Should Colleges Open? with Scott Galloway

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Andy and Zach want to know if colleges are going to open, should they open, and should Zach move to campus later this month to start his freshman year. NYU Professor Scott Galloway has led this conversation with a very provocative and clear point of view. Like with almost everything in the pandemic, we see society’s pre-existing challenges exposed — in this case elitism, entitlement, privilege and how higher education needs to change. 

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[01:26] Andy Slavitt: Welcome to In the Bubble. I’m Andy Slavitt. We have an educational show for you today. It is a show about colleges and universities and whether they should open. You may recall, if you go back, you’ll find that we did an episode with Arne Duncan about whether schools should open for K through 12. I think you’ll still find that episode very interesting. Today, we’re focusing on colleges and universities. And as you know, we have a college/university incoming student who is part of this show. So he will be a big part of this episode. Understand colleges and universities as not just something that educates our kids and helps them become adults, but understand them as businesses. Understand them as big businesses, understand them as having enormous economic consequence and impact in the communities in which they’re located. And with that, we have the perfect guest. His name is Scott Galloway. He is a professor at NYU. Very much in demand. Scott has two podcasts of his own. One is called The Prof G Show. And the other is when he co-hosts with Kara Swisher called Pivot. By the way, you can also hear Kara on this show, who absolutely kicked my butt for a half an hour, if you want to hear Andy get his butt kicked. I still hold that the last five minutes of Kara Swisher were some of the most golden part of the conversation that we’ve heard so far on coronavirus. And matched maybe by Larry Brilliant and his episode. Anyway, here’s Scott. Let’s ring him up. Let’s talk about colleges and universities. 


[03:41] Andy Slavitt: We’ve wanted to do an episode about colleges and universities opening before it starts, because it’s such a complex and interesting topic. We’ve done a lot on schools. You’re the perfect person to talk to. You’ve written some very provocative things about colleges and universities at this moment, whether they should open or not. I wonder if you could just start by giving us the landscape. How many colleges and universities are there? How many of them are opening? How many aren’t? And kind of what the profile of the process looks like for most of these schools, Scott?


[04:13] Scott Galloway: Well, depending on how you define a college, it’s somewhere between 2,500 4,500, and whether you include online universities, for-profits, vocational schools. But in sum there are thousands of universities. It’s a huge industry that I believe employs about four million people. You know, even just the 400,000 international students come here and spend about $40 billion in our economy and support something like 400,000 jobs. Eleven million kids are supposed to show up as freshmen in the fall. Twenty five million college students. So it’s it’s an enormous industry. And it’s also, from a national perspective, if you were to say what categories does America dominate, you’d say, right, software, weapons, media, maybe pharma. But right up there would be education. In almost any survey of the top universities in the world by almost any metric, we kind of dominate the list. So it’s not only a big industry, it’s an important industry. And it plays that kind of a key national role in terms of the wealthiest, most powerful people usually have one thing in common, and that is there’s a good chance they’re going to be educated in the U.S. So it’s important economically. It’s important from kind of the brand U.S. And it’s also played an enormous role in our progress as a nation. If you were to say what is the key to upward mobility, income mobility in the United States over the last 50 years, a lot of people would point to education that’s accessible to the lower and middle income households. 

[05:43] Andy Slavitt: How many towns and cities across America rely on the college or university as a primary economic driver?


[05:52] Scott Galloway: So I don’t know how many towns are, but there’s gotta be hundreds. I mean, whether it’s Lynchburg or Ann Arbor or Athens, Georgia, you’re talking about economies where sometimes 40 to 50 percent of the employment is somehow connected to the university. And that’s where it gets kind of scary, talking a little bit about your wheelhouse, is the idea of a small town, maybe not with a huge hospital, all of a sudden incurring an influx of tens of thousands of what could be asymptomatic carriers of the coronavirus. And, you know, these little college towns, you know, could be overwhelmed. But there’s just no doubt about it, some of these little towns are kind of one-industry towns. 


