A few months ago I received an invitation out of the blue to attend the University of California's annual System-Wide Technology Transfer Forum. They must have heard through the grapevine about my extraordinary business acumen and remarkable insights. I do have to live up to my reputation, so of course I accepted. The forum took place today down in Millbrae and I was suitably impressed.
I commiserated with some fellow investors over breakfast about the state of the economy. A few of us had read David Stockman's recent NYT op-ed piece arguing for the inevitability of economic annihilation in America. I admitted I had no idea what the future held for the economy and that I was content to tread water in my own portfolio until things shake out. My regular readers know that my coverage of natural resource stocks anticipates a hyperinflationary scenario friendly to hard assets, but that doesn't preclude Stockman's deflationary asset crash from happening first. Anyway, we were all attending out of optimism that commercializing technology out of the UC's labs is the antidote to whatever malaise and stagflation afflict America.
The Forum's opening remarks taught me a fun new term: the "Valley of Death." I heard about "Crossing the Chasm" years ago so I figured the Valley of Death is where failed startups go if they can't cross that chasm. There are ways across the chasm that avoid the valley, and the UC Forum showcased some good research ideas that could attract funding. The winners of the UC's system-wide proof of concept program got to showcase their technological developments here after thorough peer review.
The morning's motivational keynote came from Nathan Harding, the CEO of Ekso Bionics, who got his own professional head start in UC Berkeley's laboratory system before jumping to the private sector. His company's story was a template for everything that should go right with partnerships between universities and entrepreneurs. U.C. Berkeley's Office of Technology Licensing helped write Ekso's business plan. Their robotic powered exoskeletons had obvious military applications, but the defense community wasn't interested until Ekso brought in a market-specific leader with a defense background as a temporary executive. Presto, he got them funding from Lockheed Martin. That's how it's done, folks, and you won't learn that in business school. They got funding from leading rehabilitation centers (the opposite of how new devices are usually introduced) by allowing sponsoring hospitals to use the Ekso devices in their own capital raising campaigns. That's another win-win you won't read about in textbooks.
Here's the ultimate winning play. The Ekso team demonstrated their robotic powered legs on a volunteer patient who had lost the use of his own legs in an automobile accident. While they were strapping him into the robot harness and powering it up, he briefly fell over and the team had to do a retake. They didn't break their stride, complain, or ask for a bailout. They had obviously rehearsed contingencies like this and calmly proceeded to reset, reboot, and get back on their feet. That's exactly what that patient did, folks. In front of hundreds of executives and scientists, he got out of his wheelchair and walked across the conference room on powered legs. The lesson for America is obvious. It doesn't matter whether you fall into David Stockman's camp of disillusioned Reaganites or Paul Krugman's passel of needy liberals. When you fall down, run through your playbook of backup plans and GET BACK UP. Americans used to know how to do this, before bailouts and entitlements. We need entrepreneurs to get us back into the habit.
I picked out the breakout sessions I wanted to attend from what looked like a biotech-heavy lineup. I'm neither a scientist nor a doctor, so I wondered whether these subjects were going to be over my head. I checked out a presentation on microfabricated ceramic blade arrays from folks associated with the UC Davis Engineering Translational Technology Center (ETTC). That's a fancy way of saying ceramics can make sharper, longer-lasting edges than metal alloys. I get the emphasis on a razor blade that holds its integrity for ten shaves before degrading. Human skin can be course and tough, and I usually change disposable blades after seven shaves (i.e., once a week). Going head to head with this blade against Gillette, Schick, and others means figuring out whether consumers will change their shaving habits to a ten-day calendar that optimizes the product's demonstrated value. I think a ceramic blade is more readily adaptable to industrial fabrication apps that integrate microfluidics, like cutting silicon wafers.
The next presentation got me really excited. I figured I couldn't go wrong hearing about "self-healing multiphase polymers for coating applications" because it gave me a mental image of the old movie The Blob. I had to see if these mad scientists had made a real blob that could re-form on its own, and fortunately their creation was benign. They designed a synthetic material that can regenerate itself after experiencing damage. The video of this stuff maintaining its integrity under load after re-forming was impressive. This stuff combines two of the hottest trends in engineering today: biomimicry and additive manufacturing. The material mimics nature's use of multiphase, composite designs and is assembled layer by layer to conform to the expected temperature of its environment. UC Irvine is behind this stuff 100% with support from their Office of Technology Alliances. I was intrigued by the potential applications in rail transportation as a buffer between the metal rail and concrete trackbed. I was further intrigued by the possibility that this material can be tailored to tolerate the temperature and pressure extremes of any known environmental window. I am convinced that the oil and gas sector needs to know about this development so they can evaluate whether this self-sealing polymer is viable in the extreme environmental conditions experienced on drilling rigs and subsea infrastructure. There are many more ways to use this stuff than in aerospace anti-corrosion coatings. Gentlemen, you know where to reach me.
