“Unfortunately, healthcare in the USA (and many other countries) is *extremely* entrenched in Microsoft products (trust me, I know) and closed source software. The whole “giving out money for EMR’s” has been a disaster. Special interest groups have pretty much ensured that all the money will go only to “approved” or “certified” systems, which are all closed-source, commercial packages (and almost all also running on MS-Windows).

And guess what those companies did? They RAISED THEIR PRICES for that software by the same amount of money that is being pumped into handouts to hospitals and physician groups!”

from
http://it.slashdot.org/story/10/07/17/1316208/Feds-To-Help-Train-50000-Health-IT-Workers?art_pos=20&art_pos=20

In other words, you have to trace where the money’s going and how much of it ACTUALLY goes where it is needed and supposed to go.

For what it’s worth, I do sometimes decide to delete long rambling comments that are way off point.

I’m also not fond of people posting seven or eight comments in a row making the same point again and again. Or consistent use of an arrogant carping tone.

Somehow I don’t think that makes me a “mouthpiece for Fianna Fail”.

Huh?

So, I’m staying out of the academic/dropout debate. I don’t think its major league important.

But back to IP.

If any investor insists on owning IP then there is nothing in it for the founders. They’ll just walk away. This is not the standard model. The founders will always want to be in control of their commercial destiny. The standard model is that investors take a %, but not controlling %.

In the case of state investment and particularly as the companies that need investing will be at incubation stage, then a 10-15% stake is appropriate. The only people who’d sell a controlling interest or the IP are fools.

This is what irishecomony.ie like to edit.

That would be “edit out” of debate.

Is it because the university is being “bought off” with €500,000,000?

Well obviously not.

But what if the “university” got 5% of that?

What if the “innovation” could pay for, oh let’s say, some unfunded pension scheme?

That would be nice wouldn’t it?

How do Governments buy universities?

Who is bought with the scraps from the table?

What is a “Universe” “City”?

Would that be a “one word” place?

This is what irishecomony.ie like to edit.

I’m sure they have reason, or if not, at least self interest (which of course is reason itself).

From here to …………………….

“It’s hard to believe that the richest man in the world doesn’t have a college degree, but that’s soon going to change. Bill Gates, co-founder and chairman of Microsoft, will receive his honorary degree from Harvard University after speaking at their commencement ceremony in June.”

Some people didn’t even bother to waste their time with “University”.

Bill Gates didn’t get €500,000,000 to “innovate”.

He just did it.

http://www.kineda.com/bill-gates-finally-gets-his-college-degree/

“In 1972, Jobs graduated from high school and enrolled in Reed College in Portland, Oregon. Although he dropped out after only one semester, he continued auditing classes at Reed, such as one in calligraphy. Jobs later stated, “If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts”, he said.”

http://en.wikipedia.org/wiki/Steve_Jobs

Dear me.

Another dropout.

And not €500,000,000 in sight.

Thank God Eamon Ryan has yet another opinion on “innovation”.

Otherwise we’d all be tilting at windmills.

There are some who didn’t drop out.

“Edwin Howard Armstrong (December 18, 1890 – January 31, 1954) was an American electrical engineer and inventor. Armstrong was the inventor of modern frequency modulation (FM) radio.

Edwin Howard Armstrong was born in New York City, New York, in 1890. He studied at Columbia University and later became a professor there. He invented the regenerative circuit while he was an undergraduate and patented it in 1914, the super-regenerative circuit (patented 1922), and the superheterodyne receiver (patented 1918).”

That’s right.

Edwin Howard Armstrong invented the regenerative circuit while he was an undergraduate and patented it in 1914.

But the Irish, God bless’em. They need Government soup to “innovate”.

Oh look.

This guy didn’t need to take the Government soup.

http://en.wikipedia.org/wiki/Gary_Kildall

No.

He did it on his “days off”.

