Stanford Confidential: Sex, Lies And Loathing At The World’s No. 1 B-School

Stanford’s Graduate School of Business

From the outside, the GSB appears an ideal and idyllic training ground for young capitalists. Palm fronds rustle in the gentle Silicon Valley breezes, three Nobel laureates sit on the faculty, and the exit routes are paved with gold: Forbes noted that Stanford grads five years out are pulling down total annual compensation of $255,000 a year, higher than MBAs at any other school in the world, with nearly four in 10 boasting stock options with a median value of a quarter of a million dollars; GSB graduates founded 31 of the 100 most heavily funded MBA startups on the planet in the past five years. But here, at the most selective B-school in America for the past 10 years, where the leaders of today and tomorrow are equipped to run the world, a dark side is emerging and its taint is spreading through the school, the university, and the community.  

The legal saga brings up serious questions about Stanford’s oversight of the business school, about the role of Provost John Etchemendy in the university’s response to the dean’s affair, about the decision by the university to pay hundreds of thousands of dollars in legal expenses to keep emails and Facebook posts between the dean and his lover out of public view, and about Saloner’s leadership and judgment. At stake are the reputation of the business school, its lucrative donation stream, and ultimately the value of the degrees it confers, whether already in a CV or to come.

SEX, BOOZE, VIOLENCE, AND DEATH ON A HIGHWAY

Problems go beyond the fact that the judgment and actions of the man in control of the B-school are being questioned inside Stanford’s red-tiled buildings and in two different courts. Over the past two years, incidents involving students that left an innocent man dead and a woman battered have raised alarms about the culture underlying the GSB. Taken as a whole, troubling events in recent years at the business school can be seen as an all-too-familiar tale of spectacular success that has led to arrogance and overreach at best, contempt for laws, policies, and social mores at worst – much as in some of the corporate cases studied by MBAs in their classes. As one of the B-school’s professors says, “We’re at the right place at the right time. The students come here thinking that their ticket has already been punched. A lot of what has happened here is about overconfidence and hubris. A symptom of power is that you don’t believe the rules apply to you.”

GSB students guzzle beer from plastic flamingos on an airplane during the 2009 “Vegas FOAM” trip. – Facebook photo

Last academic year, a male GSB student was suspended from the MBA program and banned from the Stanford campus after he was accused of raping a fellow GSB first-year MBA student, his girlfriend at the time, in her campus dorm room last year, and attacking her on multiple occasions. After the March 2014 reported rape, the male student was arrested by university police and booked into Santa Clara County Jail, but the DA declined to charge him. Stanford’s disciplinary office, which operates on a lower burden of proof than the California criminal justice system, noted evidence that the couple had in the past engaged in “consensual aggressive sex” and it dismissed the rape charge. However, it found the male student responsible for committing violence against the female student during the episode involving the rape claim, leaving her with small bruises, and broken capillaries on both sides of her neck. Determined to be unfounded were allegations by the woman that the man had committed violence against her on three other occasions, one of which she claimed had occurred during a student-organized GSB “FOAM” trip to Las Vegas after what the female student has described as a fumbled attempt at a “threesome” with an expensive, surgically enhanced escort in their suite at the Bellagio.