Are Universities The New VCs?

The New Yorker has a piece on Stanford's StartX. They ask some interesting questions and end with this one:

If the university is a farm, do the students become the cows?

I have promoted this idea of becoming an early stage investor to a number of Universities and schools within Universities for some time now. It isn't the IP and patents that are held by Universities that interest me. It is the human capital that is inside of them.

Universities are organized to educate students and do cutting edge research. The byproduct of that is a lot of great ideas. In an era when the cost of a University education has gone up way faster than the value of it, we need new business models to sustain universities other than tuition increases, federally funded research, and the generosity of the alumni.

I think capital gains from equity investments in startups that are birthed inside universities is an interesting idea and I am glad to see Stanford and some other schools trying it out.  If Universities are the farms, I think students might be the farmers, not the cows.

#hacking education#VC & Technology

Comments (Archived):

  1. William Mougayar

    Didn’t Dell and Facebook start in the dorms of a university? Amen.

    1. awaldstein

      Yes, but they weren’t ideas bred on education as much as students who just had the chutzpah to leave and follow their guts. Add Gates to that list.That’s not the same to me as making the university, what you experience there part of the process of building a company.

      1. Matt A. Myers

        Exactly. Those cases, including for myself, result from the university not actually facilitating what I needed to move forward – or not in an efficient manner, which would require me to get X credits or Y degree – in order to move up the academic ladder. That works for some people in the real world, but not for people who have strong ideas they’re driven and passionate for and “just know” they will work if they can execute on it.I think there’s a lot of opportunity to engage students and help with learning – harnessing the drive and passion of certain doers – much like how role modelling and mentors work, people with prior experience who share their ‘secrets’ or experiences.

      2. William Mougayar

        Subtle distinction, but the outcome can be accelerated now. They are role models for the future breed.

        1. awaldstein

          You are calling me subtle? I’m smiling over this 😉

    2. JamesHRH

      Cisco is an even better example. But they were not really going anywhere until KP invested.

  2. awaldstein

    Maybe this is as much a way to add true value to the students as it is to defray costs.

    1. Matt A. Myers

      Can this scale though? There may be better options out there for students with ideas who are passionate enough to keep moving them forward. Is education currently even working at this scale? It could be argued it’s not, and a lot of waste and inefficiencies exist. Likewise for startups, maybe citing Y Combinator as an example – though I don’t know their inner workings.There are certain pressure structures that exist in academia, likewise in business for most sectors – though room for competition – it really changes the dynamic of being able to just “factory line” students through a system over X number of years.

      1. Drew Meyers

        Agree this brings inefficiencies. Why doesn’t academics just form closer partnerships/relationships with existing sources of capital?

  3. Assaf Lavie

    If you find yourself on a farm with no livestock, you’re the livestock! Unless you’re growing corn. In which case the students are the corn and the university is the cow that eats the corn. I think. But then who eats the university? I need to diagram this…

    1. Matt A. Myers

      The ideas are the livestock?

  4. Rohan

    3 separate thoughts -1. I am surprised Stanford took so long. My alma mater – the National Uni. of Singapore – has been doing this for many years and our incubators haven’t churned out start-ups with valuations close to the ones around Palm drive…2. Universities as breeding grounds for enterprise makes sense on many levels. I would, however, think that is the future of high end education and not mass education. When we have 10 billion people in the world, we will have more of the university = factory system that we have in most developing countries today.3. I feel the fundamental issue with the cost of education is that there isn’t enough differentiation between prices. Nowadays, you find all sorts of analysis on the ROI of a course – engineering related courses have higher ROI at under graduate levels than the arts simply because your chances of walking out with a 100k/year is small. So, instead of having more and more students boycott the arts for fear of debt.. we ought to bring the cost of arts down and raise the cost of courses that result in higher starter salary.There’s a mad push to be programmers/engineers, etc., and that makes sense.. but the societal costs of students not pursuing perceived softer subjects like the arts will be much higher.

    1. Matt A. Myers

      You don’t need money to take a course to learn how to program – you just have to do it and be good at learning, and build stuff. This makes universities/schools clubs that you can pay to attend and be some like-minded people, and have access to certain resources.Specialization, e.g. Masters and Phd level stuff, is the only real way to compete.Through the factory system however we can foster certain thinking and behaviour to lead more people into higher education – though all of this takes time, and time has costs associated with it. The lower these time costs are / costs associated with time, and accessibility, the more time people have to succeed or find success in whatever it may be they end up doing.I have future plans to help fundamentally change base structures relating to time / accessibility, though as everything, it will come in time..

  5. Matt A. Myers

    Universities certainly have been investing for certain industries that require leading edge research for big breakthroughs. Unfortunately for the most part, only research that leads to or would result in something protectable, patentable, gets funded – because the research money or grants a lot of the time come from big R&D companies who are looking to make profits in the billions.There’s new reach into incubating and supporting tech startups, though so far it doesn’t seem like money well spent. The issue with most startups being successful is the perseverance aspect – and generally you’re glued with people you don’t necessarily know at all, very well, or have any real common passion – yet you try to discover an idea and project everyone could be ‘passionate enough about’ to work on it – which doesn’t result in passionate enough to maintain, guide, and learn the nuanced aspect of a business over 5+ years.It’s certainly great experience for them though.

  6. jason wright

    they milk cows, don’t they?ip rights are the issue before how they are exploited. Universities are too quick to claim the creativity of others. Universities have become corporations by another name, in a bad sense.i took a university backed startup opportunity once. the bureaucracy was unbelieveable, and the aversion to risk taking retarding.where did google come from, and what has it now become?

    1. Matt A. Myers

      They should be facilitating with no expectation – or moderate return expectation – and perhaps bringing fairness into it through sliding scale or convertible debt/note structures. You are a student paying to be in the school afterall – even if subsidized by the government, then it’s everyone’s money – though still should take into consideration all influencing factors.If the structures were fair and working, or once they are, then you’d be able to hold onto talent and businesses. This is in part a people resource issue though, and talent and people available immediately (in a different city) is perhaps more valuable than staying with what an institution can offer – not to say that they have to stay or be in a single location.In the end it has to be people who have gone through the process of good idea generating, turning those ideas into action – and having the intuition / experience to know that it can succeed in current marketplace conditions … and then acting. Without that speed of acting, generally for most ideas, your competitors will win out – though you could win a certain territory – but with the efficiencies in globalization, that’s almost a non-differentiating factor these days.

    2. BillMcNeely

      Stanford Professor $100,000

      1. Pete Griffiths

        Not just any Stanford professor 🙂

  7. Ana Milicevic

    What’s a good model operationally? The University raises a fund and current students (and alumni) can apply for early-stage investment? University waives tuition in exchange for x% of FutureCo?

    1. Matt A. Myers

      This is a pretty deep, complex issue, and where every situation will be different. And if you start to narrow your box of what’s acceptable, you’re not going to have many enrolled – and that’s assuming you know what prerequisites are to higher levels of success, which seems to boil down to perseverance – which could derived from any number of qualities or scenarios having existed.You’d have to balance the value to the student (aka founder), with what the expectations are, along with the costs to the institution. In the end, if schools are subsidized by government (by society), it makes more sense as then the value created for the people will trickle out into society – assuming those people don’t leave your country or the society that supported them – then they are a leak, however beneficial to the world society.And is there even time for taking a full load or even half load courses while working on a startup? At top schools, usually no – they overload you with work to give you “real world” experience. That’s not conducive IMHO to understanding something better and learning theory or nuanced aspects of it all.It’s not difficult to give someone $50,000 and ask them to spend it, build a base product, build a brand, maybe pick some marketing messages. Though that on its own doesn’t turn something into possibly being a sustainable company. What makes the difference between spending $50,000 well and not well, is if you have the long-term strategy figured out, and the market exists for disruption, something new – and strategy that leads it to getting a foothold and becoming sustainable.And, if I was a student, giving up say 10% of my future company idea blindly is almost irrational. And is that of any future company you start? You can’t really know what the scope of where someone’s ideas will lead them.The most important factor it seems anyway for investor / company scenarios is relationship building and value – so it’s the people you have there helping out the students, teaching them, giving feedback (useful / good feedback hopefully) – and if they are a fit strategically, personality wise, etc. then that’s most likely the most important cohesive factor to it all.I understand too there is situational scenarios where you only have one option, and if it’s the only option – and it’s your local university – then you’re more likely to take it, though that allows for the higher possibility for abuse or taking advantage of those who don’t know better – as to what would be fair or not.Wow that got long. And now to start my day. 🙂

    2. fredwilson

      a strawman:- university dedicates a portion of its endowment to providing seed funding to students and faculty members- use a marketplace model like angel list to crowdsource how the funds are invested. students and faculty are the only members in the marketplace modeli think this solves a lot of the problems that people are mentioning in this thread

      1. Andrew Kennedy


      2. Pete Griffiths

        Who allocates the funds?One of the most striking things about the way academic grants are distributed is that most $ goes to proven researchers not to potentially disruptive ideas. They have long talked a good game about how to be less risk averse but have failed to implement. How do universities overcome that cultural problem?

