Diaspora NZ with David Booth
00:34:24 · David Booth, Jamie Beaton
[00:34:24] S0: Yep. Yep. So there's no there's no working on behalf of a particular college trying to fill out their specific application pathway. Even though I think the... Probably the middle of the bell curve of colleges in The US would actually really like that service, that they're looking for more applications, particularly where where, you know, we started out a more global application pool for Totally. A more selective sort of top tier. I mean, you're really curious about the... Yeah. What that says what that says for the college model generally, and I have absolutely no fear for the Stanfords and Harvard as well. You know, people are gonna be applying to go to those institutions based on the raw prestige and the sort of the density of talent that comes along with it. The middle of... Or the middle to lower end of the spectrum of colleges in The US seems like there is an industry which is not necessarily serving its customer terribly well. Yep. Yeah. There's a a still a very expensive product. A lot of the the data in in this country in particular, we're sitting here in New York, shows that people who took on a lot of student debt over the past decade [00:35:21] S1: Yep.
00:35:21 · Jamie Beaton, David Booth
[00:35:21] S1: Yep. [00:35:22] S0: Have not necessarily ended up better off than doing so. A lot of the colleges that, you know, charge them a lot of money and stacked up a lot of student student loans along the way have sort of become fat and bloated of sort of the administrative overhead. The the the cost disease, Baumol's cost disease has continued to drive prices up in the space. If you connect this together with a conversation about AI and the the dropping cost of tutoring and the understanding of what's actually needed in the world to succeed, what happens in the next, knows, ten years? Is there a reckoning coming for the the long tail of higher education? What happens next?
00:35:57 · Jamie Beaton, David Booth
[00:35:57] S1: So firstly, I would say a huge amount of the world's universities today shouldn't really exist anymore. And the reason for that is they've got no competitive advantage. They sit in a country, and they've only succeeded because they physically are close to a bunch of students. But in a world of online access and global mobility, if they have no competitive advantage and they don't have a particularly good commerce program or a particularly good AI program, they're just a physical building with teachers who aren't necessarily best in class without any particular magic or alumni community. Those universities will get smoked over time. Why would you... You know, if you're a student in Wellington, and you could take part in a Johns Hopkins online, you know, medical undergrad degree with some in person, some online, and they had a remote lab, for example, in Wellington, but you took a lot of the core classes from some of world's best faculty in Baltimore, Maryland. [00:36:43] S0: Mhmm.
00:36:44 · Jamie Beaton
[00:36:44] S1: Why wouldn't you do that? Mhmm. So I think what you'll definitely see, and you're already seeing, is bankruptcies of huge amounts of the weaker universities that don't really have a competitive value prop. The same way ecommerce has decimated a lot of, you know, physical store chains around the world that only existed because they were close to other... To people. Mhmm. And, you know, you get the mega brands that emerge. The same phenomena is happening in college... In colleges in general, where more of the long tail will be lost, and colleges will have to be hyper specialized to succeed. So certain schools like Babson that have built up a cult following around entrepreneurship, that's great. But the school that's just sort of mediocre everything and is also high cost will get smoked. The other two things is there a lot of universities that I would say are fake Ivy League pretenders where the Ivy League costs 80 k USD, but actually a lot of kids don't pay that because of the financial aid we talked about earlier. But they still charge the same crazy price with much worse outcomes. They look similar because they've got a fancy building. They've got a nice lawn. They've got some nice brochures. But the outcomes faculty results are far worse. Those schools are getting smoked because you can't pretend to be something you're not for too long. Now, of course, as there's more and more demand for the top schools, you see the spillover where a school like NYU, when I first began Crimson, I would say it was a a match school for many. It wasn't considered extremely selective, but now it's considered extremely selective for most of the world. It's very tough to get into. So you're seeing more of the top schools in the top 50, top 70 get hyperselective, but the long tail, the thousands of US colleges and then the tens of thousands of universities around the world, many of those will get smoked. And then to your point on student loans, it's actually probably one of the most horrific things, I think, in American society is that there was these huge scaled for profit university companies, many of them funded by student loans, where a student often from a disadvantaged background will go. They'll get funding from the government. They'll enroll in this expensive degree that costs way more than it should.
00:38:32 · Jamie Beaton, David Booth
The degree, you know, is a commerce degree, and the degree tells you that all the graduates get into business jobs. Many of them are just going to Starbucks as a barista, and Starbucks is a business. They count it as a business. And you saw Obama crack down in a big way on many of these guys, and, you know, they had billions and billions and billions of dollars of value on the stock market, and a lot of these companies got smoked as they should have. And, you know, they were probably the worst offenders. [00:38:55] S0: Mhmm. [00:38:56] S1: So I would say there is definitely a quality reckoning happening where the strongest schools that add huge value to their graduates, like a Stanford or something, are accumulating more market power, more and more applications, more and more demand. You know, applicants have gone up by five times in the last thirty years to these schools, and then the the the long tail are getting smoked. Mhmm. [00:39:13] S0: There's a lot of people getting smoked. I I mean, it's it's the it's the free market doing its thing in a way. Yeah. And you're right to call it out. There's there's productive beneficial for most. The problems come where there is, I think, in The US, in the specific case, of the the debt that you might take on to go to these institutions is not even forgivable of bankruptcy. There's a lot of people who are carrying that through. [00:39:31] S1: It's crazy.
00:39:31 · Jamie Beaton, David Booth
[00:39:31] S1: It's crazy. [00:39:32] S0: Yeah. And one thing that comes to mind is is, again, like, the elite institutions, the ones you're talking about, they're the ones that the world are aspiring to come to, but they aren't necessarily increasing their their admissions count. A lot of them are capped in the number of people they'll they'll bring through, even though they don't necessarily need to be. There's a sort of view that I I believe was first very popular during the pandemic, that while everybody was sitting and learning from home, and in theory, the number of people, you know, Stanford, Harvard could have taken 10 times more students in the year of 2020 or 2021. They obviously didn't. They sort of have maintained a specific role count and a specific sort of student admission count. The cynical view of that would be that they're doing it to preserve the the eliteness or or not to dilute the the brand further across a larger pool. The practical view might be more, yeah, constrained by physical numbers that you can teach. But at this point, you say, well, if the mid to long tail of of institutions is gonna get smoked, the elite ones are gonna be fine and gonna have you more applications than ever, but people can't go through that. So how do you sort of resolve that for the people who don't, who might be very ambitious, might be very talented, shouldn't get into the local... Shouldn't bother with the local mid tier university, but they can't get into the elite one? What is the the sort of the path for them?