The Feds help transform psychology researchers and clinicians into entrepreneurs


By Paula Hartman-Stein, Ph.D.


Have you ever wanted to change your career path from a psychologist to the Chief Executive Officer or President of a company that creates high tech products based upon your own brainstorming? This dream can become a reality without being chosen as a contestant on The Apprentice or ever working for Donald Trump.

In 1982 the Federal government created the Small Business Innovation Research (SBIR) to stimulate technological innovation, use small business to meet federal research and development needs, and increase private sector commercialization.

Then in 1992 came the Small Business Technology Transfer Program (STTR) in 1992 that is modeled on the SBIR program but encourages the sharing of technological information through cooperative research between small businesses and non-profit research institutions such as universities.

Interviews of Simon Budman, Ph.D. of Newton, Mass., and Anthony Sterns, Ph.D. of Akron, Ohio illustrate how career transformations can occur from psychology researcher/clinician to business entrepreneur.

Budman, President and CEO of Inflexxion, had been the director of mental health research at the Harvard Community Health Plan in Boston and associate director of the Institute for Health Research at the Harvard School of Public Health. He started his own company in the early 1990s and left the Harvard Plan in 1996. Author of several books on brief psychotherapy, he still maintains a small psychotherapy practice.

Sterns’ first career was a naval architect and marine engineer involved in the repair and overhaul of aircraft carriers. Gradually his interests turned away from engineering and toward management science. In 2000 he obtained his Ph.D. in industrial/organizational psychology, and while in graduate school he obtained a  graduate certificate in gerontology. He now works full time as vice-president of research in a small, family-owned,  for- profit company, Creative Action LLC.

Question: “How have SBIR grants shaped your business?”

Budman: “The SBIR program has helped us move my company, Inflexxion, from a two-person consulting firm in the early 1990s to a 55 person healthcare business solutions company. The program not only helped us develop products that we could then market, but it helped us gain expertise in a variety of areas that we then extended into other products and services. Some of these products and services were supported by SBIRs and some were not. Carrying out large government supported projects gave us great credibility.

 Sterns: “From 1996 to 2003 our family-run company, Creative Action, grew from 4 to 12 employees and 10 independent contractors. However, our grant funding has declined over the last two years, and we find ourselves currently sized at two full-time and two part time employees. During this period we continue to seek investment capital and build strategic partnerships, but that has been challenging in the current economic climate. At the same time we have created a tremendous cache of intellectual property.”

Dr. Sterns is in business with his anthropologist mother, Ronnie Sterns who is a psychologist and president of the company, and his father, Harvey Sterns, a gerontologist and vice-president of business development and full-time faculty member at the University of Akron.

Question: “To date, how many grants have you been awarded?”

Budman: “We have had about 30 SBIR Phase II’s to date.”

Sterns: “Our projects have included nine Phase I SBIR grants, one STTR grant, and three Phase II SBIR grants.”

When a business receives an award, it begins a three-phase process. In Phase I the company evaluates scientific and technical merits of the project to determine the feasibility of a technology idea. Phase I lasts about six months, with the award up to $100,000.  Phase II is the prototype development phase, and is up to $750,000 and lasting about 24 months. Phase III is to commercialize the technology created during the other phases, with no funding from the federal agencies allowed. Phase III requires the use of private funds such as venture capitol investments, loans, and other company investment

Question: “What are some examples of your products developed from SBIR funds?”

Budman: “The Addiction Severity Index Multimedia Version (ASI-MV) is one example. With National Institute on Drug Abuse (NIDA) support we developed a multimedia version of the Addiction Severity Index (ASI). The ASI, used as a structured interview by substance abuse treatment centers, is required in many states for patients entering drug or alcohol treatment. The standard ASI is expensive and time-consuming to administer. The ASI-MV requires no staff training and is cost effective to administer because it is based on patient self-report. It does not require the patient to be literate because the questions are administered by virtual on-screen interviewers. We are now developing Spanish, Chinese, and adolescent versions, and there are about 600 treatment centers using the instrument.” (For more information on this scale go to

