EIEIO…Up Schitt’s Creek?
Higher Ed must be reimagined.
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“Be a fountain, not a drain.” – Rex Hudler
“Harvard, Yale, Princeton, and the rest of the Ivy League are worthy institutions, to be sure, but they're not known for educating large numbers of poor young people.” – Robert Reich
”Speech is not violence. Silence is not violence. Violence is violence.” – University of Florida President Ben Sasse
”In a democracy, we have always had to worry about the ignorance of the uneducated. Today, we have to worry about the ignorance of people with college degrees.” – Thomas Sowell
In 1969, Cleveland’s Cuyahoga River caught on fire. This wasn’t the first time this had happened, in fact the Cuyahoga had been ablaze at least a dozen times before.
Decades upon decades of Cleveland's citizens and their factories dumping waste into the river had caused it to deteriorate into a cesspool of toxic sludge and muck. Symptoms abounded years before the water caught on fire. The fish were long gone and swimming was only an option if you accidentally fell in.
This time, however, TIME magazine captured the debacle through a series of dramatic photographs that shocked the nation and thoroughly embarrassed the bourgeois of C-Town.
It’s one thing for Cleveland to be snidely referred to as “the Mistake on the Lake” by people in Michigan…it’s another to be publicly humiliated in the nation’s dominant news magazine. This mortification ignited a cleanup campaign that is now over 50 years old.
Nobody in their right mind would drink from, eat a fish from, or swim in the Cuyahoga River today, but at least theoretically, you could. Once something has reached that level of infestation over so many years, getting it rooted out is near impossible.
With that in mind, let’s talk about America’s elite universities.
The River of Power
President Biden has referred to the Ivy League schools as “the River of Power”.
To wit, eight out of today’s nine Supreme Court Justices graduated from Ivy League Schools. Sixteen of the 46 Presidents of the United States went to Ivy League Schools. Fortune 500 CEOs, the Halls of Congress, and leadership at the largest philanthropies all have disproportionate representation from the eight schools that make up this uber-elite club.
For some, the first hint of smoke came out immediately after October 7th with Hamas’ terrorist operation in Israel where over a thousand innocent Israelis were killed – including many instances of beheadings and rape. A Harris poll showed it was about a 50/50 split amongst 18-24 year olds regarding who was at fault…Israel or Hamas.
Broad awareness of the inferno that was engulfing our elite institutions came from the infamous testimony to Congress in December by the Presidents of Harvard, Penn and MIT where all three said it was a matter of “context” whether Jewish students should be able to be taunted with physical threats and chants of “from the River to the Sea”.
As Florida President Ben Sasse wrote at the time,
“The three university presidents, however—with their moral confusion on naked display—were likely not lying; instead, we saw a set of true believers in a new kind of religion.
It is important to note that the three presidents who testified before Congress—Liz Magill, who subsequently resigned as president of the University of Pennsylvania; Sally Kornbluth, of the Massachusetts Institute of Technology; and Claudine Gay, of Harvard University—didn’t open themselves up to perjury charges. Instead, they revealed themselves as having drunk the Kool-Aid of a new and cultlike worldview.”
Now, there is a full-on “five alarm fire” on the River of Power that is on display 24/7 from every media source known to man.
Current State of Play
Columbia’s classes have gone remote for the remainder of the term due to the increasingly violent and fraught anti-Israel protests on campus. In an admission that the university can no longer protect its students’ safety, $90K per-year Columbia has told the student body to pack their things. See ya in the fall!
Encampments are in place at more than 40 campuses around the country, and not surprisingly, elite universities are leading the way with the most raucous demonstrations.
Stanford had tents up since before Israel entered Gaza.
Columbia had set up CHAZ EAST with its own appointed leader. Khymani James encourages “Comrades” who are building encampments across the country.
Harvard Yard had become a campground with signs that read “Welcome to the People’s University for Palestine.”
It would be convenient to pretend the disturbing state of play at our elite universities just appeared suddenly and mysteriously like a Midwestern thunderstorm but the truth of the matter, like the Cuyahoga River, this has been decades in the making.
Many of the most elite schools have been around longer than our Country….Amongst the Ivy League, only Cornell was started after the Revolutionary War.
We are all for tradition, but we are more for innovation. Elite needs to equal excellence, not exclusion.
If you come from a wealthy family, you are more likely to be admitted to an elite university. 75% of the students at elite schools come from the top 25% of household incomes.
If your parents went to an elite school (making you a “legacy”) and they are in the 50th percentile of income earners, you’re more than twice as likely to get in compared to non-legacy applicants with the same test scores. If they’re extremely wealthy (top 0.1% of all earners) you’re 7x more likely to gain admission to that school.
I’m not suggesting that schools should be biased against legacies or students from wealthy backgrounds...but I am arguing that schools shouldn’t be biased in favor of those students. Your future should not be determined by how well you selected your parents.