The lunchtime panel showcased the entrepreneurship programs of several UC campuses. UCSF's Entrepreneurship Center is looking to move beyond the school's biotech focus. Startup UCLA is focused more on educating students and reconnecting alumni than incubating live businesses (hey, whatever works). UC Davis' entrepreneurship center sounds like it has a hard-core schedule of workshops, angel events, and prep sessions for business plan competitions. UCSD's von Liebig Center funds innovative projects all over SoCal. It's hard to believe California is hostile to business with all of this academic interest in fostering entrepreneurship. Take heed, Sacramento. Ambitious dreamers will create jobs if you get the tax and regulatory environment right. The panelists had plenty of wisdom on how to get the job done. They were big fans of their centers' collaborative efforts with each other and their campus laboratories. Gift campaign pitches to donors now include requests for underwriting the commercialization of UC technology. The entrepreneur centers want investors to get involved; their doors are open, so go visit and get on their email lists. The culture of entrepreneurship on campus was more important than the the quality of any specific technology.
The afternoon briefings I attended touched on material science, another blind spot for me but I wanted to see what was on display. One guy from UCSD talked about a nanostructured coating for solar thermal arrays. I couldn't miss this one, as I've long been convinced that whatever bet California makes on a solar future should favor solar thermal (a.k.a. CSP) over PV panels. Go back and read my blog archives for more info. His observation that CSP allowed for energy capture from both solar radiation and visible light meant that solar thermal installations would benefit from the heat capture abilities of an enhanced coating. His solution was a silicon-oxide spectral selective coating with embedded Si-Ge nanoparticles. His research indicated the coating would resist oxidation and see less degradation over time. There's no shortage of silicon for his solution, but I wonder about the availability of Germanium for his nanoparticles. The vast majority of Ge is found in China, so that country's potential lock on supply is a cause for concern. I want CSP to work but it has to be cost effective, so making Si-Ge viable means knowing the cost per Watt of a coated CSP cell and comparing it to the cost of a typical Bi-Sb-Te coating compound.
The briefing on broadband full duplex radios kind of threw me for a loop. I'm unfamiliar with the commercial limitations of radio broadcast technology using half-duplex hardware. I can see the military applications of deploying full duplex mobile base stations to isolated outposts in combat. The mystery for me lies in convincing civilian base stations of the efficiency to be gained from improved base stations when the path of least resistance in telecommunications is to pursue advances in streaming and data compression. The best test market for full duplex base stations may be isolated regions like sub-Saharan Africa where nomads, adventurers, and resource prospectors have no access to existing broadcast towers.
A briefing on a lithium-sulfur battery cell was intriguing but I think they've got a tough road to commercialization. Li-Ion battery makers already have a lock on much of the hybrid car market so Li/S will need more than just a serious cost advantage or capacity enhancement. New car models must be engineered to account for the likely difference in weight and volume of an Li/S battery. Sulfur is an abundant material but research on the safety and degradation problems unique to Li/S batteries needs attention.
The final panel on crowdfunding was right up my alley. I'm starting to see the same thought leaders from the same portals at more of these panels, which means a handful of committed innovators are going to write the rules for the entire movement. Direct equity investing still isn't available because the SEC is waiting for FINRA to certify the first crop of ready portals. Those portals that want to raise equity capital are limited to collecting login data from self-reporting accredited investors and segregating their platform interfaces so bona fide angel investors can contact startups directly. I learned that medical device trials may offer product iterations that lend themselves to reward-based crowdfunding; hey, donate a couple hundred bucks and get a free thingy. I wonder if that would work for cosmeceuticals too. The panelists were adamant that crowdfunders run their own social media campaigns rather than outsource them; that aligns with the adage that a startup CEO must give the traditional roadshow pitch, no exceptions. The ideal time frame for a project-only crowdfund pitch is accepted as 40 days, give or take ten days; this phenomenon is maturing so quickly that metrics like that are now validated from widespread use. BTW, crowdfunding isn't just for little startups anymore. Large organizations can crowdfund a high-profile project they want to showcase because a well-crafted social media campaign can raise any organization's "digital footprint." Philanthropic funds are attracted to crowdfunding projects that are already supported by well-defined communities. Caution is warranted when crowdfunding a project that isn't fully IP-protected, because it will be exposed to scrutiny before it's mature. See, this isn't just greasy kid's stuff anymore.
Good times lie ahead somewhere and they won't come about through monetary stimulus, fiscal profligacy, Wall Street legerdemain, or populist agitation. They will come when entrepreneurs team up with inventors and bring forth disruptive new solutions, just as they always have in American history. Some of those solutions were right there at the UC's Forum. See you next year.
