Reprinted with permission
A shadow crosses Lou Padulo's hooded hazel eyes. It's a flash and it's fleeting, as ephemeral as a summer sunset. It's a shadow, like a secret handshake. which only someone
who's a parent will recognize, a sudden sadness, a haughty hankering to hang on to the child who's left the nest.
This all happens in an instant while Lou Padulo's charging down the fluorescent-light-bright hallway, propelled on scuffed brown wingtips, in this maze of cubicles and cubbyholes that is the University City Science Center, popping his silver head into, first, one cubby, then another, talking with the techies, schmoozing with the scientists and pointing out the ghosts of enterprises past.
There are no doors here, and no walls. There are only movable partitions that end well below the stained-tile drop-ceiling. The partitions delineate the physical space that each entity comprises, but can't begin to con tain the cosmic energy, the spirit that's pervasive. There is a spirit of discovery, of science pure and sweet; and, more to the point, there is the spirit of the entrepreneur, a spirit as penurious and as ambitious as you'll likely find in any Fortune 500 company.
This is a research park, the first and largest urban university-related research park in the country. And this is a business incubator, the oldest in the. country. Businesseshigh-tech businesses, mostly science- and computer -related businessesstart and grow here. The idea of incubating high-tech businesses was born right here in West Philadelphia.
And hovering like an anxious parent is Lou Padulo, the new president and CEO of the science center. He is the quintessential father and the quintessential professor. He worries and he encourages, he brainstorms and he networks. And he talks a blue streak. He is interested in everything. And he knows so much about so many things, from applied mathematics to writing poetry. That's his job. And his nature.
He pokes his nose into one small cubicle, where only a desk and a chair and a filing cabinet fit. An earnest young woman is speaking softly on the phone. Symphony Pharmaceuticals, Inc. is the melodic name on the tag next to the doorway. It sounds rather whimsical but she is singing a very different tune. It is serious and businesslike. She has a new pharmaceutical product that she's trying to develop. She is one small person with one large price tag. If only, if only. She is hard at work. She thinks she has something here. But it will take millions to bring this product to market.
This is a company in its infancy, needing nurturing and TLC, the technical expertise so convenient in this university atmosphere, entree to venture capitalists and, quite frankly, a cheap place to set up files and a phone. Maybe this business will take its place among the hundreds of companies that have grown here and flourished here. Maybe not. Maybe, like SMG, it will grow and expand and take over a significant portion of the science center building. And maybe, like some of the science center's illustrious alumniCentocor or SEI come immediately to mindit will be fruitful and move on.
Padulo stops abruptly in mid-tour. "Over here," the proud papa opines, pointing, "is where we incubated a little company called Neose. We're gonna be hearing a lot about these guys.
"They're doing clever things with carbohydrates. They incubated here and they did it just the way we want people to do it. They came out of the universities into the incubator, and we helped them think 'international' from the git-go.
"They plugged right into ITEC [the International Technology Exchange Center]. They got money and a terrific board of science advisors to advise them on the way to do their research and the way to develop their company. "A good, high-tech company needs all of this; it needs a lot of advice.
"But," he says, and this is when that momentary shadow flits across his face, a reflection of the pain from an imagined stab in the back, "now they're gone. They've moved to the suburbs."
A developer with some vacant space in Horsham has made them an offer they can't refusefree rent. He sighs that long-suffering, parental sigh. "Little companies are often quite opportunistic," he says. "That's the most important job of an entrepreneur.
"Anyway, it's a free country," he says. "We can't put chains around their ankles." Chains around their ankles? More like wings upon their shoulders.
The idea, back in 1963 when the University City Science Center started as a private, non-profit corporation by a group of 23 area universities and hos I pitals, was to cash in on the research that was being done in those institutions, to get credit for it and maybe even to turn the research results into useful products.
They were exploring bold new territory, the concept of technology transfer, of intellectual property. Unlike books, where the author always got the royalties, scientific findings were not considered the property of the scientists who did the findings. If you worked at IBM and you developed a product that became patented, IBM owned the patent; they might give you a dinner or even a bonus, but the patent was IBM's. And universities and hospitals weren't even bothering to get patents.
"They all knew it could be done and should be done," says Padulo, "but they weren't good at it.
"In those days, if someone read your paper and made something out of your research, they were under no obligation to give you something for it.
"Universities just weren't very good about getting research results patented."
