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John Vander Sande

John Vander Sande: Between two worlds

Director of a technology-based company and MIT professor came to Brazil to set out his ideas on entrepreneurism

Leo RamosWith one foot in one of the prides of American science, the Massachusetts Institute of Technology (MIT), and the other in a cutting edge company in the area of superconductors, American Superconductor, of which he was one of the founders in 1987 and is still a director, John Vander Sande is an apostle of entrepreneurism in academic circles. Above all, entrepreneurism à la MIT, it has to be said. At the end of last decade, Sande participated directly in the agreement signed by his institute of learning with universities from Singapore, the objective of which, to put it simply, was to inculcate in the oriental scholars the MIT’s innovative spirit and its capacity for seeing promising business, where most scientists see just an exciting line of research. As Sande himself admits, it is still too early to assess whether the agreement with the Asian Tiger has produced or is going to produce the effects hoped for. That, however, came far from discouraging government and industry in Britain, which were worried with the lack of entrepreneurial dynamism in the British systems of learning. They decided establish an alliance between one of its most renowned universities, Cambridge, and the institution from Massachusetts. In July 2000, the Cambridge MIT Institute was born, with a five-year budget of US$ 135 million – with British cash, of course – and run by Sande.

Armed with this victorious curriculum, both from the academic and the business point of view, in July, Sande was in Rio de Janeiro, where he spoke to an audience of 60 persons who were taking part in the PUC-Rio/MIT Workshop, an event organized by the Studies and Research nucleus of the Genesis Institute, an incubator of companies of the Pontifical Catholic University in the state of Rio de Janeiro. It was his second trip to Brazil. He talked of his experience with the MIT and with American Superconductor – which has just returned a profit for the first time, after 15 years of investments in the development of superconducting wires and cables – and discussed the question of how the transfer of technology from the Brazilian institutes and universities to the market should be fostered.  “When setting up a company, the researcher has to run risks and cannot be afraid of failure”, says Sande. “He also has to know that some of his university colleagues will never again look at him in the same way, after he has started up a company”.  In an interview with reporter Marcos Pivetta, this professor with more than three decades at the MIT talks of his life as an academic-entrepreneur, and about how Brazil can foster technology-based companies from its universities.

How did the idea arise of founding a company in the second half of the 80s to produce superconducting wires, American Superconductor?
My specialization is in the science of materials. I am very interested in the arrangement of atoms and their effects on solids. In 1986, I noticed a “revolution” in superconductivity: the discovery of copper oxide compounds that behaved like a new class of superconductors, at temperatures very much higher than the old superconductors (superconductors are materials that, below a given temperature, successfully transmit an electric current with zero resistance, that is to say, without losing part of the energy produced in the form of heat). It was an exciting time, and one of rapid evolution in the area of superconductivity. The need for information in the area was so great that researchers did not wait for works to be published normally (in scientific magazines).  There would be conferences taking place and, on the following day, news would appear in the press about a compound that seemed to be better than the others. You couldn’t wait to apply for a grant (with a request for funds to do research) by the traditional process.  This way would take months or years to get the money.  We needed to have cash in our hands to do research in 24 hours. Otherwise, you would be worried because your colleagues would leave you behind in the research.  In those days, I and a colleague from the MIT (Gregory Yurek) redirected part of our research funds to this new class of superconductors, and we started to pursue the idea of making wires with these new materials. Then we had a project approved by the Department of Energy, and, in the following weeks or months, we got a small proposal from the research support funds at the MIT for materials science and engineering, which came from the National Science Foundation (NSF).

How much was invested to start with in founding American Superconductor?
Probably some US$ 30,000 from the Department of Energy and the NSF. The important point here, of course, was moment of the investment.

At that time, did the MIT have a clear policy to help, or at least not to hinder, this process of a professor being able to quit the university to create a company?
That is a very good question. The MIT did not have a pro-active policy, but, at the same time, it is very important to say that the atmosphere there did not hinder this kind of thing. Our contract with the Department of Energy did not have to go to other MIT offices. All that it took was a phone call to the man in charge of contracts, saying “this is a good idea, aren’t you interested in it?” There was very little bureaucracy. We would get a positive reply in probably one week. This is the most important thing I can say: although there was no organized policy in the short term, the entrepreneurial culture and the fact that the teaching staff and the research department at the MIT did not feel inhibited by rules were very important.

