It is official, we are a tax deductible non-profit public charity

Just a little update.

On Tuesday, I got the notice from the IRS that OCARI is a tax deductible public charity. So any donations (including services), dating back to August 11th 2014, are tax deductible. That should help with fund raising efforts.

On another front, in conjunction with the Portland Section of the American Chemical Society I'm starting work on putting together a science start-up symposium focused on start-ups in Oregon and Southern Washington. It will be combination of poster session, short presentations (~30 minutes), and maybe workshops. Now this would be fairly pointless without investors present, so I intend to invite OEN, OAF, PSF (the obvious Oregon investment groups) as well as VC from out of state - how many and from how far away will depend on how many start-ups attend. I'll post updates about this as things move along.

A side post... 2 redesigned high vacuum traps

Besides doing synthetic chemistry, I am always looking for ways to improve workflow & efficiency. Sometimes that means looking at a piece of equipment and redesigning it. An example of this are this pair of high vacuum traps which are designed so one can empty them without dismantling one's system. They are also designed with greaseless ball joints (AKA: O-ring spherical joints) to reduce the time it takes to assemble a high vacuum system (most are designed with flat O-ring flanges which require very precise alignment to avoid leaks) and to reduce contamination due to vacuum grease.

Design 1: Dewer style

Here one has a Dewer to fill with either liquid nitrogen or dry ice/acetone and a receiver that can/should be submerged in liquid nitrogen. When one is ready to empty the trap, close off the pump, open the line to atmosphere and the disconnect the receiver - that simple and fast.

Design 2: Recirculating chiller design

In this design, one attaches a recirculating chiller (< -40 C) and the receiver is vacuum jacketed (one could also have a single-walled receiver submerged in dry/acetone or liquid nitrogen). This design has an outer vacuum jacket, a middle shell for the coolant, and the inner shell for the vacuum line. The inner surface of of the middle shell is a Friedrich style condenser body to force the coolant to circulate around the condenser. The hose connectors should either be barbed or threaded instead of smooth as shown.

The designs are copyrighted 2015. If you wish, I'll send you a copy of the designs (.dwg files - requires a CAD program to open) for personal use in exchange for a reasonable fee. If one would like to produce them for sale, please contact me for licensing arrangements.

The designs were done using VectorWorks, vectorworks.net

Oregon City Applied Research Incubator: Update December 13th, 2014

It has been a while since I last posted and well past time for an update. During the last few months I've been networking like mad, both with the state legislators and the business community.

In order to get funding, it has been obvious to me for some time that I'd have to get a bill passed through the legislature here. Now that the elections have past, I'm seeking sponsors for such a bill. Unfortunately upon hearing this Jennifer Fox (OTRADI) has pulled her support. In fairness to her, OTRADI has recently started an expansion project, increasing their capacity by 4 companies (which is already full) and reducing their waiting list to 3-4 companies. In doing so, she sees a changed landscape and OCARI as competing for limited state resources.

This is unfortunate. OCARI was never about meeting today's demand for laboratory space. If funded in 2015 by Oregon, building the facility for OCARI would not be complete until sometime 2018 or early 2019.  OTRADI's expansion just means that the next company that wants space gets added to a shorter waiting list.  Since a science start-up, say a pharmaceutical company, typically requires 1-5 years of incubation before they have grown enough to leave an incubator, that waiting list that could take years to advance. In other words there is still more demand than capacity (which is 20-30 science companies for the entire state of Oregon). Besides increasing the state's capacity, OCARI would increase the state's capabilities by adding start-up chemical workspace (which is extremely limited here) and science co-working space for the 85% of non-academic scientists who may wish to prototype an idea, or for small businesses that need a small amount of labspace but can't not afford to add it to their existing facilities (Polaris Battery Laboratories comes to mind).

So build OCARI, which will take 3 years, and increase capacity by up to 24 companies plus a lot of enties in the co-working space. What is the worse case scenario? It takes a few years after construction is complete for the state to grow into the new capacity. In another 3 years the research at the Knight Cancer and Knight Cardiovascular Institutes should be mature enough to start spinning-off start-ups which, if the status quo is maintained, will have no place to go within Oregon. So how likely is it that both OCARI and OTRADI will have vacancies once OCARI is built?

The other limiting growth factor for science start-ups within Oregon, is the lack of access to capital. The good news is that the state is considering several proposals to address this issue.

While Jennifer Fox has retracted her support, I've recently gotten this letter of support from David Eastman and David Farrell at Gamma Therapeutics.