Meanwhile, back then, back in the '60s, scientists in other countries, Japan primarily, were reading our journals, studying the results of our science and seeing the commercial possibilities. Americans, however, were not. Our scientists were more on track to win the Nobel Prize than to find commercial uses for their discoveries.
"If you were trying to find a cure for cancer," Padulo says, "you weren't going to stop to make a new cough syrup with your discovery just to make a few bucks. If someone else did it, you'd like to get a piece of that, but that's not what got you up and out of bed in the morning."
So the idea of the science center was to put the right pieces together without slowing down the research activity, to harvest the research, mine it, pick out the nuggets and exploit them in ways that would benefit the institutions and the individuals involved in the research. To take research and discoveries and turn them into products. To bring good things to life.
That was the idea. "At the time, they were only thinking about getting credit for a discovery," says Padulo, "maybe getting a patent for it, making some money to help support their research, so that every time, say, Kodak used the thing you invented, you'd get a dollar"
There was also an urban development component to the plan. Back in 1963, that part of West Philadelphia, that part around 36th and Market streets, by any standard, was a blighted area, and there was an idea that companies that were engaged in industrial research might like to buy one of the many vacant lots in the neighborhood and develop their own lab facilities; that scientists at, say Dupont or IBM or Lockheed would hear about research that was being done at the science center and would want to hang out with the researchers, you know, to make the technology transfer easier.
It never happened. Not one large company built an R&D center in West Philadelphia. Enter Randall Whaley. That's his bust in the science center's lobby. He came out of NASA to head the science center in 1970. He would bring distinguished scientist Buck minster Fuller in as "genius in residence," Buckminster Fuller who would say when he first visited the science center: "We are engaged here in learning what it is we need to know to make our world work for everybody."
Anyhow, Whaley soon realized that the science center's great dream was going unfulfilled. But instead of getting clobbered by this unfulfilled dream, he was clever enough to notice that there was an important need going unmetthe special need of entrepreneurs starting high-tech companies. Whaley came up with the concept ofindeed, he coined the phrase"business incubator" While the original idea wasn't to start companies, the focus of the University City Science Center changed with Whaley.
"In starting any businessany business," says Padulo, "you critique the business problems: Are they good managers? What does the cash flow look like? Are they prepared to handle growth?
"And it doesn't matter whether it's a pizza parlor or a dry cleaner.
"But with science and technology businesses," he says, "you have to evaluate the science itself and the technology itself: Is this really a fundamental discovery? Does this person really have it locked up? Is this really a new discovery or just a new wrinkle to an old one? Is a patent going to be awarded unambiguously to him? Because if I'm going to invest $12 million in this, and it turns out some guy in France is going to be given a piece of it, I can't see how it's worth sinking money into it.
"Hubert Schoemaker tells me," says Padulo, referring to the founder of Centocor, "that it takes $250 million and a dozen years to get a drug to market. I mean, you've got a unique discovery; then you have to go through all the clinical investigations, all the safeguard trials, you get into production, do all the advertising, hire the staff. You can spend $250 million and wait 12 years before you can get one penny out of it.
"And if in those 12 years some new science comes out and it cures nine out of ten people and your drug cures six out of ten peopleyou're dead.
"It's just much more complicated than looking at an ordinary small business plan," says Padulo. "It requires patient capitalinvestors who can invest in something that might take a large amount of capital and a lot of time before they can even start to reap any returns.",
And of course, he says, "you can kill any project by looking at the numbers. You can throw cold water on any idea. Almost anything new can't be justified if it's really new. I mean, what would a market survey do for you? No one ever saw an airplane. Or a CD. Would you buy one before you knew what it was?
"But you have to do some projects just because they seem central to your core to do them. If you're a car company and you stopped designing engines, you're not a car company anymore; you're an assembly plant.
"At some point you have to draw the line and say, 'I want to be a car company; I don't want to be an assembly plant."
That there was research talent here in the Delaware Valley was undisputable. But in order to launch a successful company, biotech entrepreneurs had to hop on an airplane and hunt for capital in New York or Boston or the Silicon Valley, where the money for high-tech start-ups was known to be.
Of course, there was money here, too. But it was private and not a whole lot of people knew about it. Today, the science center is credited with attracting money for high-tech businesses. Pools were formedthe Delaware Valley Venture Group, among them. Now, the Delaware Valleywhich wasn't always a con tenderis said to be the third fastest-growing region in the coun try in the amount of money specifically available for investment in biotech ventures.
