While walking and talking on a videoconferencing call, professor Scott Galloway articulates why higher education organisations in the United States and elsewhere failed during the pandemic, and argues a more inclusive system that embraces a hybrid-teaching model is the only direction to take
Picture credit: Nick Rogers
No interviewee has accused me of being “full of shit” before. So when professor Scott Galloway, speaking to me via a transatlantic videoconferencing call while pacing around his spacious home, smartphone at arm’s length – the walking helps him articulate thoughts, he says, but the jerky, facial profile view is unorthodox and intense – labels me in those profane terms, I’m shocked.
And yet, given the 57-year old’s venerated standing as a pioneering thinker and controversial truth-speaker, his candour should have come as no surprise. Indeed, after completing an MBA from the UC Berkeley Haas School of Business in 1992, Galloway has, one way or another, been calling out BS, predicting future trends, and rallying against socially damaging systems and organisations.
First, he founded Prophet, a brand and marketing consultancy firm. Then, five years later, in 1997, RedEnvelope, one of the world’s first e-commerce websites, was launched. Along the way, the entrepreneurial Galloway has also established a digital intelligence company and an activist hedge fund, among other ventures. More recently, there have been influential books, podcasts, and digital newsletters, and, in 2019, he opened an online higher education startup, Section4.
Additionally, since 2002, Galloway has been clinical professor of marketing at New York University Stern School of Business. There, ‘Prof G’ teaches MBA students about brand management and digital marketing. A considerable amount of his research arrows in on the ‘Big Four’ – Apple, Facebook, Google and Amazon – and specifically how the ambition and rapaciousness of those tech titans have triggered a seismic social and economic change.
Unquestionably, business leaders can learn a lot from Galloway’s forceful opinions and predictions. Today I’m seeking his latest thoughts on what’s wrong with higher education, which – as he wrote in a contentious No Mercy/No Malice newsletter post in April 2021 – is “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.”
Doubling down on positioning as luxury brands
Now, post-pandemic, he laments a “huge missed opportunity”. The top American universities have largely refused to pursue a hybrid-teaching model that would enable intake numbers to swell, therefore affording more students a better education and greater career opportunities.
“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 posits that American elite universities are “the ultimate luxury brand for wealthy people in China, the Gulf, and Europe”, who will pay massive 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 $300 million to put their name on the side of Apple’s headquarters.”
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 the University of California, Los Angeles (UCLA), in the 1980s, the acceptance rate was 74%, and this year it is 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 university education
Galloway, who donates all of his NYU salary back to the university and has contributed millions of dollars to both NYU and Berkeley for immigrant student fellowships, is gathering pace, physically and mentally. His side-on head lurches from left to right on the videoconferencing screen, the background a blur. “Here’s the thing,” he says, turning slightly to his smartphone camera, mid-stride, “these universities are technically private organisations, but they are non-profits. And non-profits usually have a societal, public-serving mission.
“I would argue that 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.”
Pleasingly, with greater diversity increasingly prioritised by business leaders, a growing list of organisations, in the United States and elsewhere, 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 Apollo, the big private equity firm, 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.”
Stunned to silence
At this juncture in the interview, I comment that I’m unconvinced my two young children will attend university. Suddenly, Galloway stops walking and looks directly at his phone screen. He calmly asks a series of questions, including whether I’m married and whether my wife and I attended university. Having answered “yes” to his queries, he raises the volume and picks up the pace again.
“OK,” Galloway starts, “so you’re full of shit. Both of your kids are going to university. While you pretend to be thinking avant-garde, the odds are that by the time they start secondary school, you will recognise the power of certification and begin creating landing lights and guardrails, putting your kids on track to university.”
Seeing I have been stunned to silence, he goes on. “I think you are expressing the general sentiment that university is slowly but surely not the return on investment it once was. 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.
“Now, an outrageous cost is attached to attending an elite university, but the certification that sets you up for life, making you more attractive to potential mates and employers, is still very powerful. And while people like you are starting to do the math, statistics based on your demographic, your profession, and the home environment you will create, your kids are college-bound, full stop.”
Mindset change required by those in charge
Desperate to shift the conversation, I ask whether Section4, which provides “unlimited, MBA-quality online business education”, according to its website, 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, virtually. “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.”
Bracing myself for more Prof G profanity, I pose a final question. What 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.”
Turning to the camera once more and slowing his walk, he adds: “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.”
Business leaders would do well to heed Galloway’s warning.
A (sanitised) version of this article was published by Raconteur in July 2022 – you can read that here
Oliver Pickup 