Beyond the Breakthrough: Andy Shenk

Andy Shenk, chief executive of Auckland UniServices, the commercialisation subsidiary of University of Auckland, joins us to discuss how the office collaborates with the Māori people and why that matters, what the opportunities and challenges are around big data and AI, and why being a remote country is an asset for space tech.

He also tells us why New Zealand is missing serial entrepreneurs despite a willingness for people to try their hands at startups and why Auckland UniServices not only creates spinouts or handles licences, but also operates its own businesses – including the one that trains covid-19 vaccinators across the country and several Pacific island nations.

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Transcript

Please note: the intro and outro have been omitted.

Andy, welcome to the podcast.

Thank you very much, and I am glad to be here.

It is a great pleasure to have you. You are my first guest from New Zealand as well. So that is great. To start with, can you give me an overview of Auckland UniServices and some key figures if you have them handy?

Sure. UniServices is the research commercialization and knowledge transfer company that is wholly owned by the University of Auckland and unlike many organizations in this field, we are involved from the very beginning of an idea because we are involved in attracting research funding and contracting that research funding that comes into our university, as well as protecting the outputs of those research programs be it through patents, trade secrets, or what have you, and then turning them into commercial outcomes.

Sometimes through startup companies that we create, sometimes through licensing to existing companies, and sometimes through creating and operating our own businesses, which we run for both the impact that it creates, but also the revenues and profits that they generate. To give you some figures. We have staff of about 400 people.

We raised about $250m in third party investment into our startups between 2016 and 2020, and during that period, we started about 40 new companies. Because we are a profit centre, we generate significant returns for our university owner, but we also are able to return our profits back into our investing in business development activities. So, we do not receive funds or support from our parent. We are a net contributor to our parent.

Wow. Amazing. You have run a wide range of initiatives at UniServices: Velocity, Vanguard, Inventors Fund. Can you tell me a little bit more about these?

Sure. I will actually separate those into two types because Velocity and Vanguard are actually programs of the University of Auckland Business School where we are sponsors and significant participants. So, I will start with Velocity. This is a student run entrepreneurship program that has multiple different offerings in it, but the largest one is the $100,000 Challenge where teams work with a mentor to develop their ideas.

Then there is a pitching competition, and the winners receive financial support and the opportunity to enter an incubator program and turn their idea into reality. Velocity has been hugely successful over the years and almost 10% of the student body of the University of Auckland go through one or more of their programmes every year, which is nearly 4,000 students a year.

So quite a large cohort and quite a lot of activity. Vanguard is a specific program for the Velocity winners where they and others are taken up to the Bay Area to meet with players in the startup ecosystem, but also the startup investment community in the Bay Area. Some of whom use that as a landing pad to continue on with their businesses.  Vanguard has not been able to operate during the covid years unfortunately, but we do expect to return to that when we are able.

Now, the University of Auckland Inventors Fund is our own investment fund that we use to invest in startups that come from researchers, academics, and students from the University of Auckland. It is a $20m evergreen fund, and we return the realisations from our startups when we exit back into the fund. So, it gives us a sustainable way to be the first investor in new startups from the University of Auckland.

Amazing. You also have the Return On Science programme. Can you tell me a little bit about that one as well?

Happy to, sure. So, Return On Science and its sister programme, Momentum, are a collection of investment committees that we operate, but they are supported by the New Zealand government so that we can make access to those investment committees available to anyone who wishes to access them. So, any university, any research Institute, private individuals, whomever wants to seek advice and steering and leads to people they might need to talk to, they can come to one of our committees.

Now, Return On Science has five specialty areas that it operates, and they are agritech and food, biotech and pharma, digital technologies, physical sciences and engineering, and MedTech and surgery. They are made up of experts from the field. Some of them are key opinion leader researchers, some are serial entrepreneurs, some are experienced early-stage investors and they advise at quite a detailed level on the technologies and the commercial opportunities.

