2024 Gala
Restarting NYC’s Economic Engine: Tapping Economic Potential of the Academic Research Institutions

Event - May 2004

Restarting NYC’s Economic Engine: Tapping Economic Potential of the Academic Research Institutions

On April 29, 2004, CUF research director Jonathan Bowles moderated this panel discussion at New School University on how to better leverage the city's research and academic establishments into economic growth.

Tags: economic growth entrepreneurship innovation economy higher education human capital

Andrew White, Director, Center for NYC Affairs, Milano 
Graduate School, New York University:
 The Center for NYC Affairs is at the Milano Graduate School at the New School. And you’ll note that the New School isn’t really part of this discussion--we’re not necessarily one of the premier research institutions in the city. But we are very intently focused on the fields of practice in which you all are working, and on making this city a more livable and equitable place. I think a lot of the back story behind the work that the Center for an Urban Future is doing is similar to the work our center is doing here at Milano and the entire graduate school is doing--around trying to boost employment, lower unemployment, make jobs better in this city and strengthen the economy. As far as what the Center for an Urban Future is doing, my work is more around social policy and strengthening health care systems, schools--and all of that comes together in a piece.   

So, it’s wonderful to be hosting the Center for an Urban Future as it does its forums this spring around strengthening the city’s economy. We are going to be continuing our series of programs in the fall around social policies and immigrant communities in New York, and I hope you’ll keep your eyes open for that, and I hope you’ll keep your eyes open on the Milano Graduate School as well, which is deeply engaged in getting its students into the fields of practice, working with your kinds of organizations. So, welcome to the New School again and Marc Jahr, from Citibank will say a few words. 

Marc Jahr, Vice President, Citibank Community Development: Good morning. How are you? My name, as Andy said, is Marc Jahr. I’m the market director for Citibank Community Development in the metropolitan New York area. And on behalf of Citibank Community Development and Citibank, I’m quite pleased to welcome you to this event today. Citibank is sponsoring this series of four forums on the economic health and future of the city of New York. I’m also proud to be a member of the board of the Center for an Urban Future, so I guess on behalf of the board of directors of CUF, I want to welcome you as well to this event--this forum on the economic potential of the city’s academic research institutions.   

This is the third of four forums that we’re conducting. The first one was on the general economy and the economic engine of the city. The second one was a terrific one on the role of immigrants in the city’s economy. There is, of course, this one on the role of academic research institutions in the city’s economy. And lastly, I think we’re going to be doing one on venture capital in the city. You know, New York has an abundance of capital of assets. We have enormous financial capital, which my institution has a passing interest in. We have great social capital in the form of our neighborhoods and rich civic life. And as a city we also possess magnificent intellectual capital, embodied in part in our vibrant cultural institutions and powerful academic research institutions. This forum’s going to focus on those research institutions and on how their intellectual capital can be harnessed and can help contribute to the city’s economic prosperity. We have a terrific set of panelists today to explore this issue, and I’m going to turn it over to Jonathan Bowles, who’s the Research Director for the Center for an Urban Future, and he can introduce them and begin the discussion. Thank you. 

Jonathan Bowles, Research Director, Center for an Urban Future: Thank you, Marc, and of course thanks to Citibank for sponsoring this forum series. And, as always, to Andrew and the New School, thank you for being the host of this forum series. I’m really excited to have all these esteemed panelists here today and to have this event, and I’m pleased to see so many people in the room today about what I think is an incredibly important economic development issue for New York City, and one that rarely gets the attention it deserves. As Marc said, this is actually the third of four forums that the Center is presenting over the next few months, with support from Citibank, that build on the findings and recommendations from our recent “Engine Failure” report. If you aren’t familiar with the report that we did, you can check out--there’s a brief insert in the packet, about one page from that report. The report is on our website--www.nycfuture.org. And, one of the sections of that report – in that report we were really talking about: well, what are the opportunities for growth that lie ahead in the city’s economy? We don’t pretend to know all of them, but we put forth a number of areas where we think the city has an opportunity, where we think the city has untapped assets. And we had a section on this very issue. In the past, the Center has written a lot about the biotech sector in New York. You can also check out those reports on our website. Also, while this forum today is going to be focusing on the economic development potential of the city’s academic research institutions, let me also tell you that the Center recently issued a report--just last week--about the important role that CUNY is increasingly playing in workforce development and job training. A copy of that report--titled “CUNY on the Job”--is in your packets, as well. Now, let me introduce our panelists, and I’m just going to go in alphabetical order here.

We’re very pleased to have Andrew Alper here, who is the President of the New York City Economic Development Corporation. Since his appointment in January 2002, he’s overseen a number of changes at EDC that have gotten high marks from many business leaders across the city. I think it’s fair to say that under his watch, EDC has become less reactive and more focused on a wider group of industries that are important to the city’s economy. As part of that, he has restructured EDC to include a client coverage division, devoted to developing relationships between the public and private sectors. He set up industry desks, within the division, that focus on specific industries with competitive advantages in New York. One of those desks focuses on the bioscience sector. In fact, today two EDC employees are solely devoted to promoting and building this industry, and EDC has developed a biosciences presentation material for corporate outreach, created a new initiative to attract companies in the field, and developed a targeted world-wide prospect list. Prior to joining EDC, he was Managing Director and Partner at Goldman, Sachs and Co. 

Jeff Brancato, seated second from the end, is Director for Economic Development Initiatives at Science and Technology Ventures, Columbia University’s tech transfer office. He is responsible for efforts to more effectively measure the economic impact of Columbia’s research portfolio, and leverage its knowledge base for regional and national growth in sectors such as computing and communications, biotechnology and nanotechnology. Columbia is widely regarded as a leader in technology transfer. Its research enterprise exceeds $400 million in annual expenditures, and since 1998, its resulting intellectual property has generated – on average – $115 million in annual revenues. Previously, Jeff worked at the National Science Foundation and also held positions in the past as an Investigator in the New York City Council’s Office of Oversight and a Policy Research Specialist at the New York City Partnership.   

