Monthly Archives: December 2018

Brother To Brother: Sorry Jarrett, Athletics Can Not Save Us, But Research & Entrepreneurship Can

Posted on December 19, 2018 by | 2 comments

“And this is going to piss Will off when I say this, but go get a football coach.” – Jarrett Carter

I open this “letter” to my dear brother saying that we have known each other for many years and this debate maybe as old as our friendship. Even I will admit that at one point I too believed that if HBCUs could return to obtainment of our community’s physical talent on the football field and basketball courts that our schools would reap the financial rewards they so desperately need. Unfortunately, Michael Vick, LeBron James nor his son, or the likes of Zion Williamson is walking through our doors anytime soon. Instead, we are going to have to rely on what truly drives the economics and finances of higher education institutions and that is research, entrepreneurship, and good old fashioned Afro-Brain Power.

Let me first address why we have absolutely no chance in sports savings us. I do not mean we have a little chance, I mean we have no chance. None. Zero. Negative zero even. Unfortunately, HBCUs even if LeBron James had gone to one can not fight the shiny uniforms that billionaire boosters like Nike’s Phil Knight rolls out to the University of Oregon every other week or the tens of millions that Kevin Plank the founder of Under Armour has poured into the University of Maryland’s athletic facilities. The former has so much influence in the state of Oregon that when he wanted to build a headquarters dedicated just to football that apparently ran afoul with the state building process – the state changed it. Yes, the state changed it. Both of these programs mentioned until these billionaire boosters got involved were marginal programs at best and are now most would agree significantly better, but by no means powerhouses. Essentially, Knight and Plank have poured over $500 million into these programs combined to take them from the basement of Division 1 college athletics to middle of the pack and sometime contenders. Between these two men, they are worth a combined almost $40 billion. It is safe to say the interest on their wealth alone allows for eight and nine figure donations to their alma maters in perpetuity if they so choose. Ironically or not, both of these men were college athletes who became entrepreneurs and not professional athletes and whose products were essentially developed in their time on campus, but more on this later.

Secondly, the ROI on athletes going pro or schools turning a profit on athletics is just not even worth a paragraph so I will keep this short. The NFL, NBA, and NCAA continues to squeeze HBCUs out of professional sports. HBCUers in the NBA is more a historic statement than current or future one. This year’s list of HBCU alumni in the NFL and their earnings: 22 players representing 16 HBCUs and combining for almost $40 million in earnings, which is the lowest earnings figure since HBCU Money started tracking the data. For perspective, that $40 million is 0.1 percent of Knight and Plank’s combined net worth. To further drive the point home, if Knight and Plank put all of their wealth into a savings account paying 1 percent, it would earn $400 million – ten times what all HBCU players will earn in 2018. Further to the point, because these careers are so short, major donations from these players who have tasted professional glory have been few and far between. I am still waiting on Jerry Rice to make a public donation of the seven figure variety – not a pledge, Jerry – to Mississippi Valley State University. Yet, schools like Prairie View A&M University spend $60 million on a new stadium that struggles to sellout. Lest we forget the almost disaster dome Jackson State University wanted to build at $200 million. If your school does not have access to a major TV network contract, the chances of you making money is almost slim to none and networks offer those contracts because they want to sell advertisements – networks I might add that are not African American owned and represent a media that shows a consistent disdain for our institutions. How do you sell that level of advertisements? Large fan bases, pure and simple math. The University of Michigan or Alabama on any given Saturday can put 100,000 fans in the seats and probably another million plus eyeballs glued to the television screen. HBCUs (individually) do not have that kind of scale nor the means to create it. So much for a short paragraph, but the problem is deep and the solution even deeper. The solution to building sustainable institutions lies in a holistic and committed approach to research and entrepreneurship on HBCU campuses.

HBCUs (and our alumni) for whatever reason have never really committed to research. Even during the days of George Washington Carver at Tuskegee Institute there were rumors that his research was looked at more in passing than integral to the future of the institution. I dare imagine what Tuskegee would be like had Carver or the institution had the patent on peanut butter. The global peanut butter industry is worth an estimated $3 billion as of 2017 and demand is growing at 6 percent annually according to CAGR. An article in the New Yorker reported, “In 2012, American universities earned $2.6 billion from patent royalties, according to the Association of University Technology Managers. The tech-transfer model is entrenched in medical schools and in biotech development.” As noted in our piece about HBCUs and patents, the University of Wisconsin and Carnegie-Mellon University garnered patent settlements in their favor to the tune of $1.2 billion, an amount that is virtually half of all HBCU endowments combined and almost three times what HBCU spend on research.