Momentum is a parallel program in which we recruit advanced students and form committees with them with a few of those seasoned experts alongside them. They are regionally based. So, we have five of them at the moment, and they are spread from the North Island to the tip of the South Island of New Zealand. Importantly, those student committees are there not just for the development of the people on them, but to create an environment that is more conducive for students when they bring their ideas forward and they are interacting with their peers, but they are accredited just like the Return On Science committees with deploying pre-seed accelerator funding, which comes from the New Zealand government. So, they are proper investment committees with the same powers and scope and responsibility as our sector focused committees.

One of your colleagues — and please forgive me I will probably mispronounce the name — Tui Kaumoana is responsible for connecting UniServices to the Māori communities. Can you tell me a little bit more about that role and why it was created?

AS: Sure, I would be happy to. So, Tui is our Kaiārahi, which is Māori for guide or leader, or sometimes it can also mean bridge, and her role is to advise me and the rest of the company on how we need to approach engagement with Māori communities, tribes, and other organizations, how to be culturally appropriate in our interactions and she also opens doors for us. When we know that we want to engage with a particular group, she is very widely connected through the Māori community.

So, she can be that door opener for us, but the work is really about helping us be better at what we do and then helping us engage more effectively. Now, why is that important for us? We think it is important to be culturally appropriate and welcoming with every group of people that we work with. But Māori have a special place in New Zealand being the original peoples of the country, having the special role that they play. So, it is worthwhile in our view to invest in getting that to work as well as possible and to do it as well as we can. So, that is the reason for her role.

That makes perfect sense. How does your engagement from researchers and maybe your own staff in general fair when it comes to diversity and inclusion?

Well, we put a lot of effort and attention to this. You might imagine that what we learn and practice when we are engaging with Māori is helpful in other cultural settings as well and we are ourselves very diverse amongst our 400 staff. We have at least 29 countries of origin. I do not know how many different languages we speak, but we speak quite a few.

Similarly, if we think about gender diversity, about 77% of our staff are female or gender diverse and so we have a very unique makeup, partly because of the type of work we do but also because of the way we go about building our teams.

What is working well in Auckland’s ecosystem? And what are the challenges? I am assuming you have challenges.

Of course, we always have challenges. When I thought about this question, when you sent them to me earlier, I was thinking principally about the ecosystem in and around the University of Auckland. So, I will answer there, but if you mean something different, we can talk about that as well. In and around the university, we have a well-established model that helps us recognize opportunities and help teams coalesce around their business ideas, and we have been doing this for more than three decades. So, we have a reasonable track record and experience of doing it.

At the moment, our biggest challenge is access to markets. The international border of New Zealand is not yet open. It is possible to travel outside the country, but it is extraordinarily difficult. So, we have not been travelling. So, in some senses we are falling behind a little bit and making the connections, particularly for brand new ideas, brand new opportunities that no one knows about yet, getting traction with those is quite difficult.

If I think particularly in terms of the innovation area, we have reasonable access to capital, we have reasonable access to talent and we have very, very high-quality research to draw from. So, we have all the elements that you might think we would need, but we do not have a lot of any of those things.

We are actually quite blessed with research and there is capital, there just is not an abundance of capital. There is talent, but there is not an abundance of talent, particularly experienced talent who have been involved in more than one startup or licensing activity. So, I think we have a good and vibrant ecosystem and we are growing, but we have lots of growth still to come I would say.

That makes sense. Is the capital that you do have generally local capital or national capital, or do you seek investors overseas as well?

All of the above basically. There are some New Zealand government programmes that are designed to support the creation of new, early-stage investment firms and VC firms, and to take some of the financial risks so that those firms can raise the capital they need and get to the scale that they need to be self-sustaining.

So that is an intervention that has worked very well, and we are a beneficiary of that, not directly, but we know that our companies will have access to capital when they need it, because there is follow on capital to go after ours.

Our companies tend to start out financed domestically, but fairly quickly end up with a combination of international and domestic financing because of the nature of the, both the areas that they are involved in and the scale of the capital required. So, it is a bit of both.

Talking about talent for a second as well, is it generally Kiwi people that work for your companies or maybe now with the pandemic it is easier to find talent overseas as well, I do not know.

It often is Kiwis, but that does not mean that they are homogeneous, frankly, because just like we have 29 countries in our staff, Auckland is a super diverse city. It is one of the top cities in the world for the proportion of people who are born somewhere else in the world.