What notions of entrepreneurism is the MIT trying to pass on in Singapore and at Cambridge University?
They are two very different examples. Singapore is a small island nation, which literally, from one day to the next, went from an incredibly small per capita income, 20 or 25 years ago, to one of the highest in the world. How did they do that?  By bringing a lot of international companies to their island, essentially with the purpose of manufacturing there. The only natural resource that Singapore had was an educated population. In wasn’t, in terms of natural resources, like Brazil. In a visit that I and a few colleagues made to Singapore, it became clear that they need to do a far more aggressive job in terms of master’s degree programs. I also noticed that their doctorate programs were nowhere near world class quality, nor were they attracting the right number of people. To satisfy the need to attract new companies to their company and top keep those that were there already, Singapore realized that they had to have more students studying for a master’s degrees. Then, to cut short a long story, let me say that they hired the MIT to assess their educational programs. That was easy, because they only had two universities, with an educational system on the British model, where they teach English as the first foreign language. That is where the MIT went in, to start to change things. First, with a system for research and education.  We wanted them to do more courses for learning, but also more research.  As well as to set up a schooling program that could be based on the American doctorate program.

How many companies arose from this cooperation from the universities in Singapore?
Both in Singapore and in Cambridge, I think it’s too early to say anything in this regard. But I think that the foundations are being laid in the proper place. The reward in both the programs is still a few years away, simply because the Singapore-MIT alliance started formally in 1999, it is very recent.  And the Cambridge-MIT Institute started only in July 2000.

How did the partnership with traditional Cambridge University arise?
Part of the reasons for the MIT to go into major partnerships of this kind is that it realized that it wasn’t growing any more domestically.  We saw that we had to look for an answer to this question as to whether the MIT should think about going international or not.  And the best way to answer this was to do a few experiments.  So, from various angles, Cambridge and Singapore are experiments for us. We thought: is there something of value that we can export?  And can we do this in such a way that it does not jeopardize what we are carrying out in  Massachusetts? What we did in Singapore was to stick a flagstaff into the ground and say: “If you want an MIT style education, come to Singapore”. We will probably not make a similar campus in South Korea, in Japan, in Taiwan, nor in four places in China. We cannot do that.  Once the agreement with Singapore was entered into, it was hoped that the next partnership would take place in Central and South America, in countries like Brazil, Mexico, Venezuela, Chile and Argentina.  They are countries that ought to be thinking about how they can maximize the return on their investments in research.  Now, to answer your question, I was shocked when we had the opportunity to get involved with a European nation.

I was expecting many places in Europe to say something like: “We are extraordinarily good, we have been doing this for far longer than you from the MIT, why do we need you?” It so happens that the English Chancellor of the Exchequer was very concerned with competitiveness, productivity and business culture in Britain. Obviously, the people are very clever, with a tremendous track record in terms of education and world class scientific findings. Cambridge University is extremely strong from the scientific point of view.  It happens that injecting the MIT culture, injecting a creative, innovative and business spirit, even in places like Cambridge, can have incredible benefits. The necessary condition is that you have good ideas, but this alone does not necessarily lead to budding companies and dynamic effects on the economy. I think that both Singapore and Cambridge, to a lesser extent, suffer from aversion to risk and a relative intolerance of failure. This is very strong in Asia. Running a risk, with the possibility of failing, is very frustrating for them. It is going to take a long time for this cultural component to be eradicated. And even in Britain, there is discomfort with risk and a real concern as to how to deal with failure.

Does the entrepreneur have to face failure naturally?
I am not saying that any of us likes to fail. We are all a bit averse to risk. But there is less awkward for running risks in a place like the MIT than in other places where I have had some experience. You have have a skill, a desire to run some level of risk, because not every idea is going to work.  Or even if it works, it may work for a time, but transforming it into a business is completely different. Many of these good ideas are coming from researchers who are very academic, focused on their research and learning.  Who is going to give them a hand?  Are there any offices inside their academic community willing to help them and to make the task of taking their ideas to the market easier?  This is any area where Cambridge is certainly much weaker than the MIT. By means of the Cambridge-MIT Institute, we are correcting this.