Right next to me is Dr. Ron Cohen, President and CEO and founder of Acorda Therapeutics, a biotechnology company that was founded here in the city, and which develops therapies for spinal cord injury, Multiple Sclerosis and other disorders of the central nervous system. I’ve known Ron for about five years now, and I know that he has long been one of the strongest advocates for growing New York City’s biotechnology industry. In fact, he is currently Chairman of the Board of the New York Biotechnology Association. He also serves on the advisory editorial board of BioPeople magazine and is a member of the Columbia Presbyterian Health Sciences Council. 

Next to him is Dr. Eva Cramer, who is Professor of Anatomy and Cell Biology, and also Vice President for Biotechnology and Scientific Affairs at the State University of New York Downstate Medical Center. While there’s been a lot of talk about the need to create incubators for biotech companies in New York, Eva is actually doing just that at SUNY Downstate. She is overseeing the development of a new biotech park, adjacent to Downstate, and helping to develop sites for biotechnology expansion and manufacturing in the Brooklyn Empire Zones. She has helped raise funds from the city, state and federal governments for the first 24,000 square feet of a 50,000 square foot biotech incubator building. She has attracted an anchor tenant to the biotech park – ImClone Systems – which has established their new division of small molecule compounds adjacent to the incubator. In addition, she has helped form the Brooklyn Biotech Consortium.

Finally, at the end of the table is David Hochman, who is a consultant in technology-based economic development, serving clients in the government and non-profit sectors nationwide through the Technology Partnership Practice at Battelle Memorial Institute. And also, locally, as an independent consultant. Prior to this work, he served as Deputy Director of the New Jersey Commission on Science and Technology, where he guided a $125 million capital investment program at the state’s research universities, the start-up of a dozen university-based academic and industrial research centers and associated incubators and the development of a comprehensive technology transfer system. In the early 1980s, he co-founded and served as COO of a high-tech firm based in New York City. I have to add that in addition to all of that, David is without question one of the most knowledgeable people in New York on issues related to how cities and states can achieve growth in technology-related industries. We’ve been fortunate at the Center for an Urban Future to tap him for advice on a number of occasions.   

Now, let me say that for those not familiar with the Center for an Urban Future’s forums, we’re trying to get these issues out there and I think the best way that we’ve always done that is really not to start with opening statements from any of the panelists, but really go right into discussions. And, so, for the last 30 or 40 minutes today, we’re going to open it up to questions from the audience, and I’ll let all of you ask questions of these distinguished panelists. 

I’m just going to really quickly try to frame the debate today, and I’m going to start by saying that – as we found in our “Engine Failure” report, New York faces some significant structural economic challenges going forward. For instance, many economists predict that the city’s finance sector will show a net job loss over the next 30 years. And largely because of globalization and advances in technology and telecommunications, many of the city’s high-end service businesses in sectors like advertising and publishing are also increasingly shifting units out of the city, or opting to create the bulk of their new jobs elsewhere. Now, these industries are still very important to the city, but obviously, in this climate, New York City needs to cultivate new sources of economic growth. With that in mind, this forum poses the question: could the city’s many high-caliber scientific research institutions be one potential engine of growth for the city’s economy in the years ahead? 

I’m going to open it up to the panel and, I think, if we could just start with that end and move forward – start with David, with this question: New York has among the world’s largest concentration of premier scientific institutions. These institutions already bring in more than $1 billion in federal research grants to the city, but some say they are assets that have gone relatively untapped and hold enormous potential to contribute even more significantly to the city’s economic growth in the future. Let me ask you all – could these institutions, do you believe that that’s true? Could they serve as an engine for growth for NYC in the years and decades ahead? And if so, how do we begin to tap into this potential?   

David Hochman, Senior Principal, Technology Partnership Practice: Thank you, Jonathan. Yes, there’s no question they have that potential, but if concentration of assets were sufficient, the national landscape would look a lot different. It’s necessary, but it is not sufficient. Let me also start – I’m also pleased to see the number of people who came today, it’s actually more than I’d feared, somewhat less than we’ve had for some of the other forums, and I think that’s telling. The issue of science and technology and its contribution to economic growth is not something that the traditional constituencies of the Center, of the New School, of folks in the Milano School who study these issues, it’s not something they’re entirely comfortable with.   
And, in part, that derives from the other important sectors in which New York City is a leader tends to submerge the role of science and technology. I just came on something the other day – we’re preparing to do, through Battelle, to do some work in Vancouver, which is a city that shares some characteristics with New York; a big port city, important international trade, large research enterprise. They did a city of British Columbian attitudes. 88% of British Columbians surveyed indicated that science and technology was important or very important to the present growth and development of BC’s people, industries and economy. Do we honestly think we could get a number like that in this region? I don’t think we could.   

Yet, there’s no question that universities are part of that – the report recommends exploiting our geography. Universities are a part of that geography, and I think universities in many communities have become accustomed to being the largest non-government employer. And so what they’ll do – easy Jeff – I’m going to dump on Columbia here for a moment. What they will do from time to time is they’ll come to an economic consultant and they’ll commission an impact study, and they’ll say: well, what difference do we make? And they’ll say: well, we have a $500 million expenditure budget, and you apply the following multipliers to our purchasing and the following multipliers to our payroll, and we have a multi-billion-dollar impact on the economy, as if anybody would care. It’s not like Columbia is going away tomorrow. Maybe there were chances for that in the past, but the sunk investment in the city is quite considerable.   

