My colleague is monetizing our contributions and not compensating us A few years back, my advisor began a project (received funding for, etc.). My advisor funded a student (we'll call them "CEO") on this project, who's now working on a startup in this area and is nearing graduation. Eventually, a more junior student "B" comes along, and works on the project.

Recent Timeline:


So I agreed to work with B and "CEO" on this project, as I've had a specific idea to improve the work in mind. I prototype and evaluate the algorithm, it seems to work, people get more excited. "B" helps me write up the theory and present it to our advisor. 
Authorship is discussed and the order filters out to ["B", Me, "CEO", Advisor], with both "CEO" and Advisor as tentative authors, given their other commitments. I'm happy for "B" to go first, even though the core idea was mine, because this paper supports their thesis work, and they've been at least an equal partner in contributions.
My idea works even better: "CEO" suggests we change metrics for evaluation, and our performance is more clearly better. [They are not without contribution on the paper]
"CEO" suddenly gets their startup funded by our university to do prototype development and to market research.
I explain to "CEO" that they should offer my advisor equity (as my advisor was the first to identify this hot area), because this never occurred to them.


Here's the problem. 


Technically my contribution doesn't belong to me (University owns everything), and the University is okay licensing its discoveries to this startup. 
But, I strongly feel that the startup is not realistic or viable without my recent algorithmic contribution, and while "CEO" is technically an author on the paper, they explicitly tried to talk me out of trying my approach "too simple", "no way it will work", etc, before I came up with numbers.


Even if I don't agree to be CTO (and I don't want to), the sheer amount of money I've saved this fledgling startup (with my more efficient approach) is more than their net-worth in server costs.


How do I communicate my value to the startup owner without "burning bridges"? and without actually owning the insight that just saved them an incredible amount of money. At least part of the reason I don't want to be CTO is that I don't want to get "in bed" with someone who doesn't already value my contributions.
Their previous approach isn't feasible to demonstrate to investors (too slow). I've thought I could pitch a "contracting fee" to implement the algorithm to the CEO, giving them a demo based on my new tech, and get compensated in this roundabout way. CEO brought up a "conflict of interest" complaint - claiming it would be more legitimate to "just give me equity" and make me CTO instead. I find their reluctance to pay me alarming, considering the actually have money now. Do they have any merit to saying that they can't pay me as a contractor because I'm also a University employee and that would be too conflict-of-interest-y?
Should I just stop working on this "hot" problem at all? Or do I have to accept that anything I come up with will make someone else money who has historically forgotten to credit others in the past?


I haven't yet discussed my concerns with my advisor. I plan to, but admittedly don't understand all the issues involved. I realize with anonymity, particular laws, etc, this can be hard. 

We're in the US, "B" is an international student and probably can't be a contractor (VISAs are hard), but I would like to protect their research, somehow too.
Since you published your idea in a paper, you must accept that someones else implements and uses it. Don't ever expect much credit here, outside of academia.

It would be different if they used your source or a patent (but either of which would probably belong to your university; but most universities have a procedure for compensation then to encourage you).

Of course you could talk to them, and it would be appropriate if they paid you some compensation e.g. in form of a consulting fee. Then you may be willing to share further ideas early with them.