“Gary attended the University of Washington hoping to become a mathematics teacher, but became increasingly interested in computer technology. After receiving his degree, he fulfilled a draft obligation to the United States Navy by teaching at the Naval Postgraduate School in Monterey, California. Being within a few hours’ drive of Silicon Valley, Kildall heard about the first commercially available microprocessor, the Intel 4004. He bought one of the processors and began writing experimental programs for it. To learn more about the processors, he worked at Intel as a consultant on his days off.”

Henry who?

http://history1900s.about.com/od/1920s/p/henryford.htm

“It was during this time that Henry met Clara Bryant. When they married in 1888, Henry’s father gave him a large piece of land on which Henry built a small house, a sawmill, and a shop to tinker in.”

Are we allowed use the word “tinker”?

Good job his father gave him a “large piece of land” on which he built a small house, a sawmill, and a shop to tinker in.

If only Henry’s dad had known that the Irish Government would one day spend €500,000,000 on “innovation” he could have grown vegetables on that land.

A long holiday weekend.

Apparently there’s no need to tax 400,000 people for €1,250 per head to “innovate”.

All you need is a long weekend.

“Omidyar was 28 when he sat down over a long holiday weekend to write the original computer code for what eventually became an internet superbrand — the auction site eBay.”

http://en.wikipedia.org/wiki/Pierre_Omidyar

Maybe with twelve weeks off the Government can come up with the next eBay, Apple, Microsoft, or Ford rather than resorting to the last refuge of the incompetent. Taxation.

to …….. here

What is irisheconomy.ie?

Just another mouthpiece for Fianna Fail?

But that problem is simply solved by making it a condition that the companies are Irish owned. Now many Irish software companies will officially headquarter in the US and keep a sales force etc out there. The Israelis do the same thing. Register the companies in the US (usually Delaware) and open a big office in the Valley, but the high value jobs (R&D) are kept in Israel.
Of course, as the company develops you can’t dictate who they sell it to, but take Iona as an example Fair enough it ended up a subsidiary of Progress (who have now closed the office here ) but for 15 years there was a really good engineering base here in Dublin.

btw, the US doesn’t fund research so that it creates jobs - they do it so the US gov can buy the technology - its the technology they are after. So the Military funds computer science, The Depart of Energy funds Physics, Department of Health biotech etc.

As for owning the IP, why not just own shares? I’ll go check with my Angel/VC contacts about the exact ownership structure…..back in a jiffy…

Israeli academic salaries are much lower than those in Ireland - Israeli universities often complain about a hemorrhage of young staff to the US and even the UK. Despite this VC inwards in Israel in the 08/09 period was exceptional. You can grab a an official VC and technology report from the web. Wearing a different hat some time back I drew both Lenihan’s and Varadkar’s attention to Israeli achievements not as a model but as heuristic.

“This innovation fund won’t work if they are too greedy. Its success will depend on NOT making too much money out of their investment. That will reduce its “success” on the balance sheet, but if the process results in a few decent companies being created, then the state will benefit, but indirectly. I think that’s the bit the economists generally can’t handle.
The model here is Stanford, which earns a tiny amount of its revenue from its campus companies because of its simple licensing system, but earns big through reputation and donations in the long term.”

The main reason that Ireland is different to the US and why the Stanford experience does not transfer is that you are missing a key point.
When the US invest Public money to Rand D and then allow Private enterprise to pick up the genuine innovations it does as you say have a long term indirect benefit. The reason it does it this way is more ideological than anything else. But the reason for that is Simple.
They are American owned companies and pay taxes and create Jobs in the US. You are suggesting that Ireland use the same policy but the problem is that it is not Irish companies who pick up the IP and innovations. Its usually the foreign multinationals.
I think the state should be looking for a % of any value in the IP. If a start up with a bright idea are receiving investment it is the least any Angel/Venture capitalist would require. Or am I wrong?

I believe a lot could be achieved if we had a credible governance system and competent people were involved in makeing desisions — again as with Financial Regulation, outsiders who are not likely to be in conflict of interest situations.

Niall O’Dowd as the cherleader in today’s Irish Times, reminds me of the Bertie Ahern years.

