See show notes for this episode: S 02 | Ep 21 The $120 Billion Founder Community You’ve Never Heard Of.
Alex (00:07) Welcome to Experience-focused Leaders. I am delighted to introduce you to Shannon McClenaghan. She is the CEO of StartX, Stanford's secretive and "super-weapon" of a startup community for alumni, faculty, and serial founders. It is one of the best-kept secrets in Silicon Valley. Shannon, welcome to the pod.
Shannon (00:38) Thank you, Alex. I’m very delighted to be here.
Alex (00:41) Well, I’m a huge fan of StartX. I’ve taken Relate AI through the program as a serial founder. It takes no equity, which we can dive into in a second. I’m advising several startups on their boards of advisors, and I think it’s one of the best community-driven initiatives out there. I’m delighted to reconnect with the Stanford community through StartX. Tell us a little bit about the program and why it’s such an impactful contributor to the Stanford and Silicon Valley founder community.
Shannon (01:20) Yes, awesome. Well, thank you, Alex. And of course, people like you are what make us special. StartX has been around for about 15 years. We started on campus as a program for founders to help founders—specifically Stanford students who were building companies.
Fast forward 15 years: we’re no longer on campus, but we’re still a nonprofit. We don’t take any equity or fees from founders. The whole mission behind StartX is really about building an ecosystem where founders can help founders, and there’s no one in the mix profiting from that relationship. Unlike other accelerators that might take investments or equity in exchange, we don’t do that. We’re stage-agnostic and industry-agnostic.
To date, we’ve had 2,700 founders join our ecosystem across every kind of industry and business type you could imagine. What we do at StartX is develop this ecosystem and bring it to bear to help founders succeed. That is our entire mission. We judge ourselves on whether we are creating that ecosystem where founders help each other be successful.
Alex (02:48) Let me jump in—you’re being too modest. I want to shout out some of these statistics and have you react to the secret behind them: $120 billion of value created, 20 unicorns, 10 decacorns, and 150 companies valued at over $100 million. The average company raises as much as $42 million. This is a non-trivial set of stats.
Most accelerators that you pay to get into can’t deliver these types of results. Some people refer to this as "YC without giving up the equity." I don’t know if that’s an accurate comparison, but tell us how you are able to achieve such a track record of success.
Shannon (03:46) I think it really starts with the mission. If the mission is not about focusing on returns, but rather helping founders do what they want to do, that’s where it all starts. Because we’re a nonprofit, the founders who initially came to StartX—and those who have since joined—felt they received true value because they had knowledgeable people in the ecosystem willing to share their time and energy.
As they become more successful over time, it creates a flywheel. Those founders want to give back because of what they experienced. It’s a unique ecosystem where you truly have founders talking to founders. In other ecosystems, that might happen, but it’s not at the core.
Alex (04:41) At the core of others, it tends to be very investor-focused. It’s all about prepping you just for the investment. One of the things that strikes me about your success is that in our cohort, there are founders who are super experienced—people with multiple successful exits or large Series A and B funding—who are still participating and contributing to the community.
They would be "qualified out" of 99.9% of other similar programs because the equity component would simply be too expensive for them. You’re basically creating this virtuous cycle where successful folks continue to join the community. Not only was the majority of our class serial founders, but there were people who had taken StartX before and came back as second or third-time participants, right?
Shannon (06:01) That is probably the thing that makes me the most proud. When founders who have a lot of experience—people who have spent a lot of time doing startups and have done multiple of them—still find that StartX fills a need they aren't getting from the rest of the ecosystem. And don’t get me wrong, the rest of the ecosystem—the venture capitalists, the lawyers, everyone else—is important, but this is different.
Cloud companies are super valuable in the ecosystem. I think we just play a particular role. A lot of the companies that come through StartX also do other programs; they go on to raise VC and participate in programs at Stanford. So, we play a unique role there. Because we are pure in terms of our goals—our goal is to make those founders successful in whatever way is important to them—it’s not a case of Shannon telling Alex what he should do.