HBCUs combined have research expenditures of approximately $520.1 million as of 2017 according to the National Science Foundation data, an amount that is 0.7 percent of the $75.3 billion colleges and universities totaled in R&D expenditures. A number that has been declining every year for the past four years and off dramatically from 2014 when expenditures were a combined $547.1 million at HBCUs, a decline of almost 5 percent over the period while the top ten R&D colleges/universities have seen their expenditures rise by almost 20 percent in the same period. There are now 46 individual colleges and universities whose research and expenditures exceed $520 million per year, 12 of them exceeding $1 billion annually, and then there is John Hopkins University that lords over everyone with its $2.5 billion annually in research expenditures. But what does all this investment in research mean to sustainability? For one, it means these schools are institutions that are integral to the intellectual advancement of the nation in every aspect of industry, government, and military. A charge that HBCUs could take on in a very similar fashion for African America and the African Diaspora at large if it wanted to really be aggressive. However, it also takes on the commercialization of research, which ultimately leads to answering the question you my dear brother asked – Can HBCUs Create Billionaires?

In an oldie but goodie article that I published at HBCU Money many years ago called “The University of Power & Wealth”, I asked the question, “What do Google, Time Warner, FedEx, Microsoft, Facebook, and Dell have in common? They were all founded on college campuses. Google founded at Stanford, Time Warner & FedEx at Yale, Microsoft and Facebook at Harvard, and Dell at the University of Texas.” The value of all those firms as of this publication are a combined almost $2.2 trillion. Yes, that is trillion with a T. In addition, the founders of all these companies, except for the now defunct Time Warner which was sold for $85 billion to AT&T, have a combined net worth over $320 billion as of this publication. Some would argue that even the world’s move valuable company, Apple, is the result of Steve Jobs and Steve Wozniak’s proximity to Silicon Valley, basically a development creation that sprung out of Stanford’s research. Stanford and MIT maybe the nation’s most entrepreneurial colleges and it is no secret that their endowments reflect their innovation.

MIT is a monster or model all in and of itself. The school located in the heart of Boston, MA. has a student population of a little over 11,000 students. It is ranked 14th in the country with $950 million in R&D expenditures and that research combined with entrepreneurial DNA and cultivation shows up in a major way. “A new report estimates that, as of 2014, MIT alumni have launched 30,200 active companies, employing roughly 4.6 million people, and generating roughly $1.9 trillion in annual revenues.” If HBCU entrepreneurs employed 4.6 million African Americans it would be equivalent to employing almost 1 in 4 African Americans that are employed and the $1.9 trillion in revenue would be 50 percent greater than all of African America’s current buying power. MIT is so committed to its entrepreneurial culture in fact that it has even created an accelerator called The Engine to fund these ventures. “Just months after its launch, MIT’s new startup accelerator The Engine yesterday closed its first investment fund for over $150 million, which will support startups developing breakthrough scientific and technological innovations with potential for societal impact.” Can anyone imagine what would come of the ingenuity that our students possess if we had access to startup capital at even a fraction of that amount? Unfortunately, some in leadership want to spend more time bickering about why Michael Bloomberg, John Hopkins alumni and founder of Bloomberg L.P. and net worth of $45 billion, should have given the $1.8 billion he recently donated and some of the $3 billion overall he has donated to John Hopkins to schools who need it more than actually making the investments they can make into their own students, alumni, faculty, and staff so that they can create the next Bloomberg.

Let me also be clear in that last point that this onus is not all, not even remotely the responsibility of administrations who may come and go ultimately, but on alumni. Our alumni and their deference to administrations is part of the problem. Most HBCUs and the communities and towns they are in are underdeveloped and therefore there is millions of dollars that flow from our HBCUs every year from students and the like that could be circulated back. If alumni would invest in the dirt and build infrastructure so that small businesses, entrepreneurship, and capital was available intimately to their own HBCU, it would go a long way in creating communities, businesses, jobs, internships, opportunity, and more.

In closing my dear brother, I say this to you. It is indeed Afro-Brain and intellect that is our key not only to survival but success. Yes, sports pull at our heart strings, but it is not putting anything into our purse strings. Bowie State University obtaining their first patent is amazing, but it needs to go from breaking news to common news. HBCUs can be at the forefront of the new space race, the cure for Alzheimer’s, solving the water crisis in Flint, or the latest best selling apps for smartphones and the like if we truly believe that we can and invest in it like we mean it.