An endorsement form Oregon Representative Bill Kennemer, House District 39

Thank you Representative Kennemer for your note and for endorsing Oregon City Applied Research Incubator. It was a pleasure to meet you Friday, October 3rd, at the Boring-Damascus Grange Forum. I will most certainly keep you posted.

The downside of the 30 second elevator pitch

I've heard a lot of advice about the need to prefect one's elevator pitch: make it WOW, make it short (30 to 60 seconds), give people a reason to care (have an emotional punch), etc. All of that is great and wonderful advice, and for most business ideas that is all you need. Unfortunately there is a downside, that only works with ideas people are already basically familiar with or with "simple" ideas. Simple in quotations because no business is simple, but some ideas are more complex than others. A long-term vision can be very complicated (3M is a great example of this: today we know them for Post-it notes, sandpaper and tape, but they started out as a mining company that realized they had to move into R&D to survive). Often, but not always, complex ideas can be teased apart into simpler but still useful ideas. The 30 second pitch is good for forcing people to do that teasing apart. Complex ideas are not inherently bad, convoluted ones are.

Enough about simple vs complex ideas. To understand why 30-60 second elevator pitches are only good for fairly familiar ideas one needs to understand the 3 types of new products/business approaches:

1) products/business based on efficiency improvements or lower costs.

It is very easy to pitch these; just point and say "I'm going to do that better and cheaper than anyone else."  These are also probably the easiest to find funding for as the business sector is well defined, but have the highest risk of being edged out or copied by competition.

2) products/business based on combining familiar things in new ways to create a entirely new category of product (for example, iPhone = cellphone + computer).

These are a bit harder to pitch quickly but do able following this basic template: "You know product A and product B. If we combine their best features we get a great new product and here is why." Here there is a huge potential for success or failure. If they work, they will be copied, but that is not actually a bad thing as it will push the business towards continuous improvements. This type of business is great for traditional investors.

By the way pharmaceuticals fall into this category: everyone is familiar with illnesses and medications, even though most don't understand the technical details.  

3) products/business based on "revolutionary ideas." Revolutionary ideas, in this context, means that the typical investor/general public is not familiar with the basis of the idea, also the idea has far reaching applications and is probably very disruptive.

A fast test for a revolutionary idea is simple: a series of concise and simple statements can not adequately describe the idea in less than 60 seconds but can in under 5 minutes (beyond this the idea is either poorly formed or the speaker is fishing). Two examples of this: pitching the internet in 1985 and pitching mass distribution of electricity in 1875 (Edison invented the light bulb 1879). These types of businesses are best suited for crowdfunding, as they are likely to scare most other investors away as being too risky.

The functional purpose behind the 30 second elevator pitch

While there is truth to the claim that investors have many business ideas to consider and often don't have a lot of time to do it in, the functional purpose of elevator pitches is to quickly eliminate high risk ideas and poor salesmen. Unfortunately, that often means eliminating the ideas that might prove the greatest benefit for society. So I'll ask you the next time someone approaches you with an idea respect their courage (it takes guts to cold call or "ambush" a stranger to pitch an idea), and really listen for a few minutes (maybe they have a revolutionary idea or just not the best salesman - there's that proverb about "never judge a book by its cover.").

A note about my "test" for revolutionary ideas

The "test" is more of an observation than anything else and learned from trying my full pitch:

I have a way to make bleach more energy efficiently then the current best practice. One that does not produce chlorine gas which makes this method safe for anyone to use. That in turn means it can be used in the third world to disinfect drinking water and save over 1 million children a year from dying from water born illnesses. While bleach is cheap, shipping it isn't. With my method, a 50 pound bag of salt and a solar panel, it is possible to produce enough bleach at the point of use to disinfect drinking water, to US standards, for 150 people for a year.

Furthermore, a side product of the process is hydrogen; thus solar arrays, my catalyst and seawater lets one do desalination to get drinking water at a net energy harvest. Doing this is also more energy efficient than the electrolysis of water.

Back to "production at point of use;" such production reduces greenhouse gas emissions due to transporting bleach. It also means on does not have to transport either chlorine gas (AKA mustard gas) nor concentrated bleach, both of which are hazardous chemicals. Point of use production also means one does not have to store large quantities of concentrated bleach.

Electricity accounts for at least 50% of the production costs, which often makes it too expensive to produce bleach, or chlorine gas from which bleach can be made, anywhere but in the least expensive electricity markets. That in turn requires transporting either chlorine gas or concentrated bleach long distances to reach all markets. With my method, I estimate I could save the global bleach industry $250 million USD in electricity every year.