How dare anyone question the spoofers?

I have heard of academics putting pressure on PhD students to do research that suits them.

We should use the Israeli template over say a 5-year period — at least there would be a sytem that would be understood and projects would be selected for support according to understood criteria.

The total Israeli budget for the two year term ranges between US $350,000 to US $600,000.  Budget for Biotech incubators (under directive 8.4) may be up to $1,800,000 for three years.

85% of the approved budget provided as a grant or a soft loan. 
For Biotech incubators: 80% of approved budget provided as a soft loan.

http://www.incubators.org.il/

A Singapore scheme aims to provide up to 85% co-funding in each startup in the incubator’s portfolio up to a maximum of SG$500,000. However, the incubator is required to invest the remaining amount of at least 15 percent, although there is an option for the incubator to buy out NRF’s share in the start-up within three years of investment.

The scheme is part of the S$360 million National Framework for Innovation and Enterprise (NFIE) announced in March 2008 to strengthen innovation and entrepreneurship in Singapore, and the Singapore National Research Foundation says it’s actually modelled after Israel’s successful Technological Incubator Programme.

I see the point but its but its getting dangerous…

This fund should be managed as a commercial entity and targeted at companies with commercial potential. Whether these companies are spin offs of academics or otherwise is irrelevant in my opinion, the only criteria should be… If it was your own personal money, would you invest.
Anything else, potential jobs, where in Ireland the company locates, whose office it rents etc should not be part of the criteria…

The fund should be measured on net return over X years. Ideally, as the investment is over 5 years, with some target in year 4 or earlier where a decision could be made to kill it if its not performing.

This should be treated as an investment. Money from the fund that is not directly invested in companies but otherwise spent should be listed in its results.

There is an ‘entrepreneur industry’ in Ireland like the ‘poverty industry’. It eats up scarce resources in administrative overheads. There are plenty of people in both ‘industries’ making a very good living talking bollocks. 80+% of people in employment in both these ‘industries’ are charlatans, the figure is much worse for the entrepreneur industry than the poverty industry.

Though I have a small business and might be interested in this in the future, I cant support calling for stringent standards in somewhere like NAMA and something else in ‘innovation’.

Both are investments of scarce taxpayer resources. All such investments need to be accountable, transparent and ran on a commercial basis.

That doesn’t mean those managing the fund must shy away from risk. They should be empowered like VC’s to make their decisions, and maximize their investments using whatever strategy they deem best… e.g. if they have 2 companies on the books with synergies then they should be empowered to take advantage of that.

But on no account must talk of long term value or other bullshit be allowed to cloud investment decisions. Pretend its your money.

@Michael Finnegan
Where did you get the figure of 85% as a contribution to start-ups in Israel? IDF affiliated research programs have certainly underwritten some interesting technology but 85% for stand alone ventures?

Re Israelis etc. Does that mean you are in favour of the Irish government providing similar funding? Whatever the Israelis are doing clearly works so, shouldn’t we copy it?

There is a message in the success of Microsoft, Apple, Google and Facebook.

The winners are often those who improve on an existing concept.

Most people think Thomas Edison invented the light bulb!

Who developed Visicalc? — the first PC spreadsheet, or maybe it wasn’t!

@ Sarah

The Israelis provide 85% funding to companies in its incubation program.
25% of firms survive 10 years.

As most Irish start-ups will have to depend on bank credit to get going unless they are being promoted by academics on a public salaries, there needs to be some answer to funding other than VCs.

The biggest problem I see is that policymakers are running a constant PR campaign; State enterprise agency heads dose on the same vacuous superlatives while in the past Leo Varadkar had nothing of substance to say on innovation policy while I assume Deirdre Cloone is currently in her villa swotting up on the Innovation Taskforce report.

The danger is that these people have already drank the Kool-Aid of the academics who are banking on having a eureka moment and will ignore the potential outside of university research.

For example, an Irish company, Glen Dimplex, has become a world leader in the manufacture and distribution of electric heating appliances.