[06:34] Andy Slavitt: So if you’re a university president, you are right now, or over the last few weeks — and I think over the coming few weeks, still — facing an important decisions or set of sub-decisions. Can you walk us through how university presidents at different types of schools, large or small, those with big endowments, those with small, however you would want to cut it, are thinking about this decision. What factors they have to consider and what decision do you see them making? And then I think we’ll get to your perspective. 


[07:07] Scott Galloway: So I’ll start with what I see them doing. And that is they’re in general putting out what I would argue are fairly strident, bold statements around — the Brown president, Christina Paxson, said that we had a national obligation to reopen and welcome students back. And I think that, you know, that kind of hits you as correct, that universities are important, young people continuing their education is important. But I think a lot of this is driven by what I would call the consensual hallucination between university leadership, parents, students and the finance departments of these universities. Because what you have at a university, it’s an organization and it’s a business. You have exceptionally high fixed costs. The majority of the costs are incurred by the personnel. In many instances, the majority of that cost is made up with tenured professors. It’s sort of an immovable object. It’s an immovable cost. And then the maintenance of these facilities, which have undergone what I would refer to as the great Rolex-ification of campuses, where it’s sort of a keep up with the Joneses. You know, these places look more like the Ritz Carlton, Cambridge than they do a campus. So you have exceptionally high fixed costs.


[08:15] Scott Galloway: You have 40 years where you could depend on the same amount of revenues coming in within a two-week period where parents sent in their deposits, maybe plus four or five percent. And all of a sudden that’s threatened for the first time in four or five decades. And you don’t want to be the captain that takes the ship down. So I think that lends to a lot of rhetoric around how important it is to open, and that we’re going to figure out protocols to ensure something resembling a normal experience. I think a lot of this, quite frankly, is Latin for “parents, please send in your tuition checks.” And I think where we’re going to end up is what they will refer to as a “hybrid experience.” And right now, the terms they’re using to describe that hybrid experience are labs and studios will be in-person. So if there’s a large lab component, if you’re bio-chem, or you’re a music major, there is still this notion that we’re going to have labs and studios. I don’t think that’s the case. I think that university leadership are generally very responsible, empathetic, data-driven people. And I think all the data points to one thing, and that is the downside risks of putting potentially asymptomatic carriers in a room or the windows don’t open. Keep in mind, the majority of the windows don’t even open in classrooms because they do that for temperature control. 


[09:32] Scott Galloway: And all of these protocols that we’re trying to, you know, A/B class testing, plexiglass, the professor in what is almost a hazmat suit, testing every day on campus, temperature checks. My understanding is, and this is your wheelhouse, is that those protocols are only as effective as the protocols these students adhere to off-campus. And when you’re dealing with a population where for tens of thousands of years, every instinct in their body is pulsing that they should be not distancing, they should be forming relationships, they should be finding, you know, mates, or at least practicing. They should be establishing friendships. And then you introduce alcohol. And by the way, I think that the generation — I know your son is thinking about college. I think that generation is, generally speaking, more responsible than our generation. You know, lower drunk driving incidents, lower incidents of teen pregnancy. But even so, if you just have 10 or 20 percent that have something resembling the college experience I had, it sort of reads like the opening scene of Contagion 2.


[10:35] Scott Galloway: So where I think we’re headed is, once the deposits are in or are not in, there’s going to be a more sober communication to parents saying, look, if you want to send your kid back to New Orleans, if you want to send your kid to Ann Arbor or Cambridge, fine, you have to assess your own risk for you and your family. But we’re not — I think we’re going to effectively pretty much close the campus down. I think universities, especially the research labs, have been warriors against disease and viruses. And I don’t think we’re gonna opt to be the enablers here. I think the risks far outweigh the upside. If your son is forced to stick in his house for another 12 weeks, that’s a nuisance for him. That’s an impairment for his college experience. But it’s not profoundly tragic. 19 year olds have been asked to do worse in our history, whereas the K through 12 debate that sometimes get conflated, I think is a much more serious debate. It involves developmental disability. But where we’re headed is I think once the tuition’s up in the next — and most of it is supposed to come in in the next kind of seven to 14 days — I think you’re gonna see a lot of announcements along the lines of the following: in an abundance of caution, because of increased surges, we’re going all remote. Some schools have already decided that. And typically, the ones who have already decided that have done that because they can, or they’ve announced it. And it’s all over the map. A Harvard can take an economic hit. They’re gonna be just fine. 


