Stanford is really an investment fund that runs a school on the side for the tax break.  This started in 1991, when Stanford spun off their endowment management as the Stanford Management Company.[1]  SMC&#x27;s headquarters was on Sand Hill Road, across from all the VCs.  This ended up putting Stanford into venture capital in a big way.<p>This was new. Before that, universities tended to put their endowments into passive investments - real estate, stocks, and bonds.  Investing in startups worked out very well for Stanford. Stanford had pre-IPO stock in Cisco, Yahoo, Google... They have money in various VC funds. Buying into YCombinator is consistent with that investing approach.<p>As SMC became more powerful, executives from SMC started moving into positions in the university itself.  SMC moved its HQ onto the main campus.  Not clear where this will end; we&#x27;ll have to see who replaces Henessey as president.<p>[1] <a href="http:&#x2F;&#x2F;www.smc.stanford.edu&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.smc.stanford.edu&#x2F;</a>