Stanford recently announced that it will be directly investing in start-ups founded by students. If a company is accepted into a campus incubator and if it raises at least half a million dollars from outside investors, the university will also put money in through its endowments. The investments aren't going to be huge sums, either for the start-ups or for Stanford, whose endowment exceeds the GDP of Jamaica.
I've written extensively about these questions before, and have a long post up on newyorker.com describing Stanford's new policies and the questions surrounding them. The great virtue of the investments is that it will help train students in important life skills: raising money, running companies, creating, building. Stanford students have given the world important companies, like, for example, LinkedIn. (As a disclosure, I'm an alum with a small start-up I helped found called The Atavist.) But here are some of the questions raised:
* Stanford professors often invest in student companies. This creates potential conflicts of interest: could it, for example, affect a student's grades? Coercive power, which professors have, is not a good thing to pair with financial opportunity. Fortunately, this new fund is designed to limit such issues. But it's an issue other schools should examine if they start similar programs.
* Could such a fund encourage students to drop-out? Successful start-up C.E.O.s work all the time at their companies. Could the university promotion of start-ups lead to fewer students graduating, and could that be a bad thing?
* How does intensive university promotion of start-ups change the culture on a campus that has always prided itself on its intellectual diversity?
Silicon Valley has provided the world with extraordinary innovation, and Stanford has always had intensely close relations with Silicon Valley. But these are all important questions and reasons why we should watch this experiment.
Photo: Bloomberg via Getty Images
Nicholas Thompson
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