      3. JamesHRH

        Crowdsourcing the allocation of capital? Not sure of that.Allocation is the issue? Anyone with ability is likely a competitor, so they will be uninterested. Academics are out. Students are out.I would make a list of accredited (i.e., Harradence Unviersity’s official leads) investors and then match their investments.

  8. Tyler Hayes

    There’s a fertilization joke in here somewhere.

    1. Matt A. Myers

      Ideas are incubated in cow patties?

      1. pointsnfigures

        While we were cow tipping.

        1. Matt A. Myers

          Poor cows.

  9. Corbett Morgan

    I worked in the startup group at a university that was investing a whole lot to help funnel university IP to startup formation. My experience led me to believe that it’s very tough for universities to do this without help from the outside.At most major universities outside of those like Stanford, the process is backwards. Researchers solve problems to get published, not to build companies. Universities then are left trying to take this research and retrofit it to solve problems in the marketplace. The human capital and know how is there. There just needs to be more information on the front end to help focus this research if building companies is the intent.Talking about kids in their dorm rooms cranking on concepts is a different story. But isn’t it a paradox that many entrepreneurs drop out of school to make the jump?

    1. William Mougayar

      I wonder if being funded and supported early would increase their chances to stay and finish their degree? Don’t they drop out typically because they don’t see the university as a helpful ground, whereas this changes the equation potentially? I dropped out of my MBA because I had the urge to work and got bored with it.Most of these programs are done with outside help with entrepreneurs and VCs that are involved, so it’s not just the university themselves. Otherwise, you’re right, it creates the problem you have described.

      1. Matt A. Myers

        Dropping out of university is basically just rejoining the school of life. :)Universities like businesses are organizational institutions, they organize things.Whomever is better at organizing and connecting the dots, and keeping the dots together, is who has highest chances of succeeding.

      2. Corbett Morgan

        I think it definitely increases their chances, to answer your question. In my experience though, it takes a maniacal commitment to find momentum. If you’re at a school in the midwest where connections might not come as easy as they do at Stanford or an NYC school, it’s very tough to drive a concept and hit the books simultaneously.Waterloo definitely is doing a good job…but with a major investment is the Velocity program. We can hope that schools in the U.S. catch on, but it will take a serious commitment if we want it to happen anywhere other than the coasts.

        1. LE

          If you’re at a school in the midwest where connections might not come as easy as they do at Stanford or an NYC school, it’s very tough to drive a concept and hit the books simultaneously.School is full time and business is full time. If you are try to do both one or the other will suffer or you will not get the most from the education experience.This is more or less a general concept that I believe in. You can’t be a brain surgeon operating at the highest level and also be a dentist operating at the highest level. The time factor is key and not changeable even by intelligence or motivation.

      3. ShanaC

        yes, you get invited to things with your university…they are helpful

    2. Sebastian Wain

      There is a conflict of interest between doing research and funding students to start companies: cutting edge research may require decades or centuries to be applied and, in general, can’t be accelerated in the business sense. Promising students jumping to start a company now instead of investing their time and focus on advanced problems is going backward.

      1. Corbett Morgan

        that’s interesting perspective, sebastian. i think there is room for both. although i’d agree that there is some research that takes a long-term commitment to be applied, i’d argue that at times a concept can be accelerated by a young, (probably) foolish entrepreneur.

      2. Cam MacRae

        I don’t think they’re the same students. Entrepreneurial types aren’t even going to contemplate a postdoc, let alone hang around waiting for someone to die.

        1. Sebastian Wain

          Sometimes they are. For example, you can be a top researcher or professor who doesn’t want to miss an interesting opportunity that could never happen again.One interesting case is RSA, where the three founders jumped to research again after a while.An interesting interview with Leonard Adleman, one of its founders, is available here USC Interview with Adleman (it’s in English after a Chinese prologue)

          1. Cam MacRae

            Universities have been funding and/or supporting spin-off companies to commercialise applied research for a very long time. It’s not really the same as running incubators for students, irrespective of whether the intent is experiential learning or getting to the pay window.

          2. Sebastian Wain

            Yes, but the model was more oriented to licensing patents instead of moving researchers outside the academia.

          3. Cam MacRae

            That’s pretty much irrelevant. I don’t accept that the students who will jump to start a company now are the same students who would otherwise invest their time and energy into basic research; your conflict of interest is plausible but improbable.

          4. Sebastian Wain

            Well, I know many cases and that’s why I am concerned.

        2. ShanaC

          not true, my cofounder has in fact completed a post-doc. To everything there is a season

          1. Cam MacRae

            Sure, but in doing a postdoc your cofounder invested their time and focus on advanced problems and didn’t jump to start a company.That they’ve started a company now isn’t all that remarkable, although to be fair, by virtue of being your cofounder they didn’t hang around waiting for someone to die.Although I don’t think they’re the same students, and therefore there is no great tension between basic research and entrepreneurship, it’s a law of nature that the two sets will intersect; but they always have.

    3. btrautsc

      I have a variety of feelings about the overall topic, but in terms of students in research vs ‘dorm room cranking’ we’ve had first hand experience.Anecdotal experience: the people we’ve recruited who literally dropped out to join us – those were the most entrepreneurial technical people I’ve come across. Those who we’ve pulled from the research dept/ labs – PhDs/ MSs, those were the best engineers, but extremely risk averse and have difficulty to adjusting to the massive unknown of creating a company from scratch.Both are valuable to have, but in *my* experience, both are meant to play significantly different roles. I would be very concerned about investing at different ends of that spectrum

      1. sigmaalgebra

        It’s from super difficult up to just impossible fora Ph.D. to do applied research and apply it whileworking for people without a comparable Ph.D.Actually, in essentially all fields relevant toinformation technology (IT), a Ph.D. holder from agood research university was a high risk player whowas successful.So, with meager financial support and in a big hurryto get his Ph.D. and get on with his life (maybe hiswife is pregnant), he has to:(1) Pick an advisor, someone he can work withproductively — not always easy.(2) Get a suitable research problem. Maybe hisadvisor will suggest a problem — e.g., “Why don’tyou settle that nagging question of P versus NP? Ibelieve we would like to see what you can do onthat.”. Of course, nearly everyone in any fieldclose to applied mathematics knows about this”nagging question” because no one has even dented itin decades. If the professor had a nicely doableresearch problem, then he likely would have gotten asolution and published the results himself.Or the student has to select his own problem andhope that he can solve it and that the solution willbe regarded as “new, correct, and significant” (theusual criteria).(3) He has to do the research, that is, find asolution to the problem. Essentially he starts witha blank sheet of paper. For IT, this work isn’tjust ‘hacking’ guys; instead it’s original andnearly necessarily not routine.(4) If his research goes well, then he writes up hiswork as a dissertation, stands for an oral exam todefend his work, passes the exam, then rushes to thehospital just in time to see his new baby, as hischeckbook, gas tank, and stomach are all empty.But his faculty advisor(s) and other faculty memberscan, and sometimes do, criticize the work withoutmercy; can’t get the Ph.D. until the criticismstops.Ph.D. research is high risk stuff and actuallydangerous: Lots of people work so hard on theirPh.D. research that they are seriously injured forlife — I will spare you various grim details.For the risk level, I helped start FedEx, and I gota Ph.D. The risk in the Ph.D. was much higher.I was not injured and, indeed, found the Ph.D.research fast, fun, and easy, but I picked my ownproblem, found my own solution, wrote up my work,and my professors knew next to nothing about what Iwas doing until I was done. I got the Ph.D. justabout the time my checkbook went empty.Where I got my Ph.D,, Johns Hopkins, the officialcriteria was “an original contribution to knowledgeworthy of publication”, and, again, the usualcriteria for publication are “new, correct, andsignificant”. So, if a student gets too muchcriticism from his faculty (I didn’t; all I had todo was rewrite one sentence to clarify its meaning),then the good news is that he need only publish.Then the bad news is that some journal has to acceptthe work, and journals can be brutal with no apologyor appeal.My advice to Ph.D. students: Do an ‘engineering’Ph.D. Pick a fairly serious, recent practicalproblem. Get a clean solution via some appliedmath. Then since the problem is recent, have anopportunity to do some math that stands to be “new”.Present the math as polished theorems and proofs (agood undergraduate pure math major is good here).Tough to argue with theorems and proofs — supertough. With the proofs, likely have good progresson “correct”. Since started with a fairly seriouspractical problem, have a good start on”significant”.In ‘research’ are trying to add to the researchlibraries that already have the crown jewels ofcivilization with the work of Newton, Maxwell,Einstein, Lebesgue, Hilbert, Kolmogorov, Banach, theBirkhoffs, Ulam, Bellman, von Neumann, and manyothers. This isn’t social promotion kindergarten,guys. If you work yourself half to death, thenthat’s your decision but not a sufficient conditionfor good research.

