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This article by Phyllis B. Maguire was published in U.S. 1 Newspaper
on July 22, 1998. All rights reserved.
Finally, Princeton Gets Cozy with Business
In the early days of Silicon Valley, young companies
were able to leverage the academic richness of California’s
into entrepreneurial success. In contrast, Princeton University
potentially entangling relationships with commercial enterprises.
"I think they ran up against the belief that business
would distort the academic focus Princeton held as its paradigm at
that time," says Ed Zschau, a Harvard Business School professor
and former United States Congressman who is now visiting professor
That’s changing now. When Zschau addressed a technology forum last
month, staged at Princeton University as a photo op for Governor
Whitman, he likened the intellectual vibrancy of the Princeton
to northern California’s famed technology territory. He admitted later
that his statement was more of a futuristic statement than present
fact. "But I’ve always felt that if you point to center field,
you just might hit a ball over the wall," says Zschau. "New
Jersey — with the Princeton area in particular, and other
within a 50-mile radius — has all the makings of an
high tech environment."
Nurturing that environment, as was evident at the forum, is the
focus for state government as well as for the business and academic
communities. The state has just upped the ante by more than
funds provided for technology transfer: the licensing of university
patents and trademarks to outside companies.
And Princeton University has taken a new business-friendly stance.
It encourages the transfer of technology, and it has set up a master’s
in engineering program — not a "business" degree —
but the next thing to it, because candidates can focus on engineering
management. Now the corridor’s corporations can dangle this degree
in front of their prospective recruits.
At the forum, Governor Christie Whitman announced $8.5 million in
new grants for technology education to New Jersey primary schools.
Last week she announced $5 million in technology transfer money for
the New Jersey Commission on Science and Technology, a huge increase
over the $600,000 allotted for previous years.
Sharing the podium that June morning were scientists and industry
leaders — and Ed Zschau (E-mail: firstname.lastname@example.org). A
charismatic speaker and entrepreneur, Zschau will reprise his course
on high tech entrepreneurship at Princeton both semesters this coming
year and is one of the luminaries contributing to the new Master of
Engineering program. At the forum, it was Zschau, a veteran of Silicon
Valley academia, enterprise, and politics, who delivered the day’s
most enticing message, about how Princeton can grow to be a Silicon
Serendipity, Zschau points out, was certainly at play
in Silicon Valley. "The exploitation of the transistor was the
first generation," he says. "Were it not for the fact that
William Shockley, one of the transistor’s inventors, had a mother
living in Palo Alto, there is a distinct possibility Shockley Labs
would have been located in Murray Hill." But happenstance got
a boost from other factors, like industrial environment — or the
lack thereof. "The industrial setting on the East Coast was
by large companies like RCA, General Electric, and Bell Labs. People
in northern California didn’t have big companies to work for, so the
setting was right for small start-ups."
And Silicon Valley had its visionaries. Zschau singles out Frederick
Terman, dean of engineering at Stanford University in 1944 and its
provost from 1954 to 1965. "Terman believed the real benefit of
being trained as an engineer lay in inventing new products and
new companies," says Zschau. "He personally encouraged Dave
Packard and Bill Hewlett to start their company there — and he
convinced Stanford to allocate land for an industrial park, which
became the site of Hewlett Packard and many other companies."
Terman also encouraged Princeton to promote similar measures.
But, says Zschau, perhaps due to Princeton’s desire for academic
the university was slow to participate in the licensing of its patents
and trademarks, an arrangement which, according to Zschau, now reaps
$50 million annually for Stanford, with Berkeley receiving only
less. "MIT, Harvard, the University of Chicago — there are
many examples," he says. "One could argue that Austin became
a high-tech center as a direct result of the role played by the
of Texas and its local business community. Universities that don’t
capitalize on what they create on campus miss out on the opportunity
to learn — and on financial returns."