So, we have a very, very cosmopolitan mix of people and backgrounds, experience, ethnicities, and so forth. So, our staff often come from within that pool, but that is a pretty rich pool. It is not like some places.

Attracting new talent, young talent that have opportunities and potential to grow is relatively straightforward for us. It is the experienced talent that is the rarest. We definitely appreciate when we come across a serial entrepreneur as being someone who not only can prosper with their next opportunity, but can be a mentor for others who have not yet had that kind of experience. It is one of the reasons for the Momentum programme is to grow talent for the future and that is working very well.

What we are focused on right this minute is governance talent, because even if we have a management team and we have everything that we need, we do not always have directors who can go on boards, who are as experienced in the startup environment as we might wish. So that is a current target for us.

What is your view of the New Zealand ecosystem more broadly outside of Auckland?

Well, I would say it is pretty buoyant. We have the advantage that a part of the national culture here in New Zealand is one of inventiveness and give-it-a-go kind of attitude, which is very helpful. The willingness for people to imagine a different career path for themselves is reasonably high and that is very good. We have quite large and growing angel networks across the country.

So, we have the certain kind of early investment available to us, a relatively small number of professional investors in these kinds of companies. So, that is why the government has targeted that area, and we certainly support and benefit from that. But I would say it is a healthy and growing ecosystem in the country in general.

How would you say does it compare to Australia or other international peers?

Well, looking at Australia in particular on a per dollar of research and per capita basis, we do pretty well. Australia is a larger country. They spend substantially more on research than we do because they have a larger budget being a larger country. In some ways that willingness that I mentioned of people from this community, putting their hand up and saying, I want to be part of something new is probably a little more frequent here than it is in Australia and so I think we compare pretty well.

We have for a long time been seen as functioning well under the circumstances if you like.

That is a weird compliment.

It is a weird compliment but there was an MIT report that looked at these sorts of things many years ago. And they said, well, Auckland is not bad under the circumstances and one of the key circumstances is that distance from market, distance from collaborators and so forth. In normal times, it is not a problem because we are also very heavily travelled. So, we get on planes quite frequently. We go long distances, and we are used to it. Right now, we are not able to do that and it is holding us back a bit.

As you said, New Zealand: relatively small country, fairly remote. How does that impact how you do business? Do your companies generally try and expand internationally as fast as they can.

They definitely try to expand internationally. I would not say automatically as fast as they can because there are some who are able to use our population of 5 million people who are often willing to try a new idea or to buy a new product as a test bed.

So, they might operate here for a period of time and get some traction, refine their offering and so forth, almost as a test market. It is though rare for a company to have its entire lifespan here, unless it is got an offering that all 5 million people want to buy and they want to buy it frequently. It is hard to achieve the full impact that a new opportunity would have in such a small market.

So, we do often end up international, but sometimes there are something very special going on. We have a rapidly growing space program here in New Zealand, for example, and that is because there a couple of keystone companies that have made a big difference in their approach, Rocket Lab being the most prominent of them, but it is also because our geographic position makes launch opportunities much more accessible than almost anywhere else in the world.

Down range from us is a vast expanse of Pacific, between us and the tip of South America and the Northern edge of Antarctica. It is actually a brilliant place to do this. It is a special and very good place. So, we have examples of that as well, where there is something unique to be pursued.

That is amazing. I never thought of New Zealand as a space nation, but when you talk about it, it really makes sense.

Well, it does. And in terms of particularly smaller satellites, more affordable, so you can do things that are difficult to do otherwise. I would say arguably as a nation, we are leading in that area. None of us would have perhaps predicted it, but if you could do a launch for a few million dollars instead of a few hundred million dollars, it changes the economics and the accessibility of space for other firms.

That is very true. I need to do more research into space in New Zealand clearly. That sounds fascinating.

Now look at Rocket Lab. They are going very, very well.

I will. When your spinouts do go international, do they try and keep a base in New Zealand or do they up and leave and move their headquarters to, I do not know, the Bay Area, for example?

Well, sometimes they may move their headquarters, but that does not stop them from maintaining a connection. Because the vast majority of our startups come from a deep research basis of some form, it is very common for that R&D and continued early product development relationship to continue here in New Zealand.