@ Chris Horn

Chris, we’ve sent an SOS out for ya!

You could throw in the ‘national competence centres’ as well. These were marketed by government agencies as vital (as is every state initiative) to growth, the Smart Economy, supporting multinationals and the whatever you’re having yourself. However, the costs of these vital appendages are not borne by the multinational sector. Instead, the taxpayer again picks up the subsidy tab. Curiously the US Bureau for Economic Analysis has identified Ireland as consistently topping the list of best sites for US multinational profitability. It surprises me that the multinationals aren’t underwriting the entire cost of the competence centres. The silence from politicians suggests this is a minority opinion, or perhaps they are afraid to voice their own.

What happened to Gates, Jobs, Ford etc?

Is it because they innovated without State aid?

Or is it that they found “university” a little slow?

Sean Baker’s point on IP is a key one. I spoke to one start up recently looking for funding - there is some sort of scheme available to them (there are many actually) but the quango in question (some sort of National Digital thingy) wants control of the IP. Since that’s where the value is, the start up isn’t interested - why would they sell the IP now? So they are looking for private angel funding instead.
This innovation fund won’t work if they are too greedy. Its success will depend on NOT making too much money out of their investment. That will reduce its “success” on the balance sheet, but if the process results in a few decent companies being created, then the state will benefit, but indirectly. I think that’s the bit the economists generally can’t handle.
The model here is Stanford, which earns a tiny amount of its revenue from its campus companies because of its simple licensing system, but earns big through reputation and donations in the long term.

One other factor _ I spoke to a Tier 1 VC in Silicon Valley recently about government investments alongside VCs (e.g from pension funds) and he said that VCs generally aren’t interested because the public element requires too much oversight and control.

I think the real need is not, as an earlier commenter suggested, to invest later in the process, but rather at the earliest stage. It means higher risk and lower returns but that’s when companies need the money. Remember, VCs only get involved when a concept is proven. The Angels/Y combinator guys get in much earlier - once you guys are prepared to accept the higher risk.

One other point re selling too early - yes I’ve heard more than one anecdote of Irish VCs exiting too early. In the Valley, the VCs are complaining about the founders getting too impatient and exiting - taking the acquisition instead of hanging on for the IPO. So I guess it works both ways.

Anyway, my point is:
1. public money should be in very early, commercialisation of research stage
and
2. it has to accept low returns. Greed doesn’t work.

Oh finally - don’t diss that property bubble money too much - I’ve also heard a lot of anecdotes about property guys investing 100k here and there with friends of friends working in start ups. The disappearance of that source has generated a need for fresh seed capital.

You say in the link provided to your excellent blog: “Europe does not yet have a strong hub for commercial exploitation of innovative R&D: there is a vacuum in Europe”. That is an interesting statement, thinking about Lund, Delft, Cambridge and Stuttgart - all places I know and where effective networks exists that do precisely that!
The simple fact is that Francophone and Germanic Europe not to mention the Nordic countries have a far stronger track record at building innovative business with a strong technology dimension than Ireland has. Not to mention substantial service-based businesses where technology is less prominent.
It is also worth pointing out that “innovative R&D” is only one of the four basic things that need to be understood and reconciled for successful innovation. Failures in delivery of the other three ingredients are every bit as mortal: failure to understand customer attitudes and behaviour; failure to understand and predict the regulatory and legal environment and failure to deal with the ambitions and capabilities of the innovating organisation itself.
VC, tech-push, R&D and financial engineering are important but not the dominating elements in the sort of innovation that builds the kind of strong sustainable ‘mittelstand’ companies in which ‘old Europe’ abounds.
The innovation fund is fine - one small piece in the myriad of structural, behavioural and attitudinal changes needed in Ireland to make it more than a Eurozone-based US client state. Far more than this is needed and cheerleading is not appropriate.
I do not see a substantial direct role for the state in the increased focus on building small sustainable businesses that is now taking hold. Perhaps the best thing the state can do is leave entrepreneurs alone-stop competing with them through its agencies, tone down the endless content-free utterances about hubs, green collars and smart economies, and let them get on with their work.