Princeton has subsequently been playing catch-up with the
of James Wei, who became dean of engineering in 1991 after decades
of teaching and administrative positions at MIT. Rutgers has been
even more aggressive, licensing about 225 patents to 150 companies
and 27 startups, compared to Princeton’s 100 patents licensed to over
25 companies. But, Zschau points out, the synergy of universities
and industry through tech transfer is not limited to economics; while
intellectual property gets seeded throughout a surrounding area, so
Last month’s technology education forum at Princeton’s Engineering
Quad showcased this principle. Among the New Jersey-based companies
were several licensees of technology developed at Princeton and
Universities. Universal Display Corporation in Princeton exhibited
its organic light-emitting diode (OLED) (U.S. 1, February 25, 1998),
while other displays included a virtual endoscopy system from Siemens
Research Center on College Road East; and a prosthetic hand created
through a joint venture between the Somerset-based Nian-Crae Inc.,
and Rutgers’ Biomedical Engineering Department.
Also on display were educational software from Trenton’s Productivity
Works Inc.; interactive products from Jersey Cow Software Co. Inc.
in Franklin Park, and the imaging and sensing technology of Sensors
Unlimited Inc. in Princeton, a licensee of the university’s POEM
and Optoelectronic Materials) Center. Highlighted too were the
and educational efforts of Princeton’s Center for Ultrafast Laser
Applications, the Princeton Materials Institute, and the Princeton
Plasma Physics Lab.
"New Jersey and its schools have to make a concerted effort to
retain its people, so they’ll build businesses here rather than in
Austin or Boston or Palo Alto," Zschau says. "Over time that
could create a very exciting setting."
Fostering that type of relationship is a major impetus
behind the formation of the Master of Engineering program. "The
university has historically been, and will continue to be, a school
for PhDs," says Stuart C. Schwartz, professor of electrical
and the program’s director. "But the master program is in response
to other perceived needs." One of those is the need of engineers
for advanced training in applied technology. "This is for
who don’t intend to teach or do research," Schwartz continues.
"The program is for engineers who want to manufacture, design,
But the program also provides an effective recruiting tool for local
companies. Although the eight required courses can be completed by
full-time students in one year, the degree will be available —
another innovation — as a two-year, part-time program. Full-time
tuition is $23,820 this year. Presumably, the two-year program will
cost about the same but officials have not yet fastened on a firm
"Details of the tuition are still being worked out," says
Sandra Mawhinney, associate dean of the Graduate School. "If
are self-paid and show financial need, limited fellowship funds are
available on a restricted basis. We don’t want to restrict the program
to company-sponsored or wealthy students."
The part-time option should be an attractive alternative for high-tech
employees and for firms importing talent to the Princeton area. Says
Zschau: "The courses being offered through the master program
increase the likelihood of candidates starting a business close by,
rather than joining a company across the country and having an idea
occur to them there."
The program is also designed, says Joseph Montemarano, director of
industrial liaison for the POEM Center and the Princeton Materials
Institute, to improve "the ability of engineers to analyze their
options. As they develop technology, we want them to at least
what they’re giving up. In some cases, very good technologies don’t
move forward because the people creating them don’t want to give up
control. Fifty percent of a big number is better than 100 percent
of nothing, and that’s a calculation we want engineers to be exposed
The engineering master’s will be available in several permutations.
A candidate can specialize in any of the five engineering departments
— electrical, computer science, chemical, mechanical and
and civil engineering and operations research — taking six
courses in that discipline, with two non-technical courses. Within
departments, more topical curricula can be structured for financial
engineering, telecommunications and information networks, structural
engineering, and photonics.
And the degree will also be available to those who don’t
elect a department specialty. A master’s in engineering management
will feature the same technical component that distinguishes the
from standard MBAs, but only four technical courses will be required,
with four non-technical ones rounding out the degree. One on
leadership will be taught by Norman Augustine, former CEO of Lockheed
Martin Marietta and author of "Augustine’s Laws." Another
non-technical course available to master’s candidates, as well as
to senior engineering undergraduates, will be Ed Zschau’s.
