The 19-Year-Old Startup
Scroll to the bottom of the Proceedings of the National Academy of Sciences of the United States of America’s website, and you’ll see the words “PNAS Online is distributed with the assistance of Stanford University's HighWire Press.” The university will soon be cut from that phrase, as HighWire escapes the confines of institutional budget parameters to become a privately funded company.
After existing as an auxiliary of the Stanford University Libraries since 1995, HighWire on Friday announced it had accepted an investment from the equity firm Accel-KKR. Terms of the deal were not disclosed, but the firm generally targets companies with revenue between $10 to $75 million, said Thomas J. Rump, the managing director who now becomes CEO of the newly spun-off company.
While operating under the university umbrella can provide a startup with a sense of security, it also comes with certain limitations -- particularly when the company has to trim its plans to fit a budget intended to last throughout the academic year. In the red-hot ed-tech market, that can hamstring a company’s ability to adapt.
“It depends on what part of the education space you’re in,” Rump said. “If you’re more on a student side or Internet side where you need to get users signed up and you need to market to them, it’s sometimes hard to accelerate all that before the revenue comes in -- because typically in the university budget, every year you’re on a not-for-profit basis, so you’re expected to break even.”
HighWire likely could have continued to operate as an auxiliary, Rump said, “but not to the extent that you would really want” after nearly two decades of doing so. As an auxiliary, he said, “You may put in place a three-year plan of how you would retool your search capabilities, whereas this will give us a chance to say, ‘What is accomplished in a year’s time?’ because we can accelerate.”
That HighWire has “Press” in its name may overshadow the fact that it is first and foremost a technology company that provides services to the academic publishing world. For publishers, it offers an electronic hosting platform; for journal editors, the manuscript management service Bench>Press; and for researchers, a catalog of 7.1 million articles across more than 3,500 publications.
With its newfound freedom, Rump said, the company will continue to support its Open Platform, as well as invest in electronic commerce, mobile technology and integration with new publishers.
HighWire is the exception rather than the norm when it comes to how ideas spin off from Stanford, said Bob Weinschenk, CEO of the copyright management service provider SIPX, another Stanford spinoff. Normally, he said, the process resembles that at many other institutions: A faculty member or administrator approaches the technology transfer office -- which at Stanford is called the office of technology licensing -- to negotiate intellectual property rights, royalties and stocks, among other points.
“Once you come to an agreement with [the office], it’s your company,” Weinschenk said. “When you’re out, you’re out.”
SIPX -- the second Stanford spinoff Weinschenk has been involved in -- became an independent company in 2012 after about an 18-month-long pilot. That proof-of-concept phase was in turn a result of about three years of research, Weinschenk said, but it still pales in comparison to the years HighWire has logged as part of the university.
But after 19 years, the company has also been able to develop a rapport with its customers, said Rump, adding that he is confident publications won’t shy away from HighWire once it explicitly drops the Stanford brand. SIPX, on the other hand, negotiated with the university to keep the “S” in its name -- before the company spun off, the project was known as the Stanford Intellectual Property Exchange.
What the two spinoffs have in common is a lingering presence from Stanford. Michael A. Keller, the institution’s Ida M. Green university librarian, sits on both boards, and the university owns a minority stake in both companies.
“As a university and as a university library, we’re not walking away from our commitment and our industry in this sector,” said Gabrielle Karampelas, the university library's director of communications and development. “In fact, we’re going to still stay closely aligned and have an advisory role in the next step of where HighWire Press goes.”
Heather Ruland Staines, SIPX’s vice president of publisher development, said she hoped that next step would include a “fancy upgrade” of HighWire’s platform to ensure that smaller publishers are given an equal opportunity. “I do feel like as a partner with them -- and having talked to many of the publishers who we work with in common -- that this is a positive development,” she said.
HighWire has been approached with offers “since the inception of the platform,” said Karampelas, who stressed that the company has been able to wait for a suitable partner. The equity fund has a 14-year horizon, which Rump said suggests a long-term commitment to growth and investment, “rather than a churn and burn.”
“HighWire has always been mission-based,” Rump said. “Our intent is to keep that mission vibrant and active.”