Stanford University is so startlingly paradisial, so fragrant and sunny, it’s as if you could eat from the trees and live happily forever. Students ride their bikes through manicured quads, past blooming flowers and statues by Rodin, to buildings named for benefactors like Gates, Hewlett, and Packard. Everyone seems happy, though there is a well-known phenomenon called the “Stanford duck syndrome”: students seem cheerful, but all the while they are furiously paddling their legs to stay afloat. What they are generally paddling toward are careers of the sort that could get their names on those buildings. The campus has its jocks, stoners, and poets, but what it is famous for are budding entrepreneurs, engineers, and computer aces hoping to make their fortune in one crevasse or another of Silicon Valley.

Students at the Institute of Design at Stanford, or d.school, work this spring on an irrigation project for farmers in Burma. The work is part of the university’s focus on interdisciplinary education. Photograph by Aaron Huey

Innovation comes from myriad sources, including the bastions of East Coast learning, but Stanford has established itself as the intellectual nexus of the information economy. In early April, Facebook acquired the photo-sharing service Instagram, for a billion dollars; naturally, the co-founders of the two-year-old company are Stanford graduates in their late twenties. The initial investor was a Stanford alumnus.

The campus, in fact, seems designed to nurture such success. The founder of Sierra Ventures, Peter C. Wendell, has been teaching Entrepreneurship and Venture Capital part time at the business school for twenty-one years, and he invites sixteen venture capitalists to visit and work with his students. Eric Schmidt, the chairman of Google, joins him for a third of the classes, and Raymond Nasr, a prominent communications and public-relations executive in the Valley, attends them all. Scott Cook, who co-founded Intuit, drops by to talk to Wendell’s class. After class, faculty, students, and guests often pick up lattes at Starbucks or cafeteria snacks and make their way to outdoor tables.

On a sunny day in February, Evan Spiegel had an appointment with Wendell and Nasr to seek their advice. A lean mechanical-engineering senior from Los Angeles, in a cardigan, T-shirt, and jeans, Spiegel wanted to describe the mobile-phone application, called Snapchat, that he and a fraternity brother had designed. The idea came to him when a friend said, “I wish these photos I am sending this girl would disappear.” As Spiegel and his partner conceived it, the app would allow users to avoid making youthful indiscretions a matter of digital permanence. You could take pictures on a mobile device and share them, and after ten seconds the images would disappear.

Spiegel needed some business advice from campus mentors. He and his partner already had forty thousand users and were maxing out their credit cards. If they reached a million customers, the cost of their computer servers would exceed twenty thousand dollars per month. Spiegel told Wendell and Nasr that he needed investment money but feared going to a venture-capital firm, “because we don’t want to lose control of the company.” When Wendell asked if he’d like an introduction to the people at Twitter, Spiegel said that he was afraid that they might steal the idea. Wendell and Nasr suggested a meeting with Google’s venture-capital arm. Spiegel agreed, Nasr arranged it, and Spiegel and Google are now talking.

Spiegel knows that mentors like Wendell will play an important part in helping him to realize his dreams for the mobile app. “I had the opportunity to sit in Peter’s class as a sophomore,” Spiegel says. “I was sitting next to Eric Schmidt. I was sitting next to Chad Hurley, from YouTube. I would go to lunches after class and listen to these guys talk. I met Scott Cook, who’s been an incredible mentor.” His faculty adviser, David Kelley, the head of the school of design, put him in touch with prospective angel investors.

If the Ivy League was the breeding ground for the élites of the American Century, Stanford is the farm system for Silicon Valley. When looking for engineers, Schmidt said, Google starts at Stanford. Five per cent of Google employees are Stanford graduates. The president of Stanford, John L. Hennessy, is a director of Google; he is also a director of Cisco Systems and a successful former entrepreneur. Stanford’s Office of Technology Licensing has licensed eight thousand campus-inspired inventions, and has generated $1.3 billion in royalties for the university. Stanford’s public-relations arm proclaims that five thousand companies “trace their origins to Stanford ideas or to Stanford faculty and students.” They include Hewlett-Packard, Yahoo, Cisco Systems, Sun Microsystems, eBay, Netflix, Electronic Arts, Intuit, Fairchild Semiconductor, Agilent Technologies, Silicon Graphics, LinkedIn, and E*Trade.

John Doerr, a partner at the venture-capital firm Kleiner Perkins Caufield & Byers, which bankrolled such companies as Google and Amazon, regularly visits campus to scout for ideas. He describes Stanford as “the germplasm for innovation. I can’t imagine Silicon Valley without Stanford University.”

