Monday, July 18, 2011

GEARS Consulting LLC

I've been a huge slacker over the past few weeks about posting. However, good marinades take time, which is what I've been doing. Basically, I've been making contact with local companies for possible research avenues and with colleagues that are initial collaborators. Aside from them, I was contacted by another colleague of mine to do some work that's too short to use for a project through SnowU but could bear fruit for a longer project if we're successful. This brings up a fourth aspect to being a professor that I didn't discuss at Engineer Blogs the past two weeks (part 1 and part 2): Consulting.

I didn't mention it there because consulting is not part of your activities through the university. But, many universities allow profs to consult provided it's within the stipulations of your contract. I thought I would discuss two things: why would a university let you consult and how to go about setting up a LLC. Today, I'll tackle the whys and on Wednesday, I'll tackle the hows.

Why allow consulting? Up until a few years ago, I wasn't really sure why universities let their profs consult. I knew my profs did during UG and Grad school (occasionally missing lectures) but it seems at odds with their normal job of professing. I think the reason with the biggest misconception is because profs would make more in industry so if you don't let them make something on the side, they'll eventually jump ship. While this is somewhat true, I don't hold to that school of thought that profs (especially in engineering) don't make anywhere near what they could in industry. My guess is there is a 5%-10% premium on industry jobs for the same level of competency. And while a worker at a company may get stock options and profit sharing, profs get summer salary and consulting. In the end, I think it's a wash.

But that still doesn't answer the question of why profs are allowed to consult. As near as I can tell, I think the main reason is there are often project available from companies that need to be completed in a short timeframe. This is too short to be a university project and probably not enough money to fund a prof+student+equip+50% overhead. Rather, short projects that are successful by the prof can turn into longer projects at the university. Essentially, you (as the prof) help them fix an immediate problem and they look to you to solver longer term problems through a partnership with the university.

If successful, this is a win-win for everyone involved. The prof gets some extra salary for consulting. The company gets their immediate problem solved. Also, the company has a partner to look at future problems that may/will arise but don't have the internal resources to commit to solving them. Rather, they can fund the prof and their student(s) to solve them in a more university-like pace. The university wins because they will get their 50% overhead on whatever the company sponsors at the university. And, because this money wouldn't normally be available to the university, it's an extra source of funding. Plus, it only came about because the prof did consulting on the side.

The last thing I'll say about this aspect is that funding from companies is generally much more flexible than agency/foundation funding. When you're getting money from the government, you need to explicitly spell out everything that you'll spend money on, even before any research has been done. This has the potential to hamstring you because you may commit X amount to travel each year but you actually need to travel more in the latter years rather than the early years. But when you get funding from a company, to them, it's just $X amount out the door. If you need to shuffle things around to get the research done, they don't generally care. That's very good from the prof's perspective because there's a lot of flexibility in there to work with.

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