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<title>2024-1-10-university-audio</title>
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<p><strong style="color:#72B372">Ben:</strong> <span style="color:#808080">[00:00:00]</span> We as a society are running a scam and ripping off a huge percentage of our young people who are going to college with the clear expectation that they're gonna get a higher quality job and be able to pay for college. But that's absolutely not the case. And if we don't address that, it doesn't, you could forgive this batch.</p>
<p>What about the next batch and the next batch and the next batch and the next batch? It's still not worth the money. And I think that's the great thing that has to be reckoned.</p>
<p><strong style="color:#6600CC">Marc:</strong> Hey folks, welcome back to the Mark and Ben Show. Today we are going to tackle, uh, one of the hot topics of the moment, which is the topic of the university system. Very hot topic. It's been in the news a lot lately. A couple things we wanted to say up front. So first of all, I think we're, in general, we're gonna have a very kind of American perspective.</p>
<p>So when we talk about the, the, the universities and colleges we're most familiar with are American. So, you know, assume we kind of have a, maybe a little bit of a parochial view just in terms of what country we're talking about. But look, the, the most important thing is kind of why we want to talk about this.<span style="color:#808080">[00:01:00]</span> </p>
<p>And I guess what I would say is like, look like universities and I would say especially the really good ones, they matter tremendously and they matter tremendously to the world and to the country and to everybody in the country. And they matter a lot to us. And I just wanna say up front, like they matter a lot to me.</p>
<p>I'm, I'm where I am 'cause I, I got a modern university education at the University of Illinois. They ma they matter a lot I know to Ben who can talk about his own experiences. And so, so they really matter. They're obviously in, in some state of, of sort of crisis right now. I think our opportunity is to talk about them, not so much in terms of like the topics that are like super hot in the news.</p>
<p>So we're not necessarily gonna weigh in on the same stuff that you've been reading about if you've been following the, the last, uh, couple months of, of drama. But, you know, we're, we're gonna do kind of what we do, which is we're, we're gonna, we're gonna talk about it structurally. So we're, we're gonna think about sort of universities as an industry and as a business and as a form of organization and as something that has customers.</p>
<p>Has constituents and, and has a structure and has an industrial logic and incentives, right? So, you know, thinking about this a little bit more structurally, more from a business <span style="color:#808080">[00:02:00]</span> standpoint. And then the other thing is there, there's two specific reasons we wanna get into this today. So one is both Ben and I have a lot of friends and, uh, colleagues all across the country that are trying to basically make universities better.</p>
<p>And, and some of these are people who are on boards or are running university presidents or endowment heads or, uh, other people, alumni, professors, people who have been kind of scrubbing in hard to try to make universities better. And so we, we hope maybe sharing some of our perspective might help them.</p>
<p>And then the other is since we are venture capitalists, so there, there is always the possibility, but higher education is an industry and there's always the possibility of startups. And so one of the interesting questions always is when an industry is going through kind of structural transitions. And when, when sort of a lot of things are flying, there's always this question of like, well, should there be new, should there be new competitors in the industry?</p>
<p>Or, or actually should the structure of the industry itself change and maybe things that have been bundled in the past should be unbundled and, and so forth. And so we'll, we'll, we'll get into that a little bit as well. And there, there may be entrepreneurs listening to this who may, may have ideas coming out of it.</p>
<p>So, Ben, let me, let me let you, you let you also add introductive thoughts. Yeah, and I'll just </p>
<p><strong style="color:#72B372">Ben:</strong> add, I was a trustee at <span style="color:#808080">[00:03:00]</span> Columbia University. I'm a trustee Emirati now, I think they call me. So I have a huge interest in, in kind of helping the system improve and kind of get over its current issues. The other thing I'd say about American universities in particular is they are to large extent the envy of the world in that when I travel the world, many countries, the, the, the government officials and the, the, the highest ranking people in the country send their children to American universities to study, even if they're gonna come back and.</p>
<p>Kind of literally run the country at a future date. So it's really been an amazing system and produced an awful lot of good. So we're gonna do a lot of dissecting, deconstructing, criticizing of it. But it's in that context, </p>
<p><strong style="color:#6600CC">Marc:</strong> a great case study of that. Ben is, I think, uh, Xi Jinping's daughter, uh, goes to Harvard, I believe.</p>
<p>Yeah. Perfect. And then of course, particularly when we talk about the top universities, right, which are of course the ones that draw most the press coverage. But you know, they, they, they, they have what economists call an externality, which is their graduates end up <span style="color:#808080">[00:04:00]</span> running a lot of the country. Yeah. Right.</p>
<p>And so like, basically like almost every Supreme Court justice either went to one of a very small number of, of super elite law schools, usually Harvard or Yale ceo. If you look at the CEOs of the Fortune 500, if you look at top politicians, presidents, um, I think Harvard alone is responsible for eight presidents.</p>
<p>And then there's this, we'll talk about this later in the, in the, in the session, but there's this policy setting function that they play where the ex, the expertise at the universities in the form of the professors and the research is used to set a lot of public policy. And so the, the, the decisions made at these places, basically basic, basically end up determining a lot of the future of the country.</p>
<p>That's right. Is, I mean, they're, </p>
<p><strong style="color:#72B372">Ben:</strong> they're elite universities that produce the elites. </p>
<p><strong style="color:#6600CC">Marc:</strong> Yes, that's right. And the elites end up running a lot of things. Yeah. So, yeah. So anyway, so, so that's why we want to, another reason we wanna talk about this is the, the, the implications of sort of what's either going right or wrong at the top universities matters not just for the universities and for the people who go to those universities or teach at those universities, but also the, the citizenry as a whole was sort of very exposed for better or <span style="color:#808080">[00:05:00]</span> for worse to the, to the implications of what happens at these places.</p>
<p>Yeah. So certainly a topic that I think everybody should at least think about somewhat. So the structure for what we're gonna do today is, so, um, I've made my list of the, the dirty dozen or 12 step program. Um, I made, I made a list of the dozen sort of key functions that I think are kind of most central to what modern universities are.</p>
<p>And I, and let me start by saying basically like where did the modern university come from is actually quite an interesting story in and of itself. The very short form of it is that the original universities, well the original universities started in like England, like 800, 900 years ago. The American universities actually started 400 years ago.</p>
<p>American universities are actually, in some cases older than the country. So Harvard in particular is sort of the, the leading case study on this is, and I think Harvard's the, I think the oldest current one, Harvard is I think 400 years old. And, and then, and basically what happened is the, the, the, these institutions have been evolving for, for hundreds of years.</p>
<p>And so what they basically are today is they're sort of a bundle of functions and products and services and staffing and economics. That's <span style="color:#808080">[00:06:00]</span> sort of been evolved over the course of literally hundreds of years. Right. And so, and I'll just give you a, a, a sense of the evolutionary steps quickly, just take Harvard as a case study.</p>
<p>Harvard started as a, as a religious institution, started out basically training re religious training for, for basically for Protestant Puritan religious leaders in the us. </p>
<p><strong style="color:#72B372">Ben:</strong> That wasn't knowledge at the time. Right. The Bible was the best source of knowledge in the world. </p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah. If you read, if you read the, yeah, if you read the original charter of Harvard, this is all right there on the Wikipedia page.</p>
<p>It, it basically was it, was it chartered as actually a a an actual religious instruction? Right. Religious institution, a religious training. It kind of went, it went hand in hand with sort of the, the sort of creation of the, at the time what, what became known later as sort of the wasp, sort of Anglo-American aristocracy that sort of colonized New England and ran basically, and basically ran, ran the country and basically conducted the Revolutionary War.</p>
<p>Ultimately, I think that was very kind of heavily Protestant, Puritan, and, and, and Harvard was sort of a, a key note of the propagation of those values and of that culture and of that religion. So it ran that way for a long time, but then broadened it, it, it, and its peers then broadened out and they, they basically, through <span style="color:#808080">[00:07:00]</span> the course of the last 150 years or so, they, they basically threaded in two foreign models, elements of two overseas models.</p>
<p>So one was the sort of classical education model from the English universities, and so particularly Oxford and Cambridge. And so the idea of basically teaching sort of a classic classical politics, history, economics, basically the, the philosophy, literature, kind of the, the key topics that when England, for a long time have been viewed as sort of the way that you train leaders, like basically every, every leader in England, every prime minister basically, essentially came through this particularly program.</p>
<p>They have, I think at Oxford called PPE, which I think it's like, it's like politics, philosophy, and forget what, uh, economics, I think are the three. And so the, the sort of classical education role of these places kind of came from the English model. And then more recently, starting about a hundred, I don't know, a hundred, 120 years ago, the, the influence started showing up much more also of the German model.</p>
<p>And the German model was for technical education, right? And so the German model was for basically training scientists and engineers. And so most, most, most elite universities in the US now at large universities, they sort of <span style="color:#808080">[00:08:00]</span> famously have both sort of liberal arts component to what they do. But they also have a, what they, what we now call STEM science, technology education or engineering mathematics.</p>
<p>And so the, the, the modern uni American university is sort of a hybrid of, it's sort of a hybrid of a religious institution, a classical education institution or humanities, uh, education institution, and then a technical education institution. Um, and at least like the, the place I, I went to University of Illinois and like, it was actually very interesting is there were actually two physical sides of the campus.</p>
<p>Yeah. There was the liberal arts side and then there was a street that divided. And then there was the engineering campus. The other side now </p>
<p><strong style="color:#72B372">Ben:</strong> at, at Illinois were the STEM buildings kind of much less nice than the liberal arts building. 'cause that was the case at Columbia. So </p>
<p><strong style="color:#6600CC">Marc:</strong> at el, so so at Illinois, the engineering buildings were much nicer.</p>
<p>Oh, they were </p>
<p><strong style="color:#72B372">Ben:</strong> nicer. Okay. Interesting. So it depends who gave the money. Yeah. </p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah, so this was, and this was actually a big deal at, at least at Illinois. This is a very big deal because I can tell you the liberal arts people were very mad about this. Liberal arts people. The liberal arts buildings were just collapsing.</p>
<p>They were ancient and collapsing. And the, there had been this building <span style="color:#808080">[00:09:00]</span> frenzy at the, at the, at the engineering department over the preceding 10 years before I got there. And there were these just incredible Chinese spectacular buildings and Oh, wow. And people, I, I remember people on, people on the other side of the street were like super mad about this.</p>
<p>Oh, that's really funny. 'cause </p>
<p><strong style="color:#72B372">Ben:</strong> when I was at Columbia, and Columbia's built a gorgeous new campus now, so it's, it's a little different. But the old buildings were gorgeous. They were from when, however, Alexander Hamilton days and the new building was just like the ugliest. Thing you could ever see. And that was the </p>
<p><strong style="color:#6600CC">Marc:</strong> engineering building.</p>
<p>Yeah. Maybe that tells you that maybe that's a different difference between a land grant, fundamentally technical university. Yeah. The sort of tack tact on liberal arts versus a liberal arts legendary institution tacked on tact on technology. Right, exactly. Yeah, that's right. And so, yeah, so the, the, these are good examples of kind of this hybrid, this, this hybrid that's emerged.</p>
<p>And, and then of course, we'll, we'll talk about this some, but since the 1960s in particular, the universities have kind of taken on a sort of, uh, you might call sort of a more potent set of like kind of social political ideological roles, which we'll, we'll, we'll talk about as we get into, so there, there's a modern take on this too.</p>
<p>But, <span style="color:#808080">[00:10:00]</span> but anyway, the point of this is as, as a result of how these, uh, institutions evolved is, is they're bundles, right? And so if you look at it as an industry, they're, they're bundles. They do a lot of different things. And the, the bundle evolved. So the good news is the bundle evolved. And in general, in business, that's kind of a good way to kind of figure out what you should do is to like, let evolution work on your side and figure out what works and what doesn't, and add to the things that work and subtract the things that don't.</p>
<p>But the other thing that happens is sometimes you just like inherit the bundle and sometimes as a leader you want to kind of re-look at the bundle and whether this actually is the bundle that makes sense, or whether things should be split out or whether things should be added. To the bundle. And so we're gonna kind of talk about it in terms of the current bundle and then we'll talk about the potential in bundling.</p>
<p><strong style="color:#72B372">Ben:</strong> Yeah, and I would say, like one of the very interesting things with regard to the bundle, and, and you can think of the bundle as like the cable bundle where you get your ESPN and HBO and all the things in one is that the, the bundle was of course created pre-internet. And when you and I went to school, that was significant because there was this thing where you could only get <span style="color:#808080">[00:11:00]</span> knowledge, like the best books, the best information was all you had to go to school to get it.</p>
<p>In fact, if you wanted access to the internet, when we went to school, you had to go to university. It was the only place that had the internet. And so we're in a really different world than we were even 35 years ago. Uh, which is, and, and so that puts tremendous </p>
<p><strong style="color:#6600CC">Marc:</strong> pressure on the bundle. Yeah, that's right.</p>
<p>Yeah. A great example is Illinois had a famously huge library. And I remember it was actually in the marketing material for both, uh, recruiting students and professors was the quality of the library. 'cause if you went there, you could do certain kinds of research that were not possible if you didn't have access to the library.</p>
<p>Yeah, yeah. Which is </p>
