A analysis of high-tech entrepreneurship at Stanford unievrsity through its staf,, students and alumni.

1. STANFORD UNIVERSITY AND
HIGH-TECH ENTREPRENEURSHIP:
HIGH TECH ENTREPRENEURSHIP
AN EMPIRICAL STUDY
Hervé Lebret
EPFL
Babson College Entrepreneurship
Research Conference
Hervé Lebret BCERC 2010 1

2. Motivation
High-tech entrepreneurship and innovation are important topics
Whereas Silicon Valley, the Boston Area and MIT have been
extensively studied, Stanford University is not really well-known,
y , y y ,
with the exceptions of (many) famous success stories (Sun, Cisco,
Yahoo, Google, etc)
g )
Basic motivation is a description of high-tech entrepreneurship
g
and founders from Stanford university
Another important motivation is that data on Stanford may
induce new studies and results on the topic
Hervé Lebret BCERC 2010 2

3. Spin-off and start-up
Hervé Lebret BCERC 2010 3

4. The full set of data (2727 companies)
1991 study
406
234
149 4
19
2140 124
57
2368 Stanford spin-offs
204
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5. Stanford spin-offs
spin offs
204 companies
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6. Stanford spin-offs - distribution
1%
5% Nb of companies
20% 35% Biotechnology
Medtech
Computers
Electronics
IT & SW
21% Energy ‐ Env
Unknown
17%
1% 1%
1%
VC-Backed
26% Biotechnology
gy
38% Medtech
Computers
Electronics
IT & SW
Energy ‐ Env
Unknown
19%
13%
2%
Hervé Lebret BCERC 2010 6

7. Stanford spin-offs – VC funding
100 in total, 4 VC-backed start-ups per year since 1985
$120M / year of VC money, $30M per company since 1985
20
18
16
14
12
10
VC Backed
8
No VC or
6 unknown
4
2
0
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
198
198
198
198
198
198
198
198
198
198
199
199
199
199
199
199
199
199
199
199
200
200
200
200
200
200
200
200
200
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8. Stanford spin-offs - success
$2.9B invested
$2 9B invested,
$8.2B of M&A,
$22.4B of public value exc.
Cisco ($131B) and
Google ($153B)
14 000
14'000
12'000
10'000
$M 8'000
6'000 VC
4'000 Public
2'000 M&A
‐
Hervé Lebret BCERC 2010 8

9. Stanford spin-offs - status
20
Status All start-ups VC- backed
18
Public 8% 14%
Private
P i 39% 37%
16
M&A 29% 36%
Ceased 16% 13%
14
Unknown 8%
Total 204 100
12
Unknown
10 Public
Private
8 M&A
Ceased
6
4
2
0
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Hervé Lebret BCERC 2010 9

10. Stanford spin-offs – time to liquidity
Nb. of companies VC backed No VC or unknown
5.97 years to liquidity when VC-backed Unknown 2
Energy – env. 3
6.55 years if no VC or unknown IT & SW 16 5
6.16
6 16 years overall Electronics 16 6
Computers 2 0
Medtech 2 4
Biotech 25 11
Total 61 31
Unknown
Energy ‐ Env
IT & SW
No VC or
Electronics
unknown
Computers All
Medtech VC backed
Biotechnology
0.0 2.0 4.0 6.0 8.0 10.0 12.0
Hervé Lebret BCERC 2010 10

11. A broader picture
2140 companies
out of the Wellspring
of Innovation
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12. The full set of data
1991 study
y
406
234
149 4
19
2140
124
57
Stanford spin-offs
204
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13. WellSpring Start-ups (2140) - distribution
0% Biotech
2% 3% 1% Medtech
6% 5%
Computers
5% Semiconductor
10%
Electronics
5%
Telecom
IT & SW
9% Internet
I t t
12%
Energy ‐ Env
Manuf.
Eng. Services
7% Non tech services
14%
Finance
Consumer goods
1% 1% 17% Others
Unknown
Hervé Lebret BCERC 2010 13

