Crisis in Higher Ed & Why Universities Still Matter with Marc & Ben

22:00It's in the fact that you were admitted, and then it's in the fact 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, this become very popular, which is I was admitted to MIT, but I didn't go. Or I was admitted and I went for a year and dropped out. And it turns out there's no penalty for VCs like us. Actually, the fact you got admitted at MIT is itself a credential, even if you never went. even if you never actually completed the thing. So it links back to the Sheetskin effect anyway. So basically like 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.

22:38There's the admission, the fact you got admitted, and then there's the fact that you graduated in psychological testing terms, sort of 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. And the reason we can be confident in saying that admissions as an IQ test is that traditionally admissions was based on standardized testing, which is like tests like SAT, ACT, GRE, and those tests from a clinical standpoint, like in clinical psychology, psychometrics, those tests are all proxies for an IQ test.

23:15Those are all sort of roughly equivalent to just a straight IQ test. We're highly correlated. Highly correlated to an IQ test, point eight or more kind of correlation to an IQ test. So basically historically, the fact that somebody got whatever 1 ,400 or 1 ,500 on the SAT and that correlated to an IQ of 130 or something and then therefore they were qualified to go to a certain tier of university like that was as long as that standardized testing components in there and those tests are real like that. That's a real signal of like an basic intelligence. And then the fact that they completed the four year degree is a real signal of conscientiousness.

23:48And I think there's a really kind of fundamental thing that's breaking right now that's not getting enough attention. The employers are starting to really think about, but I think a lot of people who write 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, both for ourselves 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. And there's a whole political social kind of overlay as to why that's happening.

24:18But at a lot of even the top institutions now, they very deliberately are not being in a mission space in any sort of standardized testing, which means they're not applying the IQ test, which means, which means, by the way, maybe that's the right thing for them to do, but what it means is they're giving up on that as part of the credential. Like that IQ component of the credential is being voluntarily surrendered. And then the other thing that's happening, and this is very clear, the data is just great inflation. And so the trend over the last 50 years has been increasingly that just everybody gets a and everything.

24:45And of course, if you just get A's and everything, of course, it's a lot of you should graduate, right? You're much, much less likely to drop out or get forced out. And 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. 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. Yeah, and what do you think drives the great inflation the most?

25:15I've been thinking about that quite a bit Do you have a view on that from what you saw Columbia? Yeah, I mean, I think that a lot of it has to do with incentives, right? So if you're an instructor you get Yeah, 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 and And the easiest way to get a high student evaluation is to give them 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, because they're going to come to you and complain and harass you and so forth, like, why do it?

26:01You don't have to. So just give everybody an A, you get a high evaluation. 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 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 and why not me and then 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.

26:44And so like I think it just naturally went there, but I'm not sure. Well, I'll give you two other, I think that's right. And like the role of, I think it's like my professors .com and I think it's pretty central now. But I'll give you two other incentives I think. I would suspect one is development, donated future donations, right? which is the other constituency here as the parents. Yeah. And then by the way, these students, and then these students later on becoming donors, right? And like, I think that the professors, most professors are not that directly connected to the fundraising process though, I think.

27:18Right. Yeah, that could be certainly. But it also, but then a year ago, to like, here would be a reason for the administration to not be holding the line on. Oh, sure. Right on up. Yeah, and the last thing you want to deal with is an angry parent who don't need a fuck ton of money. That's like that's no fun at all. So so in that way definitely the same thing. Yeah. 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 could for bad grades you can be hauled in front of administrative proceedings. You can get in trouble right because you can open the door to fairness right equity classroom conduct.

27:50Yeah, the complaints like the the students and the parents can complain and they can get you in the same room. It gives you a false harassment complaint or something because you can do, right? Yeah. Hostile classroom, like, you know, so the HR, the sort of HR policy is basically providing Avenue. And by the way, there's Avenue for legitimate complaints, but also if you're a professor, you must be thinking about why I, what's the last thing I need in my life is to open the door to somebody saying something like that. And so, yeah, I think that's, to me, I think that that's my analysis is just, and then this is the thing, the great inflation thing, like the great inflation thing has been, it's been like a 50 -year trend, like the charts there are like actually pretty linear.

28:25Yeah, and so this is going for a long time. People have known about this, and it's just, it's not a problem as long as the credential is still intact. But I think it's at the point now where I think it's damaging the credential. Right, it slips, slips, slips, all at once. Yeah, and I think that, well, so there's another thing which I got in a huge kind of argument about when I was at trustee, and it's a Columbia's credit. 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.

28:59They accept a thought on the order of a thousand students a year. Every, you know, high school graduate in the world wants one of these slots. They're very hard to get, and that's the credential. But there's also these things, the extension schools, which are 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. And they all have them. Harvard has a Columbia, et cetera, et cetera. And they are mainly foreign students.

29:44So it's mainly like Chinese students. And then the 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. So it's Columbia University masters and statistics was the big kind of debate that we kind of got into at the Extension School because 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 going to distinguish? And the truth is the Chinese employer cannot distinguish. Like that's like really hard for them.

30:23And so you do that enough. And it ultimately waters down the green now in the United States, like we can distinguish when we get a student coming from Harvard, we like talk to other Harvard students, make sure they knew them, like, ooh, it's a possible disorder, but it's not possible to sort for everybody. 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, and then it's very scalable because they can let in as many students as they want because they're not taught by professors and there's no none of this credential idea.

31:04But it ricochets back into weakening the credential. Yeah. A lot of this, you alluded to it, but I'll just focus on it for a second. a lot of these are then international students. And the core of a lot of this, as you said, is this, yeah, if you're Chinese employer, you might not understand the gradations here. 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's the kind of information, a symmetry that the internet historically has been very good at demolishing. Yep.

31:34Yeah, yeah, yeah. And I think that that is, I mean, which kind of is going to be thematic in this discussion, which is a lot of the things that the university could rely on get undermined by the internet. And which is causing things to come to a head, I think. Maybe not right now, but certainly soon. Yeah, coming. And then Ben 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 on this top? of like the value of the University of Credential, now versus 10 years ago, and then where is it going?

32:14It hasn't changed materially yet 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. 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 Meta, they used to only hire people from Stanford and MIT, or I think are Harvard Stanford MIT. Like they had like stricker. Nobody has that role anymore. Like that role's gone. Like I don't know any company that you have to be Stanford Harvard or MIT, you like being engineer there.