Where once the lack of capital was a barrier to attracting people who wanted to establish new businesses here, now, with visible money around, the area is a magnet for high-tech entrepreneurship. And the science center has played no small part in that. It has successfully incubated some 150 companies since its founding; its success rate, says Padulo, is 70 percent.
And its urban development mission continues as well. Thirteen buildings employing some 6,000 tax-paying citizens have gone up in the area, lured by the science center, things like the Society for Industrial and Applied Mathematics, whose world headquarters are next door, and the National Board of Medical Examiners, whose new headquarters are underway nearby.
Lou Padulo, who came to the science center barely one year ago, was born 54 years ago in Athens, Alabama, near Huntsville. But that accent you hear is Jersey City, where he grew up, and Boston, where he served for 11 years as dean of BU'S school of engineering. He's also taught at Stanford, Morehouse College and Georgia Tech and served for two years as president of the University of Alabama at Huntsville.
His background is in science and engineering but his main interest now, his focus, really, is on science technology management and policy.
"In the universities," he says, "I had to worry about what kinds of labs to invest in, what kinds of science should we be in. That would determine what kind of people to hire, what kinds of facilities to build. I had to say, 'Gosh, where am I going to get the money, how much is it going to cost to build the facility and how will we get our value back out of it? Where will we get our experts? Let's say we get the technician to run the facilitiesyes, she's hot stuff, we hire her, but do we have a glass-blower if she wants one? Do we have someone who's good at computer-aided design of big molecules?'
"They're awfully close, running a university or a high-tech or biotech company. It takes the same set of skills." As president of the science center, Padulo is, in his words, "on the interface" with the start-up companies, the private sector and venture capitalists.
Molecular Biophysics never made it. "There were high hopes for that company when it was incubating here," says Padulo. "It looked like a good company. They were doing things with lasers, interacting with molecules." It didn't survive. "They didn't sell things," says Padulo with a shrug. Three out of ten companies that incubate at the science center never make it. Nationwide, seven out of ten companies that are started fail, he says.
But others have succeeded. There are Centocor and Neose; Uni-Coll, which was bought and sold several times before emerging as Sungard Computer Services; and Wharton Econometric Forecasting Associatesthe Wefa Group.
Up on the fifth floor of the science center's building is SMG, Strategic Management Group, Inc., a computer-simulation management training firm, which owns its own space through a condominium arrangement. The company was founded by some Wharton grads and relies heavily on Wharton faculty as consultants.
There's also NIM, Inc., Non-Invasive Methods, Inc., where scientific research is running apace. There are drawers full of patents and patent applications, shelves full of grant proposals. Right now, they're testing a device called Run Man, which measures tissue oxygenation in muscles and the brain. There are high school students working on the project along with NIM's core group of research experts.
Over there is Design Science, a one-year-old company that does engineering testing for industrial design firms. Principal Stephen Wilcox says the firm acts like the left brain of industrial designers.
And here's Dr. Narayan Patel whose International Health Products is trying to find cures for the likes of cancer and AIDS by studying natural sources.
"The appeal of the science center," says Padulo, "the thing that makes it most attractive to private companies, is that they recognize the talent base here; they want to be close to them. If you really want to be around a lot of bright people doing wonderful, creative things, this is really attractive. This is the place to be. You can find out about seminars. You can hook in with venture capitalists. You can pick the brains of other people who have dealt with the problems you're trying to solve.
"And of course, all of the resources of the universities are right here, that pool of people. Don't you think a university scientist would rather be a consultant to a company that's right here instead of being hired by someone in the Midwest and having to hop on a plane and fly to Cleveland every few months ?"
Lou Padulo is fairly flying down 36th Street now, his gray slacks flapping in the mild midday breeze. He is hurrying to Penn's Faculty Club, where he will choose an authentic Philadelphia lunch of snapper soup and crabcakes.
Two gray men in white coats are headed in his direction. Research and discovery are in the air. The men in lab coats are so deep in conversation that they don't even notice Lou Padulo as he passes. But he notices them.
He leans toward them as they approach and strains to hear what they are saying, and as he does, a shadow crosses his hazel eyes. He is the scientist and the entrepreneur. He is interested.
Photography by DAVID MALE/Philadelphia Foto & Design Associates