Instead, it’s Alex telling Shannon what he needs, and then Shannon and the StartX team find those resources and put everyone in the same room. That is the magic of the organization.
Alex (07:14) This is helpful because sometimes we get stuck in "consensus mode" in this industry. There is a conveyor belt of accelerators: pre-seed, seed, Series A, and so on. That’s fine, and it’s necessary; Silicon Valley is best-in-class at that. But the special thing I found in this community is that you can get advice and play the game the way it’s played right now, while also having the opportunity to change the game and not get stuck in that pattern.
Obviously, StartX still wants venture-scale outcomes. It is very ambitious; it’s not a "laid-back" environment. After all, this is Stanford, and it’s very hard to get in. Perhaps you could talk a bit about that ambition and how many times people apply to get in. It feels like the program maintains adaptability because the incentives are aligned around the founder’s success.
Shannon (08:35) I think the through-line of what you’re seeing with founders at different stages is that while you can go through a 10-week accelerator, you aren’t done building your business at the end of those 10 weeks. Whether you are at the pre-seed, seed, Series A, or Series C stage, you are still facing very similar challenges as a founder. You are still looking for opportunities where people can provide perspective—whether it’s investors, customers, or fellow founders.
People think that once you get to Series B or C, it’s all smooth sailing and you have it all figured out. The reality is, if you talk to those founders, they’ll tell you, "Oh my gosh, it was never like that."
Alex (09:20) It was never like that. And particularly in the age of AI—with us being an AI startup—you basically have to reinvent yourself every few months. If we want to grow at scale, for example, we have a core platform that is adapting like its own startup, but then we go to market vertical by vertical.
Shannon (09:34) And you have to do it more frequently.
Alex (09:50) Exactly. Each vertical is effectively a brand new startup. We happen to have de-risked 85% of the technology stack, but we still face the risk of the go-to-market, which we know is a huge component of success.
Shannon (10:11) Yeah, founders will sometimes say, "Everything’s great, it’s automatic, I don’t have to do anything."
Alex (10:19) Well, those stories aren't the real stories. They are heavily edited.
Shannon (10:29) I can tell you a bit about the application process. Because we started on the Stanford campus, you must have someone on your team who is part of the Stanford community—an alum or a current student. Most companies that come to us are beyond the "idea" stage.
It is really competitive to get in. We have three cycles a year. In the application process, there are several rounds of interviews where founders are evaluated on different criteria. The folks doing those evaluations are actually members of the StartX community; we have about 135 judges. I play no role in admissions, as it’s meant to be at arm's length.
The average founder applies two or three times before they get in. We do provide feedback. We primarily look for a founder’s commitment to their business. It isn’t always about commercial success; we have nonprofits and small companies that might not have huge markets but are making a big impact in a niche space. We are looking at the founder’s ability to execute their vision.
We want to see that when things get hard, they aren't going to give up and apply for a job at Google or Microsoft. We also believe that we are investing in the founders themselves. They don’t always get it right the first time, so we are happy when our founders are successful on their second or third attempt—they are still part of StartX. This frees us up to focus on the founder rather than just the TAM (Total Addressable Market). It’s hard to get in, and people try multiple times because it is so valuable. We typically accept only 10% to 20% of applicants per session.
Alex (13:25) I’ll just come out and say it: the first time we applied was with Relate when we were still a tech-enabled service. We had designs on building a scalable business, but it was the early days of AI and we hadn't figured it out yet. We didn't get in. One piece of feedback we received was, "Are you just going to be paying the bills by running this agency-based service?"
At the time, we had great customers, and that actually turned out to be our secret weapon when we applied and got in the second time. We were passionate about the problem set, but our first approach wasn't going to deliver scale. StartX’s feedback was basically: "Commit. You have what it takes, but you have to commit. You can't de-risk this with services; you have to build a fundamentally different business."