Leland Stanford was a Republican governor and senator in the late nineteenth century, who made a fortune from the Central Pacific and Southern Pacific railroads, which he had helped to found. Stout and bearded, he could be typecast, like Gould, Morgan, and Vanderbilt, as a robber baron. Without knowing it, this man of the industrial revolution spent part of his legacy establishing a center for what would become the Age of Innovation. After his only child, Leland, Jr., died, of typhoid fever, at fifteen, Stanford and his wife, Jane, bequeathed more than eight thousand acres of farmland, thirty-five miles south of San Francisco, to found a university in their son’s name. They hired Frederick Law Olmsted, who designed Central Park, to create an open campus with no walls, vast gardens and thousands of palm and Coast Live Oak trees, and California mission-inspired sandstone buildings with red-tiled roofs. Today, the campus extends from Palo Alto to Woodside and Portola Valley, spanning two counties, three Zip Codes, and six government jurisdictions.

Stanford University opened its doors in 1891. Jane and Leland Stanford said in their founding grant that the university, rather than becoming an ivory tower, would “qualify its students for personal success, and direct usefulness in life.” From its early days, engineers and scientists attracted government and corporate research funds as well as venture capital for start-ups, first for innovations in radio and broadcast media, then for advances in electronics, microprocessing, medicine, and digital technology. One of the first big tech companies in Silicon Valley—Federal Telegraph, which produced radios—was started by a young Stanford graduate in 1909. The university’s first president, David Starr Jordan, was an angel investor.

Frederick Terman, an engineer who joined the faculty in 1925, became the dean of the School of Engineering after the Second World War and the provost in 1955. He is often called “the father of Silicon Valley.” In the thirties, he encouraged two of his students, William Hewlett and David Packard, to construct in a garage a new line of audio oscillators that became the first product of the Hewlett-Packard Company.

Terman nurtured start-ups by creating the Stanford Industrial Park, which leased land to tech firms like Hewlett-Packard; today, the park is home to about a hundred and fifty companies. He encouraged his faculty to serve as paid consultants to corporations, as he did, to welcome tech companies on campus, and to persuade them to subsidize research and fellowships for Stanford’s brightest students.

William F. Miller, a physicist, was the last Stanford faculty member recruited by Terman, and he rose to become the university’s provost. Miller, who is now eighty-six and an emeritus professor at Stanford’s business school, traces the symbiotic relationship between Stanford and Silicon Valley to Stanford’s founding. “This was kind of the Wild West,” he said. “The gold rush was still on. Custer’s Last Stand was only nine years before. California had not been a state very long—roughly, thirty years. People who came here had to be pioneers. Pioneers had two qualities: one, they had to be adventurers, but they were also community builders. So the people who came here to build the university also intended to build the community, and that meant interacting with businesses and helping create businesses.”

President Hennessy believes that the entrepreneurial spirit is part of the university’s foundation, and he attributes this freedom partly to California’s relative lack of legacy industries or traditions that need to be protected, so “people are willing to try things.” At Stanford more than elsewhere, the university and business forge a borderless community in which making money is considered virtuous and where participants profess a sometimes inflated belief that their work is changing the world for the better. Faculty members commonly invest in start-ups launched by their students or colleagues. There are probably more faculty millionaires at Stanford than at any other university in the world. Hennessy earned six hundred and seventy-one thousand dollars in salary from Stanford last year, but he has made far more as a board member of and shareholder in Google and Cisco.

Very often, the wealth created by Stanford’s faculty and students flows back to the school. Hennessy is among the foremost fund-raisers in America. In his twelve years as president, Stanford’s endowment has grown to nearly seventeen billion dollars. In each of the past seven years, Stanford has raised more money than any other American university.

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Like other élite schools, Stanford has become increasingly diverse. Caucasian students are now a minority on campus; roughly sixty per cent of undergraduates, and more than half of graduate students, are Asian, black, Hispanic, Native American, or from overseas; seventeen per cent of Stanford’s undergraduates are the first member of their family to attend college. Half of Stanford’s undergraduates receive need-based financial aid: if their annual family income is below a hundred thousand dollars, tuition is free. “They are the locomotive kids, pulling their whole family behind them,” Tobias Wolff, a novelist who has taught at Stanford for nearly two decades, says.

