Last spring, in a nondescript office in Ann Arbor, two self-described “gear heads” showed off a prototype of their new invention, the SpikerBox. Sitting on the tabletop, it looked like any other science kit for schoolchildren, with its electrodes and metal wires—until you noticed the very large cockroach crawling around. The insect is an integral component of SpikerBox, which helps high school teachers demonstrate neurophysiology by monitoring the electrical activity in the nerves of cockroaches. Inventors Greg Gage, PhD’10, and Tim Marzullo, PhD’08, anesthetize the bug, remove one of its legs (which will grow back) and place the leg into a dish. With the flip of a switch, SpikerBox allows students to hear the electrical impulses when the neurons in the leg fire a spike. They can then capture and record data for experiments. They explain the benefits of working with cockroaches: they’re affordable (60 cents each at the pet store) and easily anesthetized (you simply put them in the freezer and wait five minutes). In fact, all the SpikerBox components are far from cutting edge. “Everything we’re doing here was probably developed in 1967,” jokes Gage. What is cutting edge is the way they’ve taken their idea and developed it for the marketplace. As doctoral students, Gage and Marzullo performed similar procedures using very expensive equipment. The goal of their company, Backyard Brains, is to develop a simple kit for less than $100. Backyard Brains is one of several companies that have participated in TechArb, a student-business incubator launched in Ann Arbor in May 2009. For a year, Gage and Marzullo learned about the business side of starting a company, whether it’s creating a business plan or writing a grant. Rather than being “two guys in a garage,” they benefited from TechArb’s professional office space as well as the opportunity to build relationships with other students who shared the vision of starting a company. “Once students get their idea far enough along and solidified, they can apply to be granted access to TechArb, where they can actually incubate their company,” says Doug Neal, managing director of U-M’s Center for Entrepreneurship, which jointly manages the business incubator with the University’s Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies. TechArb is one of the many ways the University is encouraging entrepreneurship among faculty, staff and students; these include more than 100 classes, venture funding, competitions such as the Mobile Apps Innovation Challenge, and student organizations such as Mpowered. Plans are also under way for an academic program to launch in fall 2011 that will offer a master’s degree in high-tech entrepreneurship. (For a list of campus organizations focused in some way on fostering entrepreneurship, see “Innovation on Campus” in the right column.) “U-M’s reputation way back was that we created a lot of science but none of it ever made it to the street. It’s changed,” says Thomas Kinnear, executive director of Zell Lurie. “The whole University is now much more entrepreneurial.” The role of entrepreneurship at U-M has grown since the US Congress passed the Bayh-Dole Act of 1980, which allowed universities to patent and retain title to inventions developed with federal funds and to commercialize them. Previously, research was done in government labs, but relatively few inventions made it to market. Revenue generation isn’t the primary objective, says Kenneth Nisbet, executive director of U-M Tech Transfer. But it is important because the University leverages its income for further research and education. And, lately, there has been a lot of research. With $1.14 billion of research In fiscal year 2010, Tech Transfer reported 290 inventions, 97 agreements, 10 startups and $39.8 million in revenues. “The University is an amazing place because of the quality and the quantity of not only the research, but the researchers,” says Nisbet. His office works closely with faculty and researchers to develop the commercial potential of their inventions. This ranges from consulting and researching the marketplace to assessing the invention and marketing it. Tech Transfer also plays matchmaker, finding commercial partners for researchers’ discoveries. “If we jointly decide a new startup venture is a good approach,” says Nisbet, “we use the resources of the Venture Center to develop the opportunity and leverage entrepreneurs and others, often from our alumni ranks.” Tech Transfer formed the Venture Center in 2009 to make it easier for entrepreneurs and venture funding partners to work on new startups. The center includes internal business formation staff as well as a mentor program. And this fall, Tech Transfer moved into new offices in the North Campus Research Complex (see page 34 for more about NCRC). One major project there is a new venture accelerator that will provide office and laboratory space as well as business services for startup companies. Some companies born from University research have recently achieved another measure of success: acquisition by a larger company. In August, Texas-based Tektronix Communications acquired Arbor Networks, a network security company founded by Farnam Jahanian, professor and chair of the Computer Science and Engineering Department, and G. Robert Malan, MSE’96, PhD’00. Such acquisitions boost not only the University and its inventors but also the local and state economy. Arbor Networks, for example, will keep its research and development facility in Ann Arbor. This type of business development has made the University a bright spot for Michigan’s economy, which has been in a slump due to the declining fortunes of auto manufacturing. As any new parent knows, babies often outgrow special occasion—and usually expensive—clothing after only one wearing. Three student entrepreneurs hope to make such clothing more practical and affordable with their Web site, Bebaroo.com. Allen Kim, Luis Calderon and Augie Hill founded the “Netflix for baby clothes” last spring. Like the DVD rental site, parents create a queue of designer outfits, which are mailed to them and returned in a prepaid box. Guaranteed to be “cleaner than new,” the clothes are retired after just three or four wearings. Parents can save up to 75 percent off retail prices. Kim developed the idea when a relative commented that her baby wore an outfit only once or twice. “I thought, there’s got to be a smarter, more inexpensive way for parents to clothe their kids. And that’s when I realized the solution was right under my nose: Netflix.” Shortly after that, he