[Special Feature: Prospects for University-Launched Startups] Michiko Ashizawa: The Environment That Produces University-Launched Startups—Prospects for the Future of the Keio University Startup Ecosystem from the Example of Stanford University

2024/05/07

Stanford University is famous as a university that produces many entrepreneurs. Google was created by young researchers majoring in computer science. Yahoo was born in a trailer house on campus. Instagram was launched by students in the "Mayfield Fellows" entrepreneurship program. Shockwave Medical is a company that emerged from the "Biodesign" entrepreneurship education program at the School of Medicine, and news was broadcast worldwide in April 2024 that it was acquired for approximately 2 trillion yen. At Stanford University, such examples are too numerous to mention.

I stayed at Stanford University as a visiting researcher for eight months starting in August 2022. This was to investigate "why entrepreneurs are born from Stanford University." On the summer day I first visited the campus, the strong sunlight, refreshing climate, and clear blue skies were impressive. The vast campus was lush with greenery, and the group of buildings unified in a colonial style was truly beautiful. Soon after visiting, I understood with my whole being that "it is precisely because of this environment that entrepreneurs are born here and overcome numerous difficulties." It was truly a case of seeing is believing.

My own entrepreneurial spirit was naturally ignited, and I immediately began my investigation. I showed up at campus events, sought out students participating in entrepreneurship education programs, and requested interviews. Furthermore, by following various connections, I was able to interview the founders of the programs. Among them was Professor John Hennessy, the 10th president (who currently leads the Knight-Hennessy Scholars program and is also the chairman of Alphabet, Google's parent company), who pushed Stanford University to become the university that produces the most entrepreneurs in the United States during his 16-year tenure starting in 2000.

From the stories I heard from more than 20 people, the reasons for "why entrepreneurs are born from Stanford University" began to emerge.

First, there is active collaboration with the "outside" of the campus. The university is located in the heart of Silicon Valley, and startups of various sizes have offices nearby. Venture capital firms line Sand Hill Road on the west side of the university, and law firms line Page Mill Road on the east side. As if taking advantage of this physical benefit, entrepreneurs and supporters routinely visit the Stanford University campus to give lectures or serve as judges for pitch contests.

Elon Musk is said to have participated in events for the student entrepreneurship circle "ASES." There was also a Japanese international student who chatted with John Doerr (a famous venture capitalist who has invested in Google, Amazon, Twitter, etc.) while he was visiting the campus and was told directly, "Start a business soon. I'll support you." One student described their days at Stanford University by saying, "It feels more like being 'immersed' in entrepreneurship rather than being 'taught' it." Such networks and interactions with the "outside" of the campus push students toward entrepreneurship.

Second, there is active collaboration between departments "inside" the campus. For example, students from three schools (the School of Medicine, the School of Engineering, and the Business School) participate in the "Biodesign" entrepreneurship education program at the School of Medicine. Medical students present clinical needs and patient needs, while engineering students present technology. Then, business school students build the business model and coordinate the presentation.

Many such cross-departmental entrepreneurship education programs can be seen. Although the number of students is about half that of Keio (approx. 7,800 undergraduates and 9,700 graduate students), the number of entrepreneurship-related organizations officially recognized by Stanford University reaches 40 (SEN | Stanford Entrepreneurship Network). Most of them allow participation across departments. Entrepreneurial ideas are born from interactions across specialized fields, and human networks across departments enable the formation of complementary teams when it comes time to start a business. There are entrepreneurship support programs specialized by type of startup and business phase. Mechanisms to encourage entrepreneurship exist all over the campus.

Third, there is a culture that supports entrepreneurs and startups. When asked "why entrepreneurs are born from Stanford University," almost everyone speaks of the importance of the culture that permeates the campus. A culture expressed in words such as "challenging new things," "tolerating failure," "responding with 'Yes and' instead of 'Yes but'," "working incredibly hard and resting a little," "being loyal to technology rather than organizations or people," and "entrepreneurs are important figures who move society forward" is rooted throughout the campus.

Furthermore, not only for students but also for faculty and staff, those who open up new fields are evaluated, and value is placed on social implementation of research by connecting with industry rather than being confined to academia. To begin with, I have yet to encounter an organization in Japan where so many people mention that "culture is important." A culture that supports the development of entrepreneurs and startups exists, many people recognize its importance, and they try to become carriers of that culture themselves. The entire campus is enveloped in an atmosphere that seeks to produce and nurture entrepreneurs, and it is warm toward those who take risks and try to challenge themselves.

The question that arose after understanding this far was, "Well then, since when has Stanford University had such a system and culture?" When I spoke with professors involved in launching entrepreneurship education programs, I found that about 30 years ago, there were almost no programs to support entrepreneurship and no culture to encourage it. It seems it was only to the extent that a few faculty members personally challenged or supported it.

So, when I asked the professors again, "Then why did entrepreneurship education programs start up one after another on campus? Who were the drivers?" four things emerged. They were: "the leadership of the 10th president, Professor John Hennessy," "donation support from successful alumni such as Hewlett-Packard," "the massive wave of internet industrialization in Silicon Valley near the campus," and "Stanford University's decentralized organizational structure." It was not difficult to understand that there was a leader who was convinced that nurturing entrepreneurs would be the key to the university's development (Professor John Hennessy himself had the experience of taking a year's leave of absence to start a business after becoming a professor), that supporters who resonated with that vision supported the development financially, and that the external environment was favorable with Apple, Google, Facebook, and others being born one after another near the campus. However, the story of the "decentralized organizational structure of the university" required additional explanation, as in "what exactly does that mean?" When I asked a professor involved in launching an entrepreneurship education program about this, they told me the following.