It was an unpleasant message at the time because we thought we could do it all, but it propelled us to think harder about where to draw that line. It isn't an easy transition from a service-led business to a pure-play tech company, and we needed to recommit to that. StartX was a core part of that pivot. We are grateful for it, and while we’re still on that journey, it’s been wonderful.
Shannon (15:09) Me too, by the way. We all are—that’s part of what brings us to this industry.
Alex (15:15) The reason I bring it up is that the feedback we received during the application process was actually valuable. Sometimes when you talk to VCs while trying to get funding, the feedback is neither here nor there. It doesn't help you because the incentives aren't right for an investor to tell you that something is off or isn't working. They want to keep their options open.
Shannon (15:55) Exactly. They don’t want to say "no" until much later.
Alex (15:58) I think StartX is obsessed with feedback, both for the organization itself—I get more survey requests than I know what to do with—and for those eager to learn. You provided really helpful feedback on that first application. We valued the people interviewing us; they were "switched on." It wasn't feedback from random people just giving opinions; it was valuable. Not everyone provides the time or bandwidth to do that, and you give back to the community through that alone.
Shannon (16:50) Feedback is incredibly important to us. As a founder, your job is to take in a lot of feedback and opinions from everyone—experts and otherwise—and sort through them to decide what is valuable for your business. It isn't necessarily about doing exactly what "Investor X" says; it’s your business. You have to be able to sort through that feedback and decide what matters. That is a core value for us, and we try to practice what we preach with all the surveys we send out.
Alex (17:33) Another core value we discussed is that successful founders give back. What are some stories of these successful founders and the lessons they share? For those listening who want a flavor of the program, what are some of the "big ahas" that surprise you or the founders going through the program?
Shannon (18:07) I’m still surprised when I hear them, even though I hear them often. For example, I had dinner with six very experienced StartX founders about two weeks ago. We were getting together to see how we could help them, as many have been part of StartX for years and are at similar stages.
Their companies are worth more than $100 million. Some of these people are incredibly impressive—I won't call them out by name—but they have founded multiple companies and been very successful. It’s amazing to see.
Alex (18:51) I wasn’t invited to that dinner, so they must be very good!
Shannon (18:58) I am constantly surprised to hear these incredibly successful people talk about their challenges. Often, their challenges are the same, and the help they need from each other sounds like: "We’re doing really well in this category, but I’m worried that if we don’t address this other area, we’ll never make it." They look to each other to talk through that. I find that incredible.
Again, it’s not that we are providing the answers; we are providing the forum for them to get the answers from one another. I find that very humbling. The people who have come through StartX and stayed engaged—whether as mentors or founders—are incredible. We’ve had the founders of Patreon, Lime (who are still around and doing well), OpenSea in the Web3 space, and Orca Bio.
Actually, a little-known fact is that about 20% to 30% of our companies are in the bio-med space. Orca Bio is a unicorn. I was talking to the founder, Ivan Dimov, yesterday. He was sharing how much StartX helped him, and now he wants to give back. He actually just led what we call a "pod"—a group for companies raising money after Demo Day—specifically for the MedBio founders. He talked about how much he gets out of helping them, just as they benefit from him.
Filling that void is constantly refreshing. You hear stories like, "StartX really helped me back when..." and you could fill that in with a hundred different sentences. People used to come to StartX just to take a nap so they could keep working on their companies. Even our interns are impressive—I just learned that David Risinburg, who runs the Acquired podcast, was once an intern here.
The thing you’ll find—and probably have already found—is that when you reach out to a StartX founder, even if you don’t know them, and say, "I’m a StartX founder," there is an intangible but valuable trust. They will help you. It’s always: "Yes, what do you need? Let me help."
Alex (22:08) It’s beautiful. I think what you’re tapping into is the immense burden on a founder or leader to absorb everything and keep information to themselves. We’ve learned that the hard way. I’ve tried sharing some of my day-to-day challenges with my lovely spouse, and her feedback was pretty clear: "Too much information."