32:59And more and more people are not finished school, coming straight to high school. So I would say the aperture, which is really great, by the way, has opened. But the other thing is that I am hearing a lot just anecdotally is, you know, Stanford students aren't what they were. Like, I got an engineer from Stanford, but they're not they're they're they're not ready. 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 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.

33:54But you could kind of see it's like a glimpse of the future for the first time. Like I've never, never heard that before. I mean, like. And if we project forward, if nothing, if current trends continue. Yeah, like what do you think will be the take among the sort of leading edge employers in five years? Well, I think look I think if you take out the SAT That's a pretty big change and so it's a little 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 had SATs.

34:40So the question is, is that whatever rubric of criteria that they're using to replace the SAT as good at identifying very gifted students? Or is it not? I said worse. And I think we don't know that yet. But would you predict in five years that employers are still just basically deferring to the degree, the question of a recruits IQ and conscientiousness, or are they feel like they're going to have to validate that otherwise? I kind of think they're going to have to validate it. I mean, just because it's different. And on kind of entry -level jobs, you can do some fairly rigorous testing, particularly for an engineer or something like that in the interview process.

35:32But Stanford, you had just a huge benefit of the doubt. I mean, look, I think Meta, at one point, took any engineer from Stanford. You know what I mean? Because they were hard. That good of a signal. Yeah, it was an amazing signal. So I don't think they'll do that anymore. I think Google just closed on the topic. I think Google now formally does not take college degrees into account, or at least they've said they're neutral or maybe able to enter it, don't care. They'll equally rank people with that degree. They do their own testing, they go in those tests. Yeah, yeah, yeah. So I think that's going to become much more of the norm where companies do their own testing.

36:12And it won't be, it's not legal, at least for sure, not in California, to do a general IQ test for a specific job. but you can do pretty rigorous job specific tests that certainly kind of include something that's gonna have ability to process information quickly, et cetera, et cetera. Okay, well, I'm sure we'll come back up again. So we'll move to number two. So the actual education, the actual education, the courses themselves. So here I was just saying, when Lenz and this is actually the, again, part of the bundle here, there's actually a bundle of four different kinds of sort of education and coursework, at least four, But I would say there's four big ones.

36:51So there's the sort of classy humanities, liberal arts, which as I said, is sort of derived from the English model. There's what we now call STEM, Science Technology Engineering Math, which is, as I said originally derived from the German model, and that's physics and everything from physics to engineering and so forth. Then there's social sciences, which is a bit more of an American innovation, which was social sciences are like a hybrid of humanities and STEM. And so these are fields like psychology, sociology, economics, public health, education, that were kind of developed as quote unquote sciences, I mean, anything that has science and its name is in science is the joke, right?

37:24Like, there's no physics science or chemistry science. It's only political science. Yes. So the classic tension is the political scientist absolutely assists that they're scientists just like the physicists. Yeah. And the physicist insists, no, absolutely you're not. You're not science, right? Like it's not like I have a hypothesis that's testable. I can run an experiment and find out if my predictions come from the science. true. So if it's not that, it's not science, but what a capital S science. And there's a whole digress where you can go on about where this all came from. But yeah, sort of they're in the middle somewhere.

37:58And 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 it's a very specific obviously, that of course is a credential or for it to become a concert pianist or something like that or a doctor. And so there There is this bundle, even within the bundle, 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. And then that basically takes us to sort of the problem here.

38:28So one problem here is the sheep's can effect we already talked about, which is basically, at least a very strong suggestion at least for some degrees and some institutions, the education is not as important as people might think or let's just say the market, the market of employer certainly doesn't think it is, because you just look at the compensation data and it shows that. But then there's this other master problem. And again, this problem has been discussed at length for decades, but 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 college and universities where they're carrying these large amounts of student debt.

39:02And in the really bad case, it's actually debt because of the high interest rates. It's actually debt that compounds, it kind of grows and definitely over the life of the students. And you can't get rid of it with bankruptcy, yeah. Well, so that right, well, so this is very interesting. So on the one hand, there's been this big controversy. 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 to bankruptcy. And it's the one form of debt that can't. On the other hand, though, you now have direct bailouts.

39:29So in the last three years, 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, they use this very clever word for giveness. which makes this one wonderful, of course, what it just means is it means other taxpayers, right? Other people are going to put foot the bill for it. And that's always sensitive as in the American system at least, because, of course, the American polity is composed in part of people who went to college and in part who didn't. And so people who didn't go to college might not be so keen about having their tax money, getting used to forgive student debt for non -productive degrees.

40:02And then, and then honestly, there's also 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. Yeah, and people who paid it off don't get forgiven. And so then 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 I'm a sucker if I pay off my own student loan debt because in the future there will be another bailout. Yeah. Anyway, 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 economically and politically viable proposition.

40:39Yeah, but I think that's the exact, that's the question that is the thing we should be debating because 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, and college is not worth the money. You would not have a college student loan crisis if whatever you paid for college paid you back 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 the job.

41:29So 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. 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. And that's a big, big issue because tuition, the quality degrees got to be pretty hard to pay back $300 ,000.

42:14It costs a lot of money for even 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's many customers which will get into, but 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, which is why we have the student loan crisis. And there has been an amazing inflation of tuition, which is 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.

43:17It's all on the internet and it's all in chat GBT. There is no knowledge that you can't just get from your smartphone very cheaply and easily. 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 it means clearly not, but $300 ,000 at all. And that's a big problem. Then I had a couple of things to that. So one is this inflation thing, and maybe we could put me posted a chart to go with this that shows this, but the cost of the degree, rising faster than inflation as a continuing process.

43:54and so in compounding here really gets you, right? And so if you compound forward like 300 ,000, 300 ,000 dollars, $350 ,000 dollars likes the cost of a four year private college degree right now in the US, but if current trends continue and there's no reason right now to expect that they won't, that's on this way to a million dollars. Yeah. Like and relatively quickly because of the compounding. Even if you work for us, that's hard to pay off. Right. Exactly, exactly. And so like this, there's a way, it's right now, It's a one -way treadmill and we'll talk later on at the end about the overall fiscal structure of these of these places, but like they they they the financial structures of these places Generally assume that this kind of sort of super inflation of costs is going to continue and and they're building Cost structures that kind of assume that yeah, and that's starting to show up right that's trying starting to show up in the Application rates of the kind of percentage of kids applying to school already I think So then this also goes to this thing and 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?