<p><strong style="color:#72B372">Ben:</strong> very different world, but like the cable bundle, right? Like you could only get HBO if you had cable. So that made the bundle very different than if you can get the HBO app. Like those are not the same worlds. And I think the university is in that same situation, but people don't point it out as much.</p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah, that's right. So let's dive into the bundle. <span style="color:#808080">[00:12:00]</span> And I've identified my dozen kind of things in the bundle. And then Ben, you can, we can, we can add things as we go. I'm, I'm, there are actually many things we could easily think. We just thought of one in the library I didn't even have in my list. But there, there are many, uh, I'm sure there are many, many more kind of elements of the bundle that I haven't even prioritized here, but these are kind of the dozen that are, are top of mind for me.</p>
<p>So, and actually, Ben, let just run you through, I'll just give you the headlines on these real quick so people can have a roadmap to what we're about to talk about. Yeah. And then I'll, I'll just come back to the first one and we'll dive in. So, number one, credentialing agency. So credentialing students, graduates for employers.</p>
<p>Number two, the actual courses themselves, the education. Number three, I call the research bureau, right? Mm-Hmm. Which is the research component that most modern universities have, right? Right. Most universities are als they're also a hybrid of teaching and research. Yeah. Huge. </p>
<p><strong style="color:#72B372">Ben:</strong> Um, huge charter is to create new knowledge and o often how the kind of technical part of the university distinguishes itself from industry.</p>
<p>They, they kind of refer to industry as applying knowledge that was created at the university, although not always true, but it's a, it's the paradigm they love. <span style="color:#808080">[00:13:00]</span> </p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah, that's right. And, and we'll talk about this, but professors become, professors get hired and get tenure in large part of the basis of their research in contrast to their, to, to their teaching.</p>
<p>It's not uncommon to have professors will not surprise anybody who's been in a college environment that you have, uh, professors who maybe are better at research than teaching. Yep. As the student, sometimes you wonder who got the good part of the deal. Um, fourth, what I call the policy think tank. So this is the role of the universities in sort of setting public policy.</p>
<p>Which we'll talk about. Number five is what I call the moral instructor. And this is the sort of legacy of the fact that these institutions actually started, the original one started as religious institutions. And so kind of, and, and today in most mission statements in most universities, they might not outright say that they're teaching religion or morality, but they'll say things like that they're trying to inculcate values, right?</p>
<p>Or they're trying to basically foster citizenry. They'll use terms like that. And that's basically all code for moral instruction. Number six is what I call the social reformer role. And this is the role where they, not just, they, they not only instruct morality, but they also try to implement it themselves directly.</p>
<p>And this is where this very hot <span style="color:#808080">[00:14:00]</span> topic of, of DEI in particular comes in that, we'll, we'll, we'll spend a little bit, a little bit of time on number seven, what I call the immigration agency. And so this is the key role actually played by foreign students, which is actually really critical and not, not talked about enough because it turns out that foreign students at universities generally pay full freight.</p>
<p>And so it's a, it's a big deal. International recruiting of students now is a very big deal and very, uh, core to the, uh, economic structures of these things. And </p>
<p><strong style="color:#72B372">Ben:</strong> there's another aspect that we'll get into when we talk about credentialing, which is. They pay full freight and they don't always go to the actual university.</p>
<p>They've, the universities have set up these parallel universities with different criteria, which is </p>
<p><strong style="color:#6600CC">Marc:</strong> very interesting. Yeah, that's right. And, and this actually turns out to be very important, the economics of these places. 'cause it's not clear that these places work without these kind of, kind of, let's just say associated programs.</p>
<p>We'll talk about, uh, number eight sports league. And I'm not the sports guy but Ben very much is. And so Ben will weigh in very heavily on that. And there's been a lot of controversy around college sports in recent years. Number nine, the hedge fund, which is to say the endowments, which had become a very big deal over the last 30 years in <span style="color:#808080">[00:15:00]</span> particular.</p>
<p>Number 10, what I refer to. And I, I went to college, so this was me as I refer as adult daycare or young adult daycare. And so this is sort of where you send their 18 to 24-year-old as sort of a, a substitution for just like going out and getting a job. Yeah. They get them outta house. Exactly. And then number 11 is I call the dating site, right?</p>
<p>Which is the role that the universities have played actually, both in being a place where people actually date and, and, and, and choose mates, but also a a they also get the credential for future choosing a mate. So, we'll, we'll talk about that. 'cause that turns out to actually matter quite a bit. And then we'll close on what I call the lobbying firm, which is basically the role the government plays in all this.</p>
<p>And in particular the role that government funding plays in all this. And then what that means for the relationship of the, of the, of the government and the universities. And of course that's a very hot topic. There's a very, there's a, there's a, there's a current, you know, very active congressional investigation going on into the universities right now over all this recent drama.</p>
<p>And so there, there's always this kind of question in the back of everybody's heads in, in, in academia I think, which is like, okay, we, we, we really do, we at academia really do run on federal funding? And <span style="color:#808080">[00:16:00]</span> what, what would it, what would ever happen if that ever got compromised? Or cut off? Yep. </p>
<p><strong style="color:#72B372">Ben:</strong> Yeah. No, and it, it's a freak out whenever it pops up.</p>
<p>It popped up a little during the Trump administration. Man, I cannot, and I was a trustee at the time and. Like it was a fairly scary </p>
<p><strong style="color:#6600CC">Marc:</strong> situation. Why don't you describe what happened? 'cause that that gives you, gives people a sense of the stakes of what we're talking about. Yeah. </p>
<p><strong style="color:#72B372">Ben:</strong> So, well, Trump was talking about a variety of things.</p>
<p>One was an endowment tax and then there were kind of other things to kind of change the way the, the research research grant process worked and, and the amount of money that got allocated to various schools. And that just has huge effects on the economics. I mean, it's, you know, universities rarely, you also have to understand, almost ever do layoffs so they only get bigger.</p>
<p>And so a kind of what, what you would kind of regard as like a kind of run of the <span style="color:#808080">[00:17:00]</span> mill. Business downturn is like something that they're not really equipped to handle at a university. I, I would just </p>
<p><strong style="color:#6600CC">Marc:</strong> put it that way. Yeah. Okay. We'll, we'll, we'll come back to that. So let's start with a credentialing agency.</p>
<p>And so this, this is a very interesting topic and actually a lot of what I know on this I learned from, there's an economist named Brian Kaplan, who's written a book called, like it's a book, is a, he's a, he's a tenured university professor at George Mason University. He spent his life in academia, so he's not exactly a bomb thrower, but he gave his book a very provocative title called The Case Against Education.</p>
<p>But it's a very kind of comprehensive walk through the economics of education and how the system works. And I was very struck by, I was just sort of relay the argument that he basically makes the book, or at least what I, what I, how I interpreted it, which really stuck with me, which is the sort of default view of sort of the value of a college degree is the learning, right?</p>
<p>So you go to four years or whatever and you get the learning that you get and that gives you, the learning sort of translates to employable skills and then you get a job and employer's recruit kind of on that basis, value on that basis. It actually turns out it's actually very hard to validate empirically the value of the <span style="color:#808080">[00:18:00]</span> learning.</p>
<p>And the, the, the, the, the reason for that, the, the evidence for that is there's something called the sheepskin effect that economies talk about, economists talk about, and the way the sheepskin sheepskin here refers to the diploma, the, the actual right, the actual, actual, you graduated, you actually got the diploma.</p>
<p>And the observation is that if you go to college X in program Y and you, you go for eight, you know, you go for four years, you go for eight semesters, say two semesters per per year, and you graduate, you make whatever, say you make a hundred thousand dollars a year or whatever coming out the other side as an average salary.</p>
<p>It turns out, if you compare those graduates to students who go for seven of the eight semesters. It turns out, like on average it's something like they'll get something like half the salary. Yeah. And so for those graduates, they kind of zero in at like if the, if the, if the full, if the full, if the full graduate amount is, is a hundred thousand, they'll, they'll commit at like 50,000 or something like that.</p>
<p>And it, it varies by field, but it kind of, it kind of roughly correlates to that. And so what, what the argument I think Brian Cap has made is if you, if you basically, if you look at that, if you stare at that, there are two possible explanations for it, right? 'cause which, what you'd expect is <span style="color:#808080">[00:19:00]</span> if the, if, if it was, this is just all about the education, the, the, the graduate who, the person who didn't graduate but took seven of the eight semesters should get seven, eighth.</p>
<p>Seven eighths of the income. Yeah. Mm-Hmm. Right. Instead they get half the income. And so there's two possible explanations either. A full half of the actual valuable information is delivered in that last semester. Yeah. Right. The senioritis semester. Yes. And anybody who's been through college knows that's not true.</p>
<p>'cause that's the semester everybody slacks off. And so if anything, the opposite is true. Or the sheep skin effect, which is the actual value is more in the diploma. Yeah. It's it's more in the fact that you actually graduated. Right. And so the, the way that I think the economist view on this basically is the, the, the main credential of a, of a university degree is basically in two parts.</p>
<p>It's in the fact that you were admitted and then it's in the fact that you were, that you graduated. By the way, on the admissions thing, you can see that same thing in Silicon Valley where there's this credential in Silicon Valley that's become very popular, which is I was admitted to MIT, but I didn't go.</p>
<p>Yeah. Right. Or I was admitted and I went for a year and dropped out. And it turns out like there's <span style="color:#808080">[00:20:00]</span> no penalty like for, for, for, for VCs like us. Like it actually, the fact that you got admitted MIT is itself for credential. Yeah. Even if you never went. Right. Even if you never, uh, actually completed the thing.</p>
<p>So, so it links back to the sheepskin effect. Anyway, so, so basically like the, the, the sort of objective clinical view of the value of the credential basically is that the education plays some part, but there's these two other really critical things. There's the admission, the fact you got admitted, and then there's the fact that you graduated in psychological term, psychological testing terms.</p>
<p>So what they call psychometrics. What that basically means is that the admissions process is basically an IQ test. Come back to that in a second. And then the graduation, actually getting to the diploma is a conscientiousness test. Yep. Right. And so, and the, and the reason we can be confident in saying that admissions is an IQ test, is that traditionally admissions was based on standardized testing, which is like tests like S-A-T-A-C-T-G-R-E and those tests from a, from a, from a, from a, just a, a clinical standpoint, like tho, tho in sort of clinical psychology, psychometrics, those tests are all proxies for an IQ test.</p>
<p>Those, those are all sort of, those are all sort of roughly equivalent to just a, a straight <span style="color:#808080">[00:21:00]</span> IQ test for highly correlated results. Yeah. Highly correlated to an IQ test 0.8 or more kind of correlation. To an IQ test. And so basically historically, the fact that somebody got whatever, 1400 or 1500 on the SAT and that correlated to an IQ of 130 or something, and then therefore they were qualified to go to a certain, a certain tier of, of university.</p>
<p>Like, like that was a, that as long as that standardized testing components in there and those tests are real like that, that's a real signal of like basically intelligence. And then the fact that they completed the four year degree is a real signal of conscientiousness. And I think there's a really kind of fundamental thing that's breaking right now that's not getting enough attention that employers are starting to really think about.</p>
<p>But I, I think a lot of people who run at universities are not thinking about enough yet, which is, we're thinking about it, we're thinking about it. Yes, both. Yes. We're thinking about this, uh, both for ourselves, uh, and then also for all of our companies who hire, which is I think a lot. So a lot of universities, number one, they're voluntarily ending the use of standardized testing for admissions.</p>
<p>And there's a whole political social kind of overlay as to why that's <span style="color:#808080">[00:22:00]</span> happening. But at a lot of, even the top institutions now, they very deliberately are not doing admissions based in any sort of standardized testing, which means they're not applying the IQ test. Uh, which means, which means by the way, maybe that's the right thing for them to do.</p>
<p>But what it means is they're giving up on that as, as part of the credential like that, that, that, that the IQ component of the credential is, is being voluntarily surrendered. And then the other thing that's happening, and this is very clear in the data, is just great inflation. And so the trend over the last 50 years has been increasingly that just everybody gets a's in everything.</p>
<p>And of course, if you just get A's in everything, of course it's a lot easier to graduate, right? You're much, much less likely to drop out or get forced out. So I think what's happening is colleges, universities in the US right now are voluntarily surrendering both the admissions IQ component of the credential and the graduation grading component of the credential.</p>
<p>And I, and I think the implication of that in terms of what that credential means in terms of future employment is, I think very underestimated. Yeah. So, Ben, over to you. </p>
<p><strong style="color:#72B372">Ben:</strong> Yeah. And, and what do you think drives the great inflation the most? I've been thinking about that </p>
<p><strong style="color:#6600CC">Marc:</strong> quite a bit. <span style="color:#808080">[00:23:00]</span> Do, do you have a view on that from what you saw at Columbia?</p>
<p>Yeah, I mean, I </p>
<p><strong style="color:#72B372">Ben:</strong> think that a lot of it has to do with incentives, right? So if you're an instructor, you get, you know, the, the, the big new thing is they have these student evaluations of teachers and they get published in these books, and then you get, if students don't like you, you, you're regarded as a crap professor or whatever.</p>
<p>And the easiest way to get a high student evaluation is to give 'em an a. And so like, and the. Amount of stress and just bullshit that you have to deal with. If you give somebody a D, 'cause they're gonna come to you and complain and harass you and so forth. Like why do it? You don't have to. So just give everybody an A, you get a high evaluation.</p>
<p>So like the incentive, there is no incentive for an instructor to give a hard grade. And then there is a kind of, once one professor starts give, kind of taking that easy incentive, <span style="color:#808080">[00:24:00]</span> then everybody kind of does it. And we see this in companies where, you know, you have a soft manager promotes a bum employee, then every manager goes, every other employee goes, well that bum got to be a vice president.</p>