@ all. Y combinator is an interesting way of going about VC [http://ycombinator.com/ - also an interesting chat with Paul Graham on Econtalk] Graduates of their programme have been responsible for Dropbox and Justin.tv amoungst other things.

The Taoiseach announced recently that another €3bn in cuts were required and it may not stop there. The innovation fund seems pretty big in comparison. The country has 30-odd enterprise boards will they also need a slice of innovation fund to keep their mission warm?

Speaking to a large number of students recently, most of them are thinking of going abroad as soon as they can. I wonder how many of them already gone, or going over the next couple of years, might have been company starters and job creators in Ireland at some point in the future? My guess is most of this 250 million will end up in a few pockets of people who already know how to milk these systems.

As for supplying them (graduates) for free - most I’ve spoken to that currently have any sort of work are on non-paying internships. That’s supplying them free alright. After the internship ends, the intern asks if there’s any chance of a job and are told ‘no’, intern leaves then finds out a week or two later that the employer has picked up another free intern to keep doing the work. These are real jobs that need doing but the employers have worked out that there is an endless stream of graduates out there all desperate for work and they don’t even need to contribute to their bus fare to and from work. Wonderful country Ireland.

@Michael Hennigan - thanks. Interesting research.

50m is roughly the amount of annual interest we’ll have to pay on the interest that will have to be paid to finance the bale out of Anglo (20 bn X 5% x 5%). Unfortunately, this particular money is not being targeted correctly and invested wisely!

I have to agree here and perhaps expand on what you are saying.

I can remember the favourable media coverage the university of Limerick Spin off got. But when we think about it, it is actually awful news in my opinion.

One thing that we have to learn from the Ireali’s is that when you do make a breakthrough with developing a truely innovative product or service, the last thing we should be doing is selling it off.

The chances of Ireland ever being lucky enough to get a start up that creat huge numbers of Jobs from indiginous industry is very small. Small goes to zero when any time we do make any innovative breakthrough’s we then see them sold off to large multinationals. The state can and should take a roll here.

No one can blame the innovator for taking the money offered and heading off to Barbados or start again but how about using a large part of this innovation fund to allow for potential acquisitions of innovative Irish products and services?

Perhaps Irish innovators would be willng to sell at reasonable levels without creating a bidding war in the national interest?

Wheather it is nationalised or not is not that important to me. What would be important is that if we show we have the capacity to acquire something with potential an using good business practice and management develop it into a succesfull Irish company.

That would give us the confidence to do it again.

It seems to me that larger more targeted investments further up the value chain may give more favourable results that the current stratagy.

Ha! Very clever! You are, after all, a brilliant Chinese leader, zhou, even though you are long dead.

But ‘clever’ is not necessarily ‘right’.

Market failures which come about through government intervention get us into the kind of messy territory politicians love, and economists hate. Suffice it to say when government does something silly to correct something else it did that was silly, the two wrong generally end up making a bigger wrong.

We have not been doing university research on a serious scale for long, and we do not have a strong history of commercialising it, so it’s not surprising that we are seeing problems now, as has been highlighted by Sean Baker and many others. I think that policymakers are facing up to the problems, so, while I expect that they will take time to fix, I’m optimistic for the future.

I hear what you are saying: (i) Venture capitalists compare start-ups with high yielding Government bonds, and (ii) this will cause a failure in the VC market, but the Government shouldn’t intervene becasue they should only intervene where there is a market failure….

It’s not hard to see why the Competition Authority recommendations have been so carefully ignored.

Doctors, Barristers, Vets, Architects, Publicans -It’s almost a who’s who of the political untouchables. God forbid that they might have to compete like the oinks in the rest of the economy.

“Where did I imply anything about a start-up and lawyer/accountant?”

You didn’t. I was making the point off my own bat.
It was related to the Sean Baker quote “For me, to commercialise research, you have to have commercial input from the start”.

I wasn’t commenting on your core point about universities.