Why are unicorns an interesting topic of research?
Well, first, there is a correlation between unicorns and success. If you look at the most successful venture capital backed outcomes over the past 20 years, almost all of them are unicorns. I think in the venture capital world, over the past 10 years, a unicorn is considered like a badge of honor, especially if you reached unicorn status as a private company.
I think many also think that ‘unicorn’ is identical to the word ‘success’, which is not the case. We know unicorns that failed. For example, in our data set, there is Theranos which, as you might know, is in the middle of a jury trial right now. My data tells me it was a unicorn — at some point, during its history, people perceived it as a very successful company.
What I think is also interesting is not just looking at unicorns, but comparing them with all the other companies that will not become unicorns. On my LinkedIn posts, I thought I would start with the unicorn sample because, frankly, I thought they would generate more attention. But, we’re also looking at what I call a random sample or representative sample of similar companies, but not all of them reached unicorn status. So this would allow us to compare those companies that became, at some point, highly rated with those companies that never became highly rated. And those posts will be coming to LinkedIn too.
In one post, you looked at the academic degrees achieved by 1,263 founders of 521 U.S. unicorns. Of those less than 5% were college dropouts, but only 18.7% earned MBAs. (Compared to 38.4% of bachelor degrees, 20.5% of masters and 22.6% of doctorates.) Is the MBA still valuable for startup founders? (See graph above)
Well, I’m biased, so I do think that an MBA is a valuable degree for all sorts of reasons, not just because you can become a unicorn founder. But that is one of them, of course. Trust me that many of my students at Stanford are obviously taking my venture capital class because they would love to found a unicorn. And, by the way, some of them did.
If you have an MBA degree, and you founded a unicorn, or if you’re a student and your classmate co-founded a unicorn, apart from being pretty exciting, I think it’s very important for networking reasons. We do know, not from my research but from many of my colleagues elsewhere, that the business school network is extremely important.
In some other posts, you looked at which business schools had produced the most unicorn startups and the most unicorn founders. Harvard came out on top with 44 unicorns and 53 unicorn founders.
Yes, we looked at the number of unicorns and unicorn founders for various business schools, which doesn’t take into account size. That shows Harvard Business School in first place, Stanford GSB in second, and Wharton School in third. I can actually give you the full list of schools for all the business schools for American unicorns. (See table at the bottom of this page.)
But, when measured by unicorns per capita, Stanford comes out on top.
If you look at just the number of unicorns at business schools, then Harvard Business School comes out on top because Harvard is much larger than Stanford GSB. Harvard Has 53 unicorn founders and 44 unicorns in my dataset while Stanford has 33 founders and 23 unicorns.
But if you look at the number of founders who earned a business graduate degree on a per-capita basis, Stanford GSB comes out on top. Stanford has 3 unicorn founders per 1,000 MBAs while Harvard has 1.6 and Berkely Haas has 1.4.
What about Stanford, do you think, produces more unicorns (on a per capita basis?)
Well, first, Stanford is the birthplace of Silicon Valley. As they say in real estate, ‘Location! Location! Location!’ Of course, Stanford did not locate itself to be in Silicon Valley, Stanford participated in the creation of Silicon Valley.
Second, I think what is really important is the relationship between Stanford business school and its alumni. We have extremely strong alumni come to campus and hire graduates. We have an amazing startup garage, for example, where a lot of alumni come and help. We also have people who have become very successful and they come back to teach, they spend a lot of effort imparting their wisdom. What I really like about my classes at Stanford is the combination of what I hope is rigorous academic knowledge with real practical inputs from the best practitioners. I think that’s something that we do well at Stanford.
The third thing is, the network is critically important. When you come to the Stanford Graduate Business School, even people who’ve never had any entrepreneurial experience of any kind think, ‘Well, I should do something,’ because everybody around them is doing something.
NEXT PAGE: Age of unicorn founders + What comes next