Oh yes, one last point: globally industrial bleach is a $1-2 billion USD market every year. At a minimum, this technology is worth $1-2 million in patent royalties.
----
The whole pitch can be done in under 5 minutes. I can pitch the first paragraph in less than 60 seconds. In fact, any one of those paragraphs can be spoken in less than 60 seconds, but none of them on their own has been sufficient to get investors. It was by thinking about the problems I've encountered with my whole pitch and then asking what other business ideas would have had similar problems if one was only allowed to make a 60 second pitch that I came to my conclusion about pitching revolutionary ideas.

The major differences between academic and industrial research

While there are real differences between academic and industrial research, there are a lot of misconceptions. The three most common misconceptions I've heard are:

1. "They [industrial researchers] have tons of money, so they can get whatever equipment they want."
2. "They [industrial researchers] lack curiosity and only care about money."
3. "We have to spend more on education to improve our economy."

The role of money

The perception by academics that industrial researchers have a lot of money appears to come from the facts that industrial researchers have higher salaries then their academic counterparts with comparable experience, and industrial labs often have much more modern state-of-the-art instruments. This difference is really due to how money is used, not how much is available, as determined by:

1. salaries
2. who pays those salaries
3. where the money comes from
4. priorities

Salaries

Science graduate students typically earn stipends between $20,000 to $30,000 plus some tuition reimbursement, and until recently typically very minimal healthcare. If they get vacation, it is usually by arrangement only, with Christmas and federal holidays being the exceptions. Over their tenure as graduate students, they may get 1 or 2 milestone pay raises of $1,000 to $3,000 per year. Currently the average science graduate student is taking 6.5 years to finish their PhDs.

The stipends paid to academic postdocs changed this in 2014, and are usually set by NIH Kirschstein-NRSA awards (Postdoc pay). While an institution may pay an additional amount on top of the NIH Kirschstein-NRSA awards, they are generally very close. Based on the awards, a postdoc who just earned their PhD now make $42,000/ years, and after 7 years they reach a maximum of $55,272/year. Until the Affordable Care Act went into effect, the institution they worked at controlled how much, if any, medical insurance the postdoc received.

Now consider industrial researchers who, regardless of their level, have vacation/sick leave, full medical (with co-pay), and some type of retirement plan. A recent BA level graduate can expect to earn between $40,000-$50,000/year, and after 5-7 years should be making between $55,000 - $65,000/year. A new PhD typically earns between $75,000 and $85,000/year, though more is certainly possible. Please note, if an individual is working in an analytical lab or manufacturing setting their pay will be a bit less.

Who pays those salaries, and where does the money come from?

Within at least the last 30 years, the majority of science graduate students were paid from their department's budget in exchange for working as teaching assistants (TA). Some did receive their stipends from their adviser's research funds (RA) and very few won fellowships. This situation is changing as universities face tighter budgets and begin to demand that professors use more of their research grants to pay some of their graduate student's stipends.

Academic postdoc stipends have always come from either their professor's research grant or from a fellowship they won.

Industrial researchers are ultimately paid by their employer's shareholders from the employer's profits, or from the employer's investors in the case of start-ups.

Priorities

Again this is changing as universities face tighter budgets, but historically universities sought to increase the size of their programs. Larger graduate programs has meant more revenue (at public schools, the states pay some of the stipends), and more prestige (which attracts more undergraduates, who directly bring more revenue).

For business, the first priority is to earn more money than is spent. Once break-even is achieved other values may temper a business' priorities, but profit is always a top priority.

How do these factors lead to the equipment differences seen between academia and industry?

Since labor is typically a businesses largest expense, so minimizing its cost has the largest effect on a business' profitability. There are two basic ways of doing it: have a large staff using low tech equipment doing labor intensive work while paying low salaries and demanding long work hours; or have a small but well paid staff using highly automated equipment to do most of the work that would otherwise be labor intensive. There are pro's and cons to both approaches. The low tech/low salary/large staff approach requires a small initial investment but growth becomes difficult due to scaling issues and small profit margins. The high wage/high tech approach requires a large initial investment but considering modern automated scientific instrumentation often affords a 5 fold or greater force multiplier, this approach has a lower net overhead and often is easy to scale.

I've worked at companies that use both approaches and experience tells me that the large staff/low tech/low wage approach is the wrong one within the US - somewhere in the world, there will always be a place where the wages are lower. While the high wage/high tech approach does not guarantee success it helps - with a force multiplier of 5, one can pay an employee $80,000-$100,000/yr to compete against a low tech group of 5 employees earning $20,000/yr plus a supervisor (at $20,000+/yr). For that reason, the most successful science-based business in the US have chosen to go the high tech route.