<p>Why not me? And then that that takes off. So I think it's kind of like a natural. Organizational evolution if you don't have some very strict standard on grading. Um, and so like, like I think it just naturally went there, but I, I'm not sure. </p>
<p><strong style="color:#6600CC">Marc:</strong> Well, I'll give you two other, I think that's right. And like the role of like, I think it's like rate my professors.com uh, I think is is pretty central now.</p>
<p>But I, I'll give you two other incentives. I think I would suspect. One is development, donate future don donations, right. Which is the, the other constituency here is the parents. Yeah. Um, and then, and then by the way, these students and then these students later, later on becoming donors, right? Yeah. Yeah.</p>
<p>And like I think that the, the </p>
<p><strong style="color:#72B372">Ben:</strong> professors, most professors are not that directly connected to the fundraising process though, I think, <span style="color:#808080">[00:25:00]</span> but yeah. That, that could be certainly. Yeah. </p>
<p><strong style="color:#6600CC">Marc:</strong> But it also, but there year ago to like here would be a reason for the administrations to not be holding the line on, on Oh, for sure.</p>
<p>Right. On that angry parents, </p>
<p><strong style="color:#72B372">Ben:</strong> like the last thing you wanna deal with is an angry parent who donated a fuck ton of money. That's like, that's no fun at all. So, so in that way, definitely the same thing. Yeah. </p>
<p><strong style="color:#6600CC">Marc:</strong> And then the third is, look, the other version of this, I've heard, I've heard this from professors, is like, look, if you could, you can, for bad grades, you can be hauled in front of administrative proceedings.</p>
<p>You can get in trouble, right? 'cause you can open the door to fair fairness, right? Equity, classroom conduct. Yeah. Complaints like the, the students and their parents can complain and they can </p>
<p><strong style="color:#72B372">Ben:</strong> proceeds it, give you a false harassment complaint or something because you a d right? Yeah, </p>
<p><strong style="color:#6600CC">Marc:</strong> yeah. Hostile classroom.</p>
<p>Like, so the hr, the sort of hr, the HR policy is basically provide an avenue. And, and by the way, there, there's avenue for legitimate complaints. But also if you're a professor, you must, you must be thinking about, boy, I, what, what's the last thing I need in my life? Is to open the door to somebody saying something like that.</p>
<p>And so, yeah, I think that's, I, I, to me, that, I think that that's my analysis is just, <span style="color:#808080">[00:26:00]</span> and then this is the thing, the great inflation thing, like the great inflation thing has been, it's been a, like a 50 year trend. Like the, the charts there are like actually pretty linear. Yeah. Which, and so this, this has been growing for a long time.</p>
<p>People have, people have known about this and it's just, it's not a problem as long as the credential is still intact. Right. But I think it's at the point now where I, I think it's damaging the credential, right? It slip, slip, slip </p>
<p><strong style="color:#72B372">Ben:</strong> all at once. Yeah. And I think that, well the, the, so there's another thing which I got in a huge kind of argument about when I was a trustee.</p>
<p>And to Columbia's credit, they, I, they did the right thing in that case. But all of the schools, so there's kind of whatever, Harvard College, Columbia College like these things are almost impossible to get into. They accept a thou on the order of a thousand students a year. Every, you know, high school graduate in the world wants one of these slots.</p>
<p>Um, they're very hard to get. And that's the credential. But there's also a, these things, the extension schools, which are <span style="color:#808080">[00:27:00]</span> not taught by professors, they're taught by like whatever, somebody from Goldman Sachs who's wanting to do a little side education work or this and that. And they can let in tons of people, they're far larger than the actual university kind of college program, har.</p>
<p>And they all have 'em. Harvard has it, Columbia, et cetera, et cetera. And they are mainly foreign students. So it's mainly like Chinese students. And then they purposely, and this is where I got into the argument, they purposely labeled the degree. So it's very hard to tell that it's not the credentialed one.</p>
<p>So it's Columbia University Masters and Statistics was the big kind of debate that we kind of got into at the extension school. 'cause the people in the engineering school were like. What the hell? Like that's the same degree that we're giving out in title. Like how is an employer gonna distinguish? And the truth <span style="color:#808080">[00:28:00]</span> is the Chinese employer cannot distinguish like it, that's like really hard for them.</p>
<p>And so you do that enough and it, it, it ultimately waters down the green. Now in the United States, like we can distinguish, we get a student coming from Harvard, we like talk to other Harvard students, make sure they knew 'em. Like, like it's a possible to sort, but it's not possible to sort for everybody.</p>
<p>And they're purposely obfuscating it because it's a huge money maker. These schools, everybody pays full freight. There is no scholarship, there is no financial aid, there's none of that. And so it's a, and and then it's very scalable 'cause they can let in as many students as they want. 'cause they're not taught by professors and there's no, none of this credential idea.</p>
<p>But it ricochets back into weakening the credential. </p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah. And a lot of this, you alluded to it, but I'll just focus on it for a second. A lot of this is inter, A lot of these are then international students. Yeah. And the core of a lot of this, as you said, is this is, yeah. If you're, <span style="color:#808080">[00:29:00]</span> if, yeah. If you're a Chinese employer, you might not understand the gradations here.</p>
<p>Yeah. Now, having said that, Chinese employers can use the internet just like everybody else, or at least in this, I'm sure for this, for this purpose, they can, yeah. And so that, that's the kind of information asymmetry that the internet historically has been very good at. Demolishing. Yep. </p>
<p><strong style="color:#72B372">Ben:</strong> Yeah. Yeah. No, and I think that that is, I mean, whi, which kind of is gonna be thematic in this discussion, which is a lot of the things that the university kind of could rely on, get undermined by the internet and that which is causing things to come to a head.</p>
<p>I think maybe not right now, but certainly soon. </p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah, coming and then Ben on the, on the cred, on the overall credentialing point. So yeah. What's your view? We deal with both a lot of tech companies and also a lot of non-tech, a lot of big, big non-tech companies also, like where are CEOs and hiring managers in corporations.</p>
<p>Um, on, on this topic of like the value of university credential now versus 10 years ago, and then where's it going? It it, </p>
<p><strong style="color:#72B372">Ben:</strong> it hasn't changed materially yet <span style="color:#808080">[00:30:00]</span> in my view, but for the first time in my career, people are really discussing it and you hear CEOs going, wow, the kids coming out of college this year are not what I'm used to.</p>
<p>They're not, and I'm getting kids from weird places. Not Harvard, not MIT like it used to be in Silicon Valley. I think Facebook, you're on the board of, uh, meta. They used to only hire people from Stanford, MIT or I think, or Harvard, Stanford, MIT, like they had like stricter. Nobody has that role anymore.</p>
<p>Like that role's gone. Yeah. Like I, I don't know any company that you have to be Stanford, Harvard, or MIT to like be an engineer there. And more and more people are not finished school coming straight outta high school. So, so I, I would say the aperture, which is really great, by the way, has opened. But the other thing is that I, I am hearing a lot just anecdotally is, you know, Stanford students aren't what they <span style="color:#808080">[00:31:00]</span> were like, I got a engineer from Stanford, but they're not, they, they, they're, they're, they're not ready.</p>
<p>They, they're not ready to go in the way they were before. And so I think that it's already, there's definitely a credential degrading that's already occurring with this. First time though with this class coming, that just came out, so, wow. It, it, it's pretty nascent and it's not, I don't think it's really changed hiring practices much other than people are casting a wider net, but they're not, like, still, like a Stanford degree is very powerful, but you could kind of see it's like a glimpse of the future for the first time.</p>
<p>Like I've never, never heard that before. I mean, and if we </p>
<p><strong style="color:#6600CC">Marc:</strong> project forward, if nothing, if the, if current trends continue. Yeah. Like what, what do you think will be the, the, the take among the sort of leading edge employers in five years? </p>
<p><strong style="color:#72B372">Ben:</strong> Well, I think, look, I think if you take out the SS a t. That's a pretty big change.</p>
<p>And, and so it's a little <span style="color:#808080">[00:32:00]</span> unpredictable because Okay. What are they admitting people based on, like, you know, do you have to have high scores on the AP exams? Do you, do you have to have very rigorous curriculum? I know at Columbia it really mattered the quality of the high school that you went to even when they, uh, had SATs.</p>
<p>So the, the question is, is the whatever rubric of criteria that they're using to replace the SAT as good at identifying very gifted students? Or is it not as, is it worse? And, and I think we don't know that yet. Yeah. </p>
<p><strong style="color:#6600CC">Marc:</strong> But like, would you predict in five years that employers are still just basically deferring to the degree the question of a candidate of a, of a recruit's IQ and conscientiousness?</p>
<p>Or are they feel like they're gonna have to validate that otherwise? </p>
<p><strong style="color:#72B372">Ben:</strong> I kind of think they're gonna have to validate it. I mean, I. Just because it's different. Yeah. And <span style="color:#808080">[00:33:00]</span> on kind of entry level jobs, you can do some like fairly rigorous testing, particularly for an engineer or something like that in, in the interview process.</p>
<p>Um, but you know, look, Stanford, you had just a huge benefit of the doubt. I mean, look, I, I think meta at one point took any engineer from Stanford l you know what I mean? L like, 'cause they were hiring It was that good, that good of a, that good of a signal. Yeah. Yeah. It was an amazing signal. So I, I don't think they'll do that </p>
<p><strong style="color:#6600CC">Marc:</strong> anymore.</p>
<p>I think Google, just to, uh, to close on this topic, I think Google now formally does not take college degrees into account, or at least they've said they're, they're neutral or ambivalent or don't care. They'll, they'll, they'll equally, uh, rank people without degrees. They'll, they do their own testing and they'll, they'll, they they go on those tests.</p>
<p>Yeah. </p>
<p><strong style="color:#72B372">Ben:</strong> Yeah, yeah. So I think that, I think that's gonna be become much more of the norm where companies do their own testing and it won't be. It's not legal, at least for sure, not in California to do a general IQ <span style="color:#808080">[00:34:00]</span> test for a specific job, but you can do pretty rigorous job specific tests that certainly kind of include something that's going to, ability to process information </p>
<p><strong style="color:#6600CC">Marc:</strong> quickly, et cetera, et cetera.</p>
<p>Okay. Well, I'm sure, we'll, this will come back up again, so we'll move to number two. So the actual, the actual education, the actual education, the courses themselves. So, so here I would just say one, one lens on this is actually the, the, again, part of the bundle here, there's actually a bundle of four different kinds of sort of education and coursework.</p>
<p>Uh, at least four, but I, I would say there's, there's four big ones. So there's the sort of classy humanities. Liberal arts, which as I said, is sort of derived from the, the English model. There's what we now call STEM science technology, engineering, math, which is, as you said, originally derived from the German model and, and that's physics and everything from physics to engineering and so forth.</p>
<p>Then there's social sciences, which is a bit more of an American innovation, which is social sciences are like a hybrid of humanities and stem, and so these are fields like psychology, sociology, economics, public health education. Were kind of developed as <span style="color:#808080">[00:35:00]</span> quote unquote sciences. Yeah. </p>
<p><strong style="color:#72B372">Ben:</strong> Anything that has science in its name isn't science is, is, is the joke.</p>
<p>Right? Like there's no physics, science or chemistry. Science. It's only political science. </p>
<p><strong style="color:#6600CC">Marc:</strong> Yes. Yeah. So the poli, the, the cla, the classic tension is the political scientists absolutely assist that Their scientists just like the physicists. Yeah. And the physicists insists No, absolutely. You're not. No you're not.</p>
<p>No, because </p>
<p><strong style="color:#72B372">Ben:</strong> it's not science. Right? Like, it's not like I have a hypothesis that's testable and Right. I could run an experiment and find out if my predictions come true. Like so if it's not that, it's not science, but whatever. </p>
<p><strong style="color:#6600CC">Marc:</strong> S science, and there's a whole digression we could go on about where, where this all came from, but yeah, sort of they're, they're in the middle somewhere.</p>
<p>And then, and then there's what I would call the trade school, which is basically law medicine, business and performing arts, which is basically like if you go to one of these places for, specifically for a law degree, like that's a very specific, obviously set, of course a credential or for, to become a concert pianist or something like that, or a doctor.</p>
<p>And so there, there, there is this kind of bundle, even within the bundle, <span style="color:#808080">[00:36:00]</span> overall bundle, there's this bundle within the educational courses component of it, which is, these are actually four, I would say four quite different kinds of curricula. Yeah. And then that basically takes us to sort of the, the, the problem here.</p>
<p>So one problem here is the chief's gonna effect, we already talked about. Which is basically at least a very strong suggestion that at least for, at least for some degrees and some institutions, the education is not as important as people might think. Or let's just say the, the, the market, the market of employers certainly doesn't, doesn't think it is.</p>
<p>'cause you just look at the compensation data and it shows that. But then there's this other monster problem, and again, this problem has been discussed at length for decades, but I, it feels like it's also coming to a head here getting much more politically potent, which is the student loan crisis, which is you just have a very large number of graduates of American colleges, universities where they're carrying these large amounts of student debt.</p>
<p>And, and, and in the really bad case, it's actually debt because of the high interest rates, it's actually debt that compounds Yep. And kind of grows ineptly over the, over the life of the </p>
<p><strong style="color:#72B372">Ben:</strong> student. And you can't get rid of it with bankruptcy. </p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah, yeah. Well, so that, right. Well, so this is very interesting. So, so, so on the one hand there's been this big controversy, <span style="color:#808080">[00:37:00]</span> there's been a lot of heat around this question politically, which is for a long time student loan debt, federal student loan debt specifically cannot be discharged through bankruptcy.</p>
<p>And it's the one form of debt that can't. On the other hand though, you now have direct bailouts. So in the last three years. Right. The current, the current US administration has been doing a series of bailouts where they've been doing arbitrary top-down erasure of the debt, which, and of course they call it, they call it for forget, they use this very clever word forgiveness, which makes it sound wonderful.</p>
<p>Of course. What it just means is it means other taxpayers. Yeah. Right. Uh, other people are gonna, are gonna put, put the bill for it. And, and that's always sensitive as in the American system at least, because course, the American polity is composed in part of people who went to college and in part who didn't.</p>
