Tuesday, February 19, 2008

Apparently Not Much Grows in Gorilla Shit

Last summer an angry Graham went before the Pennsylvania Senate to argue against extending Pennsylvania's Right-To-Know law to state-related universities such as Penn State. He threw a lot of shit against the wall that day and some of it must of stuck because..... well....because he got what he wanted with the help of Jake Corman (R-Old Main). Let's take a closer look at one of the turds he hurled that summer day.
Each year Penn State spins out companies and licenses technology. The details of the deals surrounding licensing fees, royalty structure and equity stake vary with each technology. If the details of these deals were publicly available, the ability to negotiate the best terms would be compromised. Senate Bill 1 would make Pennsylvania's public research universities, and as a result the Commonwealth, less attractive for such partnerships. This would hurt Pennsylvania's economic development goals.
You see making Penn State comply with open record requests would be detrimental to the Commonwealth's economic development goals, in part, because making public the details of equity deals with spin outs would mean it would be harder for Penn State to get good deals and hence -I'm guessing here, because there are a few gaps in Graham's reasoning-there would be fewer such deals. Fewer such deals are bad, at least in terms of the way these things are supposed to work, because it would mean fewer jobs created. But we know from Sunday's CDT, that Penn State hasn't spun out a major employer in Centre County in the past twenty years. So Graham's basically bullshitting. I know big surprise.

However, it is not the case that Penn State has had no spin outs in the last twenty years. An anonymous commenter informs us that there have been at least four high-tech spin outs within the past twenty years, Zetachron, Chiral Quest, Salimetrics, and Anacor.

How many jobs have these companies created in Centre County and the Commonwealth?

To answer this question, I went to the Pennsylvania Center for Workforce Information and Analysis database and fed in the company names.

The only one that came up was Salimetrics. It is located in Innovation Park, the Penn State research park, and it employs between 20 and 49 people.

Next I did a Google Search on the companies. Zetachron has no Web page, at least that I could find, but Chiral Quest and Anacor do.

Chiral Quest was founded in 2000 by Xumu Zhang, who at the time was on the Penn State faculty, but Xumu Zhang is no longer at Penn State. He moved to Rutgers last year. And Chiral Quest hasn't generated a single job for Centre County or the Commonwealth. It has a research facility in Princeton, New Jersey and a manufacturing plant in China.

Anacor was co-founded by Penn State Evan Pugh Professor of Chemistry Steve Benkovic in 2002. Relax, he's still at Penn State. But where is Anacor? From its Web site it would appear to exist only in cyberspace. There is no address listed for the company. It is advertising several job openings, but it gives no information on where the jobs are physically located. Job candidates are instructed to email their applications.

Next I turned to 411.com. In a national Yellow Pages search, Zetachron was MIA. I think we can safely conclude that Zetachron is belly up. Hence it currently accounts for zero Centre County and Commonwealth jobs.

Anacor did show up in a national Yellow Pages search. It has two listings both in Palo Alto,California. That would mean that its contribution to the Centre County-Commonwealth job count is also zero.

Based on this analysis, the total number of high-tech jobs created in Centre County and the Commonwealth by companies spun out by Penn State in the past twenty year is between 20 and 49.

And one other thing. Of the three companies still in existence, the two which are research based, Anacor and Chiral Quest,. have located near Stanford and Princeton, respectively. That isn't exactly a vote of confidence for the Penn State research enterprise.

Back to my original point. Graham thinks that Penn State should be exempt from open record requests, in order to create another 50 or so jobs in the next twenty years. Yeah, I think that's fair: About about two jobs a year in return for no accountability.

Throw Jake Corman out of office.

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Anonymous said...

Well, Veblen, I'm back. Perhaps your #1 fan after two visits. You took my comments out of context, but your thesis is more-or-less correct: PSU spin-outs don't ensure local jobs. I could list a bunch of other small local companies, but that's not productive. You want to argue about economic development vis-a-vis PSU's expenditures. There are a number of challenges to capturing PSU economic dev't locally:

Imagine you need a computer programmer in SC. We have computer programmers, they just all happen to have jobs. You want to convince them to leave Raytheon, or Minitab, or the blue tit of DOS for a start-up with six months' funding. Or better yet, relocate from the West Coast! Not so easy.

Now, what if you have a huge deal, able to attract $5 million (e.g., Anacor) in venture capital. In this instance you need 10 scientists and there's virtually no shot at doing this effectively in SC vs. silicon valley.

The jobs from PSU technologies often migrate, but so too do PSU alumni and faculty. The majority of research funding comes from Federal sources. I fail to share your outrage.


BTW, Zetachron merged with Watson Pharmaceuticals (WPI) in 1992. All the jobs went West; much of the wealth created was recycled locally.

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