreciate this attitude.

  • http://www.wacleantech.org Tom Ranken

    There was an intriguing article in the Salt Lake Tribune earlier this year entitled “Fits and startups: Is
    U. tech transfer flawed?” by Brian Maffly.  Definitions do matter.  Comparatively evaluating tech transfer offices is not very easy.  The article criticizes Utah for counting very early company creations that have no financing, no offices, no websites, no non-university officers.

  • Kim

    How Washington Beats Utah: more venture funding in University start-ups.

  • Erin

    Hi John, I have been trying to track down the primary source of this data because I’m interested in licensing, startups, patent, income, etc info for a wide range of institutions.  Could you point me in the right direction, because I didn’t see any attributed source for the chart and haven’t been able to find that specific info by school on AUTM’s website.