His career, laughs Zschau, who is now 58, has been a checkered one,
and he amply credits different people and a fascinating roster of
opportunities. Zschau (whose name rhymes with "how" but starts
with the "sh" sound) was raised in Omaha, Nebraska where,
"we had basements as homes do in New Jersey, and our basement,
like a lot of other ones, had a workshop," he recalls. "My
father was trained as an electrical engineer, so even before I entered
first grade, we were building radios and electric motors. I became
a ham radio operator and got very interested in science." His
hero growing up was Albert Einstein, "so it was quite natural
for me to come back to where Einstein had lived and worked."
After entering Princeton in 1957, says Zschau, "something happened
— reality struck. There were students in my physics classes who
were much more brilliant than I was, so I realized I could become
a second-rate physicist or branch out into something else." He
decided to pursue a bachelor’s in philosophy of science, combining
physics with a more liberal arts’ approach and coming under the
of Carl Hempel, "a world-renowned philosopher and my thesis
who had a big impact on my life." Almost 40 years later, Zschau
continues to applaud the breadth and flexibility of his undergraduate
"Princeton was a very fortunate choice for me," he says.
had also been accepted at the California Institute of Technology in
Pasadena where I wouldn’t have had the opportunity to get out of
Instead of being held hostage to something I wasn’t really good at,
I was able here with Professor Hempel to put together something that
really worked for me."
Graduating in 1961, his next stop was supposed to be the Navy’s
Candidate School, but Zschau was landlocked with a broken leg suffered
while playing rugby his senior year. Instead, he headed west for a
Stanford MBA and a PhD in business administration. He spent five years
teaching, one at Harvard Business School and four at Stanford Business
School where he eventually co-chaired its business-policy department,
before deciding it was time to leave the classroom behind.
"It’s like learning to ride a bike," he says, comparing
a business to studying how-to in business school. "Someone can
tell you how to do it, but you have to get on and learn. Until you’ve
faced business challenges, particularly the interpersonal ones posed
by vendors and customers, negotiating transactions and hiring
it’s hard to learn how to make those decisions. I try to help students
appreciate the nuances, but it’s vicarious."
He stopped teaching in 1968 to found System Industries Inc., a
products company in Silicon Valley before the area’s designation had
even been coined. "It was the year Intel was founded, itself a
spinoff from Fairchild Semiconductor which is now viewed as the
of the Silicon Valley family," Zschau explains. "Apple
was still several years away, and Silicon Valley hadn’t yet become
the phenomenon it was going to be."
Making "a bunch of mistakes" in his new venture, an essential
rite of passage for first-time entrepreneurs, Zschau realized emerging
firms were being hobbled by a tax code that placed a prohibitive 50
percent capital-gains tax on investment earnings. Working as a member
of the American Electronics Association, he helped draft the
Incentive Act of 1978 which reduced capital-gains to 28 percent,
the way for billions of venture capital investment dollars for
firms. It also paved the way for Mr. Zschau, now interested in public
policy, to go to Washington.
Elected to the House of Representatives in 1982 from California’s
12th District, the heart of Silicon Valley, Zschau was re-elected
two years later but lost a Senate bid in 1986 to incumbent Alan
Undeterred, he became general partner in the Silicon Valley office
of the Los Angeles-based Brentwood Associates, a venture capital
He then became CEO of Censtor Corporation, a Brentwood capitalization
that developed advanced magnetic recording components, before big
business called. He left Censtor in 1993, and became general manager
of IBM’s storage-systems division in San Jose.
"I learned a lot from that experience," Zschau says, "but
it is true I find starting companies more exciting than running them,
and building companies rather than re-sizing them." He returned
to Harvard Business School in 1996 and met Princeton professor
in 1997, who wanted Zschau to offer his high tech entrepreneurship
course if 15 engineering seniors could be interested. Instead, 99
applied, and last year’s fall class needed a lottery to whittle it
down to 45.