and Calderon transformed the idea into Bebaroo. The company is currently in its pilot stage with 20 customers and expects to have several thousand within the next year. The students’ initial plan is to focus on special occasion apparel, but they hope to expand the business model to include baby toys, maternity clothes and older children’s clothing. The idea impressed a panel of judges at Entrepreneur magazine, who named Kim one of five finalists in its 2010 College Entrepreneur of the Year contest. The magazine will announce the winner in its January 2011 issue. Kim, a senior in the Department of Industrial Operations and Engineering; Calderon, an MBA candidate; and Hill, a graduate student in Computer Science and Engineering, credit U-M for its support. They acknowledge Mpowered Entrepreneurship, a student organization; the Center for Entrepreneurship in the College of Engineering; and the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies as well as the student-business incubator TechArb. “Michigan has been a great place for us to start Bebaroo,” says Kim. “We have a great entrepreneurial community here.” I think southeastern Michigan is often a difficult place to be an entrepreneur. There’s not a culture for this,” says Dr. James Baker, U-M professor of internal medicine and biomedical engineering and Ruth Dow Doan Professor of Nanotechnology. “The good news is that the University is now trying to create an entrepreneurial culture. I think this is a crucial function of what the University does. This is really how you transfer technology into the economy and generate the types of highpaying jobs that make university contributions viable for most states.” Baker speaks from experience: he is also the chief scientific officer of NanoBio, a biopharmaceutical corporation that he founded based on technology he began at the University in the 1990s. “Regionally, the economic challenges of the state have created a vacuum that allows this exact behavior of entrepreneurship to flourish,” says Doug Neal of the Center for Entrepreneurship, which is housed within the College of Engineering. “Because we are a research university, we have tremendous investment in innovation of technologies, thus allowing us to be well positioned to provide significant commercialization and increases in economic activity for the state.” Neal’s organization, the CFE, promotes that innovation among students, faculty and staff across the University through hands-on training. “Only 65 percent of students we engage are actually from the College of Engineering. The rest are from the business school, the medical school, the music school, LSA, all over. And it’s very exciting because entrepreneurship in general is multidisciplinary.” About 70 percent of CFE participants are undergraduates. Professor Thomas Zurbuchen founded CFE in 2007 in response to students who wanted to learn how to realize their entrepreneurial dreams. Many U-M students, however, are entrepreneurs before they even set foot on campus. In an August article in Forbes, U-M President Mary Sue Coleman stated that, according to one survey, “as many as 15% of our incoming freshmen had already started businesses.” Coleman, recently appointed co-chair of the US Department of Commerce’s National Advisory Council on Innovation and Entrepreneurship, added, “The challenge for higher education today is to support our students in this vital area of economic development.” One way the University is helping students create companies is through CFE’s venture acceleration program. “That really focuses on commercialization, where we help students who have an idea, take it from an idea to a prototype, to a plan, to a customer validation point, to the point where they can get it commercialized,” says Neal. “So that’s really all about building businesses.” Two of CFE’s venture acceleration programs are TechArb and 1,000 Pitches, an annual competition in which students submit a three-minute video pitching their idea for a new business, invention or nonprofit organization. From the record-setting 2,165 pitches submitted in the 2009 competition, the nine winners included ear plugs with a built-in alarm clock, portable solar energy for developing countries and a plan to run University buses on leftover cafeteria cooking oil. Well before CFE’s inception—for the past 10 years, in fact—Zell Lurie has offered academic and hands-on programs to help students learn about entrepreneurship, from creating an entrepreneurial focus to understanding the fundamentals of putting an enterprise together. Many Zell Lurie graduates don’t start companies right away, says Kinnear. “Most of them, though, go into larger companies and are much better trained at being an entrepreneur. That means how to pull the resources together, how to think of new ideas. We encourage our students to be creative, creative not just around technology but around business models.” . Kinnear emphasizes the important role that alumni play by serving on Zell Lurie’s various boards as well as by teaching classes, providing internships and funding the institute. “It’s an extremely valuable network. We’re blessed with a very significant number of alums not only here in Ann Arbor, in Michigan and in the Midwest, but in California and Boston and New York, the southern US.” Alumni play an equally important role for the Tech Transfer office, says Nisbet. “The alumni network is amazingly important,” he says. “We don’t have the installed base of industry and local partners that you would see, for instance, in Boston. But 450,000 incredibly skilled, wonderful, loyal people around the world helping us is a tremendous advantage.” He cites Tech Transfer programs, such as Catalyst and the Michigan Venture Center, that benefit from alumni experience, skill sets and industry connections. CFE also relies on alumni to fill gaps in the entrepreneurial education of its students. Case in point, CFE took 50 students to the San Francisco Bay area during spring break to meet with alumni, network with high-tech companies and venture capitalists, learn about trends, and pitch their ideas. Similar trips to Chicago and New York are planned this academic year. As entrepreneurship at the University expands, these ideas—which once might have remained academic exercises—are now finding their way into the commercial sector. It is only in this sector, says Baker, that they can flourish and serve society. “From my perspective, I like to see what I’ve developed translated into things that help people.”
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