Stanford’s culture: Why do people start companies?

Authored by: Roneil Rumburg – originally posted on April 10, 2014 at The Stanford Daily

Much hubbub has been made recently, both here in The Stanford Daily and in other publications, over the perceived focus on vanity entrepreneurship by much of the student body at Stanford. The word “entrepreneurship” has taken on a heavily negative connotation among students here and is now often associated with the pursuit of wealth and power. And it certainly feels like more people are thinking about business ideas of their own.

But digging deeper, the motivations of students working on ideas are often more pure than people generally give them credit for. I asked a few students I know what their motivations were for pursuing businesses of their own, and there was one common thread among all of their responses: impact.

Many students argue, convincingly, that the scale of the impact they can have on the world by founding a successful company far exceeds that of any other opportunity a fresh college graduate can pursue. Wealth is certainly also a motivating factor for student entrepreneurs, but it tends to be secondary or tertiary in importance to the pursuit of impact. Common wisdom among the students I talked to was that for those motivated primarily by wealth, finance or consulting provide a much higher chance of success than founding a company. The odds are heavily stacked against anyone who strikes out on their own, as around 75 percent of VC-funded companies fail.

The widespread association between technology and entrepreneurship is a natural result of the focus on scale of impact; a small team, using little capital, can build technology products that touch the lives of many millions. WhatsApp, acquired by Facebook recently, has touched the lives of over 450 million users despite only employing 50 people, all without spending a cent on marketing. WhatsApp brought text messaging to hundreds of millions of people who wouldn’t have otherwise been able to afford it, charging only $1 per year.

But entrepreneurship and technology are not fundamentally intertwined with one another, and entrepreneurial thinking is often applied to solving social problems. For example, BASES runs a business plan competition called Social E-Challenge, which gives prize money away to three companies chosen for their potential to have a social impact. The also runs classes like ME206A/B, which encourage students to explore opportunities to create social ventures. Some of the most successful companies to come out of the BASES competitions, like Kiva, have come from the Social E-Challenge program.

So why are many still opposed to the growth of entrepreneurship culture at Stanford? I had an opportunity to catch up with Matt Lopez, a senior at Stanford and writer of the op-ed I linked to at the beginning of this article, and it seems that the problem stems from the lack of support given by Stanford to students pursuing more alternative paths.

While the path out of Stanford as a computer science student is fairly well worn, and many alumni and students are available to support those who follow such a path, less support exists for those interested in other fields. Stanford promised students that they could be successful pursuing anything they were interested in, but students having trouble finding their way after graduation feel that Stanford has broken that promise. The continued growth of entrepreneurship culture is drawing more and more focus away from these alternative paths, exacerbating this problem.

But this is not an issue caused by the growth of entrepreneurship culture at Stanford. Stanford does not seem to make more resources available to engineering students than it does to students in other departments, but economic forces have given entrepreneurial engineering students significantly more options than others seem to have. The center of gravity on campus is shifting towards the engineering quad, and to even the playing field for students with alternative aspirations, Stanford will need to make more resources available to those students. How Stanford can best fix this is unclear, but the problem seems only tangentially related to entrepreneurship.

What Stanford has right now is a critical mass of students primarily interested in making an impact on the world, leaving their own “dent in the universe” however they see fit. Whether that impact comes through founding a company, charitable work, politics or any other field seems irrelevant, but Stanford should support students interested in pursuing any path they choose.

Roneil Rumburg is the Chief Operating Officer of BASES. Contact him at


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