(FORTUNE Magazine) – After examining resumes from hundreds of candidates, Stanford's search committee found its new president right across the hall from Gerhard Casper. John Hennessy, 47, a gregarious computer science professor, had been Stanford's provost for the past year. It's hard to imagine anyone better prepared to lead the university at ground zero of the technological revolution. Hennessy is both a respected academic--co-author of two textbooks and a classroom favorite among students--and a successful Silicon Valley entrepreneur.

In 1984 he took a leave from Stanford to co-found the chipmaker MIPS Computer Systems. Computer architecture has been Hennessy's interest since he earned a Ph.D. from the State University of New York at Stony Brook (he has an undergraduate degree in electrical engineering from Villanova). MIPS was sold to Silicon Graphics in 1992 for $333 million, most of which, Hennessy quickly says, did not end up in his pocket, though he lives comfortably with his wife and two teenage sons in Atherton.

As a junior professor in Stanford's electrical engineering department, Hennessy shared an office and a secretary with a colleague who modeled 3-D designs on computer screens. The fellow nerd was Jim Clark, who went on to found Silicon Graphics, Netscape, and Healtheon. Last year that friendship paid off when Hennessy was able to broker a $150 million gift from Clark for a new bioengineering center, the largest gift Stanford has received since it was founded in 1891.

Hennessy realizes that some people will see his selection as a sign that Stanford will focus even more on technology than it does now; he says not. "In the engineering school we always talk about this being an engineering education in a liberal arts setting," he says. "Your undergraduate education should be about the courses that are fundamental to the rest of your life."

Hennessy says his biggest local challenge will be dealing with the "tremendous success of Silicon Valley. How do we survive as an educational institution in an environment where we don't offer stock options, where it's hard to be competitive with salaries?" He notes that this is a problem throughout the area, and that the failure to address housing and transportation issues will force the growth of other technology centers. Nationally, Hennessy believes colleges must do more to promote scientific and technical literacy among people not going into these fields. "Just as Stanford would never want to graduate somebody who didn't have a basic literacy in the humanities, we also don't want to graduate people who don't have some basic literacy in science and technology. It's a cornerstone of everything we're doing."

Hennessy is bullish on the application of new technologies to learning. His own course on computer architecture is available to his students on the Internet. He says it was an "ego blow" when some opted to get his lectures on their computers instead of in person, but he recognizes that certain students might learn better that way. "On the Internet they'll take this hour-and-15-minute lecture and spend two hours on it. They'll start the lecture, I'll say something they didn't comprehend, so they'll stop the playback and they'll talk among themselves until somebody clarifies it."

Yet Hennessy doesn't believe the Internet will ever put a place like Stanford out of business. "You can use technology to reach out and eliminate the need for everybody to come to one spot," he says. "But you can't eliminate the role of the faculty doing the lecture, creating the assignments, really saying what it means to master the material. A well-led class, 15 or 20 students with a great faculty member leading that class--technology is not going to take us there for a long, long time."

--H.M.