“Another product is the Screening and Opioid Assessment for Patients with PAIN (SOAPP). The SOAPP tool is being developed with support from NIDA and from Endo Pharmaceuticals. The SOAPP tool is used in conjunction with clinician judgments to help a doctor or nurse make decisions about which patients are likely to have greater or fewer problems with opioid pain medications. Inflexxion is licensing SOAPP to Endo, which then freely distributes the tool. A free download can be obtained at

Another example can be found on the web at (MSB). This is a comprehensive college student health program that focuses on alcohol, tobacco, sexually transmitted diseases, stress, and nutrition. MSB has various interactive tools and is meant to be available to students over their college careers. There are about 70 colleges and universities that subscribe to MSB for their student populations….I feel as though much of what the company does is totally compatible with what I was trying to do as a therapist, i.e., help change lives in a positive way. However, in the company we do this on a much larger scale.”

Sterns: “Much of our research focused on creating products that would help older adults live independently longer. Examples of our projects include a patented ergonomically- designed laundry cart with a basket raising system, a system for communicating with non-English speaking nursing home residents, and a medication reminding software. Our most recent product is an intervention and activity for groups of people with dementia that a national chain of long-term care facilities and their Alzheimer's specialty facilities will be using…. We have developed a distance learning environment and curriculum for training corrections officers about the aging prison population.”

“We also have a validated survey and web-based reporting environment for surveying middle and high school students about risk behaviors and substance abuse.”

Question: “What is the most difficult or challenging phase of the grant?”

Sterns: “…Commercialization, keeping the project going after the funding has been exhausted. The grant does not cover the cost of patents, creating sufficient inventory to take the product to a national market, or marketing the product. Gathering the capital to launch the business and take it to the next level is the most challenging. SBIR funding allows you to demonstrate the feasibility of the idea and get on your feet.”

Budman: “Every phase is difficult and challenging. First you need a good idea. Then you need to be able to think about that idea in scientific and business terms. Then you need to write up the grant in a way that is persuasive, but solidly rooted. The review committees are very demanding, and less than a quarter of submitted phase I’s get funded. This is becoming even harder with the Bush Administrations’ neglect of small business, NIH, and health.”

Question: Any advice to the budding entrepreneur from the academic or practitioner world?

Dr. Budman: “Just do it! The review committees are very demanding, but you also get good feedback from them that can allow you to revise and resubmit the grant. Don’t be discouraged if you don’t get a grant funded the first time around. Very few people do. Spend a great deal of time thinking through the ideas and get feedback from others about your application before you submit. You can call staff at the NIH that can give you helpful advice.”

Sterns: “Don’t give up your day job. Like any entrepreneurial activity there is big risk. It is important to understand what ideas, or intellectual property are yours, and what belongs to your institution. Many universities have clauses in their employment contracts that say everything you do or think up belongs to them. The case law, and remember I am not a lawyer, doesn’t support that completely, and so some ideas can be yours if outside your core curriculum or developed on your own time. You have to be careful about when you publish your ideas. Universities are all about sharing knowledge and encourage putting information out into the world. But to profit from an idea you need to protect that idea. Make sure you talk to a patent attorney, preferably one not affiliated with your institution, to protect your idea.

The initial step is generating a good idea followed by building a good team of people that will be recognized as such by the academic review committees...Be prepared to do a lot of reading of government manuals, set aside a lot of time for research and reading, writing and re-writing. Be prepared for a lot of rejection. We often resubmit a proposal two or three times before it is funded. Taking those first steps can lead you from the garage (or in our case the basement) to being a world class company.”

Ten federal agencies participate in the SBIR program, including the Departments of Agriculture, Commerce, Defense, Education, Energy, Environmental Protection Agency, Health, National Science and Space Administration, National Science Foundation, and Transportation. The U.S. Small Business Administration serves as the coordinating agency. Individual federal agencies solicit proposals and award SBIR contracts. To learn more about SBIR grants, log on to:

The National Psychologist, Nov/Dec 2004, Vol. 13, No. 6.