    4. fredwilson

      i agree that it is being done backwards right now

    5. jhpincus

      You are correct that university faculty mostly create solutions in search of a problem. Two reasons are the mission of federal agencies that fund university research and the promotion and tenure system. The mission of must federal agencies is to fund basic research that will lead to new knowledge. Grant applications proposing technology development are rarely funded. In addition, faculty are tenured and promoted for publishing basic research, not starting companies. In some universities, starting companies is still viewed as an inappropriate activity.

      1. Abdallah Al-Hakim

        Very true and I strongly believe that universities should change the way they rate and evaluate principal investigators. In other words, the “publish or cherish” model needs to be changed. I believe Israeli universities have a different evaluation system that looks at patents, IPs and other contributions to commercialization when evaluation a professors tenure.

    6. sigmaalgebra

      > Universities then are left trying to take thisresearch and retrofit it to solve problems in themarketplace.Of course. But:A famous recipe for rabbit stew starts out, “Firstcatch a rabbit”.Well, a recipe for applied research might start out,”First get an application.”.Or start with an important real problem that needssolving.Yes, most graduate departments have a seminar serieswhere, to be cynical, graduate students andprofessors show solutions looking for problems. Itwould be good also to have people, often from offcampus, with problems looking for solutions.For information technology (IT) efforts, hopefullythe problem is suitably ‘big’ in the sense that thefirst good or a much better solution will be a ‘musthave’ instead of just a ‘nice to have’ for 1+billion users can sell ads to, 100+ million userscan sell apps to, or a few hundred companies cansell to at high prices, that is, so that(number of users/customers) * (revenue peruser/customers)is large enough for a nicely successful business.Want the solution to be the crucial, new, unique,powerful, valuable, defensible core technology forthe business.Then do the research. If can’t complete theresearch, then pick another problem and try again.A big, huge advantage of the university start is:(1) good knowledge of prerequisites for the neededsolution and (2) some examples and sense of how todo ‘research’, that is, high quality work that is”new, correct, and significant”.Of these two, (2) is by far the more difficult.E.g., for one view of the challenge, buried in D.Knuth’s ‘The TeXBook’ is:”The traditional way is to put off all creativeaspects until the last part of graduate school. Forseventeen or more years, a student is taughtexamsmanship, then suddenly after passing enoughexams in graduate school he’s told to do somethingoriginal.”That last part, “do something original”, can be justsuper tough for a large fraction of students who didreally well in “seventeen or more years” of”examsmanship’. Indeed, it’s fair to say that inmost fields relevant to IT the “examples and senseof how to do research” are important, maybe evenusually crucial, but nearly always still meager sothat, net, the student has to discover largely ontheir own how to do research and then teach thatdiscovery to themselves.The situation is grim: Research “new, correct, andsignificant” done by people without graduatetraining in a research university is less commonthan hen’s teeth.Right: People who can do research to solve asuitable problem should have a huge advantage.

  10. mark

    if you have 20 mins to spare, check out Ken Robinson talking about how schools kill creativity (… and overly focus on academic studies in order to get kids into university. It’s very good and a great laugh.So, while I agree it’s a great idea, we also need to make sure schools produce people who are still willing to make mistakes, take risks, and are creative if the universities are to have the raw ingredients (in terms of pupils) to produce good entrepreneurs

    1. Tyler Hayes

      This has long been one of my favorite videos on the Internet. What a terrific speaker and a wonderful man.

      1. mark

        Absolutely. He certainly inspired me to push our kids creatively and he’s just so incredibly entertaining at the same time.

        1. D.Cory McDonald

          @mark great video!! Thanks for that. My wife and I have spent our kids’ entire lives pushing for them to be creative. We have stated to them how college is important, but not so important that they should be willing to allow their creativity to be killed for the sake of a degree which also pertains to working for a company if they choose that route.

    2. falicon

      I hope @fredwilson highlights this as the video for the Sat. post – SO GREAT and interesting. Thanks for pointing it out!

      1. Matt A. Myers

        This and a few other videos I’ve slowly been posting to my future charity’s blog – – another one you can follow 😉

      2. fredwilson

        i believe i posted it to AVC a few years ago when TED first posted it

        1. falicon

          Ah – my bad! Just glad it was re-surfaced for me then 🙂

          1. Kirsten Lambertsen

            Ha! You should have used Gawkit 😉

          2. falicon

            Yes. Yes, I should have indeed! 🙂

    3. Matt A. Myers

      Great video. I have this posted second-last on my charity-to-be’s blog –'s not just the university level that needs to be transformed, but the whole ecosystem – all life stages included.

    4. fredwilson

      i love that TED talk. i must have recommended it a hundred times or more

    5. Pete Griffiths

      great talk.

    6. panterosa,

      To succeed in school, you follow directions. To succeed in life you make your own directions. We find this out the hard way.

  11. William Mougayar

    Harvard also recently announced the Experiment Fund… and there’s the Dorm Fund in 4 cities in Canada, I can say we were probably a bit ahead or at par, with several programs already in the works, starting with:- University of Waterloo’s Velocity Program (which recently incubated Thalmic) Ryerson’s Digital Media Zone where students incubate companies for free, and Ryerson Futures, a funding accelerator for the DMZ. and http://digitalmediazone.rye…- University of Toronto’s Creative Destruction Lab whose mission is to help create companies from the university community http://www.creativedestruct…- The Next36 Entrepreneurial Leadership Initiative which recruits students from across the country and enrols them an intensive 6 months acceleration program that results in funding (I’m going to become a mentor with them)- And last but not least, the University of Waterloo’s famous co-op program which employs thousands of students at startups and tech companies throughout the year, and it’s a breeding ground for future entrepreneurs.This is happening.

    1. Matt A. Myers

      Queen’s Innovation Institute – http://www.queensinnovation… – this past summer was their first run at it.

      1. Matt A. Myers

        The team that won the $25k – from my understanding – decided to disband and just each take their portion of the funds. I think part of this is because they didn’t really have any sweat equity in it – other than the time during the summer, though they were essentially paid a salary during this time.Was the money spent paying them to be in the program going to create long-term benefit – and for who all? Valuable question to figure out I think.

      2. William Mougayar

        I didn’t know about that one. I once lectured there for a couple of hours, a few years ago.

        1. Matt A. Myers

          Do you remember what the topic was?

          1. William Mougayar

            It was on e-commerce and e-business.

          2. Matt A. Myers

            Cool. I imagine they’d continue to have interest in more lectures from you, unless that’s not something you’re interested in anymore?

    2. fredwilson

      lot’s going on in this area. that’s great.

    3. Kirsten Lambertsen

      Wow, great info. Thanks for sharing 🙂

  12. Dan T

    The young, the invincible . . .more focused on what IS possible and ignorant of all that can and should go wrong. I would fund this kid from my alma mater – Georgia Tech…

    1. Matt A. Myers

      Great quote, summary that innovation is cutting through the noise of the status quo and trailblazing a new path.

    2. Ryan Frew

      What a great alma mater. The person who I believe to be the smartest person I’ve ever met is a recent grad of GT. Hope they keep doing whatever they’re doing.

  13. kidmercury

    i’m a bit skeptical of this. or, if i am to be a believer, i think this needs to come from a new university, not entrenched incumbents like stanford.i’m skeptical for a couple reasons:1. for the software stuff, not sure why anyone is going to a fancy pants school for that. maybe codeacademy or any of its peers should start a fund. 2. for the more cost intensive stuff like biotech or energy, i think investment could pollute the objectivity of science, which is already far too polluted. universities need research grants for cash, and so they are more interested in funding prescription drug research than nutritional research. i don’t see how becoming a VC improves this situation; it seems to me it would make it worse, at least if it is coming from a traditional university.