Some people have family members in the business, which might be a way to share, but family has its own psychology and comfort zones. Often, entrepreneurial pursuits trigger uncomfortable dynamics; many founders are trying to prove to their parents that they are good enough, and that gets messy. So, family is risky.
VCs? It depends on the relationship, but history shows this can backfire, especially at the board level. You need to be transparent with a board, but you have to do so strategically. Most "best practice" advice tells you to manage expectations and have pre-board meetings with everyone. That is not only inefficient, but it’s also not an authentic way to lay out what’s actually going on.
So, who are you left with? Executive coaches—who hopefully understand the startup game—and fellow founders on the same journey. When you share with fellow founders, you aren't just getting support; you're getting the right advice from people who were in your exact shoes five or ten years ago.
The moment you feel you are no longer alone or carrying this burden in isolation, it is a massive relief. In our personal lives, when we discover a peer group dealing with the same challenges, we realize, "I’m not the crazy one." It brings humanity to the "founder game." That doesn't exist easily elsewhere; you have to be deliberate about finding peers willing to be open. StartX deserves credit for facilitating these groups and encouraging seasoned founders to be authentic. It cuts through the "everything is killing it" FOMO talk. It’s a valuable human contribution to the startup journey.
Shannon (26:30) What you hit on is a unique experience that I think almost any founder shares. At the same time that they are incredibly optimistic and totally committed to changing the world in a positive way, they have this other reality: "My God, my company is going to go out of business. It’s never going to work." They hold those two conflicting realities simultaneously. That experience is rare, and it’s what brings founders together regardless of their industry. You almost have a secret handshake—a secret language—because so few people have lived in those two worlds at the exact same time.
Alex (27:27) It’s an emotional connection, but it's also a pragmatic set of tools and coping mechanisms. They are different, but they're complementary if you can combine them.
Shannon (27:46) It’s almost impossible to separate them because founders aren't just checking boxes or chasing a market opportunity. They are doing this because they fundamentally believe the world should be different.
I hesitate to bring up Elon Musk—it’s like bringing up Steve Jobs; it’s the obvious example—but he doesn't need money. No one listening to him thinks he’s doing this for the profit. He fundamentally believes his work is important. When you talk to founders, that’s the heart of it: "I really think we should colonize Mars." That is a different motivation than simply having a competitive advantage in a big market. It’s very emotional, and I think you and everyone at StartX are great examples of that. You could do many other things, but you choose to spend your time on what you believe in.
Alex (29:24) Well, we believe it’s going to be hard to colonize Mars with PDFs! Our contribution is saving humanity and improving the healthcare system by bringing complex communications out of "compliance mode" and into "human-grade mode" while maintaining security.
Back to your topic on motivation: you need that 20-year vision to change the world, but you also need the mental stamina to get through the short term where everything is breaking. I’m learning to enjoy the challenge. That’s harder on your first go because you're trying to follow a playbook. Second-time founders seem better able to separate themselves from the outcome. They can look at a situation and say, "This is a meaty problem; let’s have some fun."
Shannon (31:10) I think that’s right. Let’s flip the table: what have you found most valuable about the StartX community? You’ve applied multiple times and you've done this before. We saw each other at Demo Day last week—what do you find magical about being in that environment with all those other founders?
Alex (31:48) I look at StartX as a proxy for my Stanford connection. Some of the courses at the Graduate School of Business are deeply relevant to life and business. For example, Interpersonal Dynamics—popularly known as "Touchy Feely"—is an entry point into self-awareness for driven people who might otherwise "break through walls" and forget to bring others along on the journey. It gives you the language to deal with those dynamics. When I meet founders with that background, we have a common language.
When I meet technical and scientific founders, it reminds me how lucky I was to get into Stanford as an MBA type. These people are geniuses; the way their minds work is impressive. There is a sense of awe regarding the intellectual horsepower in the room.