14. WellSpring High-Tech Start-ups – distribution
All companies
p
2% 1% 4% (1467)
10% Biotech
8% 2%
Medtech
Computers
7%
%
Semiconductor
Electronics
24% 8% Telecom
IT & SW
Internet
13%
Energy ‐ Env
0% 1% VC-backed
0%
Manuf. 6% (737)
21% Biotech
Eng. Services 9%
2% Medtech
29% Computers
Semiconductor
9%
Electronics
Telecom
6% IT & SW
Internet
Energy ‐ Env
21% 17%
Manuf.
Eng. Services
Hervé Lebret BCERC 2010 14

15. Wellspring (2140) – VC funding
754 VC backed companies
p
26 VC-backed start-ups per year over 1980-2004 (35% of all)
$360M / year of VC money (81-94), $3.3B (95-00), $41M per company
300
250
200
150
VC‐backed
Non VC backed
Non VC‐backed
100
50
0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Hervé Lebret BCERC 2010 15

16. WellSpring (2140) - success
$27.5B invested,
$27 5B invested
$185B of M&A
$287B of public value including eBay ($29.3B) Yahoo ($23.6B), Baidu ($13B)
but also Charles Schwab (Finance) - $21.7B
The Gap (Consumer Goods) - $14.5B
100'000
90'000
80'000
70'000
60'000
50'000
40'000 VC
30'000 Public
20'000 M&A
10'000
‐
Hervé Lebret BCERC 2010 16

17. WellSpring Start-ups (2140) – status in 2008
300
Status
S All start-ups
ll VC- b k d
C backed
250 Public 113 5% 142 10%
Private 699 33% 412 16%
M&A 719 34% 120 55%
200
Ceased 456 21% 79 19%
Unknown 153 7% 1 0% unknown
150 Total 2140 754 35% Public
Private
M&A
Ceased
100
50
0
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
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18. WellSpring Start-ups (2140) – status by field
21% of high-tech are private vs. 55% of services or non-tech
f hi h t h i t f i t h
100%
90%
80%
70%
60%
50% Unknown
40% Public
30% Private
20% M&A
10% Ceased
0%
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19. Nb. of companies VC backed No VC or unknown
WellSpring – time to liquidity Consumer Goods
Finance
8
0
45
52
Non Tech Services 2 67
5.3 years to liquidity when VC-backed
Engineering services 5 37
Other tech 0 5
8.0 years if no VC or unknown Manufacturing
Energy – env.
1 10
0 7
6.6 years overall Internet
IT & SW
177 102
125 93
Telecom 107 34
Electronics 35 43
Semiconductor 65 26
Computers 18 8
Medtech 51 27
Consumer goods
g Biotech 36 18
Finance Total 630 574
Non tech services
Eng. Services
Others
Manuf.
Energy ‐ Env
Without VC
Internet
All
IT & SW
Telecom VC‐backed
Electronics
Semiconductor
Computers
Medtech
Biotech
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0
Hervé Lebret BCERC 2010 19

20. About the founders
Reminder: These are Stanford alumni only; the companies
may have had other founders, who are not studied here.
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21. A few famous founders
Sergey Brin and Larry Page Jerry Yang and David Filo
Google Yahoo!
Sandy Lerner Larry Bosack Dave Hewlett and Bill Packard
Cisco HP
Professors Theresa Meng and John Hennessy, Marc Andreessen and Professor James Clark,
Atheros Communications Netscape
Hervé Lebret BCERC 2010 21

22. Founders: years from graduation* to foundation
100
90
80
70
60 Average:
50 2 years
40
30
20
10
0
‐7 ‐6 ‐5 ‐4 ‐3 ‐2 ‐1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 36
Years
* Stanford professors or staff imply 0 as
Stanford spin-offs (license), 204 companies value.
value If a company has many founders
founders,
62 unknown or no Stanford founder identified this is an average by company.
also 1 comp at 23, 27, and 36 years
Hervé Lebret BCERC 2010 22