Are you acquainted with our so-called “law on innovation”, which proposes the creation of a new labor regime for researchers interested in leaving the university for a while to create a company?
Obviously, I am not a specialist on it, but I think that this kind of venture can help a lot.  Fostering this flexibility inside the university, researchers will have to ask themselves if it is right to take part in a company.  Many of those whom I would call classic academics, as soon as you think of business and making money, they are going to think that you have been “tempted” as a scholar”.

Researchers, then, have to be prepared to face up to this new situation, if they decide to create a company?
They do.  It is not healthy for those who are doing this to feel that some of their colleagues are looking at them with disdain. It is not healthy for the colleague who feels that this person is not doing the right thing not to have had the chance to discuss this issue openly.  In my opinion, it is a change for the better, but it needs frank discussion. My feeling is that Brazil is a country with a European influence in its universities. The curriculum for a graduate or postgraduate student aims at essentially it for him to scrutinize deeper and deeper into his own discipline or subdiscipline. The opportunities for expanding, thinking of economic, political and legislative aspects, and of technology (as opposed to profound science) of what is being done are limited by the fact that the curriculum in many disciplines is extremely narrow.  I also wonder why Brazil isn’t doing more than Singapore. Why aren’t you bringing in more companies, more research and development?

Some people outside the academic world think that researchers are sometimes not in tune with real life, that some of them do not read the papers and do not know the potential market for the technological products that they invent?  What do you think of this view?
What you have just described is, up to a point, the way the MIT used to be 25 or 30 years ago.  I want to say that we didn’t start in 1861 (when the MIT was founded) with this entrepreneurial attitude that I have mentioned above.  This posture has been developed over the last 30 years, in the main.  In the rest of the world, and even a bit in some parts of the MIT, there still is the situation you have described.  It’s something I call the “ivory tower mentality”. It’s the kind of mentality: “I want to do my mathematics, my physics, my chemistry. Don’t bother me with the real world”.  This has got to change.

How can we attract private capital to technological research? I’m talking about Brazilian capital, and, of course, foreign and venture capital.
Not just venture capital. One of the difficulties I see in this country in general is that you have many opportunities, but there’s not enough discipline.

What kind of opportunity do you see?
Particularly with this new law on innovation, there is going to be plenty of money to hand to serve as a fuel for moving more quickly into the 21st century and ensure that Brazil plays the role that it should in the world.  But it is going to be difficult to do this, if you don’t start betting on a very different way from what is done now.  You may have to change to a system – I don’t know, it’s easy to say, but probably very difficult to out it into effect – in which you use merit and quality in a much more decisive and definitive way than now.

In Brazil, we have a large number of businesses that are being incubated.  Do you think that this kind of approach actually works, in terms of the creation of technology-based new companies?
Yes, I do.  I think it is the way how many businesses have started.  I know that there are incubators at PUC, at the University of Campinas and some others. In Rio, certainly, some of them are very good.  But I am not a great understander of Brazil’s university system.  My view is, shall we say, “a tinted view ”, I see Brazil through the PUC. If I look at PUC’s incubator, I can see some very good people, with very good ideas, in a very good incubator. But it is different from the MIT in the following: it is not clear to me why these groups of people went to this incubator.  That is not the story of American Superconductor. This was a company that really started on a scientific basis, with patents that accompanied profound aspects of engineering and science, and was concerned to use this to make a product that would possibly go onto the market.  It’s just a suspicion.  It may not be well founded.

What is the role of public and private finance in fostering new technology based companies?
I think that much of this function is private.  Nevertheless, public funding also has its part to play. Essentially, it is up to the government to receive small proposals, of the kind that you write to an agency and say: I have this idea, but I need a little more research before thinking of turning it into a product.  Please give me US$ 100,000 to go after it.  This benefit can be requested by private companies, provided that the research is to strengthen a small business.

In Brazil, there are not enough places for researchers at the universities.  What should be done for private companies to take on more scientists and set up research departments?
Unless the attitude of the companies in the country changes, you are going to be producing many PhDs, unemployed.  It is a risk, but it is a good risk!  Some group of people needs to query this.