Connecting back to Stanford and Silicon Valley brings me back to the spirit of "everything is possible." It reminds me that as a founder, you are a massive learning machine. Secondly, it’s about sharing the journey. Some founders impress you because they have less experience but are "kicking ass" in a way that keeps you on your toes.
Finally, the best way to learn something yourself is to help another founder. Explaining a concept clearly forces you to understand it deeply. When I’m in my own "stuff," my thinking gets messy because I’m too close to the data. When I give advice to someone else, I realize, "Hey, I actually have something valuable to contribute." It clarifies my own thinking.
As a parent and a founder, I want to have an impact not just in what we do, but how we do it. Doing that through a community of like-minded, collaborating folks is beautiful. Those are the three big things for me.
Here is the corrected and polished final section of the transcript. I have cleaned up the grammar, removed repetitive verbal fillers, and clarified the sentence structures while preserving the warm, collaborative tone of the exchange.
Shannon (36:35) Love that. Love that!
Alex (36:37) That is what I would say about Silicon Valley and Stanford.
Shannon (36:42) Stanford is the gold standard in community. They have created something truly amazing, and we are very proud to be part of it.
Alex (36:52) I would not have guessed how important the human connection piece—creating a non-competitive environment where you can collaborate—truly is. I would have underestimated the value of that the first time around. That is where the lessons are.
When I had my first exit at Stanford, I got lucky. I was fortunate, and I recognized that. You need to be humble enough to say, "I have to learn from people who have done this before," especially since the market is always changing. This constant sense of humility is great because there are fewer egos involved. In some community-driven organizations, you don’t have to play the same ego and status games that you do when you're pitching in the external world.
Shannon (37:58) I think you’ve nailed it. Your insights reflect exactly what many of us at StartX believe. No matter what someone has achieved, there is a humility here—a sense that "I can probably learn more." It’s a steep learning curve regardless of your stage. Our members are willing to learn, but they also want to help; they want to make it easier for others to do what they spent a long time struggling to achieve. That eagerness to give back is true for many founders, but it is definitely true for every StartX founder.
Alex (38:47) I also want to give a shout-out to you and your entire team. The staff at StartX are amazing humans with very positive energy. They are truly there to help. Combining that "hustle" with a nonprofit ethos is not a trivial combination to find in people’s DNA.
Shannon (39:20) This is the first nonprofit I have actually worked at, and I agree with you—the staff is awesome.
Alex (39:28) It really is a community. When you come back, they know exactly who you are.
Shannon (39:36) That is what we are, first and foremost.
Alex (39:38) One of your colleagues was even texting me during the reception, saying, "Alex, Adobe is looking for you, you have to talk to Adobe!" He could see I was busy and he was genuinely stressed that we might miss the connection. He literally asked, "Who can I connect you with?" These little things come from the heart. People really want to contribute, and it’s a beautiful setting. You’ve worked hard to create that organic environment.
Shannon (40:25) We are sitting on the shoulders of giants. This is the result of 15 years and thousands of people contributing to StartX to make it what it is today.
Alex (40:36) Shannon, as we wrap up, how can people learn more about StartX or contribute to your latest initiatives?
Shannon (40:47) You can always visit our website at startx.com or email me directly at [email protected]. We would love for founders to apply; we hold admissions three times a year. We are also always accepting donations. We have a new building coming to the Stanford Research Park, and we are currently fundraising for that.
Most importantly, we love people who are willing to mentor our founders. Whether you are an expert or a generalist, that contribution really helps. If you are a founder, please apply—we’d love to have you.
Alex (41:36) To all my Stanford listeners and friends, this is one of the greatest ways to stay connected to the university in a meaningful way by helping bring important ideas to life. We’d love for you to support this initiative. Thank you, Shannon, for joining us.
Shannon (41:54) Thank you, Alex, and thank you for being such an amazing part of the StartX community.