23. Founders: years from graduation* to foundation
250
200
150
Average:
9.3
9 3 years
100
50
0
‐17 ‐15 ‐13 ‐11 ‐9 ‐7 ‐5 ‐3 ‐1 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47
Years
* Stanford professors or staff
1992 study: 383 companies, 42 unknown imply 0 as value. If a company
Wellspring study: 2140 companies, 162 unknown.
companies unknown has many founders, this is an
founders
average by company.
Hervé Lebret BCERC 2010 23

24. Founders: years from graduation* to foundation
Total 8.86
Consumer goods 9.81
Finance 13.04
13 04
Non tech services 12.63
Eng. Services 9.97
Manuf. 9.59
Energy ‐ Env 11.95
Internet 6.95
IT & SW 7.68
Telecom 9.37
9 37
Electronics 8.8
Semiconductor 7.11
Computers 6.43
Medtech 7.05
Biotech 5.71
0 2 4 6 8 10 12 14
All 3 groups * Stanford professors or staff imply 0 as
266 unknown. value.
value If a company has many founders
founders,
this is an average by company.
Hervé Lebret BCERC 2010 24

25. Serial Founders
2’266 founders created only one company
445 founders having created more than one company (16%)
including 44 professors (26%)
Nb of companies Nb of founders Nb of professor
founded founders
1 2266 123
2 317 24
3 82 11
4 27 3
5 10 4
6 6
8 2 1
16 1 1
Total 2711 167
% serial
i l 16% 26%
Question: a correlation b t
Q ti l ti between success and serial entrepreneur?
d i l t ?
Hervé Lebret BCERC 2010 25

26. How do serial founders do vs. novice founders
Data on non‐serial VC‐backed M&A Public Ceased
1739 Number Average Number Average Number Average
474 $36'081'000 253 $520'000'000 102 $4'929'000'000 370
Data on serial VC‐backed M&A Public Ceased
988 Number Average Number Average Number Average
386 $39'132'000 220 $624'000'000 55 $5'955'000'000 232
1st comp VC‐backed M&A Public Ceased
445 Number Average Number Average Number Average
147 $28'466'000 120 $900'000'000 30 $11'934'000'000 92
2nd comp VC‐backed M&A Public Ceased
445 Number Average Number Average Number Average
202 $42'042'000 93 $617'000'000 20 $3'371'000'000 107
3rd comp VC‐backed M&A Public Ceased
128 Number Average
g Number Average
g Number Average
g
57 $54'251'000 18 $277'000'000 6 $2'324'000'000 39
4th comp VC‐backed M&A Public Ceased
46 Number Average Number Average Number Average
23 $38 867 000
$38'867'000 13 $165 000 000
$165'000'000 3 $1 109 000 000
$1'109'000'000 12
Hervé Lebret BCERC 2010 26

27. A summary
2’727 companies
1’050 were VC backed
150 were public in 2008
VC ($M) M&A ($M) Public ($M) Sales ($M) Jobs
Stanford Start‐Ups 2'969 8'214 307'136 65'410 105'281
1991 Study (not 1'842 75'406 185'175 171'579 454'082
including licenses)
including licenses)
WellSpring of 27'125 173'375 183'615 111'696 401'453
Innovation (tech.
only)
Total‐Tech 31'936 256'995 675'926 348'685 960'816
(non tech) 272 11'892 154'413 46'348 204'895
Total 32'208 268'887 830'339 395'033 1'165'711
Top 5 (tech) 1'719 75'800 445'000 115'661 603'528
Top 10 2'794 110'200 497'010 145'377 680'087
Top 20 4'532 148'800 564'040 173'645 762'618
Top 50
T 50 8'379 194'772 626'037 199'502
199'502 872'731
Top 5 5% 29% 66% 33% 63%
Top 10 9% 43% 74% 42% 71%
Top 20 14% 58% 83% 50% 79%
Top 50 26% 76% 93% 57% 91%
Sales, jobs and public value in the table come only from the 153 public companies
Hervé Lebret BCERC 2010 27