45:03Right, and if you dig into each of those if you dig into which college of course there There's a tearing 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 of job offers coming out the other side and then degrees as I was you know, kind of walking through a computer science degree and an English degree and like they're just the English degree maybe 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 and there's two very different financial propositions as a consequence.

45:33Well, and they cost the exact same amount, which is part of the weird thing. And it also gets into But 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 got 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. But that's not how the resources at university get allocated necessarily. They get allocated based on this, and it's sort of a function of the way they run. But there's the student demand thing, but a lot of it is fundraising.

46:23Can you get 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. 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, but you want a computer science degree, you can't get into computer science, but you can get into Berkeley. But you got to pay the same amount, and this is where it gets really wacky.

47:04Yeah, so I think there's I think there's pressure building and we could spend a lot longer on this topic But I think there's pressure building to kind of dis aggregate the question of college into like what tier of college And then I think there's gonna be growing pressure to dis aggregate. Okay, what exact kind of degree? And there's really it's really a matrix There's really a two -dimensional matrix there and the economics of both the student view on this as well as the institutional view on this Actually very a lot depending on where you land in that two -dimensional matrix And that's not gen that's not generally how this stuff is discussed or analyzed It really gets to, you've got a huge bundle that you provide to a huge, very diverse, weird set of customers, not diverse rationally, but you have to satisfy students, donors, faculty, sports fans, everybody.

47:52And so it's a pretty hard product to 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's been in those states, I know that's been controversial because of course that's going to tend to hit humanities liberal arts the hardest. Yeah. And then that because 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 think there's a lot of potential future pressure here.

48:18Yeah, I think that's kind of a little bit what is the purpose of the university, right? So through the lens of the student, they really want a job. And if they're going to fork over that kind of money, they really need to get a job. Whereas, like, 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. And there's been a lot of criticism of us in our world that were not well -rounded enough and this kind of thing, right, like that's been a pretty steady criticism from the press that if we had majored in humanities, then we would have designed social networks in particular to be better.

49:02Not sure about that, but that's a criticism anyhow. Yes, exactly. I will not take the bait. Okay, number three, a number three research bureau. So, and this is sort of the research that's done, I'm going to get in here, there's sort of a tearing or there's a set of different things, but this is the sort of university level research that happens for sure in the hard sciences, 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 that they're doing the same kind of research, and then even in the humanities, that same research approach, that same, the humanities professors, some grad students write papers and, you know, publish in journals and get evaluated in a very similar way, so that same kind of, at least the workflow of the form of the product is basically the same.

49:50This concept of the research university, like I said, is somewhat derived from the German model, but particularly the American Research University is heavily based on the thinking of a guy named Van of our Bush who was famously, he was actually a character in Oppenheimer, Matthew Modin, I think, played him. He was FDR's science advisor and he was sort of the FDR'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 modern research university as we understand it today coming out of 1945 and 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 research.

50:29Yeah, and those are very important. And we need to get into that, because that's corrupted some things until. Exactly. So the sort of way I think of looking at sort of how is this going, because this is so central to the model, is right now globally there are three million published academic papers a year. How many are read? This is the thing. So a three million and specifically published in journals, 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.

51:04American universities famously have this process for for for new professors. They call publisher Parrish. If you start out as a sister professor, a full professor, a ten year, and then at some point maybe an endowed chair. And the way that you kind of climb the ladder as professor is through your research. And the way that you demonstrate your research is by publishing papers. And so if you talk if you talk to professors, actually, they complain about this a lot, which is just a lot of pressure to publish papers, whether there's anything actually meaningful in them or not, is sort of secondary.

51:27And again, this is their complaint. And then there's this question of like, okay, like, where are the results? Like, how do we score? This is like, if you chart the number of papers per year over the last 50 years, it's one of these lines that's straight up to the right, are the results up to the right. And there have been lots of studies over the years, Robert Gordon is an American economist, the famous, he wrote this big book about this, that basically says that 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 taking place there.

51:58There's a couple of ways to think about that. One is there's what's called the replication crisis. And this kicked off, and I think 2005, when a Stanford professor named Johnny Anidas wrote a now famous paper with the title Half of All Published Research Results are Wrong, where he did a statistical analysis and basically basically asserted that claim. There have now been extensive replication studies in many fields, and it varies by field, but somewhere between a third to, on the low end, a quarter to a third and on the high end, up to two thirds or three quarters of all published research doesn't replicate, which is to say if you run the same experiment again, you don't validate the results.

52:36So there seems to be an actual quality control issue, which we can talk about. Then there's the impact question that you brought up, which is how often are these papers cited? And then you can do citation counts and it turns out most papers are never cited. And then you can also do readership counts, like library lookups, journal lookups. 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 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.

53:13And this is a lot of the research that happens in the sort of humanity to liberal arts these days. and those papers, you could have an opinion of them, which is just like, wow, this just seems like sort of naval gazing, not that. There's nothing really used. It's like, I have an opinion, you have an opinion that's both writer opinions, right, and publish them and call them papers. But 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 future citations. And so they're not cited by anybody else. They're not, they're not, they're not, there may be something brilliant in them, but they're not leading anything.

53:42They're something in the sky. They're not a wheel of padding to the knowledge of the world, 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. You and I both know people who have come out of the university system who would express this quite strongly, which is like it does appear that there is some sort of crisis going on, which is basically there's something broken in the research engine, not in the process, but in the outcome. And in particular, the replication crisis at the heart of it, like if the science doesn't replicate, it's not science, like it's not real, like something else happened along the and then that opens the door to like well, did was this, you know, there, look, there had been cases of over -crawd, there have been, you know, criminal cases that have flowed from this, where it turned out that people were deliberately lying.

54:22In 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, I was just saying this, there's been a 20, coming up in 20 years now of debate in the scientific community as to what's going on here. And so yeah, let's pause on this topic because it's so central to the mission of the modern university. And the negative side, the other problem is that government funding turns out to be highly corrupting because 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.