Once at the school, grade inflation has exploded – the “average” GPA at Harvard is a 3.8. At Yale, it’s a 3.7. That’s higher than Garrison Keillor’s Lake Wobegon where all the children were above average….in New Haven, they are all exceptional.
Hyper-inflation devalues any and all assets over time. When all the 10-year-olds get a trophy for their soccer team despite the record, it makes their parents happy but does so at the expense of the long-term fulfillment of their kids.
Another symptom that shows there is something drastically wrong going on at our most prestigious institutions is the #1 class in the history of Yale is Lauri Santos's “Happiness Class”. The most popular class in the history of Harvard is Tal Ben-Sheher’s “Positive Psychology” and the most popular class at HBS is Arthur Brooks's “Happiness Class”.
The point isn’t that we don’t want students to be happy…of course, that should be a huge priority…but the fact that so many students are in such desperate search of happiness after winning the Willy Wonka golden ticket says something that we all need to listen to.
Which brings us to the “From the River to the Sea” mess we are seeing play out on CNN.
While it’s easy to mumble amongst ourselves “What’s wrong with these kids?”…and to be sure when I see one of the leaders of the Pro-Hamas movement at Columbia demanding “humanitarian aid” for her comrades at Hamilton Hall, I pinch myself to make sure I’m not reading the Babylon Bee…but overall, the real question is what’s wrong with us as a society?
37% of teenagers have been prescribed anti-depressants. Over 100K people died last year from drug overdoses, many of them young people.
According to Gallup, less than 20% of Americans between 18-34 are “very proud” to be Americans.
More of GenZ supports socialism over capitalism. 67% of Britain’s young people actually say they want socialism. Is it because these “kids” don’t know history and socialism’s near-perfect track record of failure?
I don’t think so. It’s because what the young generation has experienced in the past 20 years is an unfair system that hasn’t worked.
The shift that’s taken place with students saying that a college education was worth it in the past decade is stunning. In 2011, 86% said it was, by 2023 it dropped to only 42%.
Part of that is because we’ve saddled college graduates with $1.7 trillion of debt, and an increasingly mathematically challenging equation to create an ROI for the $200K+ cost of college. Part of it is we are sending them into a job market that is experiencing lightning-quick changes that most universities aren’t preparing them for.
But challenges create opportunities….
The River of Hope
At the Smith’s house on Thanksgiving, the highlight was always Granny’s special ham that had the end of it cut off. After dinner and plenty of celebration, one of the cousins asked “Why do we always cut the end off of the ham and what’s the secret that makes it so special?”
Granny responded, “Well when I first married Grandpa, our oven was only big enough for part of the ham, so we cut off the end and have done it the same way ever since.”
We’ve been doing things the same way in higher education because what had been done in the past worked well at the time. The problem is, we’ve gone through radical societal changes yet the higher education model has failed to evolve accordingly.
The core of higher education – students learning and acquiring knowledge to help them thrive in life and doing important research for the good of society – shouldn’t change.
But everything else should be reimagined.
One of the sayings about going to college was you were “building a house in four years that you were going to live in for the next forty years.” In a world of lifelong learning, you are going to build the foundation of the house for four years but you will be building that house for forty-plus years.
When I think of the future of higher ed, I think a lot about Spotify. Historically, the record label had all the power, and the artist and the customer had little leverage. The customer had to buy the whole album even if it was for just one song. Spotify gives me all the music I want from the artists I want for $10 a month or I can even get it for free if I’m willing to listen to some ads. Additionally, I’ll keep getting AI-powered recommendations of new songs and artists based on my interests.
Apply that concept to learning, with the record label being the university, the artist being the professor, and tuition becoming a subscription or alternative payment structure.
Additionally, there is a “News to Knowledge” continuum that podcasts are at the center of. YouTube is easily the largest education network today where I can get the World’s greatest expert on a subject matter (like Jensen Huang from NVIDIA on AI) for free.
Importantly, the big ideas of the future are being invented with the convergence of different disciplines where it’s unlikely that the best in class will all be at one university or even one country. Being able to create your “education playlist” with minimum friction and credit loss for your academic journey is what tomorrow looks like.
Narrow and deep has been conventional wisdom for thirty years….and “coding” was to the past 20 years what “plastics” was in the movie “The Graduate”. Oops, technology has replaced the technologist and if being a specialized programmer is what you banked your future on, you are like the pitcher who lost his fastball. The Seven “C’s” serve as the foundation on which we would build our house. They include “Critical Thinking”, “Creativity”, “Communication”, “Collaboration”, “Cultural Fluency”, “Civics” and “Character.”