Ironically, the low wage/low tech approach is largely the approach universities use with their graduate students, and with the large staffs they seldom have the money to get the latest technology... The other side of this is due to the historical fact that the graduate students were mostly paid from department funds and not their adviser's research funds, so their adviser's felt little economic pressure to adopt the latest technology. All of this is changing (though slowly) due to increasingly tight university budgets, and it is a very painful process.

Do industrial researchers really lack the curiosity of their academic counterparts?

The simple answer is no. It may appear that way because industrial researchers are focused on achieving particular goals at the lowest cost possible. To understand this better, let's examine the "research tree" below.

A research tree. One starts at the green dot, the arrows are experiments and the remaining dots as results.

While both academic and industrial research have objectives (the blue dot), academic researchers are encouraged to follow all interesting leads including the ones not relevant to their objective (all paths). Industrial researchers can't afford to do that because investors want income generating results and won't provide more money unless that is happening. In practice, the industrial researcher follows the most promising results only (the yellow arrows). Then if time, money or a need for a backup plan exist, good but less promising results will be followed. When an industrial researcher discovers something that is interesting but not relevant to their objective (yellow dots), they are suppose to report the result to management who then decides whether or not to do further follow-up.

As a side note, often there really are multiple ways to reach one research objective (as shown by the three paths to the blue dot). The prime example of this comes from the pharmaceutical industry where there are many drugs to treat the same medical condition.

Open-ended research vs. Profit Driven Research

Another reason why an academic might think industrial researchers lack curiosity has to do with the fact that academic research is open-ended whereas industrial research is not. Again the majority of academic research is basic research where the principle product is knowledge. As long as an academic researcher does what they said they were going to do in their grant proposals and write papers, they can apply for more grants and will never run out of questions to ask. This is true even if they don't reach their objective, as long as they produce new knowledge. This encourages them to forge ahead despite poor results, the "never give-up" attitude.

That is very different from industrial research which is profit driven. Well disciplined companies shutdown research projects when they fail to meet objective goals, all on the principle of "don't throw good money after bad." It is common for companies to talk about Go/No-Go project goals (objective standards of success, such as "produce a drug candidate with a 100 nanomolar IC50") which are evaluated once every three to six months. If a project fails to meet a Go/No-Go goal, the company kills the project. Sometimes if a project is close to its Go/No-Go goal, it might be put on probation for one or two cycles then if it still fails the company kills the project. Do industrial researchers get emotionally invested in their projects and push on well past the point it should be obvious to all that no real progress is being made? Yes, of course, researchers are only human but if a company allows that to happen too often and for too long, then the company will fail.

What is the role of education in stimulating economic growth?

Over the years I've heard a lot of versions of "the economy is bad, we need to invest in education," implying that education will make the economy grow. Unfortunately that line of reasoning is a non sequitur. I've also heard several versions of "we need to stimulate innovation, so let's invest in academic research," which is also a non sequitur. Hopefully by now, the second one is easy to understand: academic research primarily produces knowledge (that is why they write all those papers), not new products (innovation).

Besides the fact that education is expensive, the easiest way to explain why educational investments don't directly lead to economic growth is with a gardening analogy. In order for a farmer to grow tomatoes, he needs three things: fertilizer, tomato seeds, and water. While one might argue over what variety of tomato seeds to plant, one has to plant tomato seeds to get tomatoes. Nothing else will do.

To grow a business, one needs three things: fertilizer, business seeds, and water. Paying customers are the water. Ideas and infrastructure to produce products are the business seeds. Capital, a skilled workforce, and knowledge are the fertilizer. Education produces a skilled workforce and knowledge (from basic research). It is true that if one has a pile of fertilizer laying around, occasionally wind blown seeds will sprout in it but it is not an efficacious way of growing tomatoes. In much the same way, university research occasionally produces a spin-off business.

Oregon has good schools that train far more scientists then we have jobs for. Investing more in education will only make that problem worse, like drilling a hole in the bottom of a leaky boat while it is in the middle of a lake. There are a lot of good reasons to invest in education, but it is also time for Oregon to invest in infrastructure for science-based start-ups.  

Kirschstein-NRSA awards

Kirschstein-NRSA awards

Kirschstein-NRSA award

A note from Commissioner Brad Avakian: Oregon Bureau of Labor & Industries

I met Commissioner Brad Avakian of the Oregon Bureau of Labor & Industries on September 9, 2014 at a fundraiser for Betsy Markey, who is running for Colorado Treasurer. While talking with the commissioner, I gave him a copy of the business plan for Oregon Applied Research Incubator (OCARI) and discussed the employment problems that scientists face in Oregon. When I got home today, I found this note in the mail.

 

Thank you for the note, Brad.