Professor Madison's Hypothetical Allegheny Conference Address

It's a doozy, and it seems to me to be pretty sharp, although I grant, as does he, that "I'm not part of the business community; I'm not an economist or a planner." Even so, it's hard to dispute Madison's premises -- that Pittsburgh does not want for intellectual capital, venture capital, and entrepreneurial interest and energy -- which in turn makes it hard to dispute his conclusion -- that the sources of intellectual capital need to take a longer view for everyone's benefit. Money quote:

Where are these great ideas? Most of them, these days, are coming out of the University of Pittsburgh and Carnegie Mellon University. How do they get out into the private sector? The universities have claims on [Intellectual Property] developed by researchers, so the universities have to spin off companies and license IP to them, or license IP to existing companies. And right now, that's where the problem lies: Like the vast majority of research universities across the country, Pitt and CMU aren't being aggressive enough in getting research results out of the lab and into the boardroom. Again, I hear this time and time again -- from lawyers downtown and from researchers at the universities. A small number of universities have had some big successes in this area. Stanford, MIT, Columbia, Wisconsin. No university wants to leave an extra dollar on this table.

But they should. If there's an economic upside to what's coming out of Oakland, then for the good of the region Pitt and CMU shouldn't try to keep all of that for themselves. My own alma mater is located in a depressed urban community: New Haven. My college spent years saying that the best thing that it could do for New Haven was to be a fabulous university. That was code for: We'll take care of ourselves. About a decade ago, Yale changed its tune and started making direct investments in the city, partnering with New Haven in a variety of ways. The city isn't "well," but it's a lot better. Pitt and CMU can use technology transfer negotiations the same way: Invest in the region, and let the region profit. Use lower equity requirements and reduce royalty rates. Leave upside on the table for the entrepreneurs and future investors. Don't negotiate every deal like it's the next home run. Play small ball: make a lot of small bets, instead of a few big ones.

Go read the whole thing.