<p>Yeah. And so people who didn't go to college might not be so keen about having their tech tax money getting used to forgive student debt for non-productive degrees. And then, and then honestly, there's also a moral hazard issue that comes up, which is among people who took on college debt, there's the people who paid it off versus the people who didn't.</p>
<p>Yeah. The people who paid it off don't get forgiven. And so then there's a, there's this thing, there's this weird incentives thing where it's like, well, okay, if this is the new way that it goes, then <span style="color:#808080">[00:38:00]</span> I'm a sucker if I pay off my own student loan debt, because in the future there'll be another bailout.</p>
<p>Yeah, so, so anyway, so this has become like a pretty potent political issue, but I think underneath this is this question of like, okay, like are all of these degrees and all of these institutions actually generating graduates who can actually command market wages that actually make this entire thing basically an economically and politically viable proposition?</p>
<p><strong style="color:#72B372">Ben:</strong> Yeah. That, I think that's the exact, that's the question. That is the thing we should be debating, because the, the whole forgiveness thing is insane in the sense that you're not actually addressing the real issue. It's the ultimate bandit. Yes, you're buying votes, yes, you're giving some people relief, but the fundamental issue is it's now become clear that for a large swath of the population, college is not worth the money.</p>
<p>You would not have a college student loan crisis if whatever you paid for college paid you back <span style="color:#808080">[00:39:00]</span> in the form of a job that was worth far more than the degree. But what's happened is for a huge percentage of the degrees, the degree is worth less than, than the job. So it's basically, we as a society are running a scam and ripping off a huge percentage of our young people who are going to college with the clear expectation that they're gonna get a higher quality job and being able to pay for college.</p>
<p>But that's absolutely not the case, and that's the real issue. And if we don't address that, it doesn't, you could forgive this batch, but what about the next batch and the next batch and the next batch and the next batch, it's still not worth the money. And I think that's the great thing that has to be reckoned with.</p>
<p>And that's a big, big issue because tuition, the quality degree has gotta be pretty hard to pay back $300,000. Yeah, that's a lot of money. For even in the <span style="color:#808080">[00:40:00]</span> kind of in today's inflationary world to go make back up working for a living, which I think kind of gets into the student customer right there.</p>
<p>There's many customers which we'll get into, but like as a student, what do I want? Well, there are maybe 1% of the students want to become scholars and then 99% of the student want jobs. And for that set, the value proposition is getting extremely shaky, I think, across the university system. Um, which is why we have the student loan crisis.</p>
<p>And there's been an amazing inflation of tuition, which has grown at, I think tuition rates have grown at two or three times the general inflation rate, which is insane. In the face of technology that ought to be able to reduce the cost of education dramatically. As we've kind of talked about, like it's all on <span style="color:#808080">[00:41:00]</span> the internet and it's all in chat, GBT, like there is no knowledge that you can't just like get from your smartphone very cheaply and easily.</p>
<p>And so why am I paying $300,000? And it is for like the credential, but the credential itself, depending what you get your degree in. May not be worth $300,000 at all, or, and it's clearly not worth $300,000 at all. And that's a big problem. </p>
<p><strong style="color:#6600CC">Marc:</strong> Then add a couple things to that. So one is this inflation thing, and maybe we, we could put maybe post a chart to go with this that shows this, but this, the, the, the cost of the degree rising faster than inflation is a continuing process.</p>
<p>Yeah. And so, and compounding here really gets you right. And so if you compound forward like 300,000, $300,000, $350,000 is like the cost of a four year private college degree right now in the us. But if you, if current trends continue and there's no reason right now to expect that they won't, that's on its way to a million dollars.</p>
<p>Yeah, yeah. And like, and relatively quickly because of the compounding, even if you work for us, that's hard to pay off. Right? <span style="color:#808080">[00:42:00]</span> Exactly. Exactly. And so like this, there's a, it's, right now it's a one-way treadmill, and we'll talk, we'll talk later on at the end about the overall fiscal structure of these, of these places.</p>
<p>But like they, they, they, they, they, the, the financial structures of these places generally assume that this kind of, sort of super inflation of, of cost is gonna continue. And, and, and they're building cost structures that kind of assume that. Yeah, </p>
<p><strong style="color:#72B372">Ben:</strong> and that's starting to show up, right? That's starting to show up in the application rates of the kind of percentage of.</p>
<p>Kids applying to school already? </p>
<p><strong style="color:#6600CC">Marc:</strong> I think so then this also goes to this thing, and we, we've been, I've been guilty of this already. It's just so easy to do, which is, it's so easy to talk about whether kids should go to college or not. Yeah. And then whether kids should get a degree or not. But of course, underneath both of those is like, which college and then which degree?</p>
<p>Right. And if you dig into each of those, if you dig into which college, of course there, there's a tiering in the college system where there's four or five, six different tiers of institutional quality and, you know, quality of the credential. And then corresponding income kind job offers coming out the other side.</p>
<p>And then degrees as I was, you know, kind of <span style="color:#808080">[00:43:00]</span> walking through a computer science degree and an English degree. And like, they're just, the English degree may be as like, spiritually valuable as the computer science degree, but it just doesn't carry the same economic kind of opportunity out the other side.</p>
<p>And the, the, and those are two very different financial propositions as a, as a consequence. </p>
<p><strong style="color:#72B372">Ben:</strong> Well, and they, and, and they cost the exact same amount. The they, which is part of the weird thing. And it, and it also gets into. Again to the customer question. One of the very interesting things for me and being involved in universities about that Columbia and UCLA is that the way that the slots get allocated, so the demand for computer science degrees is extremely high compared to the demand for, you name it, anything that ends in studies degrees.</p>
<p>But that's not how the resources at an university get allocated necessarily. They get allocated based on this, and it's sort of a function of the way they're run. <span style="color:#808080">[00:44:00]</span> But there's the student demand thing, but you know, a lot of it is fundraising. Can you get, uh, an alumni to give you like. Grant you a professorship or whatever, and then can you politic your way into more resources within the university system, which is at that level, extremely political and who gets what.</p>
<p>And so you end up with generally a shortage of engineering slots and a plethora of other slots. So now you want to go to Harvard, but you can't, or you want to go to particularly like uc, Berkeley or UCLA, the public schools. You want a computer science degree. You can't get into computer science, but you can get into Berkeley, but you gotta pay the same amount.</p>
<p>And that this is where it gets really wacky. </p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah. So I think there's, I think there's pressure building and we could, we could spend a lot longer on this topic, but I think there's pressure building to kind of disaggregate the question of college into like, what tier of college? And then I think there's gonna be growing pressure to disaggregate.</p>
<p>Okay. What exact kind of <span style="color:#808080">[00:45:00]</span> degree. And there's really, it's really a ma there's really a matrix. There's really a two dimensional matrix there. And the economics of, of both, uh, the student view on this as well as the institutional view on this actually vary a lot depending on where you land in that two dimensional matrix.</p>
<p>And that's, and that's not gen, that's not generally how this stuff is discussed or analyzed. It really </p>
<p><strong style="color:#72B372">Ben:</strong> gets to, you've got a huge bundle that you provide to a huge, very diverse, weird set of customers. Not, not diverse racially, but you have to satisfy students, donors, faculty, sports, fans, everybody. Right, right.</p>
<p>And so it's a, it's a pretty hard product to </p>
<p><strong style="color:#6600CC">Marc:</strong> build. Yeah. And then some state systems have started to carve back on some of the degree they're starting to cancel some of the degree programs that they think don't pay off. Yeah. Economically. And that, and that's been contr in those states. I know that's been controversial because of course that's gonna tend to hit humanity's liberal arts the hardest.</p>
<p>Yeah. Yeah. And then that becomes very controversial, which is, are these institutions walking away from kind of their core education mission if they're only focused on the economics? And so I I, I think there's a lot of potential future pressure <span style="color:#808080">[00:46:00]</span> here. Yeah. And that's kind of a </p>
<p><strong style="color:#72B372">Ben:</strong> little bit what is the purpose of the university, right?</p>
<p>So through the lens of the student, they really want a job. And if they're gonna fork over that kind of money, they really need to get a job. Whereas like, if the university was free, then it would be a different story. And then what is its function in society and to build the right morals to, well-rounded people, all these kinds of things come up.</p>
<p>And there's been a lot of criticism of us in our world that we're not well-rounded enough and this kind of thing. Right. Like, that's been a, a pretty steady criticism from the press that if we had. Majored in humanities, then we would've designed social networks in particular to be better. </p>
<p><strong style="color:#6600CC">Marc:</strong> Um, </p>
<p><strong style="color:#72B372">Ben:</strong> not sure about that, but that's a criticism </p>
<p><strong style="color:#6600CC">Marc:</strong> Anyhow.</p>
<p>Yes, exactly. I will, uh, I will not take the bait. Okay. Number three. Number three, research bureau. So, and th and this is sort of the, the research. This is sort of the research that's done. I <span style="color:#808080">[00:47:00]</span> mean, again, here, there's a, there's sort of a tiering or there's a set of different things, but this is the sort of re university level research that happens for sure in the hard sciences.</p>
<p>But like physics and chemistry and math, and then also computer science. Then also in the social sciences and the social sciences, whether the physicists would agree with it or not. The social science scientists think, think that they're doing the same kind of research. And then even in the humanities, that same research approach, that same the humanities professors, um, grad students write papers and, you know, publish and journals and get evaluated in a, in a very similar way.</p>
<p>So that same kind of, at least the workflow and form of the product is basically the same. This, this concept of the research university, like I said, is somewhat derived from the German model, but particularly the American Research University. It's heavily based on the thinking of a, of a guy named Vannevar Bush who was famously FD.</p>
<p>He was actually a character in, uh, Oppenheimer. Matthew Modine I think played him. He was FDR R'S science advisor and he was sort of the FDR R'S main guy at the level of the federal government overseeing the Manhattan project and science policy in the us. And then he basically, he and his kind of colleagues basically designed the <span style="color:#808080">[00:48:00]</span> modern research university as we understand it today, coming out, out in 1945.</p>
<p>Created the sort of modern federal funding complex of things like the National Science Foundation, national Institute of Health, darpa, and so forth for funding, funding </p>
<p><strong style="color:#72B372">Ben:</strong> research. Yeah. And those, those are very important. And we're like, we need to get into that. 'cause that that's corrupted some things </p>
<p><strong style="color:#6600CC">Marc:</strong> itself.</p>
<p>Exactly. So the, the sort of, the sort of way I think of looking at sort of how is this going? 'cause this is so central to the model is right now globally, there are 3 million published academic papers a year. Mm-Hmm. How many are read? So this is the thing. So 3 million and specifically published in journals.</p>
<p>Yeah. Right. And so these aren't like PDFs on the internet. These are like published in journals, right? So they go through an editorial process, a peer review process, like they go through that full process. American universities famously have this process for, for, for new professors, they call publisher perish.</p>
<p>You start out assistant professor, full professor, tenure, and then at some point maybe an endowed chair. And the way that you kind of climb the ladder as a professor is through your research. And the way that you demonstrate your research is by <span style="color:#808080">[00:49:00]</span> publishing papers. And so if you talk, if you talk to professors, actually they complain about this a lot, which is there's just a lot of pressure to publish papers.</p>
<p>I. Whether there's anything actually meaningful in them or not is, is sort of, is sort of secondary. And again, this is their complaint. And then there's this question of like, okay, like where are the results, right? Like, how do, how do we score? This is like a, if you, if you chart like the number of papers per year over the last 50 years, it's one of these lines that's like straight up to the right are the results up to the right.</p>
<p>And there have been lots of studies over the years. Robert Gordon is an American economist, the famously wrote this big book about this that basically says that the, the actual amount of scientific progress coming out of that, if you try to measure that, is basically like flat and maybe down. And so it seems like there's some divergence that's, that's taking place there.</p>
<p>There's a couple ways to think about that. One is, there's what's called the replication crisis. And this kicked off in I think 2005 when a Stanford professor named John ias wrote a now famous paper. With the title, half of all published research results are wrong, where he did a statistical analysis on basically, basically asserted that claim.</p>
<p>There have now been extensive <span style="color:#808080">[00:50:00]</span> replication studies in many fields, and it varies by field, but somewhere between like a third to on, on the low end, like, uh, you know, a quarter to a third. And on the high end, like up to two thirds or three quarters of all published research doesn't replicate, uh, which is to say if you run the same experiment again, you don't get, uh, you don't, you don't, you don't validate the results.</p>
<p>And so there, there seems to be like an actual quality control issue, which we could talk about. Then there's the impact question, Ben, that you brought up, which is how often are these papers cited and that you can do citation counts? And it turns out most, most papers are never cited. And then you can also do readership counts, like library lookups, journal lookups.</p>
<p>And it turns out that like, it's like, I don't know, half the papers are never even read. And then you've got this additional problem, and this is where things get controversial. But look, you, you have, you have, you have a lot of published journal articles these days that are, for example, in this category they call auto ethnography, which is basically people talking about their own opinions on things and sort of observing themselves as like subjects.</p>
<p>And this is a lot of the research that happens in the sort of humanities, liberal arts these days. And those papers, you, you <span style="color:#808080">[00:51:00]</span> could have an opinion of them, which is just like, wow, this just seems like na sort of na naval gazing. Not that there's nothing really just, it's like I, I have an opinion. You have an opinion, let's.</p>
