The rise of Stanford’s startup culture

Jan. 7, 2014, 1:33 a.m.
SAM GIRVIN/The Stanford Daily

The image of Stanford as a place for technological innovation and student-led ventures only recently grew to be pervasive on and off campus.

Venture capital and private equity firms weren’t always clustered on Sand Hill Road, right off campus.

When Hennessy’s MIPS Technologies — a company known for revolutionizing Reduced Instruction Set Computing chips, through a new type of instruction set — was founded in 1984 based on graduate students’ research, Hennessy explained how there wasn’t a well-established venture community in the area.

He added that while the company’s founding team knew their technology, they weren’t as fluent with entrepreneurial concerns, including how to raise money or how to make a valuation — a shift from the technological, innovative and entrepreneurial landscape today.

“The average student now doing something entrepreneurial at Stanford knows 10 times as much,” Hennessy said.


The start of entrepreneurship culture

Through the ’70s there were not a lot of startups formed, Hennessy said. But within the span of four or five years in the early 1980s, technological advances fueled a burst of action including the founding of companies such as Cisco, Sun, Silicon Graphics, and MIPS Technologies.

When the dot-com bubble burst happened in the late ’90s, companies in Silicon Valley took a hard hit — many companies that didn’t solve core problems went out of business, explained Mark Goldenson ’01, founder and CEO of Breakthrough, a company that provides affordable online mental health care.

“I think what made [some companies] different was the fact that some of them were offering critical consumer services, like selling items online, or the ability to search the web better,” he said.

Hennessy explained that in the ’80s and early part of the ’90s, more than half of the companies founded by Stanford affiliates were profitable.

“Maybe not all of them had a giant IPO, but they had some kind of an exit that repaid the investors and gave some value back to the shareholders,” he added.

With emerging technologies, Silicon Valley started embracing more entrepreneurial leaders to keep up with the rapid speeds at which companies launched. At the same time, Stanford ramped up efforts to prepare its students for the shifting landscape that led to the abundant resources available today.


Cultivating the new generation of leaders 

Konstantine Buhler ’14, Mayfield Fellow recipient and a member of the Stanford Technology Ventures Program (STVP), explained that the resources at Stanford for innovation and entrepreneurship are unparalleled.

“It’s why I came to Stanford — the entrepreneurial spirit that is everywhere on campus was very attractive to me,” Buhler said.

The Mayfield Fellowship is one of the many initiatives at Stanford promoting entrepreneurship and innovation. Founded in 1996 at Stanford, the Mayfield Fellows program was expanded to include students at UC-Berkeley in 2001. The program is a nine-month program, limited to a dozen undergraduate or coterminal Stanford students who go through an intense sequence of courses on the management of technology ventures, numerous mentoring and networking activities and a paid internship at a startup company.

Buhler explained that STVP was one of the many new programs that made Stanford a unique place for innovation. Hosted in the Department of Management Science and Engineering, STVP is aimed at high-tech entrepreneurship education and research in technology.

Another ubiquitous Stanford-connected program is StartX, started by Cameron Teitelman ’10 in 2009. In 2010, it launched as SSE Labs, a division of Stanford Student Enterprises, and then became an independent entity in 2011.

Unlike many other similar programs, StartX takes no fees or equity in the companies it works with. StartX’s unique features include resources like office space and legal services, and a community for mentorship from entrepreneurs.

StartX’s ties with Stanford have only strengthened despite it being an independent organization. For instance, Stanford University and Stanford Hospital & Clinics pledged $3.6 million over three years in grant funding for StartX.

Teitelman explained that his experiences in the entrepreneurial space at Stanford significantly shaped the vision for StartX, including his participation in Alpha Kappa Psi, the business-themed fraternity.

“At Stanford, there is a lot of experiential education that happens,” Teitelman said.

He explained that one of his learning experiences was the pledging process for AKPsi.

“We had to build businesses. We had to plan a startup, we had to do sales door to door,” he said. “It was really good to get over a lot of those emotional and psychological hurdles you have when you’re starting out of school.”

“By forcing you to do it in a safe environment, you get over the biggest hurdles attached to starting a company, like taking a leap to do it and taking those risky decisions,” Teitelman added.

Apart from student-directed programs, many faculty and researchers at Stanford have also been responsible for breakthrough technologies and ideas, including Andrew Ng, associate professor of computer science and co-founder of online education platform Coursera.

“I think the highly entrepreneurial ecosystem in Silicon Valley is an integral part that is not seen anywhere else in the United States,” Ng said. “It’s created a university with amazing faculty that produces amazing content.”


The current culture

Thanks to efforts such as the recent venture capital fund for StartX, more Stanford startups are being launched or developed where students and alumni can put their education into practice.

One of the criticisms surrounding the growing startup culture at Stanford, however, is that students are getting involved for the profit opportunities.

Goldenson admitted that at the height of then dot-com bubble, many companies with purely lucrative goals were misguided and unsuccessful.

Yet he added that they ended up serving an important purpose.

“A lot of these companies tried out ways to enter markets that failed for them, but ultimately created thought on new ideas for successful companies,” he said.

Goldenson cited the example of Webvan, a food-delivery startup that failed in 2001 but ultimately inspired many successful new enterprises, from Google’s local delivery service to food delivery services like Fluc and Doordash.

Buhler echoed similar sentiments. He explained that while the barriers to entry for being an entrepreneur is low, people should also put [a lot of] thought when they make decisions about entrepreneurship.

“Generally I would say that it’s not a great idea to be an entrepreneur just for the sake of it,” Buhler said. “You should be passionate about it and passionate about solving problems a certain way.”

Contact Nitish Kulkarni at nitishk2 ‘at’

Nitish Kulkarni '16 is a senior majoring in Mechanical Engineering. He writes about technology and breaking news, and runs online content sections. Email him at nitishk2 'at'

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