    1. Corbett Morgan

      totally agree on the first point. i want a school in the heartland as a case study. to your other points:1. when you’re talking about building a product, knowing how to code is great. but when you’re talking about building a company, a lot of it comes down to the connections you can facilitate. but it’s not just about going to a “fancy pants” school. it’s about being in the right place. so i would bet the odds for a kid at city college of san francisco are better than those for a kid at dartmouth.2. agreed, but sponsored research is already happening all over the place. VC getting involved could be an improvement from major pharma, or big ag.

      1. kidmercury

        i agree a fancy pants school gives you connections to powerful and influential people who like fancy pants stuff, but i think there are less expensive ways of achieving that goal aside from going to a fancy pants school. getting an internship at a promising startup, joining meetup groups, attending various tech events in san francisco/silicon valley, hanging out at co-working spaces……for the diligent and determined, i think there are better ways.

        1. Drew Meyers

          agreed 100%. if you are good, motivated, and determined – there are lots of ways to build connections that are more efficient/cheaper than fancy pants school

          1. LE

            Yeah but it also pays to be practical as part of that “good motivated and determined” feature set and not tilt at windmills.Meaning if you are so motivated and can get into Harvard law you will have a much easier time getting a good job than if you go to Delaware Law school after you graduate. Recognizing that fact is as important as everything else.

        2. ShanaC

          There is a class element going on in those places as well. I have a hard time convincing people to do those things, and when you go it can feel intimidating (since a chunk of people go to those sorts of schools and have money and you can tell)

          1. kidmercury

            yes classism is a big part of the “value” of higher “education.”

    2. William Mougayar

      There is nothing to be skeptical about. This is happening.The universities, students, mentors and VC’s have gotten a lot smarter about approaching this.

      1. kidmercury

        until universities show signs of being intellectually honest rather than selling out to the highest bidder, as evidenced by how they issue research grants, i think there’s a lot to be skeptical about.i don’t dispute this is happening, as factually, it clearly is. i’m disputing the notion that this is somehow superior to more traditional VCs like fred.

        1. Capitalistic

          But selling out to the highest bidder is what students, schools and business do.

          1. kidmercury

            sure, although businesses and venture capitalists are open about it. schools claim to serve some higher purpose, and while they obviously don’t, i think part of them still try to — which in my opinion generally makes them less skilled at selling to the highest bidder than an organization in which everyone is on board with the plan. that is part of why i don’t think they are better than traditional investors in any way.

          2. LE

            “schools claim to serve some higher purpose”I think what bothers you is the mismatch between what people who believe the bullshit believe and what the truth is.I agree with that. It’s like religious people (or churchs) who claim to be all pure and good but are human and do their version of the same thing regular folks do.People are not either 100% honest or 100% thief. They fall somewhere on the continuum. What I hate is people who paint themselves as closer to 100% honest that are actually not anywhere near that (and even more the people who fall for that type of bullshit).

    3. Russell

      +1 lets see codeacademy do this!

    4. Brandon Burns

      i’m not sure i agree. the foundations of entrepreneurship are already embedded in every (good) university, via research programs that yield innovative advances in all sorts of fields from medicine to computers to journalistic publications and film.the problem is that the universities are funneling all that energy into internal avenues, — either into patents and products that the university owns and then license out, or just as educational works that go nowhere monetarily — instead of pushing students and faculty to create external entities that can be stand alone businesses and, in turn, funnel money back into the university.

      1. Pete Griffiths

        “the foundations of entrepreneurship are already embedded in every (good) university.”The foundations of entrepreneurship are not knowledge or technical advances, which are indeed achieved in academia, they are cultural. And by no means all universities embrace the necessary culture. One of the most distinctive things about Stanford is that it has embraced this culture for a long time (Ses Steve Blank’s piece about Stanford). It is this culture that has resulted in Stanford being embedded in the entrepreneurial world of N Cal. It’s isn’t something that a college can take for granted just because it is located in the right place.

        1. Brandon Burns

          I think we’re getting at the same thing. I’m referring to the resources that are inherently there, and you’re referring to the culture that’s needed to put them to use in the right way.I think my point is, though, that the resources *are* there already. And you’re right that culture is the difference between them getting put to good use or not.

          1. Pete Griffiths

            We do indeed agree about a great deal.And yes – my point is precisely that there are a LOT of places that have excellent resources but those resources underdeliver because the culture can’t harness them.I have referred to this talk in other comments but for those interested in the intersection of academia and entrepreneurship I believe this talk by Steve Blank to be essential viewing.

    5. LE

      1. for the software stuff, not sure why anyone is going to a fancy pants school for that. maybe codeacademy or any of its peers should start a fund.Because at a fancy pants school you make connections and get hooked up with other people where you may be able to latch onto the next great thing. And the general student body is way more motivated than it is at lesser schools. Because you have a higher percentage of students who worked their ass off to get into that school. Not that there aren’t people that got in for other reasons of course – they do exist – but they are small in comparison to the people who got in for some superior trait or ability. Period.As I said in another comment location matters. Being in the wrong place or around the wrong people creates quite a difficult barrier to getting ahead in certain careers.

      1. kidmercury

        i don’t dispute that, i just think there are ways of acquiring the necessary social connections at a price of less than 40k a year.

        1. LE

          There absolutely are ways. You are right.But if you can get in it’s a shortcut. Not to mention the fact that most people don’t want to put in any creative effort they want to go for the low hanging fruit of access to success.As someone who has followed and exploited things unconventionally with pretty good success I am also fully aware that most people aren’t me and won’t do those creative things to get what they need out of the world. They are lazy and uncreative (but may actually be quite advanced academically). But they lack hustle and the ability to see opportunities. Something that can’t really be taught.

      2. D.Cory McDonald

        I agree with some of what you are saying other than “general student body is more motivated at a fancy pants school than a lesser school”. I didnt go to a fancy pants school (Alabama and online for MBA) and the student body was/is just as motivated as at any school with a fancier name depending on major(s).But, to be fair I didn’t go for anything tech, so maybe that’s the difference?

  14. JimHirshfield

    Reminds me of the software training startup (can’t remember the name) that trains folks for free and then takes a recruiter’s finders fee for placing them in jobs. Point is, the institution is creating the value in the student, so is there a better way to extract that value other than charging the student tuition? I think so.My other thought on education is that I’m much more inclined (and appear to be doing so) to pay more for my children’s lower education (K thru 8) than I am for their higher education. Thought is: let’s get the foundation strong. The rest is mostly a function of self-direction, I think.

    1. Kirsten Lambertsen

      This is one of them those free schools (here in ny)…

  15. LIAD

    if universities are farms:Students are cropsTeachers should be fertiliser (but usually are pesticides)Graduation is harvestStudent Debt are the scarecrows

    1. btrautsc

      unfortunately, Student Debt may be the harvest.Graduation is just crop rotation.

      1. LIAD


        1. pointsnfigures

          Student debt is also the govt subsidy.

          1. Matt A. Myers

            Much like certain crops..

    2. Aaron Klein

      I think the student debt is the fertilizer.The bullshit has never been piled higher.

      1. Anne Libby

        That, and also, hello: climbing walls, Pilates, and other amenities one of my university tweets about having. Seriously?And enormous staffs. (How many people does it take to run a fund the size of a major university’s endowment?)A few years back, I read an article about staff growth’s contribution to tuition increases. Aaron, do you have a view on how this works?

        1. Aaron Klein

          My sense is that when there is “free money” it will be spent.Artificially low interest rates on student debt are driving up tuition, and all of this money is washing into colleges and driving up salaries, retirement packages, staffing and construction projects.It’s much like real estate. Prices can go to the moon as long as there is “someone else’s money” to finance it. At some point, the bubble will burst. And it will not be pretty.

          1. Anne Libby

            Sigh. Tragic.

    3. Matt A. Myers

      Ahhhhh.. Nothing better than a Thursday morning big picture metaphor collage.

  16. Adam Kearney

    I love this idea and have been thinking about it for quite sometime. I will eventually go back to my alma mater and start it. I went to Bard College, ranked the third most expensive university. It is in desperate need of innovation in terms of creating capital.@disqus_5siY9gfffG:disqus To respond to your concern of students taking risks, I think universities need to take risks as well. This means largely ignoring the status quo of SATs and GPAs. Imagine if VCs had you take a standardized test. Bard has done an amazing job at ignoring the status quo. You do not have hand in SATs (they believe the standard is incredibly low) and your GPA isn’t the ultimate weight. They are looking for kids who can think. Here is a girl who grew up above a brothel in Mumbai. This isn’t just a media stunt. I was humbled by all the individuals at the school with inspiring backgrounds. Bard takes risks on its students (and faculty). In return, the students take risks with their education.I would love to implement this idea with the outliers at Bard. Like good VCs, Bard is able to pick out students that most miss. I don’ believe every university can say this.