[12:00] Scott Galloway: So they’ve said we’re going to be mostly or all remote. And then Cal State, which charges $7,000 and $17,000 for in-state, an out-of-state tuition respectively, and 83 percent of their students are commuters, such that they don’t have this toxic cocktail of high Dead Poets Society experience with a very high tuition attached to it, which is kind of the danger zone right now. You know, they’re fine. Their value proposition is really not that diminished if they go online. And they were one of the first to announce they’re going all online. Because they’re about education, some certification, and you can get most of that in the online experience. They’re not offering sort of the leafy campus football-game experience. So I think that’s where most of us are headed. I think some have been more forthright, depending on their value proposition and how economically sound they are. 


[12:45] Andy Slavitt: So this financial state that the schools are in, you talked about the impact on university towns. It’s a reality that, you know, we don’t often think about colleges and universities as businesses. But could you play out for us, what happens with different types of schools if they don’t come back, if they don’t get this revenue? How do they manage, what happens to our higher education system?


[13:12] Scott Galloway: Well, I think a lot don’t manage. I think you’re going to see hundreds of universities begin the same sort of death march the department stores have been on for the last decade. And that is if you are — there’s sort of this toxic cocktail of the following: if you are kind of high tuition, low certification — meaning that you’re a school that doesn’t have the same kind of brand equity of a Penn. But at the same time, you’re charging the same price. This is one of the few industries where you can find a Hyundai for the price of a Mercedes. Those schools are at risk. And quite frankly, I think they deserve it. I think every other industry faces a certain level of economic pressure. What industry garners more than $100,000 dollar price tag over a four year period? And most of these universities are getting more than $100,000 dollars over the four years. Operates at 60, 80, sometimes 90 points of gross margin. And hasn’t had any economic pressures in the last 40 years. A lot of the pushback I’ve received on my article isn’t, you know, they say they don’t like the methodology and it’s irresponsible. And I look at and say, OK, what industry has not received some sort of scrutiny that’s charging the fees you’re charging? What industry doesn’t at some point have to cut costs and really examine their value proposition? So the elites, Penn is fine. They’ll be under pressure to, you know, maintain their financial strength. And they’re going to just basically say to you, in almost kind of like mafia protection, like, you know, trust us, trust us, we’re smart. We know what we’re doing. Send in your deposits. The second-tier schools will have to go really deep into their waiting lists. They’ll have to cut costs, but they’ll survive. 


[14:54] Scott Galloway: But there’s going to be entire swath of schools where parents rationalize making those types of payments distinct to the fact they don’t get a great certification, or even, you know, what would call a world-class education, but they’re still charging that Mercedes price tag. Those universities are going to go into their waiting lists and they’re not going to have them, because there’s gonna be this demand destruction of the top. A lot of people at elite universities are going to say I’m going to take a gap year. I’m not going to go. I want a reduction in fees. That means they have to go deeper into their waiting list, which means a lot of kids in tier-two schools will get into tier-one. And then the tier-three guys just don’t have the waiting lists. They don’t have the cushion. But quite frankly, I think it’s overdue. I think this discussion, I think the scrutiny, I think universities exiting their self aggrandizement and arrogance where they think they can just raise their prices faster than inflation for 40 without ever kind of incurring a reckoning, I think it’s overdue. And I actually over the long term, I think it’s healthy. I think a crisis is a terrible thing to waste. I’m hoping we don’t waste this one. 


[16:55] Andy Slavitt: The thing we try to prize on this podcast is truth, honesty. And Scott and I just have got to compliment you and commend you for really just laying out some really clear terms what a lot of people don’t talk about in a very truthful way. Whether people agree with you 90 percent, 10 percent, 100 percent or not at all, you can’t argue with the fact that you’re putting forward a very clear perspective. And I really appreciate that. And I know people listen. So, I’m going to give Zach an opportunity here. Zach, you usually win your arguments with me. So you want to take on Scott here and see how he responds? 