54:58And like as venture capitalists, that's not going to lead to anything good because they're basically only funding ideas that they understand, which are very, very incremental shallow uninteresting things to research as opposed to real breakthroughs. And I know this very well because I'm in the board of 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. 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, I'm going to do this and I do this.

55:40I'm going to go explore this problem and I may discover something and that's how everything's been discovered. 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 gush of cash so it cannot be resisted but it's set up in a very horrible way. So 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 a company doing CRISPR from the kind of inventor of CRISPR.

56:19We funded Databricks out of Berkeley, which was research done on computer science and scalable systems in their bases 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 McQuillens lab. And so like obviously our money is where our mouth is and there's some very good things coming out of university still like really important breakthrough research technologies things that save lives. So it's not a zero. I just want to like make sure that we're clarifying that I think that it's massively inefficient. A lot of the research is completely useless.

56:56A lot of the fields that are being researched are completely useless. But I do think on this one, there are so many genius scientists in universities that we have to be kind of careful to, you know, as a society, ship the money to funding the people who really need the, whose research we really need, and away from this just waste land of ridiculousness. Good. Okay. Let's put it tight that off for the moment. and then it's good number four. It's a number four policy think tank. So this is a very interesting thing that happened. This started about a hundred years ago. It's a bridge where else am I, do I right?

57:35Yeah, it's a Wilson era thing. Almost exactly a hundred years ago is when this started. And particularly there's a book called Public Opinion by a guy named Walter Lippman that sort of defined this at the time, what I'm about to describe. And so I just introduced a topic by saying the following, which is today it's just like totally normal to like read in the newspaper that like there's some social issue. poverty or something, something health or something, right? And then they will quote in the newspaper experts in that field. And those experts by definition are, with their university professors, right?

58:06By default, those are always university professors. And so the professors are kind of the oracle of wisdom in that area. And then the media, so basically the media picks up the expertise from expert professors out of the universities. And then the politicians basically receive that through the media and then the media and then the politicians basically That's the content for the proposals that the politicians take forward like 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 sessions such and such health policy department at Harvard or whatever it is Right, and so it's it's it's validated now if you go back historically like prior to about 1920 20, this was not how things worked.

58:50Like in like 1850, if somebody's trying to pass a law or something, they're not quoting a perfect, like you could a professor be like quoting a, like it's just been, it'd been a very incongruous, like kind of thing, just not something people would have done. Like, why would you try to do this? It's crazy. Yeah, like randomly, yeah, some random person, right? But basically, so Walter Lippmann did in this book as he basically, the claim at the time basically was, and I think it, look, I think this made some sense at least at the time was basically, in the old world, like, system societies were simpler, Everything was smaller, countries were smaller, but pre -earlier, you didn't have modern problems.

59:22Never had smaller, yeah. Governments were smaller. And then you didn't have all these systems. You didn't have like, 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. These systems kind of got built between like 1880 to 1920 in a lot of cases. You didn't have everything mass media and mass manufacturing and all these big systems. And so basically what he said was like look like the modern policy issues are now more complicated than normal people can understand.

59:50And 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 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 jobs to sell that to the public. And he said basically that will be a superior method of governance than letting actually voters decide anything.

1:00:17You could make a steelman argument to say that that worked really well at that time because if you had like super smart people in these various positions, maybe it's better. Well, so there's an interesting question, right? There's a lot of dispute over what happened in the history. That idea was immediately followed by the great depression. I'll just point out. The great depression, exactly World War II, right? So yeah, exactly, right? So 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. And I would just say that like there's just a very obvious kind of flaw in that logic today, which is it's an empirical observation that the faculty at American universities is now radically polarized in one political direction radically.

1:01:01And we can also post a graph on this maybe, which is the numbers are like really radical. There's fields in which it's like 30 to 1 liberals to conservatives or 50 to 1 or 100 to 1, right? and it's just got empirically in the data, the idea of having conservative faculty in this place is basically no longer the case. They can't get hired, they can't get promoted, they can't get tenure. And so increasingly, the policy recommendations coming out of the policy think tank components these universities are very sharply partisan and extreme. And look, if you're on that side, you're obviously in favor of that, but it's just hard to believe that therefore, the universities will continue to be accepted by the political process writ large as the advisors and the way that they have in the past.

1:01:41Yeah, no, and also, if well, did this kind of brings up like interestingly, I hate to get into today's politics, but the role in fire case, right, where here we have probably one of the most important issues of our generation, which is this whole question of police brutality and how does race play into that and so forth. And literally, one professor in the country We did definitive research and not just a professor, but I think one that most people feel regard as a true genius of the field. And I've had an exceptionally hard worker who ran a great lab and all that kind of thing. And also happened to be black.

1:02:25And I was black, so kind of credible on that front. And he came to some very interesting definitive conclusions or conclusions that I think were important because they got to what is the root cause? What is the root cause of the problem? He got basically steamrolled by the politics at Harvard. By the way, then what happened subsequently is his recommendation or his ideas were not taken by society. What was taken and were people who did far worse or no research. And but were experts. And the result was the defund the police movement and the subsequent radical increase in murders of black people over the last two years, which is probably the greatest domestic tragedy that we've had.

1:03:22And that's what the system put out. So I think to your point, the truth can't come out. or like the truth is, somebody legal in the current university policy system, depending on what it is. And that not all truths are legal, but some truths are way illegal. And the consequences are dire. And like it's something that 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 in other cases that are just as important. Yeah, and I'll talk about this at the end, but if you look at the if you look at trust ratings trust rate Gallup does trust survey of American voting population view of universities and the numbers are just I'll talk about the numbers are in collapse.

1:04:10But in particular, the numbers are in collapse among people on the right and yeah, 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 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 there will be continued political support for the level of funding that currently exists. Yeah, yeah, yeah, I know. I think, yeah, they do have it. So definitely a big problem. But I would just say again, there's obviously great research going on in universities.

1:04:44And so, which is a huge asset to the country and ought to inform the great research auto and foreign policy. And so we do have to be careful with the baby and the bathwater on this one because there's not really another set of institutions that does this kind of work. So then I'm going to bundle the next two together. So moral instruction and then I'm just going to go straight to a social reformer. So I say moral instruction is, like I said, there's this historical role that a lot of University, a lot of American University started actually as religious kind of moral institutions. They're not formally religious institutions today, but they maintain sort of a moral instruction role.

