MIT has had an enormous economic impact on the world. Its twin emphasis on both creating innovative ideas and using them to solve real problems is at the core of its ability to boost economic activity.
However, for reasons that may also have to do with its culture, companies produced by MIT - such as Akamai and iRobot -- in recent decades are considerably smaller than ones based on Stanford's technology - such as Cisco Systems and Google. What's more, while Silicon Valley has been able to create new pillar companies for many technology generations, MIT spinoffs reached their peak of influence in the mid-1980s and have since waned in their global impact.
This is not to diminish the awesome economic power of MIT (I was a graduate student in computer science there). According to a December 2015 report, Innovation and Entrepreneurship at MIT, as of 2014 MIT alumni had "launched 30,200 active companies, employing roughly 4.6 million people, and generating roughly $1.9 trillion in annual revenues."
A significant contributor to MIT's economic power is the talent it attracts and the intellectual property (IP) that talent generates. According to my August 31 interview with Lesley Millar-Nicholson, director of MIT's Technology Licensing Office, "Between 1991 and 2015, licensing MIT's patents has generated $1 billion in revenue. Since a licensing fee is roughly 2% of revenues, that represents $50 billion in sales generated by the IP. And that excludes the $24 billion spent on [MIT's defense research arm] Lincoln Labs."
While there is no MIT-wide list of its top 10 companies, some MIT departments do list their spinoffs. For instance, MIT's Media Lab has spurred the creation of "well over 150 companies" including a few that were acquired -- such as Twitter's 2013 acquisition of Bluefin Labs, a social analytics company, for about $90 million. Lincoln Labs lists 107 companies on a list of its spinoffs -- including Digital Equipment Corp which at its peak employed 114,000 and had revenues of about $14 billion -- before stumbling when its CEO struggled to see why anyone would need a PC -- and losing its independence in 1998 to Compaq.
Then there's MIT's Computer Science and Artificial Intelligence Lab (CSAIL) which has "spawned over 100 companies, including Akamai, Dropbox, iRobot, OKCupid, Rethink Robotics, and RSA." Sadly for MIT, the economic impact of these companies is relatively limited. For example, content delivery network service provider Akamai had 2016 sales of $2.3 billion, personal robot maker iRobot's sales were $661 million last year, Dropbox and OKCupid, Rethink Robotics, and RSA - which EMC acquired for $2.1 billion in 2006-- are privately held - so their sales are unknown. This compares unfavorably to just the two Stanford spinoffs mentioned above Google (2016 sales of $90 billion) and Cisco ($48 billion).
Nevertheless, MIT has finely honed its skill at commercializing its IP. As Millar-Nicholson said, "Between 1991 and 2015, we made 11,000 total patent applications of which 4,000 issued patents have value to licensees and 437 companies licensed MIT-owned IP. After taking 15% to partially offset the TLO's costs -- $30,000 to $40,000 per patent issued - a third of the remaining licensing revenue goes to MIT; a third goes to the inventor, and a third to the inventor's MIT department. And our office helps the inventor find a licensee that will best commercialize the invention."
From there, other MIT programs help out. For example, In October, 2016, MIT launched The Engine to support startup companies "working on scientific and technological innovation with the potential for transformative societal impact." MIT supplements the inventor's skills by helping to find business people who can build a company around the IP, identify sources of capital, pick the right market on which to focus the invention, and test the value of the invention to potential customers. Ultimately, MIT's TLO helps "find a place we think is right for the technology," said Millar-Nicholson.
I have mixed feelings about this. It is amazing how much MIT contributes to the global economy -- but judging by the amount of venture capital flowing into New England compared to Silicon Valley, MIT is losing ground.
How so? In the second quarter of 2017 it attracted $7.75 billion in venture capital (combining San Francisco's $4.14 billion and Silicon Valley's $3.61 billion) - which constituted 42% of the total capital invested during that period - and was way higher than the $2.78 billion invested in the New York metro area, the $1.4 billion invested in New England, according to the Money Tree Report.
Can MIT regain its global startup leadership or will it fall further behind Stanford?