Software used to be expensive and purchased upfront, and every time a different upgrade came out, your purchase became increasingly obsolete. Then, the Software-as-a-Service came along, which was a subscription model. It cost way less up front, and every upgrade was included in the plan, allowing the buyer to always have the latest and greatest. The Tuition Model is expensive. So expensive that most people need to finance it, and with the world changing so fast, the diploma begins dropping in value the moment the grad drives off campus. Subscription models that allow for “all you can eat”, along with access to modern skills, need to be part of the new model.
The student of the future will be toggling seamlessly between a physical and virtual world and universities of tomorrow need to reflect that. What’s important to have at a campus will be like the question many CEOs are asking today, "What’s important to have at an office?” Virtual Reality and the Metaverse will be an important component of the learning experience.
It’s not that universities have lost the plot...the issue is they’ve stayed with the old story long after society (and its needs) have changed.
For many of us, seeing these protestors’ objectionable behaviors makes us angry. It’s easy for the first reaction to be, “What a bunch of ungrateful children with no appreciation for how lucky they are to live in this country/go to this school/etc., etc., etc.” However, these behaviors are symptoms that are downriver of bigger problems we’re experiencing. And now, the river is on fire.
The silver bullet is love - loving our neighbors as we love ourselves. With that, helping everybody have the opportunity to reach their God-given potential. It’s time to help our students find meaning through learning and purpose through work.
Market Performance
Market Commentary
Stocks had a volatile week with NASDAQ ultimately advancing 0.9%, the Dow up 1.0%, and the S&P 500 increasing .3%.
Tesla rose 15% on Monday with Elon Musk's surprise visit to China where it was announced that the company has a deal with Baidu for a mapping system to support autonomous driving. Lower employment numbers and wage growth were also comforting to investors who worried the economy was too hot.
Also, boosting stocks was Apple’s announcement of a $110 billion stock buyback that came on the heels of uninspiring numbers that were still better than analysts had expected. Additionally, Apple and OpenAI resumed discussions to integrate OpenAI’s generative technology into future iPhones. Anthropic also announced its mobile application on the iPhone for enterprise customers at a price of $30 a month.
More in the World of AI, the Financial Times struck a licensing deal with OpenAI allowing it to train large language models on FT content.
Lastly catching our eye was Dave & Busters getting in on the action of GenZ’s addiction to gambling with an app that allows members to bet on arcade games. Note to self…look for ideas that are in the gambling addiction recovery business.
We continue to believe we are in a positive upcycle for growth companies with a broadening of participation. Accordingly, we are BULLISH.
Maggie Moe’s GSV Weekly Rap
GSV Model Portfolio
Need to Know
READ: The Adults Are Still In Charge At The University Of Florida | WSJ
READ: The News Is Making You Miserable | A Wealth Of Common Sense
WATCH: Three Year Track Record: Warren Buffett vs. Cathie Wood | The Pragmatic Optimist
READ: Clicks and Clout: How We Seek Status In The Digital Age | Digital Native
WATCH: Mark Zuckerberg - Llama 3, $10B Models, Caesar Augustus, & 1 GW Datacenters | Dwarkesh Podcast
READ: Threads Offers Creators $500 To Post About “Positivity” | The Information
GSV’s Four I’s of Investor Sentiment
GSV tracks four primary indicators of investor sentiment: inflows and outflows of mutual funds and ETFs, IPO activity, interest rates, and inflation. Here’s how these four signals performed last week:
#1: Inflows and Outflows for Mutual Funds & ETFs
Vanguard S&P 500 ETF (VOO) alone took in $24 billion in Q1—nearly twice as much as the fund with the second-highest inflows.
Source: VettaFi
#2: IPO Market
Source: Renaissance Capital
#3: Interest Rates
Mortgage rates reach a new high for 2024.
Source: Axios
#4: Inflation
Chart of the Week
Chuckles of the Week
EIEIO…Fast Facts
Entrepreneurship: 35,315 - number of AI patents granted in China in 2022, compared to 12,077 in the US (Visual Capitalist)
Innovation: #3: Apple Pay (507m users) is the 3rd most popular digital wallet in the world, behind Chinese platforms WeChat Pay (900m users) and AliPay (1.3b users) (
)Education: 32% - rate of chronic absenteeism in the country’s poorest school districts in 2023, a 68% uptick compared to 2018. (New York Times)
Impact: 2x - the number of students enrolled in Community Colleges (10.2 million) vs. Private Colleges (5.1 million) in the US as of 2021 data (Ed.gov, Statista)
Opportunity: $100T – The amount of wealth of generational wealth set to be handed down to the younger generation over the next 25 years (Pitchbook)
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Connecting the Dots & EIEIO…
Old MacDonald had a farm, EIEIO. New MacDonald has a Startup….EIEIO: Entrepreneurship, Innovation, Education, Impact and Opportunity. Accordingly, we focus on these key areas of the future.
One of the core goals of GSV is to connect the dots around EIEIO and provide perspective on where things are going and why. If you like this, please forward to your friends. Onward!
Make Your Dash Count!
-MM
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