The issue is not the multiplier impact, the issue is recognizing yourself as a strategic actor in the regional economy. I just want to quickly read you the NIH list of the top ten cities – I’ll actually have to read eleven, because they treat certain metropolitan regions, they break up in different ways – Boston and Cambridge have separate listings: Boston, New York, Philadelphia, Baltimore, San Diego, Seattle, Los Angeles, Houston, Cambridge – listed separately, San Francisco and St. Louis. Now, if you take that list, I would say no more than a handful have what we would consider to be a thriving bioscience technology sector that’s high-growth, that’s creating jobs, that is not just idiosyncratic like an ImClone, but really represents an exciting sector. Boston, San Diego, San Francisco and possibly Seattle emerging now. 

So, we could be having this same discussion in Houston, where, in fact, I know they’ve had the same discussion. I’ve seen presentations done for the Houston Chamber in which they’ve literally said – substituting half a billion for one billion, in Jonathan’s question – well, we do half a billion dollars in research in Houston. If we were producing start-ups at the rate they do in the Bay Area, we’d be overflowing. And yet, they could count four or five in the last several years, and actually, almost all of them came from one institution – Baylor College of Medicine. And, Houston’s an entrepreneurial city like New York. Like New York, they have the problem that they have a sector – in our case: finance, media, entertainment; in their case: oil – that overshadows everything else they do, makes it difficult to focus on technology. So the issue is more than geography, more than concentration. The issues are cultural ones at the universities, and I hope as we go through the panel, we’ll be able to talk about this. It’s a question of leadership, of role modeling, of stated expectations – all those things interplay in a complex way and you kind of trace the roots from MIT to Stanford to University of California-San Diego to find institutions that are committed to engagement with their regional economy. It’s about more than technology transfer, it’s about a commitment to be part of the system. 

Jonathan Bowles: Thank you. Jeff?

Jeff Brancato, Director for Economic Development Initiatives, Science and Technology Ventures, Columbia University: No, David, I agree wholeheartedly with your comments, and particularly I understand that those economic impact studies are not perfect and that they don’t represent the strategic asset that universities can and should play in the region’s economies. And I know that that’s the focus of this panel today, but I think that it is important to understand the universities’ role in that broader context. Columbia spends $200 million a year on capital construction and renovation with NYC firms, and that translates into a number of jobs. I’m going to tie this in, because I know Andy’s been involved in a lot of discussions on the new proposal that we have to develop a campus in Manhattanville--that’s going to be a 500 million square foot project, built over 30 years, that’s going to create--average--1,000 construction jobs a year. So there’s a lot of money that gets pumped into the system.   

Now, let me also say about Manhattanville with respect to its role as a strategic platform for technology industries, that up to 50% of the space at that new site is going to be devoted to scientific research, and one of the things that we’re talking about very seriously and figuring out how to put into the configuration is: collaborative research space, incubator space, and other kinds of platforms so that Columbia scientists can work more effectively with industrial counterparts--both people who are already in the city, and to use that facility as a magnet for drawing new companies into New York that hadn’t previously been here. ‘So, in saying that, I think it’s important--like I said--to understand the broader context, with respect to economic impacts and how universities view themselves. 
I think, David, also, your comments on what I call the low signal-to-noise ratio for these kinds of issues are very important and it is a discussion about the culture of a region that we need to engage in and figure out how we get a handle on. Everybody talks about Silicon Valley and San Francisco and turning their cities into the next region for whatever the new, hot technology is. Well, the fact of the matter is that when San Francisco and Silicon Valley was initially beginning to shape itself as a technology region, there wasn’t very much there. It was a fairly young city, a new city that was being formed. And the only things that had come out of San Francisco that the nation had taken much notice of were the Gold Rush and a guy named DiMaggio. And so, at that point in time, they were building from a base that didn’t have very much. And so I think it was much easier to build something from nothing.

In New York City, we face a very different challenge. We’re already the world’s center for finance, for media, for fashion, for a number of other industries and we’re trying to build into that system a very robust technology element, drawing in biotech companies, pharmaceutical companies, Silicon Alley, and a number of other sectors. And I think there’s a real challenge to creating the kind of space for that – space on a literal, physical level. And that’s where, again, the NYC Economic Development Corporation comes in. But, also, space on a mental and a psychological level. These kinds of issues don’t command the attention of political officials, they don’t command the attention of the general public in NYC the way they do in other places. And that’s one of the real important reasons for dialogue like this, Jonathan, is that we need to get this dialogue out into the public and get people talking about it and get people to understand a little better that there are some opportunities here that we’re going to try and take advantage of

Jonathan Bowles: Great. Andy, in your comments, I hope you could at least also talk about the things that you are doing, because I know that you’ve obviously taken this issue very seriously, and your presence here is really important. So, in addition to the question that I posed, I’d love for you to talk a little bit about what EDC is doing now. 

Andrew Alper, President, New York City Economic Development Corporation: Sure. Let me first answer the question with an unequivocal yes. The academic research institutions can be--and in fact, have been--a major driver of our economic growth. You know, it’s interesting that--and you said it well, I think--that New York is sort of perceived as a center for finance, media, advertising, etc. The strength of this sector is hidden in plain sight, and in fact, if you look at New York City, on a per capita and aggregate basis, we actually have more students than Boston. People think about Boston as a college town. Nobody thinks about New York as a college town. We grant almost 500,000 degrees a year in 90 institutions, and it’s sort of lost in the noise of New York City.

