To All PhDs: A 50-Cent Dollar for Your Thoughts

Warren Buffett, the multibillionaire investor, half-jokingly attributes his astonishing market success to his ability to buy a dollar for 50 cents. Actually, his great skill is ferreting out and boldly betting on underappreciated and undervalued assets. The multibillion-dollar question, of course, is how do you know an undervalued asset when you see one? Just where can you buy a dollar for 50 cents? Better yet, where can you buy a dollar for a dime?

Every day, investors and speculators worldwide scour the global marketplace looking for undervalued assets. But in a global economy where value is increasingly contingent upon knowledge, those assets no longer come dressed up solely as equities, fixed income, commodities or real estate. Marketplaces of ideas are also great marketplaces. Research universities from California to China to India to Britain to Massachusetts are fast becoming the “knowledge factories” of the new economy.

In fields ranging from computer science to molecular biology to mathematics to finance to sociology, research universities have evolved into innovation incubators that spawn new industries. Indeed, companies like Hewlett-Packard, Genentech, Chiron, Netscape, Sun Microsystems and Cisco, for example, are all direct spinoffs from academe.

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So is it possible--even probable--that we might find more than a few 50-cent dollars just aching to burst into full value when we rigorously reexamine the assets of these global knowledge factories?

The answer, of course, is yes. And that’s the reason there is now a new global competition explicitly designed to tap the hidden assets and unrealized potential of academic research. Sponsored by the Merrill Lynch Forum, this Innovation Grant Competition--which I am going to oversee--is a provocative experiment in intellectual venture capital. I want to talk about it here because California as a state and Los Angeles as a city are economies that are becoming ever more knowledge- and research-intensive. Tapping the rich networks of public and private universities here is exactly what this competition is all about.

The idea behind it is straightforward: We want to make a new market in ideas and encourage PhD candidates in the liberal arts, the physical, natural and social sciences and the engineering disciplines to become more aware of the commercial implications of their research. We fully want and expect entrants in disciplines ranging from comparative linguistics to statistics to computer science to anthropology to compete for more than $150,000 in prizes and prestige.

We’re betting that our competition will inspire a lot of creative rethinking by people who have perhaps grown a little too familiar with their own work. This competition will encourage them to look at their research with new eyes and a new sensibility.

Why do we think this competition can be so important?

Because anything that promotes a greater grasp of market forces and market potential by the people who are going to define the research and development communities of tomorrow is probably a good thing. What’s more, anything we can do to encourage new avenues of communication and collaboration between the university marketplace of ideas and the marketplace is a good idea.

That’s why people like John Doerr, the noted venture capitalist; John Seely Brown, the director of Xerox’s famed Palo Alto Research Center; Arati Prabhakar, the former director of the National Institute of Standards and Technology and now the chief technology officer for Raychem; and Peter Goldmark, the outgoing head of the Rockefeller Foundation, have agreed to be judges.

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Certainly, the global market of doctoral dissertations is expanding. Between 1970 and 1994, the number of doctoral degrees awarded every year in the U.S. alone rose from 29,500 to more than 40,000. Some academic pundits argue that there is even a PhD “glut.” That may or may not be true. But what is certainly the case is that too many of these students have given very little rigorous thought to the market implications of their ideas. Some of them simply don’t care, of course, but many others don’t have the background or the incentive to think about their work from a more commercial perspective. Their research is their work and their work is their research.

The bet that this competition makes is that many of these dissertations represent undervalued assets. In effect, these theses are potentially valuable raw materials that could be processed--with a little more thought and ingenuity--into profitable products and services. In other words, thousands of these theses could offer dollars-for-a-dime if only their creators would take the appropriate initiative. This competition, I hope, offers appropriate incentives for that initiative.

The winners will be introduced to the business leaders and venture capitalists in their fields. We expect to provoke a lot of discussion and debate about the quality of their ideas.

Of course, many--perhaps most--of the people who get their PhDs in electrical engineering or molecular biology or linguistics or statistics are not particularly entrepreneurial. They may have no interest or desire or ability to start a company or launch an industry. But they do have ideas. Many of them have identified and created new knowledge that has pushed back the boundaries of their fields.

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Let me make something absolutely clear: We’re not trying to turn engineers and linguists and statisticians into entrepreneurs. We’re not interested in turning universities into innovation factories. That’s not the goal; that’s not where the real value lies.

What this competition is trying to do is improve the market awareness and entrepreneurial literacy of the young scholars who make up the PhD community worldwide. We’re encouraging them--and rewarding them--to be a little more sensitive to the market implications of their work.

Ever look at a typical PhD thesis? It’s dense, difficult, not easy to read and often accessible only to a tiny portion of the people in a particular discipline. In fact, you could almost say it’s designed to be inaccessible. If nothing else, this competition offers genuine incentives to encourage clear and accessible descriptions from doctoral candidates about the value of their work.

Whether a competition like this comes to rival the MacArthur Foundation Genius grants or Guggenheim Fellowships remains an open question. What’s not in question is that as the global economy becomes even more competitive, all kinds of market mechanisms will be used to help create and identify dollars that can be purchased on the cheap. The reason I have been so enthusiastic about launching this initiative is that it is truly about seeing and helping create value where it didn’t exist before. That is what innovation is all about; that is what the future of industry is destined to be in an era where new knowledge is central to new value.

The Innovation Grant Competition Web site is at https://www.ml.com/innovation