So, we have some companies that we would have spun out nearly 20 years ago and they still have large R&D connections and active programs going on with researchers at the university. So, they do not just walk away, get on the plane and never come back. That parts that are critical to their success, they maintain.

That makes sense. You wrote a comment in September about using big data for good in the post-covid New Zealand. You argued that big data in AI would help the country deal with the virus once it becomes endemic, hopefully we are nearing that point, and how it could drive other health innovations like eyecare.

If we imagine New Zealand 10 years from now, how does this vision of big data shape the country it will be and how will UniServices help the country not fall behind others, like China, which are already making significant strides in AI?

These are not weightless technologies. They do require investment and they require people to work on, but the breakthroughs can be closer to being weightless. The grunt work of expanding something takes dollars and effort in a more normal way, but the inventive part can happen anywhere. That is one point that I would mention. Because we are an attractive environment to do lots of different kinds of work, including this kind, and during covid we have been an extraordinarily safe and open place for most of the covid experience, it has meant that we have been able to attract some very high-quality talent, even if not a large number of people, involved in the cutting edge of AI.

That is one way. I think the other way is quite important. It links to our makeup as a nation, and that is that I think we will be a model of the responsible use of data of this type. In particular in relation to indigenous rights, data sovereignty, and so forth, because those are large active issues here in New Zealand and we are embracing them and working hard to incorporate them in the way we use data. It is important for two reasons.

It is important because that is almost an obligation on our nation because of the way we were founded. But more than that, it is an opportunity to reach those who might benefit the greatest but have the least natural access to things like AI.

Because in a ‘no community left behind’ approach, particularly where there is indigenous data sovereignty as a key principle, it leads you to find solutions that can only be exercised through that indigenous or culturally appropriate lens. So, I hope our future looks like that. Not AI perhaps used almost against people, but AI used for and in supportive of people.

That would be great. That is the kind of AI that I would want as well. I think most people do. In the article, you also pointed out the issue of cybersecurity with data sovereignty as well. Do you think UniServices and other tech transfer offices will have to play an increasingly important role in safeguarding people from malicious actors?

Well yes, but we would struggle to take a controlling role, but as we always do, all of us in this sector are thinking about where are, not just the needs of today, but the needs of the future, and do our researchers and those who generate those solutions, are they aware of and potentially working on solutions that could help with that future, in the future landscape?

It is our responsibility to make sure we share our understanding of the need as broadly as possible and try to attract or recruit researchers to the idea of working on some of these grand challenges so that we can then help them make an impact from them if you know what I mean.  So, I think we have, yes, an increasingly important role, even though we cannot with our own hands and our own efforts provide the solutions, we can encourage and support solutions.

I want to pick up on the thing you said about using AI against people. There is always a danger that other nations might pursue that even if New Zealand does not. Do you think that means TTOs will have to make their researchers and their companies aware that that is a possibility and help them prepare to protect themselves from that?

Yes, again yes, but just as we have to for lots of other drivers and forces acting on what we do as well. If we think about the almost package of offerings that we provide to our startups and the researchers we work with, it is about lots of things, including IP management, protection from infringement, the way to recognize and perhaps counter unfair market practices you might come up against.

A wide range of things are about, again sharing our knowledge and our understanding of what is happening in the outside world and bringing it into the university and the creative environment, not as a deterrent, but as a way to say, It is a grown up and sometimes scary world out there and if your purpose requires you to operate out in that world to be able, to achieve your purpose you also have to protect yourself and to protect what you are doing. So, I think we have a much broader than just hacking or cybersecurity or whatever contribution that we can make by sharing what we understand the context is.

I want to look at your own career as well. You have been with Auckland UniServices since 2013. How did you get into tech transfer and why did you join Auckland?

Alright, how did I get here? Well, I started as an academic researcher in a medical school, and then I left there and joined a biotech startup, and then I joined a major corporate and then I helped set up and then ran a corporate venture fund, and that led me to Auckland UniServices. During my time in the biotech startup, and also in the corporate, we were often acquiring R&D support from universities, one of which was the University of Auckland.