<p>Let's both write our opinions Right. And publish them and call them papers. But these, all this also, the reason I bring this up is not just to pick on them, it also just turns out they have like, basically they generally have zero zero future citations. Yeah. And so they, they're, they're not cited by anybody else.</p>
<p>They're not, they're not. There may be something brilliant in them, but they're not leading anything. They, they're, they're, so, they're flywheel, they're adding to the knowledge of the world. Right. If, right. If they were being read and cited, that would be a good sign. But they're not in a lot of cases being read and cited.</p>
<p>Yeah. You and I both know people who come have come outta the university system, who, who would, would, would express this quite strongly, which is like, it, it does appear that there is some sort of crisis going on, which is basically the, the, the, there's something broken in the research engine, not in the process, but in the outcome.</p>
<p>And, and in particular the replication crisis at, at the heart of it, like if the science doesn't replicate, it's not science. Like it's not real. Like something, you know, something else happened along the way and then that opens the door to like, well, did was this? No. You know, there, there, look, there have been cases of overt fraud.</p>
<p><span style="color:#808080">[00:52:00]</span> There have been, you know, criminal cases that have flowed from this where it turned out that people were deliberately lying. In a lot of cases it appears they're not lying. Maybe they just like don't realize that they're publishing fluke results Anyway. Like the, the, I'll just say this, there, there is a long, there's been a 20 coming up in 20 years now of debate in the scientific community as to what's going on here.</p>
<p>And so, yeah, let's, let's pause on this topic 'cause it's so central to the, the, the mission of the modern </p>
<p><strong style="color:#72B372">Ben:</strong> university and the negative side. The other problem is that government funding turns out to be highly corrupting. 'cause what happens is, the way the funding works is there's a panel of government bureaucrats that takes proposals for research and then approves them.</p>
<p>And like as venture capitalists, that's not gonna lead to anything good because they're basically. Only funding ideas that they understand, um, which are very, very incremental, shallow, uninteresting things to research as opposed to real breakthroughs. Um, and I'm on, I know this very well 'cause I'm on the board of, uh, <span style="color:#808080">[00:53:00]</span> Pisces, which is Sean Parker's Cancer Institute and we've adopted the model of the Howard Hughes Medical Institute, which also funds research and we pick researchers.</p>
<p>So, you know, it's like picking an entrepreneur, pick the smartest researcher and let them do their, and fund them to do their work as opposed to, because science is not. If I'm gonna do this and I do this, it's, I'm gonna go explore this problem and I may discover something. And that's how everything's been discovered.</p>
<p>You never kind of do what you set out to do. And so the whole government funding process is incredibly corrupting and bad and massive and drives so much of the research that's done in universities because it's a gigantic, it's like a gusher of cash, so it cannot be resisted, but it's, it, it's set up in a very horrible way.</p>
<p>So that's, that's a problem. I will say, like we, I mean we should state that we have funded many things that have emerged from universities and including, we've funded, uh, company doing CRISPR from the <span style="color:#808080">[00:54:00]</span> kind of inventor of crispr. We funded Databricks out of Berkeley, which was research done on computer science and scalable systems.</p>
<p>In their basis, in their AMP lab, we discovered funded any scale, which is out of the Basis lab. We funded Martin out of the Stanford, out of Nick Mccuen's lab and so. Like, obviously our money is where our mouth is, and there's some very good things coming outta university still, like a really important breakthrough research technologies, things that save lives.</p>
<p>So it's not a zero. I just wanna like, make sure that we're clear on that. I think that it's massively inefficient. A lot of the research is completely useless. A lot of the fields that are being researched are completely useless. Uh, but I I, I do think on this one, there are so many genius scientists in universities that we, we have to be kind of careful to sh you know, you know, as a society ship the money to funding the, the, the people who really need the, whose <span style="color:#808080">[00:55:00]</span> research we really need.</p>
<p>And away from this, just wasteland of ridiculousness. </p>
<p><strong style="color:#6600CC">Marc:</strong> Good. Okay. Let's, uh, put a tie, tie that off for the moment. And then, uh, let's go to number four. So number four, policy think tank. So this is a very interesting thing that happened. This started about a hundred </p>
<p><strong style="color:#72B372">Ben:</strong> years ago. So Woodrow Wilson idea, right?</p>
<p>Woodrow? </p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah. It's a Wilson era thing. Uh, almost a hundred, almost exactly a hundred years ago is when this started. Um, and in particularly, there's, there's a book called Public Opinion written by a guy named Walter Lipman that, that sort of defined this at the time, what I'm about to describe. And so it was just, I was introduced a topic by saying the following, which is, uh, today it's just like totally normal to like read in the newspaper that like there's some social issue, a poverty or something.</p>
<p>Something health or something, right? And then they will quote in the newspaper experts in that field. And those experts by definition are. The, well, they're university professors, right? Yeah. They're like, by, by default, those are always university professors. Mm-Hmm. And, and so the, the professors are kind of the oracle of wisdom in that, in that, in that area.</p>
<p>And then the, the media. So basically the media picks up <span style="color:#808080">[00:56:00]</span> the expertise from the expert professors outta the universities, and then the politicians basically receive that through the media and then, and then, and then the, the media and then the politicians. Basically, that's the content for the proposals that the politicians take forward.</p>
<p>Like that's where the, that's where the proposals come from. And then when you're trying to pass the law, you're like, well, this is based on research. Like this isn't just like my opinion, this is based on like research that took place in the whatever political such and such and such health policy department at Harvard or whatever it is.</p>
<p>Right? And so it's, it's, it's, it's validated now. If you go back historically, like prior to about 1920, this was not how things worked. Like in like 1850, if somebody's trying to pass a law or something, they're not quoting a prof. Like if you quote a professor, it'd be like quoting a, like it just been very in Congress like kind of thing.</p>
<p>It's just like not something people would've done. Like why would, it's crazy. Yeah. Like random. Yeah. Some like some random person. Right. But basically, so what Walter Lipman did in this book is he basically the, the, the claim at the time basically was, and I think, look, I think this made some sense, at least at the time, was basically in the old world, like system societies were <span style="color:#808080">[00:57:00]</span> simpler, everything was smaller.</p>
<p>Countries were smaller. Pre, earlier, you didn't have modern technology. Were smaller. Yeah. Governments were smaller and you didn't have all these systems. You didn't have like, well, you didn't have modern, you didn't have fully modern developed economies. You didn't have like healthcare systems, you didn't have education, you didn't have all these systems that got built.</p>
<p>These systems kind of got built between like 1880 to 1920. In a lot of cases you didn't, everything, mass media and mass manufacturing and all these big systems. And so basically what he, what he said was like, look like the modern policy issues are, are now more complicated than normal. People can understand.</p>
<p>And so there's just no normal person, and particularly there's no normal voter in their day-to-Day life, who's gonna be able to have like a coherent opinion on like healthcare policy. And so he's like, basically we need essentially a priestly class of secular experts who actually have full-time skills, knowledge, bandwidth to be able to do all the work to understand these issues and then make the recommendations to the politicians and then the politicians, basically their job is to sell that to the public.</p>
<p>And he said basically that will be a superior method of governance than, than, than letting actually voters decide anything. You <span style="color:#808080">[00:58:00]</span> could make a steelman argument to say that that worked really well at that time because if you had like super smart people in the these various positions, and maybe it's better.</p>
<p>Well, so that's an interesting question, right? There's a lot of dispute over even what happened in 1830 around this. That </p>
<p><strong style="color:#72B372">Ben:</strong> idea was immediately followed by the grade. Depression. I'll </p>
<p><strong style="color:#6600CC">Marc:</strong> just point out the Great Depression Exactly. In World War ii, right? So Yeah. Yeah, exactly right. And so there, there's like a historical debate about whether that worked then, but then there's a pressing debate as to whether that's working today.</p>
<p>And I would just say that like, there's just a very obvious kind of flaw in that logic today, which is, it's, it's an empirical observation that the faculty at American universities is now radically polarized on, in, in one political direction radically. And we could also post a graph on this maybe, which is, the numbers are like really radical.</p>
<p>There's, there's fields in which it's like 30 to one liberals to conservatives, or 50 to one or a hundred to one, right? And so basically it's, it's just got empirically in the data. The, the idea of having conservative faculty this places is basically is basically no longer, no longer the case, right? They can't get hired, they <span style="color:#808080">[00:59:00]</span> can't get promoted, they can't get tenure.</p>
<p>And so increasingly the policy recommendations coming out of the policy think tank components, these universities are very sharply partisan and extreme. And, and, and look, if you're on that side, you're obviously in favor of that. But it, it, it, it's just, it, it's hard to believe that, that, that, that, that therefore the universities will continue to be accepted by the political process writ large as the, as the advisors in the way that they have in the past.</p>
<p><strong style="color:#72B372">Ben:</strong> Yeah. No, and I, I, and also, well, this kind of brings up, like, interestingly, I hate to get into today's politics, but the Roland Friar case, right? Where here we have probably one of the most important issues of, um, you know, our generation, which is this whole question of police brutality and how does race play into that and so forth.</p>
<p>And literally, one professor in the country did definitive research and not just a professor, but. You know, I think one that most people in the field require regard as a true genius of the, <span style="color:#808080">[01:00:00]</span> of the field. And not only that, an exceptionally hard worker who ran a great lab and all that kind of thing, and, </p>
<p><strong style="color:#6600CC">Marc:</strong> and yeah.</p>
<p>Also happened to be, </p>
<p><strong style="color:#72B372">Ben:</strong> happened to be black and, and, and, and was black. So kind of credible on, on that front. And he, he, he came to some very interesting, definitive conclusions or, or like conclusions said that, that I think were important because, um, you know, they got to like, what is the root cause, right?</p>
<p>Like what, what is the root cause of the problem? And he, he got basically steamrolled by the politics at Harvard. And, and, and, and by the way, then what happened subsequently is his recommendation or his kind of ideas were not taken by society. What was taken were people who were kind of, who did far worse or no research.</p>
<p>And, but we're experts and kind of the result was the defund, the police movement and the subsequent like radical increase in murders of black people over the last two years, which is <span style="color:#808080">[01:01:00]</span> probably the, the, the greatest domestic tragedy that we've had. And, and that's what the system put out. So I think to your point, the truth can't come out or like the truth is somewhat illegal in the current university policy system depending on what it is.</p>
<p>And not, not all truths are illegal, but some truths are, are way illegal and the consequences are dire and like, it's something that I is, is very personal to me, but I think this, this just happens to be one of the more visible kind of times the system failed. But I'm quite sure it fails and, and in other cases that are just as important.</p>
<p>Yeah, and </p>
<p><strong style="color:#6600CC">Marc:</strong> I'll talk about this at the end, but the, if you look at the, uh, if you look at trust ratings, trust rate, Gallup does trust survey of, of American voting population, uh, view of universities. And the, the numbers are just, I'll talk about this. Yeah. The numbers are in collapse there, but in particular, the numbers are in collapse among people on the right.</p>
<p>And again, if you're like on the left, you're like, okay, that's fine, it doesn't matter. But it turns out people on the right also <span style="color:#808080">[01:02:00]</span> vote. They're also a big part of the tax base. And if the system loses credibility among half the population, half the voter base, it's hard to see how it, there will be continued political support for the level of funding that that currently exists.</p>
<p><strong style="color:#72B372">Ben:</strong> Yeah. Yep. Yeah, yeah. No, I think Yep. You know that, so definitely a big problem. But I, I, I would just say again, like there's obviously great research going on in universities and so, uh, which is a huge asset to the country and ought to inform, a great research ought to inform policy and. And so we, we do have to be careful with the baby in the bathwater on this one because there's not really another set of in, or there's not another set of institutions that does this kind of work.</p>
<p><strong style="color:#6600CC">Marc:</strong> So, and then I'm gonna bundle the next two together. So moral instruction, and then I'm just gonna go straight to social reformer. So I would say moral instruction is, like I said, there's this historical role that a lot of univers, a lot of American universities started actually as religious, kind of moral, uh, institutions.</p>
<p>They, they're not formally religious institutions today, but they maintain sort of a <span style="color:#808080">[01:03:00]</span> moral instruction role. And then they, what I call the social reformer. And social reformer is sort of the implementation of the moral instruction. So they, they, they, they, they, they, they take a step back past simply having an opinion about the ordering of society.</p>
<p>They're actually taking actions to try to change the ordering of society. And in particular, this of course the, the hot topic here is, is, is, is DEI and of course DEI is very hot political topic right now for two reasons. One is the massive controversy over the Supreme Court case on admissions and the use of diversity or adversity kind of scores and DEI programs, generally legal challenges on those.</p>
<p>And there's gonna be more cases like that coming up. And then the other is this current kind of crisis, obviously about kind of the more, the more recent events. But I am gonna, I'm Ben, Ben knows far more about this stuff than I do. So Ben, why don't we, yeah, let's talk about what you think is, is most important </p>
<p><strong style="color:#72B372">Ben:</strong> here.</p>
<p>Well, so like, just kind of starting with morality. One thing about humans is morality's complicated, very complicated. And it's complicated at different scales of society, at changes and, and these kinds of things. And so I think Lindy's strong moral values are <span style="color:#808080">[01:04:00]</span> actually like fairly important, which is why the Bible gets a lot of criticism like these days, mainly for things that.</p>
<p>They, they said in those days, particularly about, well, like various topics that we've changed our minds on since, but like in totality for something that's that old, and it's the same for the, the Quran, like it did get a lot right, and that stood the test of thousands of years. And so now we we're kind of inventing morality as we go.</p>