[17:38] Zach Slavitt: Yeah, I was just hoping to ask a few questions of things that I’m hearing people my age are wondering about just like next year. You think there’s any scenario where colleges can create a bubble, sort of like what the NBA is doing, where students can do more of what they want to do as long as there’s no cases coming in and out? And just like there’s testing and basically just what the NBA is doing right now. 


[18:04] Scott Galloway: Yeah. I think it’s possible, Zach. And the NBA will be an interesting experiment. But, you know, as you can see with the MLB, their experiment just kicked off, and we already have infections at the Marlins, the Yankees. So I think it’s possible, I think it is feasibly possible that universities could pull this off. The question is, you know, on a risk-adjusted basis, is that risk worth taking? And that is I’d like to think that at some point we’re gonna have a vaccine, or a non-pharmaceutical intervention such that you’re going to get 80 to 90 percent minimum of the college experience that me and your dad had. But for this fall semester, when I see the surge in cases, when I see these small towns not really prepared for this, I wonder if it’s worth the risk. So I would say, you know, can they pull this off? Yeah, maybe. Is it worth trying? You talk about this bubble, right? Putting everyone in a capsule, A/B tests, all these protocols. I wonder if that time would be better spent trying to enhance the online learning experience, and saying, look, I know this sucks, but you’re going to have to stay at home or move wherever you want. You’re gonna do most of your learning remotely, or all of it. And we’re going to cut tuition in half. We’re going to take a financial hit here because we recognize it’s not the same experience. And we look forward to welcoming you back, you know, hopefully and optimistically for the spring semester in January. 


[19:31] Scott Galloway: To me, that feels like a more responsible weighting of national interests, health interests, concern for the commonwealth, and also recognizing that, you know, you need to make some progress. You need to have a productive fall semester. I just worry that the generation right now that it seems to be the super spreaders of the virus, concentrating them in small areas, and then just hoping that our protocols are effective. I think the downside risk here is greater than the upside. So at your age, the present value of time is exceptionally high, meaning that a semester sounds profoundly like a long time. I think in retrospect, you’re going to look back and say, yeah, I got 90 percent of the experience. And I wish I got a hundred percent. But I think you’re going to get 90 percent. And I think that 10 percent erosion in the experience for you is compensated by the reduction in risk that will incur if we continue to have this what I call “consensual hallucination” that we should reopen campuses, and that we can figure this out with protocols. If the MLB can’t figure this out with their resources — and keep in mind, Major League Baseball, you’re talking about 30 or 40 people. I mean, how many people are on a baseball team? Twelve or fifteen. And then maybe another 80 support them. So you’re talking about 100 or 200 people. And they haven’t been able to contain outbreaks among these guys. And I would imagine these guys, they have millions of dollars on the line. I got to think they are distancing and doing their best. If the Florida Marlins can’t stop an outbreak, how the hell is Penn? So I worry that this bubble strategy — the bubble is so expensive and so risky that the best bubble is for you probably to hang at home or in a safe place, do remote learning, and get ready for the spring semester.


[21:19] Zach Slavitt: For these expensive schools that might be in danger of not lasting through the pandemic, what do you think they should do? Can they afford to reduce tuition and have their kids go back? Can they afford to keep tuition at the same price and risk losing students? Can they afford to take the risk of having failed in-person learning? What do you think they should do? 


[21:43] Scott Galloway: I think some of them should go out of business. I believe in capitalism. I believe in winners and losers. And the outrage I’ve heard via email from universities — the sense is that there’s somehow these castles of nobility that should never be questioned. And I think there are a lot of universities who reflect, and leadership that reflect this level of arrogance and self-aggrandizement that has resulted in a lot of these presidents writing me letters are making five, seven, eight hundred thousand dollars a year, charging 40 and 50 and 60 thousand dollars in tuition to middle-class families and households, putting them under extreme stress. So, you know, welcome to the work week is what I would say to a lot of these universities. The fact that they are, for the first time in a long time, falling under the same scrutiny almost every other — anytime you go in and you buy Coca-Cola or, you know, if you’re looking at a Volkswagen, you do an amazing amount of homework, and you are constantly trading off the options. And my sense is these universities just aren’t used to a certain level of scrutiny where parents are asking for the first time, are you worth it? Parents don’t have a moral obligation to send checks to an institution just because it’s a university. And they’ve all talked themselves into believing that they’re the church or something, that there’s some sort of higher obligation to these institutions. No, there isn’t. They’re wonderful, but they need some competition. So some of them should and will go away. And like every other organization in a capitalist economy, they have two choices: they can adapt or they can die. And some of them will adapt. 