1:05:19And then they're going to call the social reformer and social reformer is sort of the implementation of the moral instruction. So they take a step back past simply having an opinion about the ordering society. They're actually taking actions to try to change the ordering of society. And in particular, this of course, the hot topic here is DEI. And of course, DEI is very hot political topic right now for two reasons. since 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.

1:05:48And 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 recent events. But I am gonna, I'm gonna bend those far more about this stuff than I do. So Ben, why don't we, yeah, let's talk about what you think is most important here. Well, so it's like just kind of starting with morality. One thing about humans is, Morality is complicated, very complicated, and it's complicated at different scales of society, it changes in these kinds of things. And so I think limedy, strong moral values are actually like fairly important, which is why the Bible gets a lot of criticism, like these days, mainly for things that they said in those days, particularly about various topics that we've changed minds on since.

1:06:33But like in totality for something that's that old and it's the same for the Quran, it did get a lot right and that stood the test of thousands of years. And so now we're kind of inventing morality as we go. And 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 should with FUP, and I think that these new moral issues are also hard to debate for many reasons. And on DEI, let me just kind of talk through where that gets problematic.

1:07:12So it's very hard for people to question any of the 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, they'd say worse than being an apostate or blasphemous. 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 it? And this is something is that's, I've studied extremely hard in my life and my career.

1:08:05And what we implemented at the firm, 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 requested all the diversity numbers and basically played that back to us. And we're at a large scale, 550 people. So it's diverse. Of course, we, as do not have a head of DEI and so forth, and it's because we start from a different assumption than these DEI programs start from. And ironically, the assumption that we start from is the non -racist, non -sexist assumption, which is we believe the talent is out there.

1:08:45And 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. One is you have to have the right criteria for the various jobs, which means that we're not, I think Cara Switcher had this thing, the meatocracy. Well, like you and I don't hire ourselves for every job because one, we're not that great at networking. And we have a firm that, like, its whole business is networking. And we hire people for that. And that's a very different criteria than something that we would just replicate ourselves on.

1:09:29Secondly, from a recruiting standpoint, you need to go far and wide and find the best talent. If you look in the exact same place, if you hire everybody, you're going to get the same kind of people. So you have to kind of expand the scope of where you're going to go find the talent. And then the third thing that you have to do is you have to create a work environment where, and this is where the universities go horribly wrong. That's great for people to work who are from different backgrounds. Like that's kind of how you would design the system. And that's sort of how we've designed our system.

1:10:04And when we think about the diversity in Andres and 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 that could do that job, like that could have built the cultural leadership from, like 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 were on the other hand, took the assumption that the talent is not there, you do exactly what the universities do. And I know this from there, the way they hire their faculty is what would you do?

1:10:43You'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 town is there. And that's what they do. And then what is the side effect of that? And the side effect of that, and this is what's happening in all the universities, is if I am the whatever diverse candidate I am, the woman and professor of the black, professor of Hispanic professor. As soon as I get there, everybody knows what our process was, what our hiring criteria was, and I'm a second -class citizen.

1:11:21And that's a worse fucking shit. And so then the retention is bad. And like I saw this at Columbia, like the retention is terrible for all your diversifiers, 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. And then you're just in this weird degenerate state based on a morality that you weren't allowed to discuss. And so because, like, luckily, because I run the firm, I discuss it with you, we can get around that and we can do things.

1:12:01But 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 because I mean 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 have the right criteria. We were very, very careful in our criteria for the job. We had many things in the criteria that we don't have. We have a whole process for generating in criteria that basically aims to make sure that we can find the best talent wherever it is.

1:12:44And then we go get that talent. 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 A16's ears. We're not like the, we don't have ERG groups who are needing it. That's not a thing. A long way of saying, if you can't discuss it, you can't design the right program. This is the whole problem with morality. If morality becomes religion, you just have to have faith in the doctrine. This doctrine was invented by a bunch of people who just made the shit up two weeks ago, not people from 2000 years ago who have stood the test of time, right?

1:13:32And like 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 it's a huge, I think it's a huge problem. And I think that has to do with like every moral position in the university, which is, and it becomes very quickly and offensive, which is what's happening right now. Yeah. So as everybody knows, this is now a hot topic. It's sort of said, a transit you're discussing. I've been building growing for a long time.

1:14:08Like some of these programs are created as far back as the 1960s, and they've been kind of escalating and evolving over the course of even longer than actually you and I have been alive in some cases. And then the last 10 years, they intensified tremendously. And then in just in the last like three months, all of a sudden there's this kind of moment, or 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, especially based on your experience, kind of being inside the tent at one of these places in the past, like what? 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?

1:14:42So to rethinking requires real leadership. Even in our firm, I always keep explaining it, because it's so important and it's so different. And look, we own the firm. Like nobody can fire me, nobody can fire you. It's much harder. You come in as a president of the university. First of all, you can get a vote of no confidence from the faculty. You can get fired by the trustees. So there's a lot of ways you can lose your job. They're very fucking prestigious, Christian jobs. Nobody wants to lose them. And so the level of leadership and risk that you'd have to take to overturn essentially the current university religion, I think, is pretty risky.

1:15:30And people have seen people like Larry Summers famously got fired from Harvard for questioning the religion. And not even questioning the religion. Right? He just made a statement that said, But well, if you look at the data, this is what it says. So that could be a possible explanation. I think it was something along those lines. But 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. I think it would be very hard for Columbia to change a map front. It's a great university. Like when I was there, I brought it up. 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 problem among our black faculty that we hire?

1:16:22Like, 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? Like, why don't we start there? And how do we get to that? And it was they shut me down. It's like 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 of the religion that like we can't even hear a word you're saying and those one of my Kind of points of high frustration there, 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.

1:17:14I think that that's one of my biggest lessons in life is that if you're not a practitioner in that, and that's just designing and running a system, but dealing with the consequence of it then, you're never going to face that fucking reality. Yeah, that makes sense. And then there's going to be just one final note would be, yeah, this is let me look, Harvard ruled against the use of race and admissions, but they did open the door to the use of so -called adversity. So the diversity programs are, in some cases, illegal now. The adversity programs are being created to replace them. Yeah, the admission thing is all whole, right, another world, then the kind of hiring one.