In HBCUs We Trust,

William A. Foster, IV

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A Patent Created Is A Million Earned: HBCUs Are Not Keeping Pace In The Intellectual Property Arms Race Among American Colleges

Posted on December 5, 2018 by | 5 comments

“Necessity…the mother of invention.” – Plato

How did David beat Goliath, then go on to become a “Goliath” himself? With a rock, pebble, or stone depending on who is telling the story. However, it is truly what that piece of Earth hurling towards his enemy from his cache represented that is often most lost in the story. After all, most stories in the Bible are parables and in this case, while David gets all of the glory, it was truly the slingshot that was the star. The slingshot represented an idea, ingenuity, and research all at the same time. It was a representation of how even the smallest solutions can tackle the biggest problems and for David, the riches represent what is awarded to those who dare go after them.

What is a patent? According to the definition provided by the World Intellectual Property Organization, “A patent is an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem. To get a patent, technical information about the invention must be disclosed to the public in a patent application.”

From 1969 to 2012, the U.S. Patent & Trademark Office granted 75,353 to America’s colleges and universities. However, during that same period HBCUs were granted an apathetic 101 patents, an amount less than one percent (0.13% to be exact) is a telling story of just one of the factors that hold back HBCUs financial sustainability. In the past twenty years alone since the turn of the 21st century, patents to colleges and universities have increased from 1,307 to 5,898, an almost five fold increase. In the same time period, the value of the revenue from those patents has also seen a meteoric rise to the tune of a 1,700 percent increase in value from $130 million annually to a staggering $2.2 billion annually. This does not even factor in the societal relevance that these institutions beget as a result. Can you imagine the financial and social impact that comes with being the college who invented the seat belt (Cornell University) or an even more well known invention, Gatorade (University of Florida)? The latter has earned the University of Florida over $1 billion in royalties alone. Even more to the point of colleges and universities profiting handsomely from intellectual property, according to an article in IP Watchdog in 2017, “a judge ordered Apple to pay the University of Wisconsin $506 million for infringing one of its tech patents. Last year, Carnegie-Mellon University won $750 million in a patent infringement lawsuit against Marvell Technology Group.” Those two settlements alone are worth fifty percent of all HBCU endowments combined. Needless to say, this is an arena that HBCUs need to make inroads into if survival and sustainability are long-term goals for our institutions.

PATENTS BY HBCU (1969-2012)

  1. Howard University – 18
  2. Morehouse School of Medicine – 17
  3. Florida A&M University – 16
  4. North Carolina A&T State University – 12
  5. Hampton University – 10
  6. Spelman College – 6
  7. Jackson State University – 4
  8. North Carolina Central University – 4
  9. Meharry Medical College – 3
  10. Tuskegee University – 2
  11. Alabama A&M University – 1
  12. Alabama A&M University Institute – 1
  13. Alcorn State University – 1
  14. Charles R. Drew University of Medicine – 1
  15. Claflin University – 1
  16. Delaware State University Foundation – 1
  17. Fort Valley State College – 1
  18. Shaw University – 1
  19. Virginia State University – 1
  20. Bowie State University – 1*

For all of the creativity that our culture has and exist on our campuses from faculty to students and more, there is little if any at times from administrations and alumni when it comes to finding creative solutions to our financial issues. Since desegregation took root in our institutions and began to gut them, a financial crisis has been brewing and its presence shows up every time we see another HBCU close its doors and even more starkly today in the amount of student loan debt HBCU graduates finish with as a result of poor endowments. HBCUs have taken on a what has seemingly become a check to check mentality in dealing with its financial viability. Instead of investments in R&D and entrepreneurship (Can HBCUs Produce Billionaires?), which is where the nation’s wealth has truly been generated for colleges and their alumni, we have seen far too many HBCUs and their alumni seemingly double down on being dependent on tuition revenue, make poor investments in athletics with no real return possible, focusing their students on getting jobs not creating them, and at times a feeling of lip service in relation to developing stronger pre-alumni and alumni programs that would strengthen giving.

