Here’s why the traditional college model will probably never die

Higher Education will probably never change

Here’s some research from Stanford University on what exactly first-stage investors (in startups) are looking for when they give money. The essential “elevator pitch” of the story is that an early-stage investor typically has 1,000 meeting requests in a year, has to choose which 50 to take, and then funds maybe 1-2 of those 50. It’s a serious funnel.

So what was discovered?

Investors were most influenced by information about the founding team. In fact experienced, successful investors chose to respond only to information about the founding team, which suggests that focusing most on the quality of the founding team is a successful and viable investment strategy for early stage investors. Bernstein also found that less experienced investors reacted to all the information, essentially giving all equal weight.

He says investors may respond strongly to the quality of the founding team because they may see it as a reliable indication of whether or not the idea behind a company is a good one. High-quality founding teams — those from top schools, for example — generally have lots of options to pursue as entrepreneurs, and their choice to pursue a startup and its particular idea over other strong options sends a powerful signal to an investor that the idea is a promising one.

Yep. I bolded that part, by the way.

I think college right now is such a huge racket, right? It’s not even set up in a way to directly benefit/impact hiring, which should be the goal. We don’t even hire faculty anymore; we hire admins. The whole “value prop” of universities is based on inaccurate marketing.

The New Yorker has even written about declining college ROI:

Kenneth Arrow, one of the giants of twentieth-century economics, came up with this account, and if you take it seriously you can’t assume that it’s always a good thing to persuade more people to go to college. If almost everybody has a college degree, getting one doesn’t differentiate you from the pack. To get the job you want, you might have to go to a fancy (and expensive) college, or get a higher degree. Education turns into an arms race, which primarily benefits the arms manufacturers—in this case, colleges and universities.

But this Stanford research above nails it. Ultimately, one of the first things people are looking for about you — and in a situation where they’re going to hand you money, which you can argue is a pretty powerful condition — is what school you went to. On LinkedIn, I’d argue that your current job title/company and your school are probably your biggest brands that people are trying to determine. The school essentially vets you. That’s what you pay for, and that’s why you’re in debt.

That’s why it’s not going away or getting “disrupted” anytime soon, I’d auger.

Ted Bauer

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