News Column

Gov. Scientists Thinking Like Entrepreneurs

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PARDON THE "GODFATHER" REFERENCE -- he's Italian -- but Michele Migliuolo likes to say he's a man with only one client.

It's a big one. As commercialization alliance manager at Innovation Works, Mr. Migliuolo is spearheading a cultural shift at the National Energy Technology Laboratory, where high-cost, high-risk and high-level research into fossil fuel technologies sets the standard for industries decades down the road.

Mr. Migliuolo was hired to help government scientists think like entrepreneurs -- or, in other words, to "think small and think quick."

Innovation Works is the lead commercialization partner for NETL's three national laboratories in Pittsburgh, Morgantown, W.Va., and Albany, Ore. Also part of the commercialization alliance are Innova Commercialization Group and the Mid-Atlantic Technology, Research & Innovation Center, both in West Virginia, and Oregon Best.

The effort began in March.

NETL's big ideas are everywhere in modern industry, from the way coal is mined and burned to how shale oil and gas is forced out of the ground.

Its small ideas are few and far between.

"National labs in general have a fairly poor track record of transferring technologies developed by taxpayer dollars into the commercial sector," said Kevin Donovan, program manager at URS Corp., NETL's site support contractor. "The success rate is not that good."

In the past 30 years, NETL has been issued 106 patents and has 15 active licenses. In 2011, the organization boasted that its technology, for the first time, directly inspired the launch of a local company, Pyrochem Catalyst of New Brighton, which spun out to commercialize a catalyst originally developed for fuel cells.

On a zero-to-10 scale of market readiness, NETL research peaks at seven, Mr. Donovan said. Venture capitalists, however, only get interested at nine or 10.

To fill the gap, often called "the valley of death," Mr. Donovan suggested NETL engage Innovation Works, which hired Mr. Migliuolo to lead the effort.

"I think of myself as a sales guy," Mr. Migliuolo said, and the opportunity to "sell" for NETL was too good to pass up. "I thought, this is screaming 'me.' "

Part of the appeal for NETL is Mr. Migliuolo's multidisciplinary career -- he started as a physicist researching high-temperature superconductors, then moved into sales at Clairton-based manufacturer Kurt J. Lesker, then founded two companies to commercialize technologies for medical surgeries.

For the past four months, Mr. Migliuolo has been traveling from Pittsburgh to Morgantown to Oregon, picking through NETL's portfolio, plotting licensing deals and spinoff companies for industries outside of NETL's traditional menu.

He can't talk specifics. Even though NETL's technologies are public -- there are 110 of them looking for a home, available for perusal on the agency's website -- alliance partners wouldn't give details about particular technologies they're working to commercialize.

Mr. Donovan put it in broad terms: "What we're really talking about is applications of materials in harsh environmental conditions -- high temperatures and high pressures. Those conditions exist in many industries outside of fossil fuels."

Culture shock

NETL, which replaced its director last week, has the hefty mission of developing technologies that ensure domestic energy security; protect the environment; and allow coal, natural gas and oil to be used for generations to come. It does that with a fluctuating, annually adjusted budget from Congress.

"That is what my scientists and engineers are focused on in terms of their research," said Cindy Powell, director of the office of research and development at NETL. "In the process of doing that, there are inventions. We discover new materials or new catalysts. Sometimes a scientist, as they're looking through literature and talking with peers, may recognize an opportunity. But that is unusual."

In 2011, President Barack Obama issued a directive to all federal laboratories to increase their links with the commercial sector and get more technologies into the marketplace.

Part of Mr. Migliuolo's task is teaching scientists how to present their work to investors and, to some extent, how to think like them.

By all accounts, most NETL scientists have taken to it with enthusiasm.

"I don't like the idea that something I'm working on will need 20 years before somebody actually uses it," said Dave Berry, director of energy and innovative processes at NETL. "Let's open our eyes a little more and make industry aware of it."

It was Mr. Berry's work that led to the founding of Pyrochem Catalyst.

He's worked at NETL for 28 years, starting out in the fuel cell program. In the early 2000s, he'd cycled back to fuel cells with research into a catalyst that would help convert diesel fuel into a synthetic gas that could feed a fuel cell. The goal was to give long-haul trucks a cleaner source of power during stops. Out of all the technologies he's worked on, this held the most impact potential, Mr. Berry thought.

Then, several years ago, the Department of Energy cut its fuel cell program. Mr. Berry's catalyst went on the shelf until Tim Fogarty, then the director of energy programs at Innovation Works, sniffed it out.

A $50,000 grant from Innovation Works, an investor in seed-stage companies, launched Pyrochem, which is now funded in part by Mr. Fogarty's new venture capital firm, Crimson Hill, in Kentucky. Innovation Works also helped negotiate the licensing agreement, which gives NETL a cut of sales.

As many other energy startups in this area have done, Pyrochem has tailored its business proposition for shale gas. With natural gas seemingly stabilized at low prices, the company focused on marketing the catalyst to convert gas into a synthetic diesel fuel, or methanol, or use it to power a fuel cell.

Moving an elephant

The major focus has been to put the catalyst in the hands of potential customers.

"I really thought this would go faster," said Jeffrey Harrison, Pyrochem's CEO. "The catalyst industry is deeply entrenched by existing technology. It's moving an elephant to get a refinery to change. We entered that piece somewhat naively.

"But I'm not giving up on it."

In May, Pyrochem won $25,000 at the Ben Franklin Shale Gas Innovation Competition, money that will go right back to NETL for more research.

Mr. Berry talks with the company weekly, he said.

"It's a little bit of a culture change and a mindset that is changing here at NETL over the past five years," he said.

When NETL announced the commercialization alliance earlier this year, it promised that "this process will translate to an increase in licensing revenue as well as increased company formation, industry activity and job growth in the participating regions of Pennsylvania, West Virginia and Oregon,"

Mr. Migliuolo said he sees at least four spin-out potentials in NETL's current portfolio, and many more licensing opportunities.

West Virginia-based Innova has spotted one technology that it thinks would make for a good startup, said director Guy Peduto.

Oregon Best has identified a "handful [of technologies] that seem like a good fit with folks in our network," said its president and executive director, David Kenney. Oregon Best is focused on clean technologies, which include renewable energy, efficiency and water purification.

Matric was equally optimistic, if vague.

The commercialization alliance is still in the early phase of inventorying the research being done among the three national labs and compiling a portfolio of potentials for short-term returns.

There's $343,000 allocated for the effort, but just $100,000 has been spent thus far. In November, six months after the collaboration's launch, NETL will evaluate if it wants to go all in with the rest of the money and launch phase two.

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Original headline: Government scientists shift gears, start thinking like entrepreneurs

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