"Excellent talent gathers at Stanford University. Excellent people like to run their own worlds themselves, don't they? Therefore, it is important to be a decentralized organization. If free research is permitted, people will emerge who want to implement their research results in society and be useful to people, who want to change society in a better direction with their own hands, and who aspire to start a business. Those who have experienced entrepreneurship will then want their own hardships and experiences to be useful to those who follow. In this way, people tried to provide the knowledge, wisdom, and networks gained through their own entrepreneurial experiences to the next entrepreneurs and created entrepreneurship education programs."

It is precisely because of a decentralized organizational structure that entrepreneurs are born, and those with entrepreneurial experience try to help the next entrepreneurs, leading to the birth of entrepreneurship education programs. This kind of free and open campus environment is said to have been the starting point of the Stanford University startup ecosystem.

While listening to these stories, I naturally began to think about Keio University, where I was scheduled to take up my post after returning to Japan. "Can Keio University become a place that produces startups like Stanford University?" I wondered. Is collaboration with the inside and outside of the campus, which is important for producing entrepreneurs, possible? Are there faculty and staff who seek to implement research through entrepreneurship or who seek to take charge of entrepreneurship education? When researchers and students stand up with an ambition, is it a free and open environment that accepts them? Is there a culture of "tolerating failure"? If not, can we create them from now on?

Although it has only been six months since I came to Keio University, I am now optimistic about the future, thinking that "Keio University will become a place that produces entrepreneurs." Why is that?

Most importantly, it can be mentioned that the philosophy put forward by Yukichi Fukuzawa, the founder of Keio University, has an extremely high affinity with the production of entrepreneurs and startups. In Gakumon no susume (An Encouragement of Learning), Fukuzawa wrote something to the effect of, "Those at our Keio University who have already mastered learning as a skill must endure poverty and hardship and execute what they have gained there in actual civilized enterprises," and "What is important in learning is to actually utilize it." It can be read as if he is saying, "Keio students, start businesses." To begin with, from the fact that he launched the university called Keio University, it can be seen that Yukichi Fukuzawa was a person with a rich entrepreneurial spirit. Keio University has Yukichi Fukuzawa as its founder, and that philosophy is passed down through the Keio Gijuku Shachu. In other words, it could be said that there are not many universities with as much affinity for nurturing entrepreneurs as Keio University. In fact, many people claim that the philosophy of the founder of Stanford University also emphasizes practical business, and that this serves as the foundation for producing entrepreneurs.

One professor stated, "The fact that the founder, Mr. Leland Stanford, advocated that 'Stanford University is established to produce human resources who contribute to the economy of California' is the foundation of Stanford's current culture, and I believe that leads to the present where many entrepreneurs are born from Stanford University." Stanford University and Keio University are universities with similar founder philosophies.

Furthermore, just as the 10th president, Professor John Hennessy, emphasized nurturing entrepreneurs at Stanford University, Keio University's President Ito mentions Yukichi Fukuzawa's philosophy on nurturing business leaders and the importance of startups as a means of social implementation of learning on various occasions, taking leadership. To create new systems and cultures, the influence of a leader's messages and actions is significant. It was impressive that Professor John Hennessy spoke about what he was thinking at the time as follows.

"When I was the Dean of the School of Engineering, I created a center (STVP) in the School of Engineering to handle entrepreneurship education. After becoming the President of Stanford, I conducted a fundamental review and implemented reforms regarding the scholarship system, interdisciplinary research at the university, and internal collaboration. All of these were things I constantly thought about and executed: 'How can the university solve society's most difficult problems?' And during the 16 years I was President, programs to generate innovation one after another were established, and Stanford University became a world-famous university as a university that produces entrepreneurs."

With President Ito's leadership, I can believe there is a future where startups that have an impact on society are born from Keio University, and a future where many entrepreneurship development organizations are born at Keio University as well.

Keio University is already one of the leading universities in Japan for producing entrepreneurs. It has achieved results such as being 3rd in the nation in the number of university-launched venture companies and 1st in the amount of funds raised. The Japanese government announced the "Five-Year Plan for Startup Development" in 2022, strongly putting forward a stance of support for university-launched ventures. Keio University has much science, namely powerful entrepreneurial seeds. Keio University's campuses are adjacent to large economic zones such as Tokyo and Yokohama.

In other words, if collaboration across the boundaries of the inside and outside of the campus progresses, social implementation will proceed by bringing together resources complementarily. Furthermore, Keio University has Yukichi Fukuzawa's philosophy and leadership. The conditions for startups to be born are perfectly in place.

Actually, I asked Professor John Hennessy, "What do you think Keio University should do to become a university that produces excellent entrepreneurs?" The answer was as follows.

"I hear that Keio University produces many industry leaders and that there are many business owners among the alumni, including family businesses. I think it would be good to start by gathering the power of those people. Also, at Stanford, entrepreneurship education programs have been created in various departments over many years. This is not something that can be done overnight. It is necessary to consider it a process spanning decades. Everyone comes to Stanford and says, 'I want to create Silicon Valley in five years.' But it took us 30 years. It is about educating patiently. It is also necessary to support venture capital and work with policymakers so that labor laws change. As a university, we must continue to think about how to encourage socio-economic change."

As Professor John Hennessy points out, Keio University produces many industry leaders. If such leaders unite, Keio University will be able to produce excellent entrepreneurs and lead society even more than it does now. If startups emerge from the campus and success stories increase, they will become the foundation for the next startups, and even more startups will be produced. After decades like that, entrepreneurship development systems and culture will take root on campus. When I imagine a future where the 'leaders' of the Keio Gijuku Shachu join forces to create the socio-economy, something hot wells up in my heart.