Diaspora NZ with David Booth
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?
00:40:48 · Jamie Beaton
[00:40:48] S1: The first thing that I would say, and I think Obama did this as well during his presidency, is there needs to be huge information transparency around university graduate debt levels, salary levels, completion rates, turnover rates, etcetera. A lot of universities have survived because they are able to convince students that they're much better than they are. But if you have a full transparency into the data, you can't hide. If your if your university doesn't graduate good people or, you know, if everyone's dropping out, the market will discover that quickly. You'll get a bad reputation. You'll go out of business. So what's happening is Boston University, again, used to be considered more like a safety school. Now it's highly selective. And more and more schools... It used to be the top 30. Now it's top 50, top 80. It'll keep going down, and more of those schools will be considered, like, world class. And, you know, a university that that fights hard to be ranked seventieth in the world will be of great significance, and a lot of people will wanna go there. Then there'll be low cost opportunities that pop up, you know, more community colleges, online community college programs, online university programs that are very vocational focused, you know, future evolutions of general assembly, for example, and the coding boot camp land. So I would say what you need is you need the reckoning actually to purge all of these bad And then, you know, you want more online scale from many of the good ones. And certainly, certain schools like Harvard, they will basically prestige maximize. They're not gonna try and... They're not gonna increase the undergraduate role. And they could, like, 50 x if they wanted to with the with the endowment they have, but the whole, you know, virtuous loop of the top universities, you know, based on the fact that it's highly selective. And probably one of the most powerful signals they give its graduates is just the admissions office selecting the student because that is the signal that then fuels Blackstone and McKinsey to then chase students. It fuels Y Combinator to throw capital at these guys. And so if you broaden the if you broaden the pool of students getting in, you actually hurt one of the most economically valuable functions the university plays, which is like a sorting function. And so they won't do that.
00:42:42 · Jamie Beaton, David Booth
They might have some online programs, but they won't increase the undergraduate size. But that's fine because you can have the hundredth ranked school have more students. And think about University of Toronto. Today, takes... I think it's got 70,000 students, I think. It's, like, more than 10 times the size of Harvard. So you can have a couple of schools that wanna do the Harvard thing, but you can have other schools that have a 100,000 students and are really good too. And so, you know, the market hopefully should adjust for that too. And, you know, you see also it's a global landscape. So kids can go to Canada, kids can go to Australia, kids can go to Singapore. There are plenty of good schools. I would say there are probably 500 good universities in the world, but there are thousands and thousands and thousands of ones that probably aren't so helpful. [00:43:24] S0: Yep. Yep. Makes a lot of sense. Tell tell me, shifting into your journey a little bit more because I think there's some really fascinating insights, all of these entwined, but your journey has been a very international one. The journeys of your students that follow through have been very international. When... Do you recall the moment that you said, I've gotta go to America. I've gotta study in these places. How do you think the right time to get out? You look at some... You know, Laura Deming went to MIT when she [00:43:49] S1: was Yeah.