[23:16] Scott Galloway: I would argue that rather than adapting, like sports are adapting, media is adapting, restaurants are trying to adapt, they need to acknowledge the issue and figure out, all right, how do we deliver a better experience for less money? That’s what it comes down to. A better experience or less money/ Because this experience, especially across the mediocre universities, hasn’t gotten any better in 30, 40 years. My gosh, has it gotten more expensive. So I think this disruption is overdue. There’ll be some innocent victims. They’ll be some great universities that incur incredible strain and that may go away that serve a great social purpose. But I think this is how the sausage gets made in a capitalist society. And I think that the university system comes out the other end of this hopefully stronger. 


[23:59] Zach Slavitt: What are professors feeling about hybrid models, like Penn is doing a hybrid model. I know a lot of different schools are doing hybrid models. What are the professors thinking? 


[24:10] Scott Galloway: Well, they don’t like it because they see it as a threat to their economic well-being. I’m teaching in the fall. My brand-strategy class, I teach second-year MBAs. And it’s usually 160 kids. And the reason it’s 160 is that we’re constrained by the number of seats in the classroom. There’s 160 seats, so they cap enrollment at 160. And I said to my administration, my leadership, I’m not coming on campus until there’s a vaccine. And they said, fine, you can do all online, they didn’t put me under any pressure to do anything I don’t want to do. But they said if you’re going to teach online, can we expand your enrollments? I said, sure. I want to be a good citizen and help out. So I have 400 kids taking my class. Now, what does that mean? It means that there’s 240 fewer kids for other MBA electives. So kind of the dirty, not-so-secret factor in universities is that you’re going to find about 30 percent of the professors at Penn teach about 80 percent of the students. With online, if you will, diminishing or loosening the supply up, you’re going to see 10 percent of the professors are going to be educating 90 percent of the students. The 90 percent of professors who don’t fall into that 10 percent will have increased pressure on them to conduct better research. Professors are generally evaluated on two criteria: their research first and foremost, especially for tenure and tenure track, and then how good they are in the classroom.


[25:36] Scott Galloway: When all of a sudden they’re no longer really teaching, because there’s tremendous demand destruction for the other 90 percent, and they can’t justify their salary based on the fact they’re not teaching very many kids at all anymore, it puts pressure on them to do amazing research. So if you’re a tenured professor making a good living with lifetime job security, you have a vested interest in the status quo. So anything that threatens that, whether it’s online learning or having to learn new skills — a lot of these individuals, the average age of a tenured professor is 55. A lot of these folks don’t have the skills, as evidenced by the fact that my guess is your dad needs you to kind of like figure this whole technology out. You’ve seen just huge resistance. Their feeling is the status quo is working just fine. And they’re making a lot of arguments about the importance of education and development and the importance of the in-person experience, which is all Latin for, “I like my life just the way it is.”


[26:28] Andy Slavitt: We talk a lot on this show about equity and privilege. The picture I think you’re painting, at least for me, is one where universities of high quality, like NYU, like Penn, are available to more people because people can access them digitally if they choose. And so the thing that, like, goes off in my brain is that there’s another thing that parents and students pay for that’s almost a separate thing from how we think about the education, and the certification, which is this sort of I’ll call it a fall-and-spring four-year camp. As I listen to you, I think we all in our heads conflate these three things. The certification you talk about, the core education, and then this sort of, you know, elite privilege summer camp that many of us have, I’ll confess, a nostalgia for, and probably grow up telling our kids about. So, you know, I think what you’re suggesting, if I got it right, is that third thing is absolutely at risk right now, at least for a period of time, for the people who are privileged enough to have access to it. But those first two things, the degree and education, can get a whole lot more equitable and a whole lot better in this process.


