I was asked to talk about some of my experiences of Silicon Valley and Dublin as regards innovation; how IONA came about, and my thoughts on a greater engagement between academia in Ireland and the start-up community… Given the audience, I also took the opportunity to observe the opportunity and threat to the third level education system in Ireland posed by the internet..
My first ever trip to Silicon Valley was in 1979 as a young TCD postgraduate student. I visited the Computer Science Laboratory at Stanford University, and was impressed by some young postgraduates who had just founded a company called SUN – “Stanford University Network” – Microsystems. The trip however was torturous: a “direct” flight from Dublin to San Francisco in practice turned out to set down in St Johns, Newfoundland, for a re-fuelling stop; and I then had almost an hour-long line to get through immigration on arrival at SFO. Last week, I visited Silicon Valley for the umpteenth time: I’m chair and an investor of Gridstore which is based in Mountain View; and of Sophia, which has a sales office in San Jose. My flight was with Delta, and indirect via Atlanta; and I experienced over an hour-long queue at Dublin’s expensive bright snazzy new Terminal 2, to get through US immigration. Plus ca change.
I co-founded IONA Technologies along with Sean Baker and Annrai O’Toole in 1991. Sean and I were tenured academics at the Department of Computer Science at TCD, while Annrai was a salaried Research Assistant. One of the motivations for forming the company was my own realisation from my first trip to Silicon Valley over a decade earlier, that those who had co-founded SUN had similar backgrounds to ourselves, and that if they could do something like that, then perhaps so could we. However for me, another very major reason was a feeling that my career path within TCD was effectively blocked: as a junior academic in what I perceived as a department having a low priority for its host faculty of engineering, which in turn appeared to have a low priority within the university as a whole, meant that promotional prospects were likely to be limited until I grew considerably older. I guess I made the right decision: in 1997, IONA had the then fifth largest IPO in the history of Nasdaq; and later IONA became the tenth largest pure play software company in the world.
Fast forward two decades later to today, and I think that the general economy of Silicon Valley is now somewhat similar to that of Ireland. In Silicon Valley, the technology industry is strongly growing in sectors such as green technology, new semiconductor and nanotechnologies, and software including of course social media. But the general Californian economy, especially the public sector, is under pressure: for those outside of the technology sector, wealth remains a struggle. Homes are being re-possessed and in places, property prices have severely collapsed. Public services, including schools, libraries, parks, local policing and emergency services, are suffering diminishing budgets. In Ireland, our technology sector – both indigenous and multinational – is doing reasonably well. However, outside the technology sector, standards of life are generally falling.
For me, there are differences in culture between Silicon Valley and in Ireland. In Silicon Valley, there is a profound fascination with technology and engineering. Many young kids want to understand how things work, and dabble in building their own. From radios, to engines, to model aircraft and rockets, to web sites, and to smart phone applications, there is a deep excitement about building things. It is not really so much about science, because scientists by their nature are detectives, diagnosing and trying to understand what already exists in our world and universe around us. Rather it is about engineering, because engineers by their nature are inventors, creating things which have never previously existed, and trying to do so safely while applying their understanding of what exists in the world and universe around us.
In Ireland, in general there is not (yet, anyway) the same intense interest in technology and engineering. On the other hand, in my view, Ireland has a stronger backdrop in arts and creativity which in turn results in inquisitive kids experimenting with design and aesthetics. In my view, Dublin has a richer arts scene than San Francisco, including visual arts, theatre, literature, and music. And I guess I’m biased, in that one of my own pet projects is the TCD Science Gallery, which I believe brings technology and art together in inspirational ways, reminiscent of the great natural philosophers of the 18th and 19th centuries.
Interest in the TCD Science Gallery has developed worldwide, and I believe not least because of our internet presence, including our YouTube channel. Recently we hosted our first ever exhibition outside of TCD, when we took “Biorhythm: Music and the Body” to the Chelsea district of New York. It was amusing to subsequently see on the internet, 1TV – a Moscow based broadcaster – cover the event in Russian. The internet, especially social media and online video, is clearly changing the way in which we discover and learn from the world.
I believe one of the very greatest opportunities, but also the greatest threat, to the continuance of Irish third level sector (ie universities and institutes of technology) is the internet, and especially social media and online video. Many of the top universities world-wide are making much of the teaching course content available online, and frequently free. Go to Youtube, or Vimeo or iTunes, and you can find free videos and podcasts of very many academic courses. Stanford, as but one of many examples, has being doing this for over five years, and has both a dedicated website and iTunes presence. As you can see there, Stanford has freely available content for business, engineering, fine arts, health&medicine, history, humanities, language, literature, mathematics, science, social science, society, and teaching&education.