  17. panterosa,

    I did the IE@Columbia accelerator this spring. One of the 10 teams went on to StartX, and just arrived back in NYC. I am very interested to hear from Eventava how it was.IE@ was started last year since CBA’s Greenhouse program and other efforts did not reach deeply enough into university research of all types, but was very MBA heavy. Support non MBA students by turning them into entrepreneurs, give them the tools, and depending on what the IP was, CU or not (they offered help to decide that with their IP dept, and it was low key).The Lang Center faculty loved the ideas which opened up to them once the whole university could apply, not just MBAs. I will say we had a great mix of science, journalism, CS and education.

    1. fredwilson

      you are all over this stuff!

      1. panterosa,

        I loved the university type of accelerator vs. what I have heard of the others. The campus setting played a big role in balancing the learning/research with the biz aspect.The interesting part for my team was the our lead, a SIPA prof had to drop out mid application, then a biology PhD took her place, and she then dropped as her lab assistant was deported and she had 2 papers back for review. We then recruited and E3B dept and science prof, and this term have an intern, and some profs there looking to work with us. E3B wants to get into app space.We are only now growing roots into E3B dept, which was half the reason we did the program, because the work load clobbered us during the program.The program directors liked our project enough to keep us as we looked to link to the right CU assets. As non CU students, we worked extra hard to have the university involved since they were investing so heavily in us. The program took no equity.

  18. pointsnfigures

    I co-founded the first angel group to do a deal with a University, far as I know, we began in Nov of 2006, and inked the deal in April of 2007). So far it’s been beneficial for both.We don’t look exclusively at UChicago companies, but we do “hire” students to work for us as associates-and we do a lot of mentoring there via the Polsky Center. Since we started, the entire place has gotten a lot more entrepreneurial. Initially there was the New Venture Challenge, but now they have a separate venture challenge in many programs-that combine many disciplines. UChicago doesn’t have an engineering program, but lots of kids there program.Our members (110) come from everywhere-only 50% have ties to UChicago. Our current, and last, managing director had no ties to the University. Ironically, in a male dominated world we are 20% women. We have minorities and people from all kinds of businesses.UChicago had a separate VC years and years ago, Arch Ventures. It was supposed to invest in companies to monetize university research. They have been largely successful, but operate a lot differently than the Stanford fund.I think it’s very important to consider this; when you limit yourself to one university, you face adverse selection. I am not convinced that Stanford has more success with startups because of Stanford, and it may be a lot more about being embedded into the Silicon Valley network.At HPA we look at deals from all over the midwest, work with other schools and generally are open. Our Chicago tie comes from the fact that the University helps support us-students work for us, a professor spends a lot of his time with us (and was our first real managing director), and we meet on the campus in the Loop.But, in Chicago we needed this support network to sustain ourselves initially. At the same time, the University wanted an angel network to startup in Chicago-but no one could figure out how to put one together and recruit the right people to jump start it. We have a very symbiotic relationship.We helped Notre Dame with They run their group a bit differently, and that is awesome. Great school, great people. Each school needs to do the things that fit within its own culture. We consistently communicate with them and try to co-invest on deals.Northwestern has an angel group as well, run differently than either HPA or IA. Marquette has one. Each is different, and we try to work with them all. We are happy to share our stuff with anyone that wants to start a group. You might also contact Kathleen Swan from Quarles and Brady in Chicago. She did our legal work, and the work for Irish Angels.The University of Illinois-where a high amount of innovation happens, chose not to have an angel group. But they have some fantastic entrepreneurial programs.One thing I find odd at universities is the business school rarely interfaces in a meaningful way with the engineering school. They are vertically silo’ed. Each tries to create a brand around itself. When I lecture at business schools in the midwest, I always tell them to go to the engineering campus, pull the kid away from their screen by their pocket protecter and go buy them a beer.Universities should probably set up co-working facilities run by someone outside like and smash kids from different programs together to see what comes out.

    1. LE

      I am not convinced that Stanford has more success with startups because of Stanford, and it may be a lot more about being embedded into the Silicon Valley network.As I say “If my bubba had batesim she’d be my grandfather”. Exactly how do you remove the Stanford geography and community from Stanford? It’s part of why it is Stanford.I mean if my office were located across the hall from your office I’d know you in person and if my office were even located close to your office I’d probably have had at least lunch with you. Location and proximity in making deals is arguably the most important factor in making and doing certain types of deals.

      1. pointsnfigures

        Right, but I think Stanford gets positive externalities simply from being in the right geography. Suppose Silicon Valley would have started in Dallas. We’d all be talking about SMU or TCU, and Stanford would simply be a quality private U. I think the Stanford reputation is bigger than it probably should be because of the positive externalities.

        1. LE

          I know but that is exactly my point. You can’t remove where something is from what something is or becomes.Take Walmart. I think it’s very helpful that they are located in a place like Bentonville Ark. I mean they hire people, groom them, pay them decently and then what’s the chance that those people are going to get poached or getup and move somewhere else? Imagine if Walmart were located instead in a suburb of Chicago or Philly? Things would be much different, right? Because it’s easier to change jobs in those areas than it is in Bentonville (especially if you’re married with kids and your wife works as well).In a sense same with perhaps Microsoft or maybe even Amazon. Imagine if Microsoft or Amazon had located in Silicon Valley? Much harder to retain employees there.

          1. pointsnfigures

            Ironically, went to an Illinois event tonight. They are doing A LOT more with entrepreneurship there and I saw some really cool companies. I am probably going to invest in one, will write about it when the time is right. For those looking for educational innovation, check out; replaces blackboard at college.

      2. Pete Griffiths

        Absolutely right. Stanford has a deep longstanding relationship with the valley and this relationship is based on a culture at the university that has long supported academics migrating in and out of ‘the real world.’See Steve Blank’s talk on this:

        1. pointsnfigures

          This is true. A lot of universities are extremely tough on professors coming and going….they are also tough in the tech transfer office in transmitting research to the hands of entrepreneurs that can do something with it.

    2. ShanaC

      you still need a coworking place in hyde park last I checked.U of C is also a weird institution is that it insists on not having an engineering school

      1. pointsnfigures

        Polsky Center has co-working. The problem with doing co-working at college is students have a lot of “free” places to work, and so do professors. The co-work spaces a few miles north are pretty full.Stanford does have it right with professors going into and out of academia. I don’t disagree that Stanford has done a lot of stuff-my argument is that the reputation is bigger than it probably should be because of positive externalities.

  19. falicon

    The universities are becoming VCs…the VCs are starting accelerators…and the accelerators are the new MBA programs (… )…Also, this just in….the grass is always greener on the other side…

    1. panterosa,

      greenfield is the new grass?

    2. William Mougayar

      You nailed it Kevin. That’s an A+ statement.

    3. fredwilson

      what goes around, comes around

    4. Mark Birch

      LOL, very true indeed…

      1. BillMcNeely

        the air is still seeping into the bubble 🙂

  20. Pat Clark

    As someone with a fair amount of student loan debt (over $250k combined with me and my wife), the key point I took from Fred’s post was “the cost of a University education has gone up way faster than the value of it.”. We have three kids now (4th on the way any day) and unless something drastic changes (value of the education goes up, relative cost of it goes down, or an unknown factor), I suspect I’ll be be pushing my now-toddler kids to look at educational/life path alternatives. The irony of this shift is not lost on me — our whole lives we were told “YOU MUST GO TO COLLEGE” – how quickly things change.That being said, having a developed entrepreneurial ecosystem baked into Universities, and as part of their business model, could be that extraneous variable that could turn things around in a positive way.

    1. LE

      We have three kids now (4th on the way any day) and unless something drastic changes (value of the education goes up, relative cost of it goes down, or an unknown factor), I suspect I’ll be be pushing my now-toddler kids to look at educational/life path alternatives.When you decided to have 4 kids did you factor in the cost of education and what it would cost to support those kids into the decision process?

      1. Pat Clark

        I’m the oldest of 8, my Mom is one of 10, my Dad is one of 7 and I have 50 first cousins (keeping the Irish Catholic sterotype alive and well!) so bigger families are all I’ve known. Of course, the cost of education is always in my mind (especially when we stroke our checks to Sallie Mae each month). But I agree 100% with one of the key points of this post – the cost of college is rising much faster than the value it provides. I think the market will adapt by the time my kids are of that age. I’m not sure how it will change, but rather than be fearful of paying for it, I am excited for the new opportunities they’ll have.

