October 9, 2000

Engineering College Spawns Spinoff Successes

Earning the label of "small-business incubator," the College of Engineering at North Carolina State University has spawned entrepreneurial companies that have become big fish in the Wall Street pond.

These companies include Cree and Nitronex, Inc., developed by students in the Department of Materials Science and Engineering. Stingray Software, AuctionRover.com, Accipter, and DaVinci Systems were founded by young graduates from the Department of Electrical and Computer Engineering.

Recognizing the potential for technical opportunities, the Department of Materials Science and Engineering has developed a program in Technical Education and Commercialization (TEC), which teams up technology students with management students.

Students who become entrepreneurs have intangible qualities in addition to skills in technology and management, says Dr. Robert F. Davis, Kobe Steel, Ltd. Distinguished University Professor of Materials Science and Engineering. "These are students with defined goals, significant drive, and fearless attitudes," he said. An entrepreneurial student also needs a graduate research degree, as well as a source of money to invest and the willingness to risk the investment, Davis said.

"Eric Hunter (a founder of Cree) wanted to form a company the day he arrived for graduate school," Davis said. Hunter collaborated with a student group that made several breakthroughs in the development of silicon carbide electronics technology. They founded Cree, a company that sells and uses slices of large crystals of silicon carbide for high-power and high-temperature microelectronic devices and for substrates on which are deposited gallium nitride-based thin films for blue and green light emitting diodes (LEDs) and blue emitting laser diodes. The blue light on automobile dashboards is one of the uses for blue LEDs. Blue and ultra-violet laser diodes may soon be used in compact disk players/recorders because of their higher storage ability.

Last year two NC State graduate students, Kevin Linthicum and Thomas Gehrke, were working on gallium nitride-based materials when they figured out a novel way to eliminate their defects for use in electrical devices. Their work became the basis for the formation of the Nitronex Corporation.

Dr. Thomas K. Miller, interim vice provost for distance education and learning technology and director of NC State's Engineering Entrepreneurs' Program, also says entrepreneurial students are "clearly different" with "driving ambition." Their question, Miller said, is not "what courses do I have to take to get a good job?" but "what do I have to do, academically and otherwise, to be a success on my own?" He recalled Scot Wingo, one of the founders of Stingray Software, who, after being admitted to the master's program in computer engineering, came looking for a research assistantship not with a traditional resume, but with a demonstration of software that he and his colleagues had created. "He wanted to show us what he could do," Miller said, "and he did an excellent job of selling himself to us."

Wingo banded with two other students from the graduate school, Dean Hallman and Aris Buinevicius, to form Stingray Software, a company that makes tools for software development. Hallman is still with the company. Wingo and Buenivicious left Stingray to found AuctionRover.com, which sold just eight months after it was founded for $166 million. It is now a subsidiary of GoTo.com.

Two NC State alumni, Donnie Barnes and Erik Troan, saw the potential of Linux and joined Marc Ewing and Bob Young in building a fledgling software company called Red Hat in 1995. In 1999 Red Hat went public with a stock offering of $96.6 million. Red Hat is now considered the leading provider of products and services based on open-source technologies.

Although it is more likely that these new businesses grow out of graduate research at NC State, some entrepreneurs don't wait for a degree before forming a spinoff company. Bill Nussey and Chris Evans, two of the College's most successful student entrepreneurs, were studying electrical and computer engineering when they set up DaVinci Systems in their dormitory room.

Creating technology and software to add value to computers connected to networks, Evans and Nussey built DaVinci into the third largest e-mail software company in the world. Evans, who was interested in creating digital music, composed music with multiple parts that could be played over the network. Nussey subsequently earned a business degree from Harvard and most recently built Atlanta-based iXL into a billion-dollar company. Evans continued in his entrepreneurial career and founded Accipiter, a company that produced technology for advertising on the Internet. He has since sold Accipiter for more than $50 million.

While some entrepreneurs stay with the companies they've started - becoming chief operating officers - many leave to start other companies or take other positions. This is not unusual, both Davis and Miller said. "At each stage of growth, the needs of a company are different," Miller said. Growth and change are hallmarks of the entrepreneurial spirit.

If the current trend continues, the CEO's of tomorrow's most innovative businesses are in NC State's Engineering Entrepreneurs and TEC programs right now, learning team-building and problem-solving skills that will be valuable to them throughout their business careers, whether or not they become multi-millionaire entrepreneurs.

--williams--

Technical contacts: robert_davis@ncsu.edu, tkm@eos.ncsu.edu

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