So, I had encountered and done business with Auckland UniServices many years ago from the other side of the equation. So, it was an organization that I knew. One of the things that attracted me was that it is an organization that thrives in the academic environment of our owner, our shareholder, the University of Auckland, but it is also a business and so it can be a translator, is a translator between those two worlds and I knew that I could have a business-like commercial relationship with Auckland UniServices that I could not always have with some other university I might be engaging with when I was purchasing R&D. So, that was helpful, to know about the organization.

When I looked specifically at the opportunity of joining the company, part of what I was struck by was not just the diversity of the company, but the diversity of the deal flow and the opportunities that were being worked on and that is something that is very appealing to me. Literally every day, something new comes up. We meet some new team, we come up with something new or something happens with one of our existing companies that was surprising, hopefully surprising in a positive way. And that variety and stretch, it is just a very appealing thing to be part of for me.

I get that. I am assuming that is one of the reasons why you stayed at Auckland for the past eight years and have not moved somewhere else.

Well, yes, it is, that fact that every day is different, and what we do is very rewarding, not just in the startup space as well. If I think about the businesses that we wholly own and operate, we are delivering, for example, the training for all of the covid vaccinators in New Zealand and in several of the Pacific Island nations. So, one of our businesses is the Immunization Advisory Centre for New Zealand for example.

It is translating research knowledge about epidemiology and vaccinology into, What does a physician need to know when they are talking with their patients and how can we educate that physician so that they can have the most effective contribution to the vaccine rollout and so forth? We operate a number of businesses like that, that take research and expertise from our university and then apply them in the community in some way.

You know, it is quite a rewarding thing to do. It also generates the returns required to keep our fund healthy and to allow us to be self-sustaining in the way that we operate. So, it is a virtuous connection.

I am starting to see why you have 400 staff.

The vast majority of the staff are in those executional type businesses, running big programmes that sort of thing.

What would you say to someone who is starting out in tech transfer today?

Several things, but the main thing that I would say is that be open to new ideas, be a good listener, be thinking about with each thing that you encounter the opportunity for its future, even a surprising opportunity that perhaps the team working on it have not thought of. The second part of it is to be generous with the ideas that you share with others to help them succeed.

Our company ethos is one of providing a safe path forward for the inventors that we work with and the researchers and so forth, and sometimes that safe path is into a startup that we invest in and it grows rapidly and goes on, sometimes it is actually this is better knowledge shared with the general public and we shouldn’t start a company around it, but that is okay.

There is value, it is just the value that we see is different than a straight commercial sort of value. We try not to hold those ideas or those insights back. And we certainly do not go up to a team and say: and now I will take 20% of your company because I gave you a great idea.

So, part of being generous is recognizing that we are here to make them successful and what we contribute ultimately helps us be successful. But the purpose is shared with those who share their ideas with us.

That is wonderful. If you had a magic wand, is there anything that you would change about tech transfer either at Auckland or more broadly?

Well, yes, there is. Here in New Zealand, even though we have a culture of inventiveness and willingness to give something a go, there is also the downside that people who fail, if they fail at a large scale, those people are often seen as failures. Whereas it might have been that venture or that business opportunity or that market did not materialize as they expected. So, the programme of work, the company, whatever might have failed, but the person themselves is not a failure in my view.

They are a person who took a risk and not all risks pay back in the way that you would hope. So, a higher degree of tolerance and understanding that for us all to move forward some people are going to be further ahead than others, and those people need our support and our understanding if they are going to be willing to do it again, because the next idea might be the transformative idea for everyone. We could all do a better job about that.

Obviously, we do not want people to take inappropriate risks that are almost guaranteed to fail. That is not helping anyone, but I think we do need to understand that in our portfolio is no different from anyone else’s.

Out of 10 companies we start, one or two pay back the investment we made in all 10 and then some, and some of the others continue but do not really thrive, and some do not work. That is the nature of the activity. It is perfectly fine. It is what we all expect, who do it every day. So, a bit of openness to that and understanding would be a great help.

I suppose that comes back to the serial entrepreneurs that you mentioned earlier. If someone does it once and then they are regarded as a failure if it does not work out, and they do not come back then you have lost a potential serial entrepreneur who could try two or three times until they get the billion-dollar company in.