It begs the question where do we go from here? How do we get administrations to ensure that intellectual property & patent development is a stronger part of its focus and how do we get alumni to give their time and money in a way that compliments and assist HBCUs in the infrastructure needed for said development? And ultimately, how do we turn our campuses into intellectual property machines? Let us examine, just a few points (but certainly not limited too) what HBCUs and their alumni could do to unleash its intellectual prowess:

First and foremost, we have to look at our research, patent development, and the like from a holistic viewpoint, meaning that anyone and any department on campus can be engaged in this process. That means everyone from the traditional route of professors and researchers to students to staff to cafeteria workers or lawn and building maintenance. Everyone must be part of this and everyone must be mentally engaged and present. A patent can come from anywhere and for us it needs too. For example, Paul Quinn a few years ago eliminated salt and pork from its campus, but what if a cafeteria worker created a way to still “salt” a product or their farm created a method by which you could raise a pig that does not adversely impact a human’s health. This would become an extremely valuable intellectual property that could be commercialized into a company that the school had an ownership stake in or licensing it out to major food companies and receiving royalties the way the University of Florida does with Gatorade to this very day.

Second, campuses need an intellectual property czar and department. Yes, create a position whose only job it is to promote, oversee, and help develop intellectual property. Their job would be to help ease the process, especially for the likes of students and staff who may not be as familiar with the process as professors, but even with professors helping ease the burden of the process would go a long way. The czar and department would be charged with identifying potential customers and creating commercial relationships where the intellectual property maybe of value. They would also assist in bringing in intellectual help if an idea is being developed but the technology or expertise to bring it to bear is not available on the campus. Perhaps, a relationship with a local software company or factory lends itself to the completion of the patent or intellectual property. Also finding opportunities where intellectual focus can financially benefit the school. An example of this would be the X Prize Foundation, where in 1996 for instance a businessman and entrepreneur offered a $10 million prize to the first privately financed team that could build and fly a three-passenger vehicle 100 kilometers into space twice within two weeks. Participating in these not only has potential financial benefits, but also raises the profile of the institution.

Thirdly, community and alumni access. Allowing the use of this broadens the probability that ideas and opportunities will come to the schools themselves and serve as a potential repository. Imagine for instance had Tuskegee been setup in such a way that when Lonnie Johnson, the Tuskegee alum who invented the Super Soaker, was able to come back to the school, use some of its resources, get assistance, etc. in exchange for a percentage of future or potential royalties. In 2013, he was awarded almost $75 million alone in royalties from Hasbro. An amount that is well over half of Tuskegee’s assumed endowment. Community access would also include summer camps to engage K-12 children in thinking as problem solvers. In other words, also developing the pipeline of intellectual property creators of tomorrow is integral.

Lastly, alumni must donate to create time for this all to be possible. How many HBCU professors can sit on campus for a semester, not teach, and simply focus on research? Very few, if any. How many students could stay on campus over the summer and experiment? Again, very few, if any. In fact, one of the primary problems that HBCU campuses have over summers is shutting down facilities in an effort to save money instead of opening them up for use to their professors, staff, students, and even the community. Those summer camps for K-12, which can lead to future HBCU students. Again, they need support and funds. Alumni must supply the funds to keep the lights on. Summertime is not a time to shutdown, but a time to have an opportunity to do the out of the box things that perhaps the semester schedules bog down. That can not happen without a targeted focus and strategic giving by alumni.

Patents, intellectual property, and the financial benefits that come with them currently are largely aligned with some of the nation’s largest endowments should come to no surprise to anyone who follows higher education finance. The top five producing patent colleges and universities between 1969-2012 (2018 endowment rank in parentheses), University of California (12) has 7,488 patents, MIT (6) has 4,017 patents, Stanford University (4) has 2,403 patents, CIT (34) has 2,365 patents, and the University of Texas (3) has 2,321 patents. In fact, these five schools have a combined endowment value of $51.5 billion as of 2018. Is there primary revenue from patents? Certainly not, but is the money insignificant? Also, certainly not. For HBCUs though, it could be life saving.

Even the way we engage this process may need to be outside of the normal box. For a lot of schools, even with alumni support, it maybe difficult to implement a program like this. However, one solution could be that the five HBCU conferences take the lead to allow for scale and best use of resources or HBCUs partner with other HBCUs and create a IP consortium and they profit-share. Stronger together. However it has to come together, it must. The financial future of HBCUs is rooted in becoming the problem solvers of today and tomorrow. It is time we focus, harness, and unleash the brilliant minds that constitute our institutions. Our bodies were used to build wealth for others for centuries, it is time to let our minds be the slingshot to our own (financial) freedom.

*Bowie State University was awarded its first patent in 2018.

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