<p>And I, I, I would just say what happens when it becomes a moral issue is you can't debate it, right? Like this was a problem with the Bible too, right? Like you can't debate what's in the Bible, it's what God said. Like what are you talking about? Like, shut the F up. And I think that these new moral issues are also hard to debate for many reasons.</p>
<p>And on DEI, let me just kind of talk through where that gets problematic. So it's very hard for people to. Question any of the <span style="color:#808080">[01:05:00]</span> DEI or orthodoxy because you get not of being on a apostate or blasphemous, but of being racist or sexist. And that's probably in modern society, I'd say worse than being an apostate or, or blasphemous.</p>
<p>And so people don't really think about how the systems around that work. And just to give you an example, so you kind of have to think about DEI, like if you're an employer and you're trying to hire the best, most talented workforce possible, what are your assumptions about your DEI program that you go into with, and this is something as, as that's I'm very, I've, I've studied extremely hard in my life and my career and what we implemented at the firm, I.</p>
<p>Nothing on this kind of thing is anywhere near perfect. But look, we're the most like fact, most diverse venture capital firm in the world. Like, and we know this from Maxine Waters who <span style="color:#808080">[01:06:00]</span> requested all the diversity numbers and basically played that back to us. And we're a large scale 550 people, so it's diverse.</p>
<p>We as do not have a head of DEI and so forth, and it's because we start from a, a different assumption than, than these DEI programs start from and are ironically, the assumption that we start from is the non-racist, non-sexist assumption, which is we believe the talent is out there. And if you believe the talent is there is talent in the world that is in kind of different categories, then the approach you take to the system is basically threefold.</p>
<p>One is you have to have the right criteria for the various jobs, which means I. That not, we're not, I think Kara Swer had this thing, the meritocracy. Well, like you and I don't hire ourselves for every job because one, like we're not that great at networking and like we have a firm that <span style="color:#808080">[01:07:00]</span> like it's whole business is networking and we hire people for that.</p>
<p>And that's a very different criteria than like something that we would just like replicate ourselves on. Secondly, from a recruiting standpoint, you need to go far and wide and find the best talent. Like if you look in the exact same place, if you hire everybody, you're gonna get the same kind of people.</p>
<p>So you have to kind of expand the scope of like, where are you gonna go find the talent? And then the third thing that you have to do is you have to create a work environment where, uh, and this is where the universities go, horribly wrong. That's great for people to work who are from different backgrounds like that.</p>
<p>That's kind of how you would design the system. And that's sort of how we've designed our system. And when we think about the diversity in Andreessen Horowitz, we never think of it in terms of, oh, this person is as good as the white man who would do the job, right? We think of there's no white man <span style="color:#808080">[01:08:00]</span> that could do that job like that, could have built the cultural leadership fund like that.</p>
<p>That's not even possible. And so that's, it's a very different lens, but it starts from a belief that talent that I need is out there. And in like different populations, if you on the other hand took the assumption that the talent is not there, you'd do exactly what the universities do, and I know this from there, the way they hire their faculty is what would you do?</p>
<p>You'd make race and gender explicit criteria. So two things that objectively have nothing to do with the actual job that you're hiring for, but. Our substitutes for the fact that you don't believe the talent is there and that's what they do. And then the, and then what is the side effect of that? And the side effect of that, and this is what's happened in all the universities, is if I am the, whatever diverse candidate I am, the woman professor, the black professor, Hispanic professor, as soon as I get there, everybody knows what our process was, what our <span style="color:#808080">[01:09:00]</span> hiring criteria was, and I'm a second class citizen, and that's the worst fucking shit.</p>
<p>And so then the retention is bad. And like, I saw this at Columbia, like the retention is terrible for all your diverse hires. It's way worse than your retention for your regular hires. And then how do you fix that more racism? So then you go, well, like we need to make it, we need to start not bringing in anybody who's not of this criteria and that kind of thing.</p>
<p>And then you're, you're just in this weird degenerate state based on a morality that you weren't allowed to discuss. So because like luckily because I run the firm, I discuss it with you, we can get around that and we can do things. But like they're all starting from like a racist, sexist set of assumptions that like the only way to bring in diverse people is to make race and gender criteria, which by the way isn't true and it's objectively not true.</p>
<p>'cause like, I mean, <span style="color:#808080">[01:10:00]</span> we're 550 people, more than half our women. You and I are the founders. We're like white men. Jewish does not count as not white, but like we just had the right criteria. We were very, very careful on our criteria for the job. We had many things in the criteria that we don't have. We have a whole process for generating criteria that basically aims to make sure that we can find the best talent wherever it is, and then we go get that talent.</p>
<p>And then because everybody in the firm is hired in any given position on the exact same criteria. We have no retention problems among like any of our kind of various people we have here. And like we're just all a 16 Zs. We're not like the, we don't have ERG groups. We don't need any of that. Like, that's not a thing.</p>
<p>And so, and long, long way of saying if you can't discuss it, you can't design the right program. And that this is the whole problem with morality, <span style="color:#808080">[01:11:00]</span> right? Like if, if morality becomes religion, you just have to have faith in the doctrine. But this doctrine was invented by like a bunch of people who just made the shit up like two weeks ago, not people from 2000 years ago who have stood the test of time, right?</p>
<p>And like that, that whole doctrine in the Bible lasted many years before they ever read it down. And so it had kind of, they only wrote down what they could remember that worked. And so like, that's why it works. And like we don't have that process now and, and it's a huge, I think it's a huge problem. And, and I think that has to do with like every moral position in the university, which is, and, and it becomes very quickly indefensible, which is what's happening right now.</p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah. So as, as everybody knows, so the, this is now a hot time, so the, the, the, the, the sort of set of trends that you're discussing have been building, growing for a long time. Like some of these programs were created as far back as the 1960s and they've been kind of escalating and evolving over the course of even, even longer than actually you, you and I have been alive in some cases, and then in the last 10 years they intensified <span style="color:#808080">[01:12:00]</span> tremendously.</p>
<p>And then in just in the last, like three months, all of a sudden there's this kind of moment where at least some people are kind of throwing up a flag and saying, okay, it's time to like rethink this. Yeah. What's your, do you, do you, especially based on your experience kinda being inside the tent at one of these places in the past, like what do, do you have like a prognosis of the next couple years of like, you know, lip service and then more of the same, or like, is this the opportunity for rethinking?</p>
<p><strong style="color:#72B372">Ben:</strong> So to, to rethink it requires real leadership even in our firm. Like, it, it, it's important. Um, like I, I always keep explaining it because it's so important and it's so different and, and look. We own the firm. Like nobody can fire me, nobody can fire you. It's much harder. You come in as a, a president of a university, first of all, you can get a no, a vote of not, no confidence from the faculty.</p>
<p>You can get fired by the trustees. So there's a lot of ways you can lose your job. They're very fucking prestigious, cushy jobs. Nobody wants to lose them. And so <span style="color:#808080">[01:13:00]</span> the level of leadership and risk that you'd have to take to overturn essentially the current, uh, university religion, I think is, is pretty risky.</p>
<p>And like, and, and people have seen people like Larry Summers famously got fired from Harvard for questioning the religion in like a, not even questioning the religion, right? He just made a statement that said, well, like if you look at the data, this is what it says. So that could be a possible explanation.</p>
<p>I think it was some, something along those lines. And he got fired and so I think it's. Pretty hard to change unless public sentiment really, really swings on it. I don't know. Like I, I, I, I think it would be very hard for Columbia to change on, on that front. Um, it's a great university, but I like, when I was there, I brought it up.</p>
<p>I was like, look, can we start with like, I remember the conversation at the board of trustees. I was like, can we start with the fact that we have a bad attrition <span style="color:#808080">[01:14:00]</span> problem among our black faculty that we hire? Like, don't we think that's a problem? Like before we figure out how to recruit the next one, should this be a good place to work for the fucking last one?</p>
<p>Like, why don't we start there and how do we get to that? And it was, they shut me down. Like, and I shouldn't say they, it's 24 people and so forth, but the leadership was like, shut the fuck up. Like, you're going, you're so far outside the religion. That, like we can't even hear a word you're saying. And that was one of my kind of points of high frustration there.</p>
<p>But like, it's really hard. It's a big system and everybody believes one thing and it's been drilled into them. And look, there's a lot of literature on it and there's, and so forth. It's hard to be a systems thinker if you haven't designed large systems, if you haven't run large systems and you haven't dealt with the consequences of them being wrong.</p>
<p>And I think that that's one of my biggest lessons in life is <span style="color:#808080">[01:15:00]</span> that if, if you're not a practitioner in that and right, and not just designing and running a system, but dealing with the consequences of it, then you're never gonna face that fucking reality. </p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah. Yeah, that makes sense. And then there's gonna be just one final note would be, this is, lemme look.</p>
<p>Harvard. Harvard ruled, Harvard ruled against the use of, uh, race and admissions, but they did open the door to the use of, so-called adversity. So the, the diversity programs are in some cases illegal now. The adversity programs are being created to replace them. </p>
<p><strong style="color:#72B372">Ben:</strong> Yeah. So the, the admission thing is a whole, right.</p>
<p>Another world than the kind of hiring one and one that I have to say I'm not as familiar with. But other than reading the Supreme Court court cases and so forth, 'cause the trustees weren't really involved in admissions. So I would just say university admissions are pretty weird. Um, you know, from my reading in it, like, that's one of the things, I mean the, the, the other one that's really interesting is, which <span style="color:#808080">[01:16:00]</span> I think is misconstrued or, or misunderstood, is this legacy thing.</p>
<p>'cause people think, well, if you're a legacy, you get, it's not being a legacy, it's being a giant donor and you're really a giant donor. If you're, those tend to be legacies, but that's really what it is. They kind of obfuscate it. And the universities do this by calling it like, oh, we have this many legacy.</p>
<p>They're not legacies. They're like people who gave them 10 million. Yeah. And that's, I think that's the price. $10 million to get your kid into Harvard. Or maybe it's 20 million now it's inflation. Um, and it's a pretty big percentage of the students because it's not that big a class. Right? A thousand students.</p>
<p>Right. And who are your giant donors? All of a hundred percent of the giant donors get their kids in. And so that's a real knock on the meritocracy itself. And then if you then add in the adversity program and so forth, like eventually the people who <span style="color:#808080">[01:17:00]</span> objectively would qualify in, there's not many, right.</p>
<p>There's for them and everything else is like some kinda like weird. Thing and that back to your original point or the original discussion is like, well, what does that do to the credential? Like the, the original Harvard students made a lot of money, and so you have this huge donor base. Then does that corrupt the ability for the next set to make money by destroying the </p>
<p><strong style="color:#6600CC">Marc:</strong> credential?</p>
<p>Yeah. Yeah, yeah. And then by the way, are you selling a bill? Are you effectively, have you ended up as a position where, position where you're selling a bill of goods to the new students, promising them that they're gonna be valued that way and that it turns out employers are gonna figure this out or figure out real time.</p>
<p><strong style="color:#72B372">Ben:</strong> Right. And then, and you already have that problem in many schools, right? Where the degree is not worth the money. We a student loan crisis and all this thing, and, and then you're gonna really </p>
<p><strong style="color:#6600CC">Marc:</strong> Right. Exacerbate it. Okay, good. I'm gonna skip, uh, I wanna try to pick up the pace here a little bit to close it out.</p>
<p>I'm gonna skip immigration agency, 'cause we talked about that Sports league. Let's spend a moment on that. 'cause that's a, there was a, sports has <span style="color:#808080">[01:18:00]</span> become such an integral part of how a lot of these places operate and part of the financial structure. Huge. And then I'm, I'm not a sports guy, but I've been following, there's sort of, it seems to be recurring.</p>
<p>I don't know, I say both tension and scandals around compensation for student athletes and in the recruiting process. </p>
<p><strong style="color:#72B372">Ben:</strong> Yeah. Well, it's changed too recently. So, so like historically, so it started out. Very innocently. You're a university, you have sports. Athletics I think is a kind of great part of the, well-rounded education.</p>
<p>It's kind of goes back traditionally all the way to the Greeks, I imagine, and and then it's a great experience to play college, everybody. And it's amazing. Like if you look at the donors, by the way, this is another thing I know from being a trustee, A crazy percentage of the donors are people who played college athletics at the school.</p>
<p>So it's like really the people who have the most school spirit are the athletes by far, like not even close. And so it's like a really kind of important <span style="color:#808080">[01:19:00]</span> component of the university historically. But what happened is professional sports then emerged kind of after college sports, and then college sports became feeders to the professional sports.</p>
<p>And then college sports basically became professional sports themselves. So college football. Television ratings are much higher than NBA ratings for any given game. So it's that big. And then the coaches, right, it's not like, and they call it amateur athletics, whatever, but the coaches like Jim Harbaugh, who just won the whatever national, he makes like $10 million a year.</p>
<p>So like that's not a university salary, that's like a professional football salary. That's as much as any professional coach makes. So then the athletes get paid nothing. Okay, but they're students, right? Well, they're not students because to play on at Michigan or Alabama or any of these schools practice is 40 hours a <span style="color:#808080">[01:20:00]</span> week.</p>
<p>So when the hell are you studying? That's a great question. And you're practicing games and travel and the whole thing. And so you've got this, obviously you're running out of the back door and out of the backyard you've got a professional, like a major professional sports league where you're using essentially slave labor.</p>