1:17:55And one that I'm not as familiar with, but other than reading the Supreme Court cases and so forth, because the trustees weren't really involved in admissions. So I would just say university admissions are pretty weird. You know, from my reading in it, like that's one of the things. I mean, the other one that's really interesting is, which I think is misconstrued or misunderstood is this legacy thing. 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.

1:18:35They kind of obfuscate it. In the university, they do this by calling it like, we have this many legacy. They're not legacies there. Like people who gave them 10 million. And I think that's the price, 10 million dollars to get your kid into Harvard. Or maybe 20 million now, it's inflation. And it's a pretty big percentage of the students because it's not that big of class, right? A thousand students, and who are your giant donors? all of 100 % of the giant owners 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 objectively would qualify in, there's not many, there's not for them.

1:19:26And everything else is like some kind of like weird thing. And that back to your original point, or the original discussion is like, well, what is that? Do the credentials like the original Harvard students made a lot of money. And so you have the same donor base. But then does that corrupt the ability for the next set to make money by destroying the credential? Yeah. Yeah. And then by the way, are you selling a bit? Are you effectively, have you ended up as a position where you're selling a bill of goods to the new students? Promising them that they're going to be valued that way. And then it turns out the players are going to figure this out or are figuring out real time right.

1:19:59And you already have that problem in many schools, right? Where the degrees sound worth the money. We had a student loan crisis and all this thing. And then you're going to really write, exacerbate it. OK, good. I'm going to skip. I was going to try to pick up the pace here a little bit to close it out. I'm going to skip immigration agency because we talked about that. Sports League, let's spend a moment on that because that's a there was a sports, if you come such an integral part of how a lot of these places operate and part of the financial structure. And then I'm not a sports guy, but I've been following there's sort of it seems to be recurring.

1:20:28I don't know. for student athletes in the recruiting process? Yeah, well, it's changed too recently. So like historically, so it started out very innocently. Your university, you have sports, athletics, I think is a kind of great part of the well -rounded education. It kind of goes back traditionally all the way to the Greeks, I imagine. 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.

1:21:06So it's like really, the people who have the most school spirit are the athletes by far, not even close. And so it's like a really kind of important component of the university historically. But what happened is professional sports, then emerged after college sports. And then college sports became feeders to the professional sports. 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 they call it amateur athletics, whatever, but the coaches like Jim Harbour, just won the whatever national team.

1:21:53It makes like $10 million a year. So 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. OK, but they're students, right? Well, they're not students because to play on Michigan or Alabama or any of these schools, practice is 40 hours a week. 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 backyard. You've got a professional, like a major professional sports league, where you're using essentially slave labor.

1:22:40Like 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 happen. They kind of made the legal. I think first in California now nationally this name and likeness thing 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 can 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 make a lot of money now or like real money, like good compensation.

1:23:23And 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. It's like there's no hiding it. You've got some guys getting paid, you've got transfer portal and so forth, 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?

1:23:58Like you can't restrict somebody from getting a job. 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 small like high school football, but for sure, university of Michigan, Alabama, Georgia, like these are professional programs. And so what do you do about that? Do you actually share the money with the student, athletes 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 it's certainly coming to a head now.

1:24:37And it's fair to say that the revenue from these programs is substantial as a percentage of the operating budget. Yeah, yeah, yeah, yeah. Like a paid football, football basically, I think the economics are football pays for every other sport. And Mensa. Yeah, the big schools. So and so if like, for example, if if I not that this would happen per se, but just to illustrate it, if a law were passed that universities didn't have sports programs anymore, they would lose some significant percentage of their budget. Yeah, particularly at the big schools. And alumni donations, like so big part of alumni donations, is for sports.

1:25:11As you know, your father -in -law was a huge booster supporter of Stanford and and the sports program's there. Right, like and sports, 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 tricky problem because 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 alumni who want that program to be good because they went there and they played for that team.

1:25:55I'm going to skip the, just go I was going to come over a little bit. I was going to skip the hedge fund. It's been a moment on adult daycare. So I just highlighted a couple of things in the adult daycare theme. So just maybe everybody knows this, but I just, if I were to grow up, it's just kind of very clear. There's two very different young adult experiences for people in the US. 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 be in this kind of not quite adult. So it's like a supervised environment. Yeah. There's a lot of things taken care of for you.

1:26:23So there's there's the sort of it's it's it's not the real world and then there's just this totally different experience that people in middle middle Or middle class or lower class have that they just don't do that and so you're 18 and you get a job 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 first Shit ones are the ones who are going through the college park They just have a completely different and I have to tell you much more pleasurable experience for the course of that then just going to work right?

1:26:50In part because the jobs that you get, like if because of the credential, if you don't go to college, the job isn't even as good. And so you have to start working sooner and the job is misguided, right? Yeah, you're doing something hard. Yeah, you're out in the heat. It's like a real 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 is something happening. There's an entitlement indulgence culture that has gotten very intense, that a lot of people are experiencing from graduates.

1:27:17And that's probably been the case for a long time and 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 Hyde has written about this at length, who's a professor, I think at NYU, as 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. And so what he says, yeah, I'll spend a moment on that. So he says, so cognitive behavioral behavioral therapy CBT is the one form of therapy that clinically replicates.

1:27:48So it's the one form of therapy that will reliably make people feel like basically function better psychologically. And it basically, it's essentially applied stosism. It's basically taking responsibility for your own life. And so it's basically getting you out of 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 focus on outcomes. And so he says the culture at universities now, in a lot of cases, especially for undergrad, is what he calls reverse CBT, which is teaching you that, basically, you're a victim and you're oppressed.

1:28:19And if anything bad happens to you, it's because somebody else's fault, right? It's systemic oppression, right? Or as bias, it's this or that, or as you're in the wrong group. Microaggressions, or whatever, it's this entire cluster of basically things that have people basically convinced that they basically don't have control, right? That basically life is out of their control. And then he points to this like rapid escalation and reported rates of reported mental illness and reported basically like need for therapy mental illness, mental health services. And so he basically says something is going very wrong.

