The term "barrier to entry" describes "the existence of high start-up costs or other obstacles that prevent new competitors from easily entering an industry or area of business."
When one barrier to entry is eliminated, start-ups rejoice. But what if multiple barriers evaporate, all in one fell swoop?
That's the underlying logic behind behind a $35 million gift from clean energy power player Michael Polsky to expand the Polsky Center for Entrepreneurship and Innovation at the University of Chicago. In doing do, Polsky may very well be providing a useful roadmap for other philanthropists looking to boost innovation—and with it, critical jobs—in a post-manufacturing labor market.
In order to see how he may accomplish this, let's first look at the center itself and where it's heading.
Technically speaking, the move is akin to a kind of structural reorganization as the center will now act as a free-standing entity separate of the University of Chicago's Booth School of Business. Starting in July, all of the university’s innovation programs, including the Chicago Innovation Exchange (CIE) and the tech licensing group UChicagoTech, will become part of the Polsky Center. The CIE will be renamed the Polsky Innovation Exchange in the process.
This consolidation hopes to make it easier for entrepreneurs to get their ideas to market and connect with "necessary resources along the way," according to John Flavin, current executive director of the CIE. "To go from early idea to initial commercialization, you need a clear path and you need transparency," he said. "Barriers need to be removed. By coming together in one unified structure, all parts will be working together."
And so we can't help but return to more terminology learned during our handful of business classes in college—economies of scale. By consolidating innovation-oriented activity under one roof, Polsky's give aims to generate advantages "due to size, output, or scale of operation" (with "cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output," of course).
"That is where the world is going," Polsky said. "The university has recognized that and capitalized on that. It's not just Booth anymore."
Specifically, we infer that Polsky is alluding to a world comprised of fine-tuned innovation labs, free from traditional barriers of entry. A kind of innovation supply chain that speeds up time-to-market. To that end, the money will also help facilitate partnerships with Argonne National Laboratory, Fermi National Accelerator Laboratory, and the Marine Biological Laboratory in Woods Hole, Mass.
And indeed, Polsky is correct regarding the fact that this is "where the world is going," at least at the macro-philanthropic level. We have seen many big donor gifts earmarked for campus entrepreneurship as of late. One example comes to us from Rice University, which netted a $16.5 million gift from alumnus Frank Lui to launch the Lui Idea Lab for Innovation and Entrepreneurship.
San Diego State University, meanwhile, recently announced a $5.1 million endowment gift from Zahn's Moxie Foundation to create the the Zahn Innovation Platform (ZIP), among other things. The gift will expand the center as a "commercial and social incubator to support entrepreneurship on campus."
Polsky is the founder and CEO of Chicago-based clean energy company Invenergy and university trustee. He graduated from Booth in 1987. In 2002 his gift established the Polsky Center for Entrepreneurship and Innovation at Booth, while an $8 million gift in 2012 expanded the Polsky Center.
The gift brings Polsky's total contributions to the university to $50 million.