Stanford, Silicon Valley, and John Hennessy's Real Legacy

By Sarah Lacy , written on April 30, 2012

From The News Desk

I finally got around to reading Ken Auletta's New Yorker piece on the uneasy relationship between Stanford and Silicon Valley this weekend. It was excellently reported and written, along with most things Auletta does. Seriously, I bet he even has awesome grocery lists.

But I found he was grossly missing (or ignoring?) several points when it comes to the relationship between the Valley and Stanford, and how it's evolved over the years. To me, it was a reminder of how huge of a cultural gulf there is -- not so much between East and West coast, but between the startup world's mindset and that of the Ivy League elite.

I was stunned that Peter Thiel's name wasn't mentioned. In the back of my head as I read the post, the words "education bubble" kept ringing.

As a refresher, Thiel believes that education is the last thing in this country both insanely overvalued and widely believed in. He believes that the reason people pay a quarter of a million dollars to go to Harvard isn't because they want to study Chaucer, but because they want an insurance policy, and that even if the future doesn't go as planned, things will be okay. And as the last few years have shown more and more grads moving back in with their parents, the world has proven that this insurance policy is a fraud.

Thiel's argument has become less controversial since he first voiced it, as we discussed at last month's PandoMonthly. While Thiel's remedy isn't necessarily that everyone drop out of school, he has struggled to come up with a way to change the system.

But it struck me reading Auletta's article that Stanford is perhaps closer than many to finding a solution to the problem as Thiel sees it. Stanford celebrates ties with this business world, where most schools would avoid them. Students overtly think in terms of networking and future business plans. The school is rife with overlap between entrepreneurs, VCs, faculty members, and money flowing in and out of its endowment and startup coffers. Most telling: The now scrapped plans for its New York campus would have been totally focused on tech -- with no pretense towards teaching humanities and liberal arts.

Interpreting the dynamic between Stanford and Silicon Valley, as broken down by Auletta's article, is a bit like watching "Wall Street," a movie that was meant as a polemic on what was wrong with finance but which inspired kids everywhere to become bankers. The East Coast Ivy League could read Auletta's article as a scathing expose of what's wrong with Stanford. Those in the Thiel/Silicon Valley school -- like me -- read it as how Stanford may be paving the way for an education revolution, a de-stigmatizing of vocational education.

I'm not arguing that there's no place for learning for the sake of learning. Nor am I arguing that vocational school is the answer for everyone and every profession. I was a Liberal Arts major from a very liberal artsy family. My dad was a philosophy professor, and my mom taught literature. We talked about Kierkegaard and Dostoevsky at the dinner table. Trust me, there is no ROI on that. And yet, I am a big believer that my upbringing and education made me a better reporter than going to journalism school.

Most journalism schools haven't kept up with the way the industry has changed. If I'd studied journalism in school, I would have been on the inside track to getting a job at a big daily paper -- versus the path I took of clawing and scraping my way into my first job at a national magazine. But I'd also probably be sitting in the basement of that newspaper somewhere, because journalism school wasn't preparing anyone for the industry's disruption.

However, the nature of a school inherently tied to the changing winds of tech is fundamentally different. It's those students who can frequently pivot and adjust, even faster than already established VCs and executives, who make their living in tech. When one is learning the very business of change and disruption, there's more to it than coding -- there is creative problem solving.

The second point that the article missed is that the blurring of lines between Stanford and the Valley is endemic of something much bigger. Culturally, everything is blurred in this world. Friends invest in friends' companies; friends start competing companies; friends work for friends. All the lines that the conservative East Coast business world tells you not to cross are crossed here every day. And yet, it works. Culturally, people count on personal reputation to speak for them, not adhering to arbitrary, blanket policies. There's no compartmentalization here. Building a company consumes your whole life. Everything else -- children, hobbies, relationships, friendships -- fit into work, or they don't exist.

Stanford President John Hennessy bats away the idea that his being an LP in venture firms is a conflict for the campus by saying he's far removed from decision making at those firms. And he's right. He's as right as tech blogs -- like us -- who say the idea that investors are controlling what we write is absurd. But that's hard to see, if you don't live in a world where personal reputation, rather than artificial boundaries, dictates ethics. It's not as easy here as ticking an arbitrary box that determines whether or not you're conflicted. You have to prove it every day, because personal relationship is everything.

The final point I'd make is the most obvious: In the great litany of companies that Auletta lists that have grown out of this cozy, boundary-less relationship, the most recent tech giant named is Google. An obvious empirical point is totally ignored: The genesis for much of the Valley's recent Web 2.0 and mobile revolution has largely occurred not in Stanford's dorm rooms and lecture halls. And this may be the first time since the days of Fred Terman that we can say that. My gut tells me that a big reason for this is that tech is getting less, well, techy.

This is not to say that Stanford and the Valley aren't as intertwined as they've been in the past, but the relationship is definitely changing. Stanford is still the essential place where Valley companies troll for talent -- and that's not trivial. Access to technical talent is one of the key edges the Valley still has over other developing tech ecosystems. But in the last 10 years, it hasn't been the place where the  billion-dollar ideas that take over the global tech zeitgeist are formed.

Any student of Silicon Valley history knows that it couldn't have been formed without Stanford. But at least when it comes to founders, the Valley may be outgrowing that reliance. If Stanford weren't continually adapting to partner with business, it might have found itself in a tricky position: a future where Stanford needs the Valley more than the Valley needs it. Like any good hacker, Hennessy's real legacy is making sure the two stay interdependent.