This sector--overall, education as a broader definition, perhaps--accounts for about five percent of our employment, compared to about two percent for the average in the U.S. So, education’s already a much bigger percentage of our economy than it is in most parts of the country. Now, going forward, when we came into office a couple of years ago, we said: we need to stop corporate welfare. We can’t keep giving money out to companies that are going to stay here anyway or that really don’t need the incentives. Let’s figure out where our competitive advantage is and what we can do to take advantage of our competitive strengths.   

So, with the help of McKinsey and Co., we did a lot of work looking at New York City’s competitive advantages. One thing really jumped out: that when you look at sectors, the life science sector--broadly defined: biotech, pharma, medical equipment, infomatics, etc.--we have enormous strength. We have fundamental science programs, we have great clinical programs, we have a genetically diverse population, we train a huge number of the nation’s physicians--on and on and on. Great strengths, very bad ratio of strengths to realized commercial activity. So, we really believe that with the right attention--a large part of it’s marketing, frankly, it’s getting the story out properly--with the right level of incentives and I’m sure we’ll talk more about this, because we have to be smart about how we use tax dollars for incentives, and with the collaboration between the institutions and the public and private sector, we can actually make this a much bigger part of our economy and help diversify away from the FIRE sector. We don’t want to shrink FIRE, obviously.

But John Sexton, I think, says it well. He helped facilitate a session for economic development for city commissioners. And in his talk with us, he said: everybody talks about FIRE, we should talk about FIRE and ICE--Intellectual, Cultural, Educational--because the ICE sector is probably as big a potential driver of our economy as the FIRE sector.   

Eva Cramer, Ph.D., Vice President for Biotechnology and 
Scientific Affairs, SUNY Downstate Health Science Center: 
Well, I agree with everybody else, obviously. But one point I would like to make is I think that what we need to do is to change the culture in our research institutions. And, basically, when I was a scientist being trained, I was not trained to do my research and then make it commercial. Actually, at the time I was being trained, that was really a bad thing. And, so, in some of our institutions, the culture is not that you should do your research and then commercialize it. I think in order for us to really have our research institutions really start to spin off companies, the whole culture in these institutions has to change. 
So, for example, one of the things that we are doing at Downstate is we started a course called “Entrepreneurship in Academia.” And, essentially, that course was meant for everyone at the institution – from the administrators to the faculty to all of our students. We have students who are both medical students, Ph.D. students, physical therapists, occupational therapists, nurses – they were all invited to come to take the course. And it turned out to be a wonderful experience, because it became incredibly stimulating to all of these different people, because they were not thinking this way at all. And in the course, for example, we had people in the beginning of the course give examples of how they went about taking an idea – we had a Ph.D. talk about their discovery, taking it commercialize it, and we had an M.D. who was an orthopedic surgeon, who talked about how he was just taking care of people and it became very obvious to him that if he made these certain changes, he would have a device that would be very useful, and how he went from that idea to actually starting a company. And, you know, just watching the people in the audience, it was amazingly stimulating to these people to think in a whole new way, and I think that one of the things we need to do in New York is – because we certainly have the research institutions, we certainly have the educational institutions – is just change the culture and I think it begins with young people and with the older people, too. And just change the way people start to think about how they do things.

Ron Cohen, M.D., President & CEO, Acorda Therapeutics; Chairman, New York Biotechnology Association:    Well, I can see, as a friend of mine likes to say, that we’re all in violent agreement here. And what troubles me more than anything is that we’ve been in violent agreement about these issues for at least the last decade, since I came back to New York to establish my current biotech company, Acorda, which is up in Westchester. We’ve been talking about these issues since then, at least, and the conversations always strike me as very much the same, the white papers always strike me as very much the same, and the conclusions always strike me as very much the same. So, my conclusion has got to be that the answers are pretty much there and have been there for a long time, and the reason we keep reinventing this particular wheel is that no one’s really acting on it in a concerted way, and no one’s acting on the answers in a concerted way. And I have to be honest with you, if it hadn’t been Jonathan who asked me to be here, I probably wouldn’t have attended, because I’ve attended so many of these forums over the last ten years, and I’m tired of it. I don’t have anything new to say.

Now that I’ve expressed to you my clinical depression--are there any good psychiatrists in the audience? I’ll try and present what I perceive to be a few glimmers of light in the wall that have emerged over the last short period of time. I think one of them is the EDC. Under Andy’s leadership and others at the EDC, I’ve been impressed that there really is someone who’s in a position to do something who gets it, finally. And that has not been the case, in my experience, until now. So, I’ve been very impressed with the work the EDC has done in preparing the groundwork, at least trying to get some initiatives going that will move the ball forward for us all. I think, on the university front--Columbia has been in the vanguard for some time and, unfortunately, I haven’t seen a mad rash by the rest of the academic institutions in New York to follow. There have been sporadic indications that people are following, and, truth in advertising, I am a Columbia Medical School grad, so I have some, no doubt, some bias there. But I can bolster that by pointing out that for years now, Columbia has had the Audubon biotech facility, in which they have spun out company after company after company from their home-grown technology. And we’re still talking about most of the other incubators. There are some at SUNY now--SUNY Downstate, which is terrific, thanks to Eva and her colleagues. It’s happening slowly, but we should have incubators all over the place by now.   

We should have 100 companies, 200 companies incubating in the New York City area, and not the relative handful that we do. There is no doubt that there is a huge disconnect between our resources and what should be the economic and physical realities, particularly within my industry – biotech – and pharma and so forth. I will share with you that yesterday I was down in Washington, DC for a legislative fly-in, which the biotech industry organization every year. And they have executives from the biotech industry come in, meet with senators, congressional representatives, their staffers, and try to put forth our agenda. And we did something unusual yesterday--we had a New York delegation that New York Biotech Association organized. And we met with Sherwood Boehlert, who is the Chair of the Science Committee in the House--it’s a pretty powerful position. And Senator Clinton sent three of her staffers, several other congressional reps sent their staffers and Governor Pataki sent one of his deputy--I can’t remember the title now – but, one of his higher-up staffers.   