<p>Like you're giving them free tuition, some of them, but like, and they're taking great, like health risk and so forth. So like that, that, that just became a whole issue. And then in California they, so a couple of things happened. They kind of made legal, I think first in California, now nationally, this name and likeness thing.</p>
<p>So it used to be the colleges won't let you sell your name and likeness. Like they could sell it. They could sell your, you couldn't sell your jersey. And so that changed. So some of the very, very top guys, the most famous college athletes, which is a tiny handful of the whole population, <span style="color:#808080">[01:21:00]</span> I. Make a lot of money now or like, like real money, like good compensation.</p>
<p>And then in college football they have this thing called the portal, which you can sign up for and you can just transfer schools, like trade yourself to another team, like whenever you want or once a year, whatever. And so it's fully professional sports. Like there's no hiding it. You've got some guys getting paid, you've got transfer portal and so forth.</p>
<p>But not everybody gets paid. A lot of them don't get paid. And it seems really unfair, right? Like there are labor laws in the United States of America, and then there's also, you ought to be able to bid for salaries on athletes because anything else is pretty un-American, right? Like you can't restrict somebody from getting a job.</p>
<p>It's clearly a job. It's not an education. And there's little schools. I mean, Columbia football is not like that. It's, it's more like high school football, but you know for sure University of Michigan, Alabama, Georgia, like these are professional programs. So what do you do about that? Do you <span style="color:#808080">[01:22:00]</span> actually share the money with the student athletes?</p>
<p>Who are your employees? Or do you continue to run this essentially a scam and have them play great injury risk put in a huge amount of time, make you a ton of money and keep going. So it's a, uh, it's certainly coming to a head now, </p>
<p><strong style="color:#6600CC">Marc:</strong> and it's fair to say that the revenue from these programs is substantial as a percentage of the operating budget of Oh, yeah, yeah, yeah.</p>
<p>Like, like it pays </p>
<p><strong style="color:#72B372">Ben:</strong> football, football basically. I think the economics are football pays for every other sport and Mensa Yeah. The big schools. </p>
<p><strong style="color:#6600CC">Marc:</strong> So, and so if, if, like for example, if, if I, not that this would happen per se, but just a, but illustrated, if, if a law were passed that universities didn't have sports programs anymore, they would lose some significant percentage of their budget.</p>
<p><strong style="color:#72B372">Ben:</strong> Yeah, yeah, yeah, yeah, yeah. And particularly at the big schools and, and alumni donations, like, so a big part of alumni donations. Is for sports, as you know. Right, right. Your, your, your father-in-law was a huge, uh, booster, supporter of Stanford and, <span style="color:#808080">[01:23:00]</span> and the sports program's there, right? Like, and, and sports.</p>
<p>He's very attached to it. And by the way, really great example, he was a great college athlete at Stanford. Stanford gave him that scholarship. He always felt tremendous loyalty to the school. There's very people who aren't athletes that feel that loyalty. So it's a, it's a tricky problem 'cause it's, it's not just the economics from the football revenue, it's the economics from the donations that the football, that football generates both from, from alumni who want that program to be good because they went there and they played for that team.</p>
<p>I'm gonna skip </p>
<p><strong style="color:#6600CC">Marc:</strong> the, just a couple more left. I'm gonna skip that. I'm gonna skip the hedge fund, spend a moment on adult, adult daycare. So I just highlight a couple things in the adult daycare theme. So just I, maybe everybody knows this, but I just, from where I grew up, it's just kind of very clear. There's two very different young adult, adult experiences for people in the us.</p>
<p>There's the go to college and be in a college campus environment between the ages of like 18 to 22. Or even 18 to 24 and kind of <span style="color:#808080">[01:24:00]</span> be in this kind of not quite adult where you're, it's like a supervised environment. Yeah. There's a lot of things taken care of for you. So there's, there's the sort of, it's, it's, it's not the real world.</p>
<p>And then there's just this totally different experience that people in middle, middle or lower middle class or lower class have that. They just don't do that. And so you're 18 and you get a job. Yeah. And like you get an apartment and like you're in like real life. And so there's this big discrepancy. And of course the lucky kids are the fortunate ones, are the ones who go through the, go through the college part.</p>
<p>Yeah. They just have a like, completely different, and I tell you, much more pleasurable experience for the course of that than just going to work. Right. In part 'cause the jobs that you get, like if it goes because of the credential, if you don't go to college, the job isn't even as good. And so you, you have to start working sooner and the job isn't as good.</p>
<p>Right. Yeah, you're doing something hard. Yeah. You're out in the heat. It's like you say, real, you real life and then like a lot of people have observed and we hear this, you mentioned, we hear this from employers, but like a lot of people have observed that like there, there, there is something happening, there's an entitlement, indulgence culture that has gotten very intense that a lot of people are experiencing from grad graduates.</p>
<p>And that's probably been <span style="color:#808080">[01:25:00]</span> the case for a long time. And we're prob we're probably, you and I are probably examples of it at one point in our lives, but like it seems like it's gotten much worse in the last decade. Jonathan Het has written about this at length. He's a professor, I think at NYU is studies this issue and he's a psychologist and he, the way he describes it is he says basically the way that these environments are run now, he refers to it as reverse CBT, which is sort of reverse cognitive behavioral therapy.</p>
<p>And so what, what he says, yeah, I'll, I'll spend a moment on that. So what he says is cognitive. So cognitive behavioral therapy, CBT is the one form of therapy that clinically replicates. So it's the, it's the one form of therapy that will reliably make people feel like basically function better, um, uh, psychologically.</p>
<p>And it basically, it's, it's essentially applied stoicism. It's basically taking responsibility for your own life. And so it's basically getting you outta the mindset of blaming other people for your problems and more into the mindset of taking charge of your own life and figuring out how to process through your issues and, and focus on outcomes.</p>
<p>And so he, he says the culture at universities now in a lot of cases for, especially for undergrads, is what he calls reverse CBT, which is, is teaching you that basically you are a victim and <span style="color:#808080">[01:26:00]</span> you are oppressed. Yeah. And if anything bad happens to you, it's, it's be, it's somebody else's fault. Right. It's, it's it's systemic oppression.</p>
<p>Right. Or it's bias. It's, it's this or that, or it's, you're in the wrong group, aggression. Right. Right. Microaggressions or whatever. It's this entire cluster of basically things that have people basically convinced that they, that they basically don't have control. Yeah. Right. That, that basically li life is outta their control.</p>
<p>And then he, he, he points to this like rapid escalation and reported, uh, rates of like reported mental illness and reported basically like need, need for therapy, mental, mental illness, mental health services. And so he, he basically says something is going very wrong. And then you also have these recurring scandals happening on campus with what you might call the do it yourself on campus justice system.</p>
<p>Right. Which is if you don't go to college and you're 19 and you get accused of sexual assault, like you, you're dealing with the police. If you're 19 on campus and you get accused of sexual assault, you're dealing with basically campus hr. Yeah. </p>
<p><strong style="color:#72B372">Ben:</strong> Yeah. And the university is actually required to adjudicate </p>
<p><strong style="color:#6600CC">Marc:</strong> rape.</p>
<p>Y Yes, correct. So yeah, so basically Title IX Department of Education requires <span style="color:#808080">[01:27:00]</span> universities to adjudicate rape cases on campus and other, other forms of, of potential, uh, alleged offenses like that. But no university has its own court system. </p>
<p><strong style="color:#72B372">Ben:</strong> Yeah. We like fucking try and make it up as we go. Yeah. It's, it's, it's not good.</p>
<p>So there's, </p>
<p><strong style="color:#6600CC">Marc:</strong> there's no, there's no, there's not even a formal, so therefore there's no guaranteed to due process. There's no objective standard of evidence. There's no lawyers, there's no defense. Yeah. You don't have a, you don't have a Right to an attorney. Yeah. And so there, there have been kind of recurring scandals in, in lots of different directions, um, on this.</p>
<p>And so, so there's this hot house kind of psychological, legal, HR environments that's been created that, again, just according to objective metrics of things like reports of, of mental distress, seems like it's going very badly. Sideways. Yes. Let me lemme pause there and </p>
<p><strong style="color:#72B372">Ben:</strong> see what you think. I definitely agree with that.</p>
<p>I mean, I think that, and look, the other thing that you have to throw in there is like, you've got students, no parents. A lot of alcohol and drugs in college. I mean, and so the look, I mean, we know from the work environment <span style="color:#808080">[01:28:00]</span> like that, the, if you want sexual harassment, like serve a lot of alcohol at company events, right?</p>
<p>Like that's the way you get it. And so it's that you just, you, you create an environment with like drinking and drugs where you actually do have like, no matter how, whatever good the kids are, you just end up with incidents and then those incidents are adjudicated in some kind of weird kangaroo court and then, and all that implies, and then the savvy students can obviously manipulate that system if they wanted to and, and, and, and so yeah, like that, that part, although again, like it's really tricky because this is in any, I think college, it's a tiny like.</p>
<p>Percentage of the population that gets involved in that, but everybody knows about it. Um, so it it has an effect. Yeah. Well, and again, </p>
<p><strong style="color:#6600CC">Marc:</strong> <span style="color:#808080">[01:29:00]</span> just a reason I bring it up, it just goes back to the, again, once again it goes back to the credentialing, right? Which is just like, what, what are you getting? What, what, what kind of person, what kind of human being are you getting on the other side of this?</p>
<p>Who's been through a system that sort of cates a set of values that result in very high levels of emotional distress? Like what does that mean for employment, workplace culture? You know, what are like, are employers gonna have to like screen more aggressively for behavioral characteristics if more and more of the, of the graduating students have, like, experience very high levels of emotional distress kind of going through this process?</p>
<p><strong style="color:#72B372">Ben:</strong> Yeah, I have heard about that more recently when hiring college grads. I have to say that the college grad, college graduates we've hired at the firm, I haven't seen that at all. I mean, like, they're like the young people we have. I, I think like, wow, I'd never get a job here. These, these kids are so good. So.</p>
<p>In terms of direct experience, I don't see it yet, but um, I'm sure it's out there or it, it seems like it, it's likely. </p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah. Okay. And then I'm gonna skip dating site, which is one of my favorite topics, but we, we will tackle that over time. And then we go to the final one, which <span style="color:#808080">[01:30:00]</span> is lobbying firm. So let me, let me out outline a bunch of thoughts here, and then, and then Ben, I'll get your take.</p>
<p>So, so most importantly, like, look, everything we've described, the entire bundle runs on taxpayer money. So, and basically there's, there's, and there's multiple streams of taxpayer money, but there's four big ones that I always focus on. So one is federal student loan funding, which is now in the trillions of dollars of subsidies.</p>
<p>Uh, for federal student loans. In other words, like students would not be able to afford the, anywhere near the level of attendance rates that they have without, without that program, which is hugely expensive to the tech, to the taxpayer in which now has direct bailouts attached. And so that's a very expensive taxpayer program, federal research funding, which is very large.</p>
<p>And by the way, very significantly, federal research funding isn't just funding for research. The administration, uh, takes a rake of, at these institutions of, of, of the research funding that's actually quite large. And so the, they, they get a, a big, a big percentage of it. And so that goes to pay for a lot of, a lot of administrative expenses and administrator salaries.</p>
<p>And then there are two key tax exemptions. There's a tax exemption at the operating level, which is, these are, these institutions are, are nonprofits. And then there's a, an a tax exemption at the <span style="color:#808080">[01:31:00]</span> endowment level where, which is their, their endowments compound on a, on a tax-free basis. Like a foundation.</p>
<p>And then there's a really critical kind of detail to kind of who gets access to all this. Like which institutions get access to all this federal support and all this money. And, uh, that's the technical term is accreditation. Um, these are, uh, the institutions that have access to everything I just described.</p>
<p>They're all accredited institutions. If you dig into the detail of that, there's a very interesting little quirk to it, which is these are institutions accredited by the Department of Education, but the Department of Education, federal Department of Education does not itself do the accreditation. Um, what it does is it outsources the accreditation to associations, the third party associations that do the accreditation and those third party associations are made up of, and you will never, you never guess universities.</p>
<p>The universities. Right. And so just as an example, just to pick an ex, pick an example, Harvard, I looked it up last night. Harvard is accredited by something called the New England Commission on Higher Education. That that commission is a nonprofit, which is composed of 200 colleges and universities such as.</p>
<p>Harvard and so the, the, <span style="color:#808080">[01:32:00]</span> the, the, </p>
<p><strong style="color:#72B372">Ben:</strong> it makes it kind of hard to start a new accredited university. </p>
<p><strong style="color:#6600CC">Marc:</strong> Correct. This is, this is sort of viewing this as a venture capitalist. That's exactly right. Like, could you start a new university and get accredited today? And the answer is almost certainly no, I wouldn't get no federal funding then, and then it would be non economically viable.</p>
<p>Right. And so, and then of course in, in, in economic theory, you have a term for this, which is cartel. Mm-Hmm. And so there's an education cartel, you know, in much the same way that there's like an or cartel or whatever. So like that, that, that, that, that, that's the setup. The fiscal situation at these places is actually quite interesting.</p>
<p>So we talked already student, the cost, uh, student costs tuition and, and everything else increase much faster than inflation. But these are nonprofits and so they're not trying to drop money to the bottom line. So instead of, what they do is they also inflate their operating costs to go right along with the student costs.</p>
<p>And so what they're doing basically is they're, they're as, because they're able to escalate tuition rates so dramatically, they can escalate the entire cost base at the equivalent rate. And they're able to, </p>
<p><strong style="color:#72B372">Ben:</strong> I, I think it's important to note they're able to escalate, uh, <span style="color:#808080">[01:33:00]</span> tuition rates so fast because believe it's in the Obama administration, the federal government.</p>
<p>Basically said that the government would lend anybody the money to go to college who needed it. So basically, so it's unlimited. The university just basically raised tuition 'cause you have to go to college like it's in the, or It got into the ethos of the culture that you can't get a good job without going to col college.</p>