        1. LE

          Ok the bottom line is if the cost of something is rising maybe people need to reevaluate the amount of demand that they have for those products and services? So maybe it’s not a good idea to have 4 kids (or 10) if things have risen to the point where they are to expensive with that amount of kids?For example my dad has 2 siblings (2 died in the holocaust though) my mother has 3 siblings I am one of 3 kids. And none of us has more than 2 kids. And my kids are in college right now at those “high” rates. But the number of kids that I had was absolutely thought about when I had kids 18 to 21 years ago when college was way way less expensive. Because I knew as a generality that having kids was expensive. And at 2 I said “no mas”.So I mean if you are a Kennedy then fire away and have as many kids as you can if that is what you want. But this idea that people should just bring as many kids as they possibly can into the world is simply something that I don’t agree with although I know it is some church teaching.That said I can fully appreciate that you and many others get great joy and love having a big family because it is how you were raised and what you know. But guess what there are many things that I like and would like to have but I realize that I also have to factor in rationality and practicality into decision making.

          1. ShanaC

            kids shouldn’t be that crazy expensive

          2. LE

            How do you figure that?I mean you are a good example. You are living in NY Metro (right?) and you know NY Metro is super expensive. But you still choose to live there instead of moving to a million other places that are way less expensive (but still expensive) to raise children.Kids are crazy expensive because it’s a “keeping up with the Jones” type thing. Parents take cues from what others do with their children and want to do the same (clothing, activities, and of course college). And in order to get into the right college you need to go to the right high schools and be around similar non trashy people. And schools like that aren’t located where the real estate is cheap generally.My brother in law just got married and is remaining in the NY Metro area. So now he is beginning to no doubt think about schools. So of course any place in NY Metro with good schools will be expensive, one way or the other, right?Good school district = higher cost of living. Places that break this rule? Good luck finding them.

          3. panterosa,

            In 2002, when PantherKitty was a year old, I calculated, with the most expensive tuition I could find, at highest rate of inflation, at lowest cost of growth of my funds invested, from age 2 to 24, all private.One child. $1,000,000.

          4. Pat Clark

            To each their own, LE. Tough to comment on a family’s decision on number of kids given how little you may know about them, though.

  21. Paul Sanwald

    my alma mater, NCSU, is doing lots of cool things with public/private partnerships, like this:…redhat was located on NCSU campus for many years. I’m also proud to see that tuition for NC residents is 8k/year for a full time student. That is 32k if you do 4 years, and most CS students (myself included) work part time in research triangle park gaining valuable real world programming experience while they’re in school.From personal experience, I can tell y’all it’s still possible for many people to graduate with a CS degree and work experience and little or no debt. in my graduating class, only one person didn’t also work while they were in school. I made the opposite mistake and worked too much when I was in school, but that’s a different story.

  22. Naman Kumar

    Yes! Might be worth looking up north at the University of Waterloo. Their (our) IP policies are designed just for this.That said, I’m on the fence about the issue. I’ve been through incubators that are an extension of Universities and I have yet to see a system that supports both entrepreneurship and technical skills in a student. For all the examples I’ve seen, entrepreneurs suck as students – they are just too anxious to get it done. Good students are thorough – they spend time learning and practicing till they are able to build whatever they need to reliably. Those are contradicting traits.Very hard for a system to produce both. I tried to teach it to myself – took me took 2 extra years to complete my degree and I’ve yet to see how effective I am.One way to accomplish this would be to teach technical skills for the first couple of years and then introduce the startup bug. By then, technical skills become second nature and the learning involved is about startups, not technical skills.

    1. fredwilson

      i am a big fan of the Univ of Waterloo.

      1. Naman Kumar

        You should take a trip up here and check us out!

      2. Guest

        You should come check is out!

      3. Naman Kumar

        You should come check us out!

    2. andyidsinga

      re: entrepreneurs suck as studentsthat reminded me of paul graham’s hackers and painters essay, and this paragrah specifically :The fact that hackers learn to hack by doing it is another sign of how different hacking is from the sciences. Scientists don’t learn science by doing it, but by doing labs and problem sets. Scientists start out doing work that’s perfect, in the sense that they’re just trying to reproduce work someone else has already done for them. Eventually, they get to the point where they can do original work. Whereas hackers, from the start, are doing original work; it’s just very bad. So hackers start original, and get good, and scientists start good, and get original.(… )

    3. William Mougayar

      Hey Naman, Good plug re: UoW of course. Which incubator were you a part of?

      1. Naman Kumar

        Haha, plugs always creeps in to examples – reason for singling UW out was for the IP policies and relevance to innovations in universities; especially via student entrepreneurs. There is a conspiracy in the works to make this city and this school awesome!I’ve been with Velocity since it first started. Recently moved into the Velocity Garage, which is an extension of the uni and Communitech Hub.Now here’s a plug: – we just won the Velocity Venture Fund!

        1. William Mougayar

          Congratulations! nice. Let’s connect. I’m in Toronto. I don’t have your email. Do u mind emailing me? wmougayar AT gmail.

  23. Sudip Chakrabarti

    Fred – Thanks for bringing this up. Recognizing the opportunity in the university space, we launched a fund called Osage University Partners in 2010 that has partnered with 60+ universities to invest in select spinouts from those universities. In return, the universities share in the profit from the fund. The universities assume no risk – our capital comes from typical VC fund investors – but gains more upside thru our investments. We are super excited about investing in the university space, and I welcome you and the others on this forum to check out our partnering universities and our portfolio at, Sudip

    1. fredwilson


  24. BillMcNeely

    Here is a thought:Universities may have to look at students as partners and thus accountable to them and vis versa.

  25. Brandon Burns

    It pains me that Northwestern is so far behind in all things entrepreneurship (minus some rad things coming out of the engineering school).If any of my fellow alumni are reading and listening… eh hem, eh hem…

    1. pointsnfigures

      Linda Darragh just moved back up there from UChicago. Give her some time. Things are changing there.

      1. Brandon Burns

        I knew at least you would be listening, Jeff!And, hey, at least NU is killing it in football!

      2. ShanaC

        boo, northwestern stole a good one

  26. DoctorVP

    I understand why universities would want to take the ideas of their own students that they have spent so much time educating to help both the student and university gain an edge. However, coming from the columbia accelerator program last year (IE@), I have to say a lot of the ideas that were floating around just from the business weren’t all that great. In turn, Columbia opened up their accelerator to the whole university to solve this problem. The result was a more devise pool of students and ideas. Unlike other accelerators that focus mostly on tech, mobile and web startups, the IE@ accelerator had biotech and genetics teams. The people were also diverse in terms of ages and life experiences. I remember reading an NYT article on Y combinator where most of the teams were in their 20s, and working on mostly mobile platforms. Having universities fund, become VCs and become accelerators for their students will help with more innovative ideas and innovations in my option.

    1. LE

      However, coming from the columbia accelerator program last year (IE@), I have to say a lot of the ideas that were floating around just from the business weren’t all that great. In turn, Columbia opened up their accelerator to the whole university to solve this problem. The result was a more devise pool of students and ideas.The reason that most of the ideas weren’t great is because most of the ideas aren’t great and stand zero chance of working. Some are downright stupid. The reason we end up seeing things that work is because with the mass of things that are being tried something ends up sticking. Which statistically will happen with a large enough pool of participants. Same thing ends up happening in entertainment, right?The downside of this is that all those people trying and wasting time on something that isn’t going to work end up passing up a more solid and conventional opportunity in lieu of being the next zuck. So you have students who would end up making valuable contributions in another career dreaming big but going nowhere.Of course that is not a problem for the people involved in this industry who end up profiting from it. But it’s a problem for the dreamers for sure.I read an interesting comment somewhere last month by some guy who actually held some patents and had a Phd in something engineering related and was fairly accomplished in that area and had held solid well paying jobs. He ditched all of that and was working on some women’s clothing online startup. Imagine that.

      1. DoctorVP

        We’re taking about crossing the chasm with stickiness, which I agree is a very important part of having an idea succeed or not. The thing that was great about the accelerator both myself and Panterosa were at in Columbia was the fact that many different people from many different backgrounds were brought in.