1:28:51And then you also have these recurring scandals happening on campus with what you might call the do -it -yourself on campus justice system, right? Which is if you don't go to college and you're 19 and you get accused of sexual assault, like you're dealing with the police, if you're 19 on campus and you get accused of sexual assault, you're dealing with basically a campus HR. Yeah, yeah. And then university is actually required to adjudicate rape. Yes, correct. So, yeah. So basically, title line, Department of Education requires universities to adjudicate rape cases on campus and other forms of potential, of, uh, legit offenses like that.

1:29:23But no university has its own court system. Yeah. We like fucking try and make it up as we go. Yeah. It's not good. So there's, there's no, there's not even a formal. So, therefore, there's no guarantee to do process. There's no objective standard of evidence. There's no lawyers. There's no defense. You don't have it if you don't have it right to an attorney. And so there have been kind of recurring scandals in lots of different directions on this. So there's this hot house kind of psychological legal HR environment that's been created that again, just according to objective metrics of things like reports of mental distress seems like it's going very badly sideways.

1:29:57Yes, let me pause there and see what you think. I definitely agree with that. I mean, I think that and like the other thing that you have to throw in there is like you've got students, no parents, and a lot of alcohol and drugs in college. And so, look, I mean, we know from the work environment, like that the, if you want sexual harassment, like serve a lot of alcohol at company events, right? Like that's the way you get it. And so, it's that you just, 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 so yeah, I like it that that part although So again, it's really tricky because this is, in any, I think, college, it's a tiny percentage of the population that gets involved in that.

1:31:10But everybody knows about it. So it has an effect. Yeah. Well, again, just a recent memory. Now, it just goes back to the, again, once again, goes back to the credentialing, right? Which is just like, where do you getting, what kind of person, what kind of human being Are you getting on the other side of this who's been through a system that sort of Caucasus and values that result in very high levels of emotional distress? Like what does that mean for employment workplace culture? You know what I like our employer is gonna have to like screen more aggressively for behavioral characteristics if more and more of the graduating students have like experience very high levels of emotional distress Can I go right through this process?

1:31:46Yeah, I haven't heard about that more recently when hiring college grads I have to say that the college 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 Think like wow, I'd never get a job here. These these kids are so good. So In terms of direct experience, I don't see it yet, but I'm sure it's out there or it seems like it. It's likely Yeah, okay, and then I'm gonna skip dating site which is one of my favorite topics But we will tackle that at a time and we go to the final one which is lobbying a firm So let me let me out light a bunch of thoughts here and then and then Ben don't get your take so So most importantly, like, look, everything we've described, the entire bundle runs on taxpayer money.

1:32:28So basically, 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 for federal student loans. So in any other words, like students would not be able to afford anywhere near the level of attendance rates that they have without that program, which is hugely expensive to detect. 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. And by the way, very significantly, federal research funding isn't just funding for research.

1:32:57The administration takes a break of at these institutions of the research funding that's actually quite large. And so they get a big percentage of it. And so that goes to pay for a lot of administrative expenses and administrator salaries. And then there are two key tax exemptions. There's a tax exemption at the operating level, which is these institutions are nonprofits. And then there's a tax exemption at the endowment level, where it reaches their endowment compound on a tax -free basis, like a foundation. And then there's a really critical kind of detail to kind of who gets access to all this, like wish institutions get access to all this federal support and all this money.

1:33:31And that's the technical term as accreditation. These are the institutions that have access to everything I just described, or 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. 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 get a higher education.

1:34:01The university is right. And so just as an example, just to pick an example, Harvard looked it up last night. Harvard is accredited by something called the New England Commission on Higher Education. That commission is a nonprofit, which is composed of 200 colleges, universities such as Harvard. And so that made it kind of hard to start a new accredited university. Correct. This is sort of unanimous as a venture capitalist. That's exactly right. Like, could you start a new university and get accredited today? Any answer is almost certainly no. I would get no funding. And it would be non -economically viable.

1:34:35Right? And so, and then of course, in economic theory, you have a term for this, which is cartel. And so there's an education cartel, you know, in much the same way that there's like an oil cartel or whatever. So like that, that, that, that, that's the setup. The fiscal situation at these places is actually quite interesting. So we talked already student, the cost, student costs, tuition and everything else, increase much faster than inflation. But these are nonprofits. And so they're not trying to drop under the bottom line. So instead of what they do is they also inflate their operating costs to go right along with the student costs.

1:35:04And so what they're doing basically is 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 everything is important to note, they're able to escalate tuition rates so fast because I believe it's in the Obama administration, the federal government basically said that the government would lend anybody the money to go to college, you need it. So basically, so with unlimited, the universities just basically raised tuition because you have to go to college like it's in me or it got into the ethos of the culture that you can't get a good job without going to college.

1:35:45So everybody has to go to college. Everybody can afford college because we'll lend you the money and so therefore we can charge whatever we want. Yeah, it's an infinite federal, you have multiple trillions of dollars, infinite federal backstop for the student for the student side of it, including now with the bailouts. And so you basically just like you get to write, you get the right these checks to yourself but from the taxpayers, only accredited universities for accredited universities, for the universities that are in the credit 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 escalation is not, where the expense escalation is not going as towards taking on more students, right, or for that matter taking on more research, where it's going is to take on more administrators.

1:36:28And so the sort of administrative component of these places, the sort of bureaucratic structure, or that's where the cost inflation is really 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. And so the joke that those places is like we can literally replace, we can literally have a personal concierge for every student. And so you're talking tens of thousands of administrators. And again, the administrators are raking funding from every other part of the complex, everything from sports to research, to tuition, everything else.

1:37:01And so anyway, but the point is It's like the operating cost is escalating. These places are not running on high margins. They're actually spending the money that's coming in. Then the endowments are big, but they're not that big relative to the expense base. There's only 10 big endowments in the country. There's only 10 big endowments. Then there's one other trick. There's one other twist, which is a lot of the assets of university endowment are restricted. They're earmarked. They're earmarked by the donors for specific programs. 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 Most of that money is actually off limits if you talk to people around these places They will I'm not saying anything.

1:37:41I don't think that they would agree with like these places are actually quite 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 it is the number of students if there's a crack in the 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, like these places are not as fiscally stable as they seem from the outside. And they seem, quite frankly, just from the outside, they seem unable to constrain any of this.

