After COVID-19, nothing will be the same. The previous sentence is b——-. On the contrary, things will never be more the same, just accelerated. Over the last two weeks, organizations ranging from the East Coast’s largest hedge and VC funds to MSNBC and the Today Show have asked me the same question: What does the world look like “post corona”?
The question itself is telling. Our species’ superpower is cooperation, and our strength as Americans is our optimism. The question itself is recognition of one comforting truth: Crises always happen, and they always end.
We’ve been spending a ton of time thinking about where the puck is headed so that, similar to hockey, a bunch of white guys can make more money. But I digress. My first observation:
Let’s talk about higher education and make some predictions. An industry projected to register $10 trillion globally by 2030 may see the future happen faster. If you read this blog you’re intimately familiar with the below chart highlighting that we, academics, could not resist the temptation to starch the surplus margin (social good) so we could make more money and be less accountable.
Yes, you likely know there’s now more student loan than credit card debt. But did you know the price of a textbook has exploded 812% in the last 30 years (not worth it)? It ends up duopolies not only result in a damage to the commonwealth and teen depression, but set you back $852.75 for “Biostatistical Genetics and Genetic Epidemiology.”
This fall, I’m scheduled to teach MKTG-GB.2365 (Brand Strategy) in KMC 2-60 Tuesday nights at 6-9pm. It’s not going to happen. The room would normally be filled with 170 full- and part-time MBAs looking to garner the skills to build economic security for themselves and their families, and improve the world. Mostly the former. However, a room full of 170 NYT subscribers, sitting elbow to elbow, spells one thing — recurrence. So, while Liberty University will likely welcome kids back to campus, I speculate we, and anybody else that does not have their head up their a–, will not.
Note: I have no insider information and haven’t discussed this with any NYU administrator.
So, how things will accelerate:
We’ll see a culling among universities. Just as retail closures are accelerating from 9,500 stores in 2019 to more than 15,000 in 2020, we’re going to see dozens, maybe hundreds, of universities not reopen. In academia, we have been preying on the hopes and prayers of the middle class, offering parents the chance to check an instinctive box, giving their kids a better life, by sending them to college. We also encouraged them to borrow against their 401(k)s and take out mortgages to underwrite our shape-shifting from public servants to luxury brands. No more.
I’m good, maybe even great, at what I do. But on Zoom people are going to discover I was never worth $100,000 per class — what kids pay to hear me rant about the Four.
172 kids x $7,000 tuition / 12 classes = $100,000 per class session
My stay of execution will be that I teach at one of the 15 top 10 universities, which brings us to our next prediction:
For the first time, we’ll see a sustained drop in applications at four-year universities. As Amazon comes out of the crisis with more momentum than it entered, the schools they (and other information economy firms) recruit at will break from the cartel and maintain their economic might via endowments and increases in revenue streams, thanks to digital platforms. Amazon, the largest recruiter from my class, will become the largest employer of college grads in the US.
Education startups will attract cheap capital and seize the opportunity the pandemic has accelerated. SARS was huge for e-commerce in Asia, and it helped Alibaba break out into the consumer space. COVID-19 could be to education in the United States what SARS was to e-commerce in Asia.
The rookie move is to believe that MOOCs or stand-alone education start-ups will be the big winners. (Searches for “MasterClass” have eclipsed “business school.”) They won’t.
Why won’t MasterClass be a disruptor long-term? Because MasterClass sucks. Young people don’t gain value learning from celebrities, but from teachers, who can give them the skills to become celebrities. At each university, there are 6-12 “ringers,” great teachers who are worth it. Ringers, unbounded by the geographic constraints of their campus and parent brand, will see their compensation rise 3-10x over the next decade. Administrators at the top 10 universities who have the skills to become product managers will see their comp increase. Everyone else in traditional academia will make less.
The second-greatest accretion of stakeholder value in business, behind Amazon’s entry into healthcare, will be big (and some small) tech firms partnering with a world class university to offer 80% of a traditional four-year degree for 50% of the price. This is the gangster cocktail of the fastest-growing analog consumer brands in history (Southwest Airlines, Old Navy, etc.).
MIT/Google could offer a two-year degree in STEM. The myth/magic of campuses and geography is no longer a constraining factor — most programs will be hybrid soon, dramatically increasing enrollments among the best brands. MIT/Google could enroll 100,000 kids at $100,000 in tuition (a bargain), yielding $5 billion a year (two-year program) that would have margins rivaling … MIT and Google. Bocconi/Apple, Carnegie Mellon/Amazon, UCLA/Netflix, Berkeley/Microsoft … you get the idea.
University brands are the premier luxury brands globally, built over centuries, with margins and the illusion of scarcity that renders Hermès vulgar. If you don’t own the mine (MIT), you want to sell the picks, or staple tent denim to create durable pants for miners. Universities will dramatically increase their spend on technology and, in many cases, outsource entire programs (for example Duke’s continuing ed). There will be enormous opportunity to substantially upgrade SaaS teaching tools, as anybody who has used Blackboard can attest.
We’ll smooth out the curve of learning — more older students, fewer younger. Kids, unprepared for the world via a mix of social media and bulldozer parenting, are being dumped at campuses across America. More kids will not attend school right away, and more adults in their thirties and forties will return.
“Are we human, or are we dancers?”
In my sophomore year at UCLA, I fell in love for the first time, learned my limits were not my real limits (joined crew), realized I would not be a doctor (failed chemistry), became less insecure about my insecurities (took Intro to Psychology), and developed resilience (had my heart broken). I’d like to think all these things would have happened whether or not I attended college. But they likely wouldn’t have happened in such a safe and joyous place.
Like most industries disrupted by software, tremendous value will accrue to millions of consumers via deflation. Hundreds of thousands of jobs will vanish. And billions of shareholder value will flow to disturbingly few organizations and their stakeholders. There will also be a reshaping of priorities as we take attributes that make us most human — the discovery, empathy, and emotional growth of a campus-based liberal arts education (a luxury only the wealthy will be able to afford) — and replace them with the pursuit of vocational skills and shareholder value.
Source – https://www.businessinsider.com/scott-galloway-coronavirus-pandemic-reshaping-higher-education-universities-may-close-2020-4?IR=T