"What makes it so easy to sell a course like mine is that kids
all over the country are starting businesses," Zschau says.
are no longer an adult activity, and when students read about people
their age building companies, they come into the course really excited
Zschau incorporates not only theory and case scenarios,
but role models as well. "One individual I brought in last year
is the CEO of Trilogy in Austin who dropped out of Stanford and funded
his company by pyramiding credit cards," Zschau says. "He’s
now worth $600 million. I also brought in his former roommate —
who happens to be my son-in-law — who took a much more risk-averse
approach, graduating from school, working for a larger company,
a business degree, and working for a smaller company before doing
his own start-up. The whole notion is to give students an opportunity
to interact with entrepreneurs so that, by the time they finish the
course, they’re determined to do the same thing with an approach that
works for them."
In teaching entrepreneurship to such technologically proficient
Zschau wants them to recognize "what they’re good at and what’s
required for success. One of the decisions they may want to make is
to bring in experienced management, if they can attract it through
the richness of their opportunity. Quite often, venture capitalists
will insist younger people get what is known as `adult supervision,’
a team of more seasoned businesspeople."
What are the pitfalls when engineers turn entrepreneurs? "One
of the common mistakes is getting enamored with your technology before
you’ve faced the reality of the marketplace," says Zschau.
must first determine if your product can be commercialized and ask,
`Can this dog hunt?’ Sometimes really fascinating technologies turn
out not to be a good foundation for a company or even a product
they don’t translate into a value proposition for a customer."
And do companies, like those that sprang up in Silicon Valley, need
to be small and lean in order to prosper? "That used to be true,
but it won’t be in the 21st century," Zschau says. "You need
both speed and scale to thrive in the long run. Small companies have
speed, big companies have scale, and the ones who will successfully
compete will find a way to combine them."
His career has convinced him of the essential connections among public
policy, academics, and business. "I would like to see centers
being created at universities at the nexus of engineering and science
departments, with economics and political science, to explore how
to influence the progress of technology," he says. "The
world provides much of the foundation of what then becomes the
and job-creating engine. Having had some exposure to all three —
not necessarily expertise, but exposure — helps me see those
pretty clearly and how they might be leveraged."
He lives with his wife on Nantucket, dividing his teaching time
Princeton and Harvard, taking pains to point out to students that
life is more than business. "I want them to understand that
is very important, and if they’re fortunate enough to have children,
those years when they’re growing up are irreplaceable." His own
balancing act of a career, with many risks taken and interests
continues to bring a great deal of satisfaction.
Zschau is glad he made it a priority to spend time with his children
during their growing years, and that his wife was able to devote
to child-rearing. All three of his children are involved in start-ups.
His son is working with a small Internet software firm in Atlanta
and his son’s wife has started an Internet services company. His
daughter works for a small database software company in California,
and her husband has an architectural consulting firm. His older
has two children and her husband has started a software firm in
Texas. "I can’t help but believe that it’s part of the
setting in which they grew up."
"I’m doing everything I like to do and nothing that I don’t
he says. "I can work with talented young people, and not just
in the classroom. I’ve maintained close friendships with many
and I’ve been excited by what they’ve done in the world. And it is
very gratifying being at Princeton — which I’m glad I applied
to when I did, because the students are smarter now and I wouldn’t
get in! Princeton took a naive young kid who just fell off the turnip
truck in Nebraska and enabled me to do some interesting things."
And, Zschau continues, "I can think of nothing more personally
satisfying than to see the Route 1 corridor viewed as the new hotbed
of technological innovation and entrepreneurship. If I could have
some small part in that, it would be wonderful."
Science , 609-258-2890. E-mail: MENG@princeton.edu. URL:
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