If the world’s top universities increasingly are providing easily accessible world class teaching content and quite possibly in due course some form of full degrees, where does that leave the remaining universities in the world ? This is a critical strategic question which should preoccupy the governing boards and presidents of all involved in the Irish third level sector. Combined with the reliance of the Irish third level sector on greatly weakening public finances, some deep thinking is required on the future value to be offered by Irish universities.
For me, the main value offered by a university should be the nurturing of enquiring and analytic abilities; the skill to diagnose, identify patterns, and apply previous experiences; and the capability to articulate, explain and motivate. There are thus two key skills for academic staff: to teach, yes; but also to mentor, and so to cultivate minds by guidance, counsel and leadership. As more and more of the world’s very best teaching content becomes easily accessible online, the role of mentorship in many universities will surely take lead over that of teacher. Guidance, advice and consultation come to the fore, ahead of enunciation, edification and illustration.
This change in emphasis from teaching to mentorship and consultation creates an intriguing opportunity for many academics, but also I believe for many young companies founded by graduates and students. Many academics are both great researchers and great teachers, but the Irish public finances severely limit opportunities for both their promotion and salary increases. How can academics earn more in the current very difficult environment ?
One obvious way to improve one’s prospects is to start a spin-out, as Sean, Annrai and I did from TCD. However this is clearly riskful and involves a 100% commitment. I resigned my tenure (and all that that implies for job security) from TCD to focus entirely on my start-up company. I understand that TCD (and perhaps other Irish universities) no longer require an academic founder of a spin-out to resign tenure: however, I believe that others involved in a start-up (not least non academic founders, investors and even customers) will expect nothing less than 100% commitment to the venture. Clearly, not every academic will want to start a company, and nor be willing to fully commit to being amongst its founders and promoters.
If you as an academic want to improve your financial prospects, an alternative is to direct your research to create commercially valuable intellectual property; to then license this to outside companies and so benefit from a royalty stream. You remain within your university , and your salary is augmented. This route however implies that your research can really lead to commercially valuable intellectual property, rather than general discovery adding to a common body of knowledge. It also almost certainly implies that you become dependent on the Technology Transfer Office concerned, to find suitable licensee companies. Your intellectual property in effect competes with all the other intellectual property generated within and owned by your university to try and gain the attention of interested external parties. Creating commercially interesting intellectual property may well work for you, but is by no means easy to achieve.
A third well-proven approach to improving your financial prospects is consulting. I understand (from the TCD TTO) that the current policy in TCD is to allow any academic to spend up to 20% of their time engaging with external companies or other parties for consultancy, provided that there is prior written approval from the Head of Department concerned, and – implicitly – that your personal tax affairs are managed appropriately. Consulting is fine, but many young companies and start-ups frequently do not have sufficient capital to pay reasonable consulting fees for any length of time. Enterprise Ireland does have its Innovation Vouchers scheme which helps young companies pay for consultancy, but the sum is limited to €5,000 per company. I also assume that not all of that money ends up as consultancy fees for the academic concerned.
So, I’ld like to suggest an alternative. If you are an academic, and your students recognise you not only as a great teacher and researcher but even more so as a mentor and valued specialist advisor, then you are well positioned to act as a consultant to them in specialist aspects of their start up companies. For your students who start companies, they may well look to you for consultancy, and you may very well be able to considerably assist them. But rather than seeking payment in cash for your consultancy time – cash of which they will inevitably be short – instead negotiate with them for a small and reasonable amount of equity. This can be a specific number of shares; or an option, at your call, to buy a specific number of shares should you wish to do so at some time in the future, for a price agreed now. Receiving equity may also provide a preferential personal tax treatment over cash paid to you as income.
I think encouraging academics to consult and collaborate with the start-up and young company community, and be remunerated for their time by equity, has many attractions for all concerned. For the academic, over time shares (or options) in a portfolio of different companies are accumulated, some of which could in due course turn out to be extremely valuable. Naturally, the more companies with which you engage, whether or not they involve former students of your own, the larger your equity portfolio becomes, and the more chance you will have to receive a reasonably substantial remuneration. For each company concerned, paying a modest number of shares (or share options) maintains cash in the company whilst still enabling a substantial and meaningful consulting engagement to proceed between the founders and their chosen academics. Further, bringing one or more chosen academics onto your share register enables you to be well positioned to re-engage with them in the future for further advice, should you ever need it.
I think we in Ireland have already learnt much from Silicon Valley and no doubt have even more ahead. However, we have our own strengths too, not least a strong culture of art alongside technology. If we strategise carefully, perhaps we can achieve an ever deeper co-operation between academia and industry whilst still preserving the independence of both.