  27. markslater

    i don’t agree.universities should be exploded. The economics of a university education are perverted, the walls that prevent access to the intellect that teaches are being knocked down as we speak, and the communal benefits derived from students gathering on campus are being digitized.Its the most analog of analog models – from real estate being the axis of gathering, to aggregating the commodity (teachers only being available to the class), to its absolutely absurdly perverted economics.i pine for the day we as a society shed ourselves of this model… provide ubiquitous access to intellectual capital for all at a cost that is universally achievable.My alma mater is 60 grand a year. My 4 year olds private school is 30. nuff said.

    1. fredwilson

      i am all for innovation to compete with and maybe replace the current model. but i am also all for the existing institutions innovating to be able to sustain themselves for another century or more.

      1. markslater

        why would you like to see the existing institutions sustain themselves? they are not calibrated in any way to meaningfully serve the society of tomorrow…

        1. pointsnfigures

          I don’t agree with that.

          1. LE

            It’s kind of an inversion of the “last man over the bridge” saying. In other words since the people before you spent less it automatically means that if the price goes up it is surely a bad deal and doesn’t make sense if the reward takes time.Along those lines I wonder if anyone has ran analysis on the escalation in pricing for super bowl commercials and/or sports teams over the years vs. the actual economic benefit that either those ads or team ownership provides (forgetting the asset value).

        2. fredwilson

          i have a daughter that just finished four years of university and another daughter that is two years in.they have grown a lot and become intelligent articulate and talented young womeni realize that the gotham gal and i can afford the expense of this and many/most cannotbut i feel that we and they are getting a very return on our investment

          1. markslater

            but why pay for all those legacy costs when the new world you invest in makes the need for them redundant.I have no doubt that your experience was and is a great one with your daughters, but the vast vast majority – under the current structure – will never see anything remotely near an ROI on their investment for the simple reason that they paying for the carry on costs that no longer belong in the equation.Don’t forget my daughter wont get measured on her ability to remember things….

          2. LE

            I don’t agree with that ROI shtick that is being bantied about.Just because college used to be cheaper doesn’t mean that at the high amounts someone pays today that it can’t be something that they can pay back. Over time.First of all you are paying back in cheaper future dollars at a normally pretty low interest rate. Once again, over time.The problem is if you make the wrong career choice and aren’t making enough money to pay back the money you have borrowed.Guess what? When I did my first business in the 80’s I had to buy a big piece of machinery that cost in today’s dollars as much as a college education now. And sign personally for it. (Actually I had to buy lots of machinery). If the business didn’t work out I would be saddled with the debt. Since the business worked out, that is since the choices that I made worked out, I was able to pay back the cost of the equipment. Had the business not worked out I wouldn’t have been able to pay it back.As an aside back then the thought of bankruptcy wasn’t an option meaning I didn’t factor into the decision the potential to default if things didn’t work out. I just worked hard enough that they did work out.Education by the way was never a sure bet if you made the wrong choices. You could go to a cheap school in the 80’s and be a film major and go nowhere. You’d have little debt but you’d still end up graduating with a shitty job market because you choose a cushy major that you thought was fun instead of thinking seriously about how you could earn a living with whatever money you were spending on education.

          3. markslater

            all of what you say might be correct but that is not my point.The economic bedrock of a university education today is horribly broken, and it needs to be blown up.I am completely convinced of the need to learn and grow in a structured and communal way. I absolutely reject how its done today.Oh and if you failed – the bank would have taken your asset back even it they were to get 10c on the dollar – It was still a loan with a security.a degree is the riskiest form of unsecured loan for all the reasons you mention above.

          4. pointsnfigures

            I have a daughter that just did four years at an intense liberal arts college. She is better for it. My youngest is at Ole Miss. She is also better for it, and is fluent in Chinese (mandarin) because she went there. They have the number one Chinese program in the country, and she couldn’t have got the same training anywhere else. BTW, the cost is around 17K out of state.If you have a boy, send him there. They redshirt Miss America on that campus.

          5. LE

            I feel the same way. Particular “they have grown a lot”. With me one is first year, the other is 4th year.Interesting with the senior, last semester she was at her first “real job” [1] while in London at the school’s program abroad. (Which I was not in favor of her doing but her mother pushed for it.)She got really excited about that and received plenty of positive feedback. Also a job offer when she graduates.[1] Her other jobs were pretty much unpaid or summer camp (which was paid) or work for free for some good cause. Also teaching hebrew school – well paid but things that I don’t consider the real world in terms of a boss and working around adults in a pressure type setting. I got the idea that she felt that she had discovered a whole new world that didn’t exist and was pleased with the outcome.

    2. Mark Birch

      I went to the same university you did around the same time you attended I believe. Completely floored that the price has more then doubled and it’s completely unsustainable.

      1. markslater

        its a bubble. And the real estate investor who called the mortgage bubble is calling this one the same thing……

  28. Andrew Kennedy

    This is a great idea in theory. Would love to see University endowments diversify their portfolio’s by backing alum (or student) founded companies . It has an elegant alignment and feels right. And then we step into reality. Schools (even the best run ones) operate like governments… They are siloed, political, analog and as a result slow moving. You’d need a chinese wall or conflict of interest issues will continually come up and although stanford’s reputation could withstand an atomic bomb, other schools could be taking on significant headline risk if this isn’t handled properly.

    1. andyidsinga

      tl;dr – agreel;dr :there’s a brand damage issue that will be a huge hurdle to what fred is talking about. they will still try to do it, and that is good. but there are people in these orgs ( just like in bigcos) who have jobs to “protect” the brand ( or view their job this way). this will cause endless slow down to things that dont look/ feel like education.

      1. Andrew Kennedy

        I agree — didn’t get the tl;dr part of your comment though. what does l;dr stand for?

        1. andyidsinga

          ohhhhh andrew andrew andrew andrew andrew andrew 🙂 🙂 :)imho you have to get up to speed on your acronyms and other stupid things for the webz lolz. #hashtagtoo long; didn’t read – short version of my responselong;did read – long version of response 4u

          1. Andrew Kennedy

            word. thanks. i knew tl;dr, but just learned l;dr. i agree with you. fred suggested a platform approach as the chinese wall in a comment thread somewhere in here and i think that could help re: brand damage issue and speed. there would need to be a separate brand that connects endowment cash to founders for this to work imho. you’d need an influential alum with cash to get access to the endowment, but then you could pitch it as a custom solution and then platform it out. i love the idea of endowments ripping 10x returns by supporting their students and having the carry be a restricted gift that can only be used for tuition reduction. ttyl 🙂

  29. mikenolan99

    “If Universities are the farms, I think students might be the farmers, not the cows” is the best quote I’ve ever heard on this topic. I guarantee I will be using this in a dozen meetings in the few weeks.Student engagement and student entrepreneurship is a hot topic at this week’s SBA/SBDC conference in Orlando. We’ve come up with some great ideas at our University, and will be borrowing some best practices from around the country.Wharton and the PA SBDC does some amazing work with students, using their horsepower to help entrepreneurs in the real world…Encouraging more schools to have Angel/VC capacity is a great idea… Now we just have to make it happen…PS… Best sign seen at a bar this week: “the best way to kill an idea is to bring it to a meeting.”

  30. Kirsten Lambertsen

    Love it.

  31. MaxBranzburg

    There is a major distinction between different types of startups coming out of universities – there are licensed research spinouts (e.g., Google) in which universities have historically held some equity, and there are independent student projects (e.g., Facebook) in which universities have not played a significant role.Why would a university be better positioned to invest in an independent project started by one of its students than any other investor?

  32. Xavier Faure

    A funny thing happened while I was reading this.The question you ask in this post echoes a question I’m asking myself a lot these days : “who are the vc’s customers”So I type the question into Google and here I am :…I’m ONLY 8 years behind you, not so bad 🙂

    1. fredwilson


  33. MFishbein

    I definitely think there needs to be a better alignment of interests between educators, students, and employers. There are massive skills gaps in many areas, and the reason most people go to college is to become employable. Schools could have part of their income tied to recruiting fees so they’re motivated to make their students employable. Employers are already spending a ton of money on training and recruiting. An interesting startup in this space is

  34. ShanaC

    Why are they not funding basic research instead? And aren’t university portfolios already exposed to VC investments?

  35. Pete Griffiths

    StartX is interesting. My daughter worked there.

  36. iggyfanlo

    Hysterical… I said this the other day… at Stanford and other great schools, the best are “one and done”… like the NBA that doesn’t want a 4 year graduate, the best companies will look at a college degree and think “may this person isn’t the best of the best”

  37. Semil Shah

    It all boils down to alignment between education and usefulness, as well as creating a better mechanism than traditional TLOs to put ideas into action.

