Berkeley Sucks at Startups…An Analysis
“Berkeley sucks at startups,” said someone at Stanfurd while paying for their double espresso in Bitcoin at Coupa Cafe.
When it comes to talking about Berkeley startups, I rarely ever talk about Stanford, even though many of my conversations in Silicon Valley take the exact path of this fun interview I had with Emily Chang at Bloomberg TV. You really can’t escape Stanford when talking about Berkeley, no matter how much you avoid it.
As someone who experienced both, Berkeley and Stanford have startup culture differences baked into their DNA. While that has favored Stanford startup success in the past, the culture and resources at Berkeley are changing for the better.
A Tale of Two Universities.
As an undergrad at Berkeley, I actually spent a lot of time at Stanford, including launching two clubs there (Dorm Room Fund, Kairos Society).
And while a student at Cal, I laid foundations for The House Fund, by starting active communities for entrepreneurs on Campus. We didn’t have much back when I came to campus in 2010, so needless to say, these communities took off.
Through my experiences, I was able to build an expert perspective, mapping out the two rival ecosystems and their differences.
When exploring the pros/cons of startup culture within Berkeley and Stanford, it’s necessary to separate what happens on the Campus from what happens with Alumni post-grad. For this post I will focus on the Campus.
Why has Berkeley been so behind Stanford for recent grads starting up? The differences were clear at Berkeley back in 2010:
Culture — Students at Cal are risk averse and path driven. There hasn’t historically been a path on campus for starting or joining a startups, while the path to joining Banking/Consulting or Google/Facebook is clear. The socioeconomic wealth of Cal students is often lower than that of Stanford students, making it psychologically and socially harder to turn down a high paying job from Google. Classes are hard and bog students down, leaving little room for projects and startups. Hence, founders typically start up 7-10 years after graduating, versus 0-3 years at Stanford.
Entrepreneurship Edu — Speaking generally, Berkeley tends to teach its students how to think and solve big, unsolved problems. Stanford, on the other hand, excels at teaching its students how to build business models and start up. Hence, Berkeley has a reputation for producing great CTOs and Stanford for producing Founders & CEOs. Today, this culture plays in Berkeley’s favor. At The House Fund and in the Berkeley community, we granola-eating, protesting, capitalist hippies believe the next great companies will start with big problems that can impact hundreds of millions of lives, in addition to creating billions in market value.
Role Models — Seeing “student founders like me” 1, 2, 3 steps ahead, and finding success is vital to help founders believe they can start up too. This was rare to see at Berkeley. Shout out to Jessica Mah at InDinero and Jason Wang from Caviar who I looked up to as a student.
Networks — It is difficult for alumni to re-engage with Berkeley given its size and public institution features, as well as its fragmented departments that operate as their own brilliant microcosms. In addition, Silicon Valley core used to be in the South Bay, meaning most successful alumni down there, and leading VCs on Sand Hill Road, were unwilling to visit Berkeley because people hate traffic and parking. This has changed dramatically in the last five years, as much of Silicon Valley has shifted to San Francisco, making a 30 minute BART ride easy enough.
Knowledge — At Cal, students must be proactive to access startup know-how and a community of peers. Whereas at Stanford, you can’t escape it. My favorite example is visiting Peter Thiel’s class at Stanford, which was half empty, even though the content led to the world-renown book Zero to One. When we brought Thiel to campus in 2014, we completely packed our biggest auditorium Wheeler Hall. Which of course, in Berkeley fashion, was not without protest.
Angel Stage Capital — Success begets success. Berkeley has had less student-founded success stories than Stanford, so less alumni angels (who were successful student founders) exist to invest in the next generation of founders. At Stanford, since many founders can point to the school playing a role in their success, these alumni visit campus with an intent to invest and pay-it-forward. This has been a competitive advantage for Stanford students. And this is why The House Fund focused on finding successful alumni founders (who did not start up as students) and executives as LPs in our first fund, and why we like to be the first investors in startups, to kickstart this flywheel of community investment.
I have spent the last decade working to fuel these areas at Berkeley and will continue to do so.
Why the differences?
These six ecosystem differences compounded over decades. Stanford matured a long time ago and has sustainability. The history of Silicon Valley was defined by various factors including its historical World War II context, tech breakthroughs, Stanford (and other research companies and institutions), important startups, new jobs, and access to capital via venture financing.
All of these existed within close geographic proximity, which was an essential factor in its success. Berkeley folk have always been a part of Silicon Valley’s success, though the institution has not often been coupled with it, given the big bay in between. That all said, Cal’s ecosystem is on a clear path to reaching similar maturity in time, in it's own Berzerkeley way.
Most Cal alums and people in Silicon Valley have no idea how successful Berkeley startups have been (companies like Apple, Intel, Tesla, and many more) and continue to be. We Cal alums are humble, which I love, but perhaps too much so (I’ll save that for another post).
The reality is, there was and remains no difference in talent between the two schools.
In 2012, I had a growing thesis that Berkeley, just based on its far bigger number of alumni, would pass Stanford in terms of number of VC-backed startups.
This proved true soon after in Pitchbook’s 2016-17 Report. Berkeley passed Stanford to become the #1 University in the world, producing the most VC-backed startups founded by undergrad alums. We are now seeing many students come to Berkeley because it is a great place to start up.
Today, Berkeley and Stanford remain pretty neck and neck, but Berkeley should break away in time. That’s not to discount Stanford. They will continue to produce quality and quantity when it comes to startups, and I admire their ecosystem.
When it comes to the Big Game, that’s another story. We’ve got the Axe — Go Bears!
-Fiance
Special shout out to fellow Cal alum Brett Goldstein, whose tweet inspired me to finally write this post! Check out his awesome newsletter.