And we presented a summary of New York’s assets that ought to, by rights, make us not even in the top five, but frankly number one without question in biotech for the foreseeable future. And yet, we presented additional data demonstrating that we are not even in the top five right now in the U.S. in biotech, economically speaking. And that’s despite the fact that we’ve had a string of magnificent successes this year alone in the form of ImClone, Eye Tech Pharmaceuticals, news just this week from OSI Pharmaceuticals in Long Island--each having terrific results on their lead product or approval of their lead product and pole-vaulting their valuations by several billion dollars each as a result of that news.

That gives you a sense of what the potential is of this industry and as I mentioned yesterday to the congressional staffers and Commissioner Boehlert, you can see with OSI, which was founded in New York in 1983 and required hundreds of millions of dollars of investment and twenty years, that clearly this week they were an overnight success. And this is the nature of the industry, so if you want to reap the rewards of a biotech sector, it’s not like software where you put the software together with some clever engineers and within three to six months, you put it on the market and there you are. This is an industry that demands enormous investment, enormous patience, vision and strategy and that’s something that government in general is bad at, and it is something that our universities, in New York in particular, have proved to be bad at.   

If you go to Boston, Harvard, MIT--they get it. They have, it’s baked in now. They are entrepreneurial cultures. They collaborate with each other, with Boston University, with other universities in the area, to spin off companies, to aid and abet the translation of their intellectual wealth into goods that benefit society. So they get that that’s part of their mission now. Stanford, UCSD in San Diego, Scripps Institute--they get it. They do the same thing. Duke University and Research Triangle Park, University of North Carolina – they get it. And they aid and abet the development of their intellectual wealth into economic goods. New York doesn’t get it, yet. They’re starting to--different segments are. 
But going back to some points that my co-panelists made earlier, the missing link here is, I think, our universities. We do not have an entrepreneurial culture, with some exceptions, and I think Columbia stands out and then a couple of others are beginning to come around. But there is no entrepreneurial culture baked in, and therefore you get a lot of internecine rivalry, competition, but no action. And what needs to be done is the leadership at these universities needs to install smart, aggressive industry-savvy people in their tech transfer offices, and indeed the leadership itself has to preach the gospel of translational research.

Because up until now--I went to Columbia and I will tell you that when I got out, it wasn’t that long ago. If I had said: You know what? I’m not going to go to finish a fellowship and run a medical clinic somewhere, set up a practice or do research academically, I’m going to go out and start a biotech company that will try to take that research and turn it into therapies, I would have been ostracized. Would have been absolutely ostracized. People would have said: that’s crazy, you’re polluting the purity of academic science. Now, to me, that’s a perversion. Because why does academic science exist? Yes, it exists for the philosophical reasons – because knowledge is a goal unto itself, it’s good for its own sake. But, you know what? When we’re spending $27 billion a year of our tax money at the NIH to fund grants, I think society deserves something more out of that research and I think the people who run our universities here in New York need to understand that and preach that and act on it.   

Jonathan Bowles: Great. Well, you know what? I think there’s two major issues here. And from this point, I want to say that this is going to be ad hoc. Jump in, whoever wants to. If you have a question, if you want to make a point, go ahead and do that. We’re going to have a free-for-all, but I’m going to pose a question here. We’ve talked about two things – the role of the city in all this, and I think that over the last several years, when people talk about the bioscience sector or other technology sectors, a lot of people often say: well, what is the city doing? What is the state doing? And I think that’s an important question. But I think that what Eva and Ron and David and pretty much everybody talked about was the importance of the research institutions, of the universities. And I’ve done a lot of research on this issue myself, and I have flat-out found out from so many people in New York and across the country, that our universities--just like Ron says--are really not up to the grade, and other than Columbia, I’ve been told, are downright atrocious on this. So, David, I know, has studied this nationwide--is that the case? And what do we begin to do? Why are we not getting it here in New York?   

David Hochman: Well, Ron’s comments remind me of what the great physicist Verner Heisenberg said about his counter-intuitive interpretation of quantum mechanics, that faced so much resistance back in the ‘20s and ‘30s. He said: you don’t convert the old generation, you wait for them to die off. And, what I think has happened in New York is precisely because our institutions are at the top of the scale on prestige and size, is we have tended to gather deans and presidents who are at the tail ends of their careers and grew up in the culture that Ron and Eva both described [from] twenty or thirty years ago. It’s very difficult for them to change. Now, a dean will tell you from here till tomorrow that if the city will just buy us our next research building, economic development is right around the corner. Because they’ve learned the vocabulary, but they haven’t learned the syntax. They haven’t learned how it fits together. 
Now, what can you do? Well, there are a couple of things. If you look at the universities that we’ve all mentioned, there’s a mixture – there’s some public, some private, you can’t really pin it on that. There is a trend among some public universities that I would love to see emulated at SUNY, at CUNY, and I’d sure love to see Columbia and NYU do it, as well--to actually include economic development in their mission statement. The traditional tri-partide mission is education, research and community service. Well, here’s the mission statement in the current draft strategic plan from New Jersey Institute of Technology, a moderate-sized research institution just across the river from us in Newark. The first one is education--I won’t read you the verbiage. The second one is research. The third one is: “In contributing to economic development through the state’s larges business incubator system, workforce development, joint ventures with government and the business community and through the development of intellectual property.” Wow. And service comes after that. I mean, to them, economic development is not community service, it is something distinct. 
Now, when you look at this--some of this is from land grant tradition, which we don’t share here in the Northeast. We have this peculiar system where a private university, Cornell, is our land grant. So we don’t have the sort of NC state industrial engagement or Purdue or a place like that. We don’t have that. But, it strikes me that one of the things--Jeff poked me and said: you know, we’ve got to move this away from all bioscience, and I agree completely. One of the things that stands out for me, when you think about what has led institutions to develop these components of their mission statements, is that we don’t have in New York a full-range, absolutely top-flight engineering school. And engineers--academic engineers, even--have traditionally seen things differently from academic life scientists. Now, it’s true, there are excellent individual programs at Columbia, at Poly and at City College, which most people don’t appreciate. If you put those three together, there are elements of a good engineering program. But, I will tell you that if you add up the engineering R&D expenditures of those three institutions, you are still at one third of what MIT spends on life sciences. Biology is the largest research department at MIT, by the way. You are still at one third of what MIT spends on life sciences.   

