Stanford grads have an enormous impact
Stanford University’s graduates are well known for their entrepreneurial success. But up until now, it has been hard to measure just how large an economic footprint these alumni have left behind.
A new study by Stanford University professors shows that it is vaster than perhaps anyone imagined, with 39,900 active for-profit companies that can trace their beginnings to Stanford. In addition to founding businesses, Stanford graduates have also created some 30,000 nonprofit organizations.
In fact, there are so many businesses with Stanford roots that if they formed an independent country, their combined revenue of $2.7 trillion annually would make it the 10th-largest economy in the world, generating an estimated 5.4 million jobs since the 1930s, according to the study, which was conducted by Charles Eesley, an assistant professor in management science and engineering at Stanford’s School of Engineering, and William Miller, an emeritus professor of public and private management at the Stanford Graduate School of Business.
In 2011, Eesley sent an e-mail survey to 142,496 Stanford alumni, faculty, and selected research staff. He received responses from 27,780 individuals. About 23 percent of survey recipients with connections to the business school responded. The study is one of the largest of its kind ever conducted.
Future founders
The strong entrepreneurial community at Stanford over the years played an important role in the study’s findings and attracted many future business founders to the school’s doors, Miller says. In the past decade, 55 percent of those who became entrepreneurs said they chose to study at Stanford specifically because of its entrepreneurial environment, the study found.
About 25 percent of technical innovators — people who created products, production processes or business models — said they took an entrepreneurship class at Stanford. In addition, 60 percent of “quick founders,” those who received venture capital funding within three years, took a class in entrepreneurship.
The university began offering classes in small business and entrepre- neurship after World War II, and many professors informally mentored students interested in starting their own companies. Today, the university’s approach has become more sophisticated, with the business school playing an important role in that effort, says Miller.
For example, 16.8 percent of respondents, or 1,825 alumni, said they took a course at the business school. About 6.3 percent of alumni entrepreneurs, or about 684, said they took a class with Professor H. Irving Grousbeck, who has been teaching entrepreneurship at the school since 1985.
Silicon Valley help
Grousbeck also runs the school’s popular Center for Entrepreneurial Studies, which connects up-and-coming entrepreneurs with the larger Silicon Valley community and helps them find mentorship opportunities and counseling services.
Other popular offerings in the business school include classes like Creating a Startup, a two-quarter class that’s team-taught by Stanford faculty, serial entrepreneurs and venture capitalists. Business plan competitions hosted by the business school also remain popular, Miller says.
“The business school has been pretty active in helping students who want to be entrepreneurs,” Miller said. “The more formal teaching of entrepreneurship started in the late 1970s and early 1980s, and grew very dramatically in the 1990s because of demand for it and interest on the part of the students.”
MIT survey
The Stanford study was modeled after a similar study Eesley helped conduct when he was a doctoral student at Massachusetts Institute of Technology, which measured MIT’s economic impact. By the end of 2006, that study found that the school’s alumni had created 25,800 stillactive companies, which employed 3.3 million people and produced annual global revenue of nearly $2 trillion, the school said.
Miller says he is encouraged by the findings of the Stanford study and expects that entrepreneurship will continue to thrive, given all the programs and courses in place.
“My guess is that we’re probably at the peak of activity now,” he said. “But that’s a pretty high level, and we should be able to maintain that level of activity.”