Student Startups Test-run at Stanford

One might ask, what force has the power to draw this many college students? ClassOwl, Glassmap, or Fountainhop are all likely answers. These are just a few of the latest swarm of startups to take Silicon Valley, and Stanford, by storm.

The last five years have seen a steady rise in entrepreneurial activity on campus, some facilitated by StartX, Stanford’s on-campus startup accelerator. The number of incubators in the Valley around Stanford has seen a two-fold increase since 2004, with many of these incubators hosting companies from the Farm.

An associated effect of this stimulus has been a rise in the number of startups building products that are targeted at students, often with Stanford’s student population serving as the pilot audience.

ClassOwl, launched in April by four Stanford juniors, aims to solve the much lamented problem of planning, scheduling and managing time for students better than anybody else on the web. Marketed as a “social academic platform made by students for students,” the company offers students a website that combines social networking and their personal calendar to help keep their heads above assignments, events and other engagements.

Supported by StartX, ClassOwl is piloted using Stanford as its test drive user base, and is preparing to move that pilot out to two more schools. The service seems to have struck a chord with students, raking up 1,000 users, nearly one sixth of the undergraduate population, just in its first three months.

Fountainhop, another StartX graduate, began with a similar approach, launching its real-time, location-based events app at Stanford first, and then expanding to other student populations across the United States.

Using Stanford students as a pilot audience has been a common strategy for Stanford startups in the past. CourseRank, the successful Stanford startup launched in 2007 used the same strategy, successfully pilot testing their platform with Stanford undergraduates before reaching out to other campuses like Cornell, Berkeley, and Duke. Before being acquired by education giant Chegg.com earlier this year, the Stanford student startup enjoyed a presence on 175 college campuses across the United States.

Stanford seems to reflect the spirit of entrepreneurship throughout the whole valley right now. “It is an associated impact of the entrepreneurship boom,” says Cameron Teitelman, founder of StartX and Stanford alum.

“The resources available to Stanford students with an idea today are tremendous, almost like the pre-dot com days when everybody wanted in,” he continued. StartX is a major source of those resources, connecting student entrepreneurs not only with the seed funding to get their businesses off the ground, but also with some of the best investors and entrepreneurs in the world as mentors.

Optimistic about the Stanford-first approach, Teitelman feels that using students on-campus to “stress test” entrepreneurial ideas is a great way to realize the strengths and weaknesses of a service.

“The university is really supportive in that regard,” confirms Teitelman. “The Registrar and his team are always open to new suggestions involving technology that can make campus life easier.”

But start-ups focused initially just on Stanford face their own problems.

When asked about the sustainability of these startups beyond the pilot-testing phase, Professor Tom Kosnik, who teaches several entrepreneurship courses in the Stanford Technology Ventures Program, was wary.

“Student services is a tough market,” said Kosnik, “especially when your product requires the approval of University administration.”

He also drew attention to the tricky revenue models that companies in this sector have to negotiate, pointing to ClassOwl’s lack of initial revenue stream as a challenge that many companies who target students as customers face.

“There are definitely problems that need to be solved in the space,” added Kosnik, who also oversees the running of BASES, “but from a business perspective, your company has to find a way around charging students for your product.” That is perhaps the biggest problem for a student-focused startup looking to turn their idea into a real business beyond the confines of the “Stanford Bubble.”

Companies solving the problems of students may successfully identify the demand for their product, but must resolve the problem of the low spending power of this consumer audience. But this challenge has not deterred many Stanford entrepreneurs.

Earlier this year, Stanford alums Weston McBride and Andrew Bellay built CreditU, a mobile app that allowed students to accrue points for attending lectures, and then redeem those points for goodies like coffee at Coupa Café. But CreditU, which attempts to solve the student-specific problem of a lack of incentive to attend some classes, required support from the Regitrar’s office to take shape. While it could function with that support, it must still determine a sustainable revenue stream.

Supporting student entrepreneurs looking to solve real campus problems may give the University a way to improve the student experience on campus, even if the projects cannot be instantly monetized. But the long-term sustainability of these start-ups, both regarding the business plan and the capacity of the campus to provide a market, will take more time to determine.