[27:47] Scott Galloway: Yeah, I think that’s a great bucketing of what’s going on here. And let me be clear, I don’t in any way underestimate the importance and the luxury of having a joyous, safe place to spill into adulthood. Zach, most kids your age will go to school, test their limits around alcohol. They get too drunk. They throw up. They test their limits. You’re gonna get your heart broken, but your heart’s gonna grow back stronger and you’re gonna be more resilient. You’re gonna find out that there are other really smart kids. You’re probably the top in your high school class right now. You’re gonna find out there’s people smarter than you. And it’s going to create some humility. You’re gonna find out that maybe you think you should be a pediatrician, but you’re not meant for that. You’re gonna find topics that you never would’ve thought were interesting. And you’re gonna find them fascinating. And you’re gonna become a more well-rounded person. You’re gonna make lifelong friendships. That is increasingly becoming the opportunity and the accoutrement of wealth. And we need to figure out a way such that more kids can experience that. In terms of the economic health of our nation and opportunities for kids, we just need to provide more certification, more education and more credentialing for just more kids. Because only a third of kids go to college. And a lot of people argue that that’s maybe too many or too few. But if you think about our economy, our culture, our politics, it’s dominated by people with college degrees. And unfortunately, it’s not getting easier, it’s getting harder to get into school. But yeah, Andy, I think that was a really decent summary. And what I’m hearing from are parents that are disappointed and angry because through economic privilege, their kid was about to experience that third thing and they might have to delay that.


[29:38] Andy Slavitt: Well, look, you have sparked a national dialog. And like I think many of the topics that relate to the pandemic, the one thing that I’m finding that they have in common is they are things that extend more deeply into our social system and how we live than just the pandemic. They, in fact, expose questions we always should have been asking, but haven’t had the impetus to. And, you know, you are the catalyst for this, so we appreciate you coming on In the Bubble and sharing what’s going on in your bubble with us. 


[30:13] Scott Galloway: Thanks so much, Andy. And Zach, go Penn. It’s going to be an incredible experience. Oh, my gosh. To be a talented, handsome young man heading to Penn. I want to be you. Well done. You’re gonna have a great four years. 


[30:28] Zach Slavitt: Thanks so much for talking to us and answering questions. 


[30:34] Andy Slavitt: All right. For many of you, it’s still Monday, which means that Wednesday we have another episode coming. And it is a good one. It is with Andrew Yang, former presidential candidate, and an all-around very interesting guy who has ideas that are really resonant in this time for how to get the country through crises like this. He’s got a lot of fans. And if you know people who are fans of his, have him check in and listen to In the Bubble. And then next week, we have the Reverend William Barber, who is one of my very favorite people. I encourage you, if you have not heard Reverend Barber, to just go on to YouTube and play one of the recordings from one of his many speeches. He is phenomenal. We have a lot to talk about with him. And then Wednesday, we have Connie Schultz and Sherrod Brown. They’re a married couple in Ohio. Connie is a fantastic journalist. Sherrod is the senior senator from Ohio. And we’re going to maybe have a little bit of a four-person cocktail event as goes around around the country. We’ll try to create a model event with Lana and me. Maybe we’ll let Zach have a sip of non-alcoholic beer or something like that. Anyway, enough for me. We had a great next week coming. I hope you have a wonderful rest of your week. Over and out. 


[32:13] Andy Slavitt: Thanks for listening In the Bubble. Hope you rate us highly. We are a production of Lemonada Media. Kryssy Pease is our producer. Ivan Kuraev is our editor. Jessica Cordova Kramer and Stephanie Wittels Wachs executive produce the show and run our lives. My son Zach Slavitt is my cool co-host and onsite producer. Music is by Dan Molad and Oliver Hill. You can find out more about our show on social media @LemonadaMedia. And you can find me at a @ASlavitt on Twitter or @AndySlavitt on Instagram. If you liked what you heard today, please, please, please tell your friends to come listen, but from a distance. And for now, stay safe. Share some joy. And we will get through this together. And #StayHome.


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