“My generation has decided that it’s awesome not to provide younger people with the opportunities we had because it makes our assets, our houses, our diplomas, our shares all more valuable. It is bad for society and reflects poorly on the generation in charge. What’s happening in higher education is just a manifestation of that selfish mindset.”
So says Professor Scott Galloway, who has a long standing as a pioneering thinker and controversial truth-speaker. He has predicted future trends and railed against socially damaging systems and organisations since he completed an MBA from the UC Berkeley Haas School of Business in 1992. He founded Prophet, a brand and marketing consultancy firm. He launched RedEnvelope, one of the world’s first ecommerce sites. Along the way, Galloway established a digital intelligence company and an activist hedge fund. More recently, there have been influential books, podcasts and digital newsletters. In 2019, he opened an online higher education startup, Section4.
Since 2002, Galloway has also been clinical professor of marketing at New York University Stern School of Business. There, he teaches MBA students brand management and digital marketing. Much of his research focuses on the so-called Big Four – Apple, Facebook, Google and Amazon – and specifically how the ambition of those tech titans has triggered a seismic social and economic change.
Unquestionably, business leaders can learn a lot from Galloway’s forceful opinions and predictions. In April 2021, he posted his thoughts in a contentious newsletter, No Mercy/No Malice, setting out his thoughts on what is wrong with higher education – “the most important industry in America. It’s the vaccine against the inequities of capitalism, the lubricant of upward economic mobility, and the midwife of gene therapies and search engines.”
Today, post-Covid lockdowns, he laments a “huge missed opportunity”. The top universities have largely refused to pursue a hybrid-teaching model that would enable intake numbers to swell, affording more students a better education and greater career opportunities.
The disappointment of universities constraining supply
“The most disappointing thing is the elite universities have decided to double down on their luxury positioning and constrained supply,” Galloway says. “If they embraced technology, they could put half of their sessions online and theoretically multiply supply overnight. However, they found out early on that online learning looks and smells the same, meaning differentiation doesn’t exist.”
He suggests that American elite universities are “the ultimate luxury brand for wealthy people in China, the Gulf, and Europe”, who will pay large sums of money to boost their children’s chances of attending.
“By creating the illusion that an association with a brand – such as Bottega Veneta, Ferrari, or Tequila Ley – makes someone a better, more successful person, you can make irrational margins. The strongest brands in the world are not Amazon or Apple, but the likes of Oxford, Stanford or MIT, because nobody pays $300m to put their name on the side of Apple’s headquarters,” he says.
These munificent endowments have led to what Galloway calls the Rolexification of some university campuses, with higher wages attracting supposedly better teaching staff and no expense spared on facilities. Further, to maintain that exclusivity, admission rates have eroded in recent years, he contends.
“When I applied to UCLA in the 1980s, the acceptance rate was 74%. This year, it’s likely to be around 6%,” Galloway continues. “I thought universities would leverage their brands, resources and technology during the pandemic to soak up the market. But I could not have been more wrong.”
He points out a worrying knock-on effect. “Now, there is so much overflow from people rejected from elite universities that the second-tier universities are demanding similar prices, effectively charging a Mercedes price for a Hyundai.”
Paying a heavy price for a university education
Galloway donates all his NYU salary to the university and has contributed millions of dollars to both NYU and Berkeley for immigrant student fellowships. “Here’s the thing,” he says. “These universities are technically private organisations, but they are non-profits. And non-profits usually have a societal, public-serving mission.
“These companies no longer have a public mission because they are not growing their first-year student intake despite the money coming in. Therefore, they should lose their non-profit status. It’s like a homeless shelter rejecting 90% of people because it’s decided to constrain the number of beds despite having the resources and skills to accommodate everyone.”
But with greater diversity increasingly prioritised by business leaders, a growing list of organisations have identified the modern problem with a university degree – most graduates will be laden with debt and need training up anyway – and sought alternative routes to tap into a much larger talent pool.
“The most significant thing to happen in higher education in recent years didn’t actually happen in higher education,” says Galloway. “Companies ranging from Google to [the private equity firm] Apollo to Xerox have said: ‘We’re going to carve out a significant number of job positions for people who don’t have traditional college certification.’
“Encouragingly, a lot of great companies have recognised that if they’re only going to recruit at elite universities, they have effectively decided they are not, for example, going to hire single mothers. There just aren’t a lot of single mothers collecting diplomas and walking across the stage at Harvard or MIT.”
Urging business leaders to be more open-minded about their approach to hiring, Galloway admits that he, too, was “guilty of fetishising and recruiting from the elite universities” early in his career. “We loved it, it made us feel good about ourselves. But as long as the best organisations continue to fetishise those places, we are never going to break this cycle.”
Changing the mindset around higher education
Then there is the matter of the high cost today of attending an elite university.
As Galloway notes: “My seven years of college education cost $7,000, so it was a no-brainer for me, the son of a single immigrant mother. It meant an unremarkable kid gained a remarkable certification and has resulted in prosperity and opportunity that I didn’t have access to previously.
“There is a general sentiment that university is not the return on investment it once was.
But while some people will start doing the math, the certification that sets you up for life, making you more attractive to potential mates and employers, is still very powerful.”
Section4 could be a viable and cheaper alternative to university. Certainly, it scores well on the cost and acceptance fronts, says Galloway, offering “courses at 10% of the price of an MBA and with 1% of the friction as there is no complicated application process”.
And although Section4 thrived during the pandemic, when people had more time to study online, he concedes that the platform has become more suited to mid-career professionals looking to expand their skills alongside colleagues. “We’ve transitioned from a B2C to B2B company and have found, post-pandemic, that universities have become more proprietary about their professors doing talks for us.”
What, then, is Galloway’s key message? “There is a larger issue here in the US and Europe about whether we want to continue to embrace this rejectionist – almost Nimbyist – mindset,” he says. “Regulators and university leaders need to start planting trees the shade of which we might not enjoy. Admission rates must be expanded, as must housing opportunities for young people.”
Business leaders would do well to heed Galloway’s warning.