  38. Matt Zagaja

    Lots of this has been happening in CT some of it chronicled in this recent article about our start-up ecosystem…. Yale seems to have had some success with its efforts but then we see companies like Hadapt leave New Haven for Cambridge. However this has not stopped efforts to continue to encourage entrepreneurship including a partnership with CT Innovations to start a fund specifically to fund student ventures:…. I think that model/idea might be what you are alluding to? It’d be interesting to see other VC firms partner with universities and see how those experiments work.

  39. sigmaalgebra

    I’m all for using university (lower case) materialas the (A) crucial training in ‘research’, say, inworking effectively with things that are “new,correct, and significant” and (B) providing theprerequisites for crucial, new, unique, powerful,valuable, defensible core technology for asuccessful information technology (IT) startup.Yes, in such work, I recommend some topics inapplied math over anything in a computer sciencedepartment. Indeed, my view is that US academiccomputer science (CS) is ‘out of gas’, doesn’t knowwhat to do next except to borrow heavily fromapplied math and does that borrowing quite poorlybasically because the CS profs did not go through agood Bachelor’s degree in pure math and Master’sdegree in selected topics in applied math. A lot offamous CS professors actually have yet to learn towrite mathematics in an acceptable way. They areabout like a guy trying to write in French wholearned French only from reading restaurant menus.Q. Can such university work be a solid, powerfulfoundation for the crucial core work for powerful,valuable innovations in practice?A. Claim: Yes.Proof: Review the last 70 years of the US DoD.QED.Right, that work is for the internal use of the DoD,but, still, the crucial core work has been forpowerful, valuable innovations in practice, and theuniversities did provide the crucial foundation.Core work that is powerful and valuable should be amajor advantage also when seeking commercialsuccess.Q. Crucial foundation?A. Claim: Yes,Proof: Providing that foundation for US nationalsecurity was long the main reason Congress voted themoney for research that long provided maybe 60% ofthe budgets of the top few dozen US researchuniversities and made the US the research powerhouseof the world. QED.Q. Can such work lead to large financial successesin the US commercial economy?A. My view is that, e.g., from the DoD examples,such work is by a wide margin the best path to suchsuccess, but sadly we have too few examples in thecommercial world.There are two ways to look at this situation: (A)University research is ‘blue-sky’ stuff, too farout, too far from anything practical, with horriblylow ROI, disconnected from the commercial world or(B) such research is a mountain stream full ofuncomfortably cold water and a lot of mud and gravelbut so far untouched and just a terrific place tolook for gold.One point is that (A) the IT startup community and(B) the research community funded by the US FederalGovernment (Feds) are very different in how they doprojects: The Feds (B) with DARPA, DoD moregenerally, NSF, and NIH usually evaluate projectsjust on paper, but (A) nearly all the VC communitywants to evaluate projects based mostly just on’traction’ which is usually a surrogate for revenueand earnings.Surprisingly, it does appear that DoD fundedprojects, evaluated just on paper, e.g., the Navy’sversion of GPS, nearly just off the back of anenvelope, have much better success rate than VCfunded IT projects. It really is possible to dogood project evaluations just on paper.By analogy, the VC world would say to the ManhattanProject “You build the first one and demonstrate it,get another one ready, build the plane to deliverit, and we will pay for the aviation gasoline.”.Actually, the Manhattan Project had great ROI — itcost about $3 billion and saved maybe 1 million UScasualties for a cost of $3000 per casualty, agrand bargain.That is, the VC community wants essentially all thetechnical work done and in the market with tractionfrom funding just from the entrepreneurs, and thispractice is quite limiting on what the entrepreneurscan do and the gains the VCs can get.Thus, the best work from the research universities,which concentrates on work on paper, will be ignoredby the VC community because they will nearly alwaysrefuse to evaluate projects just on paper.In simple terms, for nearly all the VCs, a projectfrom university research with good traction is worthmaybe half as much as a project with just thattraction! Research and $5 is still quite short of a$5 cup of coffee.So, really, in practice, that an IT project had somecrucial research university roots is just a littlesecret the founders have to keep among themselvesand, for others, just say that they had a reallygood ‘business idea’ and did a lot of really good’hacking’!So, without a massive revolution in Silicon Valley,where, say, Doerr, Moritz, Khosla, Thiel,Andreessen, etc. have to return to college and getan undergraduate pure math major, not really likely,the role of universities in VC funded IT startups isat best a bit vague!

  40. Mukesh Gupta

    One of my thoughts around solving the current higher ed problem is also to enable universities to invest in businesses, which are then run by the students with the assistance of the professors. I have compiled my thoughts on this topic with a couple of suggestion to address this challenge in a blog post – http://rmukeshgupta.wordpre

  41. Vlad Ciurca

    I think an issue is that many great ideas that come out university researches fail to materialize in real startups. Here is where the entrepreneurs and investors need to come into picture. For example, we have great technical and informatics universities in Romania, and the students are doing some really exciting projects in big data, robotics & many other fields, but nothing happens after that.@fredwilson:disqus if you pass by Romania anytime soon, would be great if you could visit these universities and give the students here a push to pursue their projects! (of course I’ll provide assistance with setting everything up)

  42. Abdallah Al-Hakim

    I am a big believer in this idea. I think universities have historically collected money from donors for bricks/mortar. While this is still important, it would be interesting to see what will happen if a small percentage of these donations went into VC type investment. The university would need to eloquently explain that while the donors’ name won’t be added to a new wing or building, it will contribute to commercializing ideas and resulting in an important legacy for the donors that may even outlive having their names on building.

  43. Bob Mason

    As an Upstart backer, I’m interested in how this model can be pushed earlier in the career potential of people. I believe it has the potential to establish a set of financial incentives to drive better alignment with society’s talent demand.For example, at present the dollars invested by Upstart backers could be seen in a similar light to a company’s seed or maybe Series A financing. What’s the role of pre-seed financing for people’s careers?Imagine if the for-profit University of Phoenix had applied Upstart’s model instead of draining federal coffers from student loans. i.e. The school would have financial alignment to ensure that the students were educated and trained in skills that will enable them to have a viable, long-term career.Could a non-profit university also apply this people-centric investment model to create a more sustainable cash-flow model? e.g. Student investments occur through scholarships, and the university receives a recurring investment stream from their career.This currently occurs in a less formal, and less consistent process with alumni donations.A risk to consider is related to making sure that students don’t become indentured servants to the Universities – but this risk is mitigated considering many are already adversely affected by their debt burdens.Secondly, we would need a model where we continue to invest in those people and areas that benefit society, but may not result in significant financial returns with the arts, humanities, social sciences, etc. But perhaps we look at the developing role of social impact investing to create opportunities for people who seek this alternative path.

  44. R_U_Inclined?

    I want to see this. I am about to graduate from a non-profit and as I look back, I wish there was more geared to letting me loose in the business world. Imagine the benefit to the school and the student. Right out of the starting gate I have valuable experience and the school has cha-ching.

  45. fredwilson

    i love it. so smart. i love a lot of the things they are doing at FRC. in fact, the only innovations i really like being done inside the traditional VC model are the ones they are doing and the ones we are doing. but you also like what you are doing.

  46. Drew Meyers

    I would have loved Dorm Room Fund when I was in college.

  47. Pete Griffiths

    I have a kid at Penn and I have been staggered by the quality of some of the business related clubs there.

  48. CJ

    Only in the midwest where we like to have a bit of revenue and profit with our startups (groupon excepted) thank you very much.

  49. falicon

    Nah – that’s so 2005…

  50. Pete Griffiths

    Here’s an example:…This is the club that focuses on business opportunities between the US and China. The website is incredible.And take a look at this – it’s the sponsorship package they give to companies they work with.…It’s incredibly focused and well written.I was SO impressed with the stuff.

  51. LE

    When I was at Wharton many years ago the first thing I noticed (because I notice details [1]) was how well thought out everything is and how they had their shit together because quality people work at Penn. I’m not just talking about the educators. I mean anyone who works there down to the janitor. Because they can hire the best people period. It’s pretty much one of the best places to work in Philly. So they get their pick of the top people for any position.They had an entire master plan they effectively mowed down west philly to make a great campus. At the time Drexel next door pailed in comparison. And forget Temple in north philly. Penn is connected and worked to achieve what was needed to build a great environment for learning. Something Drexel and Temple could have done but didn’t.[1] Went to Orlando Disney World a year or two after it opened and notice how they had their shit together as well. Stood out and made a real impact on me. They gave thought to things that others ignored (same as Apple does btw which is why I like Apple).