And I think, in some respects, we’re still paying a heavy price here for NYU’s decision in 1973 to close its [University] Heights campus and, in doing so, effectively attach its engineering school to Polytechnic University, which is an excellent but small and highly conservatively-run institution. And I think that not having NYU and Columbia competing with each other has been a real problem. I think that if we had had that from 1973 forward, both engineering schools would be bigger, both would be better. And, again, to put it in context, if you look at the Bay Area, where it is engineering that drove the engagement of Stanford and of Berkeley with Silicon Valley--if you look at that area, both Stanford and Berkeley do $120 million a year in engineering research. That’s roughly--each one of them--roughly five times the total of our engineering expenditures in the city. I’m not sure what we do about that, but I think it’s a serious problem that our academic institutions are fundamentally undiversified.

Jonathan Bowles: Jeff, Columbia often is called the leading institution in New York on technology transfer. I’ve heard from a lot of people over the years that Columbia is one institution that gets it, even though a lot of times I’ve heard a lot of criticisms of Columbia in the past, as well. But, what are you doing there that you think could be emulated and what do Columbia and other institutions need to do more of in the future?   

Jeff Brancato Well, the first thing I’d like to say is that it’s important to separate out technology transfer from economic development or regional economic development, because they’re not the same thing, and I think generally people assume that tech transfer offices have an economic development mission as part of their focus, and that’s just not true. Tech transfer offices are business organizations within universities that are designed to maximize revenue for the benefit of those universities. And there is no geographic-specific component to that, unless that’s something that’s built in. In public universities, that’s often built in because public universities are ultimately responsible to the state legislature and the governor. But for private universities, there’s no specific mandate to commercialize locally or within the region, and so we have to think in different terms.   

The other thing that’s important to understand, with respect to tech transfer offices is that the technology licensing officers are ideally good business people. They don’t think about the kinds of things that go into regional economic development, they’re trying to do deals. And, so, unless--as I said, unless that’s something that’s built in at an institutional level, you won’t necessarily see outputs of that. Now, that being said, I think tech transfer offices can play an important role in assisting and implementing an economic development mission of a university. Columbia University, over the past 10 or 15 years, has generated about 65 start-ups. Roughly 80% of them, I think, are still in business and half of them are in the city. A lot of these are very small companies, but we’re hoping that they grow into larger companies.   

One thing that I’d like to say in response to Ron, about Audubon, is that while, yes, Audubon has served a very vital role for incubating life science companies that have come out of Columbia University labs, that’s not their sole function. The Audubon incubator is not operated for the sole benefit of Columbia technologies. Roughly two-thirds of the companies that have come through Audubon since it opened in 1994 have had no relationship to the university, with respect to the technologies that they’re developing. They’re people who have come in off the street, come from other academic institutions, and their relationship with Columbia is strictly a tenant-landlord relationship. They’re commercializing other technologies that they brought with them, as opposed to faculty members and graduate students that are starting up companies based on Columbia technologies. And so, I would say to Ron that, yes, we do need more incubators and we need incubators that all of the universities and all of the entrepreneurs in the city can have access to, and that’s something that I think is very important.   

And then the last thing that I want to say about tech transfer offices is that on the financial side, most tech transfer offices are not revenue earners for the universities. They spend more money than they earn, and that’s true for most academic tech transfer offices around the country. And you have to understand – and this is something that people both inside and outside the university need to understand--is that they need to make an investment. If they want their tech transfer offices to be successful, if they want them to have an economic development mission and to be successful at that, it’s going to require resources that are invested, and those are resources that don’t get devoted to other needs that those institutions have.