We have lost them, and also we lost what they learned. Because sometimes it can be brilliant for someone to say, I now know this is not the right way forward. Terrific. Then we do not need to go down that path again. Let us find a new path and see if we can get there. So, we just do not want to lose any of that if we can help it.

That is a very good point. I want to talk about some successes though. Can you give me some examples of portfolio companies that have been successes and that you are proud of?

This is a tricky one because there are too many to talk about probably in the time that we have, and there are some of all kinds, there are some that have done extremely well and some of whatever, but the quality of what they have learned, the commitment, et cetera is terrific. So, I will pick a couple.

We do have, even though they are rare, we do have some serial entrepreneurs and in particular, some very startup-oriented researchers. So, they know that they are researchers, they prefer to stay researchers, but they generate valuable commercial ideas. And we have one of those in a company called Alimetry right now. He is a physician, he is a researcher. He is also incredibly creative and commercially-oriented.

And we know that each time who brings us an idea, it is going to be well thought out, it is going to be interesting, and it is going to be more advanced than what we normally have an invention disclosure discussion with the team.

So, we are always delighted to see him and his colleagues because it is going to be something good, whether we end up investing in it or not, it is going to be a great idea, well-founded and well worked through. So, that is just a pleasure to be with. You say, “glad to see you again”, and you welcome them with open arms.

I think the other thing that I have been very gratified to see, and we put a lot of effort in trying to help, is we see a growing number of student-led companies that are oriented towards social benefit, as well as commercial success and genuinely oriented toward that social benefit and that is terrific to see. We have one called Kara Technologies, which uses avatars to teach New Zealand sign language, and it is there to help make sign language learning and translation much more accessible, and it is founded by someone who is hearing impaired themselves.

So, it is one of those terrific things that you see, and it is easy to understand, you can operate it, you can watch it, you can learn from it, you do not have to be hearing impaired. In fact, it is encouraged that people who are not but might know someone or want to add a new language to their repertoire can use these tools in a way that is much more scalable than you would have any kind of language learning with a teacher in a classroom.

It is just one of those terrific combinations of an opportunity, an understanding of where that market might be and it is a very clever technology that they have put together. So that is another one to be proud of.

That sounds wonderful. When you say student-led companies are the ones that tend to have more of a social angle, is that something that you expect your spinouts to have as well as we move on?

Well, yes. I think the environment for new entrepreneurial activities has expanded to include those. If I look at my own time in this space, it was not unusual to see an idea for something new, but it was not going to be sustainable commercially on its own, it required philanthropy or government intervention or something to be able to achieve its ends, and we always struggled to help organizations like that because we knew that we could help them for a short term, but we did not have a way to make them sustainable in the long term.

What has emerged from a lot of student entrepreneurs is a combination of balance between those two that allows them to be the masters of their own future and that is a great solution. You can be oriented toward that public benefit, that social impact that you are wanting to make, and if you are financially sustainable, then you can continue to do it as long as you have a passion for that benefit. That is a great outcome, I think.

Yes, I think you are right. That almost brings us to the end. Is there anything else that we have not talked about that you want people to know about Auckland?

No, I think I have covered pretty much everything I wanted to cover with you. I think that key thing for us is the link to research from the very beginning. That underpins everything that we do. It means that we can see an idea coming for a potential startup or license or a wholly owned business, literally from years away, and we can be providing external intelligence and market signals to the researchers who are interested in it, right from the very beginning.

Now we do not control what researchers do, and we think it would be very dangerous and inappropriate to try. So, we do not do it. But we do say, If you are thinking about applying this someday, if you thought about it this way, it may be easier for us to help you in the future than if you go down a different path, but it is up to you.

That is hard to do without that long term perspective. So, I would encourage people who have the opportunity to get close to the whole range, rather than just in a sense wait for something to be packaged up and finished and then shared with them because you can do more if you have patience and the long-term view, I believe. So, put some effort there, would be my suggestion.

I think those are very wise and memorable closing words. Andy, thank you so much for talking to me today. It has been a real pleasure to get to know you and get to know more about Auckland UniServices.

Well, thank you again for the invitation. It has been a delightful experience for us too and all the best and we will look to see you again.