1:38:12They just, they seem like they're on a one -way treadmill on everything that we're describing. And then now on top of that, at least some institutions, you have these donor strikes, right? And so you have this kind of open question as to whether the donor flows are going to happen. And then let me add one more thing, which is where I start to get worried for my friends who run these places. So Gallup does this. They do the surveys every year on trust in institutions among the American voting public. In 2015, 57 % of American voters had a positive view of American universities. 57 % in 2023, that's 36%.

1:38:42Well, statistically significant drop. 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 at that point, you're like you're freaking out, right? Like you're you you're tearing your hair out and ending up with a haircut bed and a half because like you that That's just like oh my god. What's happened? I'll just give you a couple other data points on that there are there are you can see it find this on the Gallup website There are drops in every subgroup so there's no subgroup that has a higher view of universities every everyone is a drop and then Among people with no college degree is 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 because they're not your constituent.

1:39:26But the problem is they are voters and they are taxpayers and they are a large percentage of the population and you do need their support in order to keep the sort of funding aspect of this rolling. And then there's this question of like, okay, 57 to 36 percent, 21 point drop in eight years, is that anomalous or is that going to continue? And like, you could hypothesize that that was a one off, but you could also say, wow, like and that or the current media blitz. Oh, this is all pre. Yeah, this is all pre October, October, it was all pre the recent stuff. Yes. Yeah. Yeah. So if you pull today, yeah, if you pull today, it'd be hard to imagine the numbers are higher, be easy to imagine that they're lower.

1:40:05But let's even say, so what's the baseline? Is the baseline a 3 % drop? If you just go in the last eight years, eight years, 21%, It's like whatever, two to three, two to two to half, two to three quarter something percent drop per year. And so if you project that forward in the next decade, you could lose another 25 point. So that 36 could drop to 11. By the way, 11 is like for our congresses, right? Like, right? And so like there are institutions in the US that have like 11, 10, 9, 8 % people in the paper. People in the paper, they don't pay for them directly. Congress has a huge advantage they get to set their own laws.

1:40:41the rest of us are subject to that. And so I think there's a really fundamental, I think if I were a leader of one of these organizations or on the board or just as a public spirit of 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 the next five to 10 years and say, okay, what, if these current trends continue and if popular support drops from 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.

1:41:14And in particular, the current funding structure. And I think you need to close your eyes and imagine that you lose the operating tax break, you lose the DAMA tax break, you lose the potentially the research funding, you lose the student loan. Like all these things could come to a political head, I think essentially at any moment, with the pressures that are in place right now. And basically, like... And it could win based on a promise to defund the university if you're not careful, right? Yeah, exactly. And, of course, again, we've tried to not talk that much about partisan politics on this thing, but to the extent that these places have become very partisan political actors themselves, they're having, maybe their supporters feel better about them, but they're having alienating effect on a large part of the voter base and a large part of the political structure of the country.

1:41:57So I think there's an existential question. And it's not like, it's not that these places don't have lots of levers that they can pull and lots of things that they can rejigger, but to your point, what's the level of sort a predictive power and then sort of leadership willpower that you need to get in front of problems like this. And I think that's a very open question right now. Yeah, yeah. No, it did scary. I mean, you have to, 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.

1:42:31If, if this, if these trends go unchecked, very, very bad things could happen. So, which gets into, okay, what do you do? 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 conversation this time? I would just volunteer at whatever you like, but I would volunteer two things, which is one is, well, there are actually three questions, which is one is the reform question, which is like, okay, what if you were, if you were still on the board of Columbia, what would you be trying to do, and what's the reform opportunity? And look, which of these problems do you actually want to tackle, and whatever, so forth, all the interesting questions that flow from that?

1:43:04Now, second question should be, would be like, look, and should there be more universities? Like one of the issues is just like, as you said, there's just aren't enough slots. Maybe part of the answer is create new institutions, and maybe you figure out a way to get them accredited and so forth, but or figure out another fun new model, or maybe they happen in other countries or whatever. So, could you start new competitive institutions that maybe are able to solve some of these problems if it's too hard to reform the current ones? And then the third, and this is probably we should set up another session on this, but But then there's also like, is there a potential, is there a basic potential for entrepreneurial opportunity here that would basically be a side effect of unbundling?

1:43:39And so for example, could you take the credentialing component of it and have a business or entity of some kind that just did that? 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 then there are, by the way, there are founders and startups in a bunch of these sectors. Yeah, we fund it over time, which is doing that in the sports area. Yeah, exactly. And so does it make sense to think about, either start more start up companies in these sort of unbundled categories?

1:44:12And by the way, maybe it's not all for profit companies. Maybe also we just need like literally more nonprofits. Maybe you need actually sort of independent entities. Maybe hypothetically, there should be more independent research institutes or independent science institutes. Maybe you mentioned HHMI. Like maybe funding should go to, maybe there's a different way to do research funding. There should be a much bigger philanthropic component to research funding in place of the government's role. And Patrick Halson has a big S &H, and his wife have a big new biotech research institute at Stanford along those lines.

1:44:40So, it was Stanford, but a separate thing that they're funding. And so, there's these very interesting questions along the way. And so, anyway, for the entrepreneurs, the audiences, you're listening to this, is this thing, okay, think about each of these sort of functional components of the modern university like, 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 separate categories. 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 them to do?

1:45:13And I think that, like, I kind of think that a huge or a very large part of the problem is the number of constituencies that the 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 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. 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 basically the way I would look at it if it was my business and a university is different than a business but it's got a lot of the same characteristics.

1:46:02I think if you lose the student, you're done. That's the end of the whole thing. 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 attracting and developing the brightest minds in the world. Like that's no longer happening, then that's it, like game over. And so my view would be, I would try to re focus 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.

1:46:42So when they come out, they make an outstanding living, easily pay back their student loan. And everybody wants to hire them. And like, let's go back to that. And I think if you had that as the focus, then 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 10 years. When you have 10 years, you're very hard to remove and there's just a huge constituents of administrators and politics and everybody is hired. Like there is nobody owns. There's no owner.

1:47:28There'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. So they think that it is a hard problem, but it is solved because the assets are so strong. I mean, they've got the gorgeous campuses, the amazing faculty, the incredible reputations, global reputations. So there's a lot to work with, but these are real problems. I think that's a good point to end on. All right. Great. Well, thank you. You enjoyed it, and then we'll be back to talk about how to solve it. That sounds good. Thanks everybody.