And so I think that that changes the equation a little bit because you have to convince university administrators that they should be spending money on these kinds of activities rather than spending them on their research programs for their own faculty members, rather than spending them on their curricular development, on their education programs, rather than spending them on building housing for students and other administrative functions. And so I think it’s important for folks on the outside to understand those issues so that it doesn’t devolve into a discussion of: well, gee, if the universities only understood better, if they only got it, then everything would be fine. Because I think the challenge of… [tape cuts off briefly] …the primary factor for creating technology-based economic development in New York City lies with changing the culture within the universities. I think it’s a much broader issue and a much more complex problem. 
Jonathan Bowles: Well, that’s probably the case. Let me say that before we get into exactly what EDC is doing now, I just want to throw it out to everybody, including you Andy--when we talk about changing the entrepreneurial culture of the institutions. David also mentioned that a lot of times the institutions have come and said: well, if the city just builds us a research park, then we’ll have economic development for you. I’m curious--is there a role, this is to everybody on the panel--is there a role for the city in somehow leveraging the institutions? If the city had incentives, if there was more of a focus on science and technology in the city, is there a way that the city, through their involvement, could somehow leverage the universities, the institutions, to become more entrepreneurial, to try to spin off more companies, to have economic development more as their focus, to commit dollars to research parks and incubators? Any thoughts, anybody? 
David Hochman :I don’t want to monopolize, but the answer is, yes. I think there are some very significant ways the city could participate if it’s smart. By the way, I think the city was smart with Audubon, in that as I understand the deal that led to Audubon, it was one of these [where] the dean comes to you and says: build me a research building. And EDC at that time came back and said: no we think we’ll build a commercial building first. And I think that’s something that should be kept in mind as I’m sure NYU approaches you about the East River science park, is why is the research building the first priority right now? But there are ways. As Jonathan mentioned in my bio, I worked for the state of New Jersey for some time. The state of New Jersey population is about the size of the city of New York. General fund budgets are about the same, per capita expenditure is about the same--in many ways, I think of New Jersey as an analog to the city. New Jersey, like, at this point 47 or 48 of the 50 states, has some organized effort to draw technology out of the research institutions, create friendly environments for start-up formation and growth. New York State has one, of course--it’s called NYSTAR these days, but who’s at the table representing the city? 
I feel about NYSTAR somewhat--even though it’s a fine organization-- somewhat similarly to the way I feel about the National Science Foundation or DARPA or DOE or any other federal agency that sponsors research, which is when a seed of an idea emerges and you could build a company around it, the sponsor doesn’t particularly care where that happens. If it’s a federal sponsor, they don’t care where it happens in the nation. If it’s a New York State sponsor, they don’t care where it happens in the state. Only we can protect our own interests as a city, and I think there would be a good case to be made for a modestly-funded New York City technology program that did not try to duplicate what the federal agencies do or what NYSTAR does, but fill in the gaps. For example, in technology transfer, exactly because, as Jeff said, these are not charitable operations. They are in business to maximize ultimate return. And even though the ultimate return might be maximized through a spin-off, it might be the risks are perceived as much higher and the office goes with a license to a New Jersey pharmaceutical firm that manufactures the product in Puerto Rico.   

What happened to our local benefit? There might be substantial opportunities to provide the kind of funding – some would call it a commercialization fund or proof-of-concept fund or even pre-seed funding – that would take one of these germs of an idea that may be developed through federal funding, to take it the next step. It’s no longer an academic project, it’s not suitable for federal peer-reviewed grant funding, it’s not in the academic realm anymore and yet the institution is not inclined to advance the several hundred thousand dollars it might take to take it to the next step to see if the concept works at laboratory scale, if you can advance it the next step.   

To provide the kind of funding that institutions could draw on to do that, at no immediate financial risk to themselves, would give the city a seat at the table when Science and Technology Ventures sits down and says: Okay, now we’ve proved the concept to the point where we think we can attract a venture capitalist to form a company around this. And the venture guy comes from the Bay Area, the company’s going to go to the Bay Area. Well, it makes a big difference if you or your representative are able to sit at that table and say: The hell they are going to the Bay Area! We have $300,000 in the commercialization research that led to this, let’s talk about some way to keep them local. I think simple, low-cost interventions like that, and also when we get to talk about venture capital, on the venture side, could probably make a very significant difference in the way our institutions behave when it comes time to make those decisions. 
Andrew Alper: Can I just come back for a second to the question of tech transfer and just react a little bit? Because I think that too often--this is not a New York problem, this is probably a worldwide problem--but too often, the objective is to maximize revenue when in fact, the mission should be to maximize the value of the institution. It doesn’t have to be economic development for the jurisdiction you’re in, but to maximize the value of the institution. I only know something about this because in my spare time, I’m Vice Chairman of the Board of University of Chicago. It has nothing to do with New York City, but I spend a lot of time in Chicago thinking about these issues. And these institutions are in incredibly competitive businesses and they compete for academic talent. Roughly the top five percent of academics in the institutions generate like 80 percent of the really high-quality research, etc. And to attract those really superstar academics and doctors and scientists, it’s more than just money. 
You also have to provide the facilities, you have to provide the research grants, you have to provide the commercial opportunities so you can keep them. And I think as universities think about tech transfer, they have to think more broadly. Not just trying to maximize the revenue stream in the near term, but trying to maximize what really makes them great, which is a magnet for talent. And if we had more of a commercial bias towards commercializing technology vs. licensing it, I think you might find that you actually maximize the value of the institution, perhaps not maximizing short-term revenue, but you will maximize the value of the institution. It’s funny, how infrequently we discuss it – the board discusses fundraising and development, there’s not enough of a connection in Chicago between tech transfer and our strategic mission.   

Jeff Brancato: And, Andy, that is something that’s borne out at Columbia. My boss, who’s the head of the tech transfer office, likes to tell a story that when he first started at Columbia, when new faculty members were being recruited to the institution, nobody ever came to see him. They weren’t interested – whether they were young scientists just finishing post-docs or more senior folks – they never came to see the director of the tech transfer office, because they didn’t envision that as being a priority for them with respect to choosing where they wanted to work, where they wanted to do their research. But now, he is getting a stream of recruits coming into his office, because the dean brings them in to give their talk and to meet with other faculty members and they say: I want to talk to the head of the tech transfer office. Because they see that their career as a scientist is going to include translational research, is going to include technology transfer, is going to include commercialization of their research results and possibly even starting a company. So, they want to know what kinds of resources the university has at their disposal and devotes to these kinds of activities. So, I think that’s a very important point.   