<p>So everybody has to go to college. Everybody can afford college 'cause we'll lend you the money and so therefore we can charge whatever we want. </p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah. It's a, you have an infinite federal, you have a multiple trillions of dollars. Infinite federal backstop. For for the, for the, for the student. For the student side of it.</p>
<p>Yeah. Including now with the, with the bailouts. And so you basically just like you get to write a, you get to write these checks to yourself from the taxpayers only </p>
<p><strong style="color:#72B372">Ben:</strong> for accredited universities. </p>
<p><strong style="color:#6600CC">Marc:</strong> For accredited universities, for the, for the universities that are accredited themselves. And then what happens is a lot, if you talk to anybody involved in these places, what you find is that a lot of the expense <span style="color:#808080">[01:34:00]</span> escalation is not where, where the expense escalation is not going is towards taking on more students.</p>
<p>Right. Or for that matter, taking on more research where it's going is to take on more administrators. And so the sort of administrative component of these places, the, the, the sort of bureaucratic structure, like that's where the cost inflation is like really kind of going wild. There are multiple large institutions too that have been identified in public Stanford and Yale that now have more administrative staff than they have students.</p>
<p>Right. And so, and so, and, and the, the joke, the joke at those places is like we could literally replace, we could literally have a personal concierge for every student. And so you're talking tens of thousands of, of, of administrators. And again, the administrators are RAK funding from every other part of the complex.</p>
<p>Everything from sports to research, to tuition, everything else. And so, so anyway, but the, the point is like the, the, the, the, the operating cost is, is, is escalating. These places are not running on high margins. They're actually spending the money that's coming in. Yeah. And then the endowments. The endowments are big, but they're not that big relative to the expense base.</p>
<p><strong style="color:#72B372">Ben:</strong> Right. And so, well, and, and then there's normally like 10 big endowments in the country. Right. </p>
<p><strong style="color:#6600CC">Marc:</strong> And <span style="color:#808080">[01:35:00]</span> there's only 10 big endowments. And then there's one other trick, there's one other twist, which is a lot of the assets of university endowment are restricted. Yeah. They're earmarked exactly. Right. They're earmarked by the donors for specific programs.</p>
<p>Yep. And so they're not, it's not, the endowment is not a giant pot of money that the administrator can do whatever he wants with it. It, most of that money is actually off limits. If you talk to people who run these places, they will, I'm, I'm not saying anything I don't think that they would agree with.</p>
<p>Like these places are actually quite, they're, they're not levered in terms of debt, but they're levered in terms of a very high dependency on, on, on the entire structure that they have in place right now. And if there is ever a crack in and, and the number of students, if there's a crack in access to federal loan funding, if there's a crack in research funding, if there's a crack in sports funding, if there's a crack in the tax structure.</p>
<p>Like these places are not as fiscally, uh, stable as they seem from the outside. And, and, and they seem, quite frankly, just from the outside, they seem unable to constrain any of this. They just, they seem like they're on a one-way treadmill on, on, on everything that we're describing. And then now, on top of that, at least some institutions, you have these donor <span style="color:#808080">[01:36:00]</span> strikes, right?</p>
<p>And so you have this kind of open question as to whether the, the, the donor flows are gonna happen. And then let me add, add one more thing, which is where I, I start to get worried. For my friends who run these places, so Gallup does this, they do these, they do these surveys every year on trusting institutions among the American voting public.</p>
<p>In 20 15, 50 7% of American voters had a positive view of American universities. 57% in 2023. That's 36%. Well, </p>
<p><strong style="color:#72B372">Ben:</strong> statistically significant drop </p>
<p><strong style="color:#6600CC">Marc:</strong> statist. Statist, yes. So that is a, that is a yes for the math majors in the audience. That is a 21% drop in eight years. And so if you're running a business like you're, you at that point, you're like, you're freaking out.</p>
<p>Right? Like, you're, you, you, you're tearing your hair out and ending up with a haircut, Ben. And I have because like, you, you that, that's just like, oh my God, what's happened? Wow. I'll just give you a, a couple other data points on that. There are, there are, you can see, find this on the Gallup website. There are drops in every subgroup, so there's no subgroup.</p>
<p>That has a higher view of, of universities, every, everyone is, is a drop. And then among people with no college <span style="color:#808080">[01:37:00]</span> degree, it's a 25 point drop. And of course if you're running a college, you're not used to thinking about people with no college degree 'cause they're not your constituent. But the problem is they are voters and they are taxpayers and they are a large percentage of the population.</p>
<p>And you do need their, you, you, you do need their support in order to keep the sort of funding aspect of this, of this rolling. And so I, and then there's this question of like, okay, 57 to 36%, 21 point drop in eight years, is that anomalous or is that gonna continue? And like you could hypothesize that that was a one-off, but you could also say, wow, like, </p>
<p><strong style="color:#72B372">Ben:</strong> and.</p>
<p>Media blitz on. Oh, this </p>
<p><strong style="color:#6600CC">Marc:</strong> is all pre, yeah, this is all preoc. October, October 7th. This is all pre the recent stuff. Yes. Yeah. </p>
<p><strong style="color:#72B372">Ben:</strong> The congressional hearing. Yeah. Uh, </p>
<p><strong style="color:#6600CC">Marc:</strong> so if you poll today, yeah. If you poll today, it'd be hard to imagine the numbers are higher. It'd be easy to imagine that they're lower. But let, let's even say, so what's the baseline?</p>
<p>Is, is it, is the baseline of 3% drop pre, if you just go in the last eight years, eight years, 21%, um, it's like a whatever, two, two to 3, 2, 2, 2 and a half, two, three quarter something <span style="color:#808080">[01:38:00]</span> percent drop per year. And so if you project that forward in the next decade, you could lose another 25 points. So that 36, that 36 could drop to 11.</p>
<p>Yeah. By the way, 11, 11 is like where Congress is, right? Like Right. And so like there are institutions in the US that have like 11, 10, 9, 8%. </p>
<p><strong style="color:#72B372">Ben:</strong> Yeah. But people don't pay for them or like don't pay for them directly. </p>
<p><strong style="color:#6600CC">Marc:</strong> Congress has a huge advantage. They get to set their own laws. The rest, the rest of us are, are subject to that.</p>
<p>And so I think there's a really fundamental, I I think if, if I were a leader of one of these organizations or on the board or, or just as a public spirited citizen as I am like, and I want these institutions to succeed, I think there's a really fundamental, critical thing that you have to look for. You have to look out for the next five to 10 years and say, okay, what if these current trends continue?</p>
<p>And if popular support drops in 36% to 30 to 20 to 10%, which is a real possibility, like, is there, therefore the political will in the country and support to maintain the current structure and in particular the current funding structure. And I think you need to close your eyes and imagine that you <span style="color:#808080">[01:39:00]</span> lose the operating tax break, you lose the endowment tax break, you lose the, the potentially the research funding.</p>
<p>You lose the, the student loan. Like all these things could come to political head. I, I think essentially at any moment with, with the pressures that, that, that are in place right now. And basically </p>
<p><strong style="color:#72B372">Ben:</strong> like a candidate could win based on a promise to defund the university if you're not careful. Right. </p>
<p><strong style="color:#6600CC">Marc:</strong> Exactly.</p>
<p>And of course, and again, we, we've tried to not talk that much about partisan politics on this, on, on this, on this, in this, in this thing. But to the extent that these places have become very partisan political actors themselves, they're, they're having an a, maybe their supporters feel better about them, but they're having an alienating effect on a large part of the, uh, of the voter base and, and a large part of the, uh, political structure of the country.</p>
<p>And so I think there's a, I think there's an existential question, and, and it's not, look, it's not that these places don't have lots of levers that they can pull and, and lots of things that they can rejigger. But to your point, like kind of what, what's the level of, what's the level of sort of predictive power and then sort of leadership willpower that you need to get in front of problems like this?</p>
<p>And I think that's a very open question right now. Yeah. </p>
<p><strong style="color:#72B372">Ben:</strong> Yeah. No, it, it, it's scary. I mean, you have to, <span style="color:#808080">[01:40:00]</span> like, I would just go back to the like gigantic amount of goodness that's in the universities and all these problems could, could certainly. Undermine that in a kind of fundamental existential way. If, if this, if these trends go unchecked, very, very bad things could happen.</p>
<p>So which gets into, okay, what do you do? </p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah, so we're pushing, we're coming up in two hours, and so I think we should probably not have the long form. What do you do, uh, conversation this time? I would just volunteer, add, add whatever you'd like. But I would volunteer two things, which is, one is, well, there are actually three questions, which is one, one is the reform question, which is like, okay, what if you were, if you were, if you were still on the board of Columbia, what would you be trying to do?</p>
<p>And like, what, what's the reform opportunity? And look, which of these problems do you actually wanna tackle and whatever, so forth. All the, all the interesting questions that flow from that. Uh, second question should be, would be like, look like in, should, should there be more universities? Like one, one of the issues is just like, there just aren't as you, as you said, there just aren't enough slots.</p>
<p>Maybe part of the answer is create new institutions and maybe you figure out a way to get them accredited and so forth, <span style="color:#808080">[01:41:00]</span> but, or figure out another funding model. Or maybe they happen in other countries or whatever, but so could you start new competitive institutions that maybe are able to solve some of these problems if it's too hard to, to, uh, reform the current ones.</p>
<p>And then the third, and this is probably, we should set up another session on this, but you know, then, then, then there's also like the, is there a potential, is there basically potential for entrepreneurial opportunity here? Uh, that, that would basically be a side effect of unbundling. And so for example, could you take the credentialing component of it and have a business or entity of some kind that just did that?</p>
<p>Could you take the educational course thing, break that out separately. Could you take the research part, break that out separately, the policy part. Right, the immigration part, the sports part, the social aspect of it. And, and there are, by the way, and there are founders and startups in, in, in, in a bunch of these sectors.</p>
<p><strong style="color:#72B372">Ben:</strong> Oh, yeah, yeah, yeah. We, we funded over time, which is doing that in the sports area. </p>
<p><strong style="color:#6600CC">Marc:</strong> Yeah, exactly. And so like, does, does it make sense to think about either startup, more startup companies in these sort of unbundled categories? And by the way, maybe it's not all for-profit companies. Maybe also we just need like literally more nonprofits.</p>
<p>Maybe you need actually <span style="color:#808080">[01:42:00]</span> sort of independent entities. Maybe, maybe hypothetically there should be more independent research institutes or independent science institutes. You mentioned HHMI, like maybe, maybe funding should go to, maybe, maybe there's a different way to do research funding. There should be a much bigger Phil philanthropic component to research funding in place of, of the government's role.</p>
<p>And there are pe Patrick Halon has a big, and his wife have a, have a big new biotech, uh, research institute at Stanford along those lines, or associated with Stanford, but as a separate thing that they're funding. And so there's, there's these very kind of interesting questions along the way. And so anyway, for the entrepreneurs, the audience as you're listening to this is just think, okay, think about the, each of these sort of functional components of the modern university.</p>
<p>Like in historically when there's sort of this sort of systemic situation going on, there's often entrepreneurial opportunities to kind of split off aspects of it and break them out into, into separate categories. </p>
<p><strong style="color:#72B372">Ben:</strong> Yep. I think those are all good. I mean, just kind of going back to your question for me, which is, okay, if I was a trustee still at Columbia, what would I advise 'em to do?</p>
<p>And I think that, like, I kind of think that a huge, or, or, or a very large part of the <span style="color:#808080">[01:43:00]</span> problem is the number of constituencies that a university has. So you have, as we kind of alluded to, you've got the student, you've got the parent, you've got the donor, you've got the, you have the trustees, you've got the sports fans, you've got the faculty, and you're kind of trying to optimize this very elaborate bundle for all those constituents.</p>
<p>And I think that that is, that's gotta be focused. And I think the way out is to focus on the student because the student is the thing that if you ba basically the way I would look at it, if it, if it was my business and a university is different than a business, but it's got a lot of the same characteristics.</p>
<p>I think if you lose the student, you're done. That's the end of the whole thing. Like it doesn't matter what the faculty think, it doesn't matter what the alumni think. It doesn't matter what the donors think. It doesn't matter what anybody thinks. If you're not <span style="color:#808080">[01:44:00]</span> attracting and developing the brightest minds in the world, like if that's no longer happening, then that's it.</p>
<p>Like game over. And so my view would be I would try to refocus the whole university on the value proposition to the student and then the kind of student that we produce, like how do we attract the best, give them a value proposition so when they come out, they make an outstanding living, easily pay back their student loan and, and everybody wants to hire them.</p>
<p>And like, let's go back to that and, and I think if you had that as the focus, then I. A lot of the problems would solve themselves. Now, very difficult to do because the university is a hierarchy, and it's not a hierarchy. It's kind of like there's an administration. There's faculty, faculty have tenure.</p>
<p>When you have tenure, you're very hard to remove. <span style="color:#808080">[01:45:00]</span> And, and there's a just a huge constituents of administrators and politics and, and, and everybody is hired. Like there is nobody owns, there's no owner, there's no founder. Like these things were founded a long time ago. There's no founder left. There's nobody who can just exert their moral authority to get that done.</p>
<p>So I think that it, it is a hard problem, but I, but it is solved because the assets are so strong. I mean, they've got the gorgeous campuses, the amazing faculty, the like incredible reputations, global reputations. So I. There, there, there's a lot to work with, but these are real problems. I think that's a good, uh, point to end on.</p>
<p>Alright, great. Well thank you. Hope you enjoyed it, and then we'll be back to </p>
<p><strong style="color:#6600CC">Marc:</strong> talk about how to solve it. Sounds good. Thanks everybody.</p>
<p><span style="color:#808080">[01:46:00]</span> </p>
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