According to Stanford’s own Athletic Director, only about 400 out of the 3,500 players who join Division I teams every year have a chance at getting by Stanford’s admissions department. How could Stanford compete with the elite when the majority of the nation’s best recruits were ineligible to attend?
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Trying to build an elite college football program at Stanford is a bit like moving a NFL team to Burlington, Vermont. Elite teams like the University of Texas, Ohio State, and Michigan have student bodies of 40,000 plus students and can command the loyalty of entire states or regions. Stanford enrolls under 20,000 students (7,000 undergraduates) and can’t command the loyalty of the Bay Area. Stanford Stadium seats 50,000 fans to Michigan’s 100,000.
As a result, Stanford brings in much less revenue than schools with comparable records. A Wall Street Journal article notes that Stanford’s $9.7 million in football ticket sales in 2012 compares poorly with the $27 million average of the four teams ranked higher than Stanford at the time. Stanford’s merchandise sales are similarly bleak.

Good Priceonomics article on what Stanford had to do to build a nationally competitive football team. A lot of it came down to raising more money.

The normal revenues Stanford receives from football are so low, in fact, that its 36 varsity sports teams depend on something no other school has, or would dare rely so heavily on: an athletics-only endowment worth between $450 million and $500 million that pays out at 5.5% each year, people familiar with the matter said.
Stanford needed alumni to cover the difference, and they rose to the occasion. Since Jim Harbaugh took over as coach and led Stanford onto the national stage, donations for Stanford athletics increased “53.4% and new gifts and pledges have increased by 215%.” One alumnus (the son of a wealthy Saudi businessman) pledged $500,000 because he had such fond memories of rushing the field when Stanford beat its rival Cal in 2007. Stanford benefactor John Arrillaga built coach Harbaugh a $50,000 private bathroom next to his office. Few universities endow coaching positions, but Stanford’s head coach and top assistant coach positions, as well as every scholarship for its football players, are endowed to thank donors. The head coaching position is endowed in the name of a former Stanford football player and current private equity founder who pledged $1.6 million in 1989.

It's fun if your alma mater has a good college sports program, and I'm glad Stanford's football team is nationally competitive this season, but it all feels a bit arbitrary and ridiculous to be many years out of college and still living and dying by the record of a team you have nothing to do with.

Despite the infusion of cash into the program, I'd love to hear more about non-cash strategies that have helped Stanford given its annual position as a recruiting underdog, though teams are notoriously close-lipped about any strategic advantages they may have hit upon in recruiting and player development. Those would be more broadly instructive, though.

Looking at Stanford's personnel over the years, it seems like team speed has always been underrepresented on the team and so the team has sought an advantage in size on both the offensive and defensive lines. Without easy access to a broad set of data, that's just a hunch, though.

Now that I'm older, I've tried, with some success, to become a more antifragile sports fan. Like a venture capital investor, I seek to be minimally impacted when my preferred teams lose, but maximally happy when my teams do well. Being a Cubs fan, emotional antifragility is almost a necessity. That's how I think of Stanford Football and the Cubs, for example. If they lose, it's expected and I don't pay it much mind. If they win, it's an emotional bonus.

I had briefly considered not rooting for any particular team for life as it is an entirely irrational behavior. I have nothing to do with the team, it seems ridiculous or even sick to leave my emotional state to something completely out of my control.

However, with my new antifragile approach to sport fandom, the downside is given a reasonable floor, and victories offer nothing but happiness upside. The dramatic thrill of having a rooting interest in a sporting contest amplifies one's thrills from watching, that is some free consumer surplus for a fairly low investment. Even if you don't have a hometown team to root for, you can earn a similar benefit simply by putting down a small wager on one side or the other. It's the reason I will usually enter a March Madness pool even though I don't really like college basketball all that much.

Back to Stanford: if they're going to play, I'm glad they at least choose to play at the big boy table. According to Sagarin ratings, Stanford played the 4th toughest schedule in the nation this year behind just Washington State, Arizona State, and Utah, and the Sagarin ratings have Stanford as the 3rd best team in the nation behind Florida State and Alabama.

The college football season is so short anyhow, every game might as well count, including non-conference games, so fans have more high stakes games to watch. The number of blowouts in college football is ridiculous. I don't know who won when Ohio State walloped Florida A&M 76-0 this year, but it wasn't the fans.

Of course, if Stanford wins 76-0 in the Rose Bowl tomorrow, I won't complain.

UPDATE: One example of a look at a strategic advantage that Stanford might have: its strength and conditioning program, devised by Shannon Turley.

And there was Shannon Turley, the architect of a training regimen among the most distinct in college sports. He is Stanford’s director of football sports performance, and for years, he felt it necessary to write letters to N.F.L. scouts to explain the Cardinal’s nontraditional approach. He stopped that practice this year in the wake of Stanford’s success.
Turley’s impact speaks as much to availability as ability. The coaches recruit speed and size and talent. He believes the best players, the ones most on the field, who sustain the most collisions, also carry the most injury risk. His first priority is to keep them on the field.
From 2006, the year before Turley arrived on the Farm, as Stanford’s campus is known, through last season, the number of games missed because of injury on the two-deep roster dropped by 87 percent. In 2012, only two Cardinal players required season-ending or postseason surgical repair; this year, only one.
In an era in which injuries are more scrutinized than ever, this has made Turley something of a celebrity strength coach. Counterparts from other colleges visited. As did N.F.L. personnel. As did Australian Rules football teams. The student newspaper wrote a three-part series about Turley. Bleacher Report compiled a big article. The National Strength and Conditioning Association named Turley its strength and conditioning coach of the year in 2013.