If you talk to folks at the Columbia University Medical Center, I think they’ll tell you that we’re getting a point where, in terms of competing against our set of peer institutions for top-notch faculty, the fact that there’s a burgeoning biotech industry in the Bay Area, that there’s one in Boston, that there’s one in San Diego, puts New York City at a competitive disadvantage and puts Columbia at a competitive disadvantage. And so it is certainly in our interest to help spur that process along. But the flip side is – don’t forget that that is not by definition geographic-specific. My office’s mission statement does say: to commercialize our technologies for the economic benefit of the university and for the greater social benefit. That’s embedded in our mission statement and that’s something that our Board of Trustees has approved as a mission for our office. But, again, that is not necessarily geographic-specific, and Columbia has start-up companies that are on the West Coast. Sometimes it’s because faculty members are collaborating with other faculty members in other parts of the country, sometimes it’s because that’s where the venture capitalist is and the venture capitalist wants the company near him or her. And so those decisions get made according to a long list of factors.   

David Hochman: Would city money weight that calculation, the way I’ve suggested? 
Jeff Brancato: Yes. City money at an early stage would provide us with more leverage to keep companies locally, and that gets to a bigger issue of investing while the risk is still somewhat high but where there’s an opportunity to have a significant influence on the ultimate decision.   
Andrew Alper: One of the first things that we did when we came into office – we had a $10 million venture capital fund for this industry, and we actually shut it down. Not because it wasn’t important, but because we said that New York City has a great financial sector and it didn’t strike us that our competitive advantage as city government was to be a venture capitalist. We know that politicians have a short attention span, and the odds of having winning investments is pretty low in this industry. You have to make a lot of investments, most of them don’t work. And we felt that we were better off taking our $10 million and putting it in areas where we--where only the city can make a difference, where the private sector can’t do and then going out and really jawboning, trying to get venture capitalists to spend more time and attention. The New York City Investment Fund, with the New York City Partnership, I think, is doing just this--trying to figure out that as they make investments, they put a New York City hook into the company. 

Ron Cohen: I’m delighted that Andy brought this up because he just gave me a hole in the line to run through. I would’ve created my own hole to do it. I’m a doctor, I’m here to help, too. I’m going to build up, quickly, to the counter-point I want to make to what Andy just said. First, I want to build on some ideas that I heard from Jeff and David. First of all, Jeff mentioned that in the last several years, there have been 65 start-ups that have--was it spun out of Columbia or come through the Audubon?   

Jeff Brancato: No, Columbia. 
Ron Cohen: Columbia. And he said that half of them are still in the city. That means that half of them are not still in the city, and that is a critical point because at New York Biotech Association, one of the things we did was look at figures for the companies that really get started here or that get started based on technology from our own professors and laboratories. And what we discovered is that the majority of biotech companies that are founded on or strongly related to our own technology are not in the city and not even in the state anymore. And in fact, of the remaining one half of companies that Jeff mentioned, I will wager that if things keep going the way they are going, very soon another half of those will be out of here.   

Because what we have now--Jeff did say earlier that it’s an extremely complicated set of issues and he’s absolutely right, and each one is related to the other. But one of the critical issues you see now is that even when we start companies here, more often than not, they move out of here. They move to New Jersey, the move to Pennsylvania, in some cases they go to California, of all places. And we have no structure, no incentive process for ensuring that companies that we start here, with our intellectual property that should be contributing to the social good in New York City and certainly in the state, we don’t have any structure whatsoever that incentivizes against that process. And, so, that’s going to keep happening until we figure it.   

Now, I think it is also true that Columbia [is] just illustrative of the fact that they get it, that they bring these new professors and would-be professor candidates in to see the tech transfer office. Because as David said earlier, absolutely, you wait for the old guard to die out or at least to retire before you get fundamental change. And at Columbia, there’s been fundamental change and they do get that in the new generation of scientists, professors, ambitious Ph.D.s, it’s now actually a big plus if you have an entrepreneurial culture. Because embedded in their psyche is the notion of: hey, if I discover something, I might not only win a Lasker or Nobel Prize, I might actually get to start a company and make something out of it. So it’s a powerful incentive and, in fact, we lose people. We lose people that otherwise would come to our institutions because they prefer to go to Boston or California or somewhere where there is this rich capability of turning their discoveries into companies. So, that’s all by way of background.

The hole I want to run through is the following. When I got back to New York with my fledgling company that was still really on paper, in 1995, I was sent by the EDC to this venture capital group which they had seeded with $10 million. And I was all excited, and I was thinking: Hey, this is great. Finally, New York gets it and we’re going to get some help in getting this thing off the ground at a stage when it was very difficult to get the venture capitalists in. It was too early, too high-risk at that point. So I went in and did my presentation, and the fellow sitting across from me – who I will not name--smiled indulgently for two hours, and I thought: This is great. And at the end, he said: You know what, Ron? That is a tremendous idea. Very interesting and you know, if we had any i
Jeff Brancato: And they wanted to stay in New York City.   
Ron Cohen: So, that was the point. They wanted to stay in New York. And Alexandria looked at it. They actually called me, among other CEOs, just to get some due diligence on the area. And in the end, they concluded that the risks were too great for developing here in New York and they were going to go and do it in New Jersey. Now, that perception has got to change. And so, ideally, New York ought to be getting people like Joel Marcus. They ought to be getting panels--a think tank of people like Joel Marcus, major VCs, venture capitalists, not only from New York, from Boston, California, elsewhere. Put them in a room and say: Here are some ideas, what are your ideas that’ll make it more attractive for you to invest here? That’s where you’ve got to start. Because if we--if the city, the government gets into the business of building facilities, you’re nibbling at the margins. If you put in a little tax provision, well, that’s great. But it’s not big enough to put us where we ought to be at this point. You put a few hundred million dollars right out there and say: “We’re committed,” that’s going to change things.   

Jonathan Bowles :You know--David, I’ll let you talk in a second, but I also want to say that you mentioned earlier, Jeff mentioned, that we don’t just want to focus on biotech here today.