But Stanford’s entrepreneurial culture has also turned it into a place where many faculty and students have a gold-rush mentality and where the distinction between faculty and student may blur as, together, they seek both invention and fortune. Corporate and government funding may warp research priorities. A quarter of all undergraduates and more than fifty per cent of graduate students are engineering majors. At Harvard, the figures are four and ten per cent; at Yale, they’re five and eight per cent. Some ask whether Stanford has struck the right balance between commerce and learning, between the acquisition of skills to make it and intellectual discovery for its own sake.

David Kennedy, a Pulitzer Prize-winning historian who has taught at Stanford for more than forty years, credits the university with helping needy students and spawning talent in engineering and business, but he worries that many students uncritically incorporate the excesses of Silicon Valley, and that there are not nearly enough students devoted to the liberal arts and to the idea of pure learning. “The entire Bay Area is enamored with these notions of innovation, creativity, entrepreneurship, mega-success,” he says. “It’s in the air we breathe out here. It’s an atmosphere that can be toxic to the mission of the university as a place of refuge, contemplation, and investigation for its own sake.”

In February, 2011, a dozen members of the Bay Area business community had dinner with President Obama at the home of the venture capitalist John Doerr. Steve Jobs, who was in the late stages of the illness that killed him, eight months later, sat at a large rectangular table beside Obama; Mark Zuckerberg, of Facebook, sat on the other side. They were flanked by Silicon Valley corporate chiefs, from Google, Cisco, Oracle, Genentech, Twitter, Netflix, and Yahoo. The only non-business leader invited was Hennessy. His attendance was not a surprise. “John Hennessy is the godfather of Silicon Valley,” Marc Andreessen, a venture capitalist, who as an engineering student co-invented the first Internet browser, says.

Hennessy is fifty-nine, six feet tall, and trim, with thinning gray hair and a square jaw. He talks fast and loud, one thought colliding with the next; he bubbles over with information and data points. His laugh is a sharp cackle. Hennessy grew up in Huntington, Long Island. His father was an aerospace engineer; his mother quit teaching to rear six children. As a child, he read straight through the sixteen-volume encyclopedia his parents gave him. He studied electrical engineering at Villanova University and went on to earn a doctorate in computer science at Stony Brook University. He married his high-school sweetheart, Andrea Berti, and, in 1977, became an assistant professor of electrical engineering at Stanford.

Hennessy’s academic work focussed on redesigning computer architecture, primarily through streamlining software that would make processors work more efficiently; the technology was called Reduced Instruction Set Computer (RISC). He co-wrote two textbooks that are still considered to be seminal in computer-science classes. He took a year’s sabbatical from Stanford in 1984 to co-found MIPS Computer Systems. In 1992, it was sold to Silicon Graphics for three hundred and thirty-three million dollars. MIPS technology has contributed to the miniaturization of electronics, making possible the chips that power everything from laptops and mobile phones to refrigerators and automobile dashboards. “RISC was foundational,” Andreessen says. “It was one of the maybe five or six things in the history of the industry that really matter.”

Hennessy returned to teaching at Stanford, and became a full professor in 1986. In 1996, he was elevated to dean of the School of Engineering. He had little time to teach, but he marvelled at the inventions of his graduate students. He describes the time, in the mid-nineties, when Jerry Yang and David Filo took him to visit their campus trailer, which was littered with pizza boxes and soda cans, to show off a directory of Web sites called Yahoo. He calls this an “aha moment,” because he realized that the Web was “going to change how everyone communicated.”

In 1998, Larry Page and Sergey Brin, who were graduate students, showed Hennessy their work on search software that they later called Google. He typed in the name Gerhard Casper, and instead of getting results for Casper the Friendly Ghost, as he did on AltaVista, up popped links to Gerhard Casper the president of Stanford. He was thrilled when members of the engineering faculty mentored Page and Brin and later became Google investors, consultants, and shareholders. Since Stanford owned the rights to Google’s search technology, he was also thrilled when, in 2005, the stock grants that Stanford had received in exchange for licensing the technology were sold for three hundred and thirty-six million dollars.

In 1999, after Condoleezza Rice stepped down as provost to become the chief foreign-policy adviser to the Republican Presidential candidate George W. Bush, Casper offered Hennessy the position of chief academic and financial officer of the university. Soon afterward, Hennessy induced a former electrical-engineering faculty colleague, James Clark, who had founded Silicon Graphics (which purchased MIPS), to give a hundred and fifty million dollars to create the James H. Clark Center for medical and scientific research. Less than a year later, Casper stepped down as president and Hennessy replaced him.