--:-- Steph: Hello, everyone. Welcome back to the A16Z podcast. This is Steph, but as you just heard in our intro, today you'll be hearing from A16Z co-founders Mark and Ben. And you'll get to hear them tackle a hot topic that's been absolutely dominating the news over the past few months. That is, of course, the university system.
--:-- Steph: As Mark states at the top of the episode, universities matter tremendously to our world, but they're also currently in a state of crisis. Now, a lot of people are covering this topic, but Mark and Ben take a different approach, a structural approach to higher education, by actually breaking down the 12 functions of the modern university.
--:-- Steph: They also start by taking us back in time to the origins of some of these elite institutions, all the way through to today, unpacking the numerous challenges that universities face, from student debt to the replication crisis, and also other topics ranging from DEI, tuition inflation, and grade inflation, student athlete admissions, accreditation, and so much more.
--:-- Steph: So as colleges face an existential threat that could have long-lasting repercussions, the question becomes, how can we find ways to improve these institutions while still being open to new entrepreneurial opportunities in education? And of course, if you do like this episode, don't forget to subscribe to The Ben and Mark Show wherever you get your podcasts so that you're the first to receive new episodes. Enjoy.
--:-- Steph: As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see a16z.com slash disclosures.
--:-- Marc Andreessen: Hey folks, welcome back to the Mark and Ben show. Today we are going to tackle one of the hot topics of the moment, which is the topic of the university system.
--:-- Ben Horowitz: Very hot topic. It's been in the news a lot lately.
--:-- Marc Andreessen: A couple of things we wanted to say up front. First of all, I think in general, we're going to have a very kind of American perspective. So when we talk about the universities and colleges we're most familiar with are American. So assume we have maybe a little bit of a parochial view in terms of what country we're talking about.
--:-- Marc Andreessen: But look, the most important thing is why we want to talk about this. Universities, and I would say especially the really good ones, they matter tremendously. They matter tremendously to the world and to the country and to everybody in the country. And they matter a lot to us. I just want to say up front, they matter a lot to me. I'm where I am because I got a modern university education at the University of Illinois. They matter a lot. I know to Ben, who can talk about his own experiences. So they really matter.
--:-- Marc Andreessen: They're obviously in some state of crisis right now. I think our opportunity is to talk about them not so much in terms of the topics that are super hot in the news. We're not necessarily going to weigh in on the same stuff that you've been reading about if you've been following the last couple months of drama. We're going to do what we do, which is talk about it structurally. We're going to think about universities as an industry and as a business and as a form of organization and as something that has customers and constituents and a structure and an industrial logic and incentives.
--:-- Marc Andreessen: The other thing is there are two specific reasons we want to get into this today. One is both Ben and I have a lot of friends and colleagues all across the country that are trying to make universities better. Some of these are people who are on boards or are running university presidents or endowment heads or other people, alumni, professors, people who have been scrubbing hard to try to make universities better. So we hope maybe sharing some of our perspective might help them.
--:-- Marc Andreessen: The other is, since we are venture capitalists, there is always the possibility that higher education is an industry and there's always the possibility of startups. One of the interesting questions always is when an industry is going through structural transitions and when a lot of things are flying, there's always this question of, well, should there be new competitors in the industry? Or actually, should the structure of the industry itself change? Maybe things that have been bundled in the past should be unbundled. We'll get into that a little bit as well. There may be entrepreneurs listening to this who may have ideas coming out of it. Ben, let me let you also add introductory thoughts.
--:-- Ben Horowitz: Yeah, I'll just add I was a trustee at Columbia University. I'm a trustee emeritus now, I think they call me. So I have a huge interest in helping the system improve and get over its current issues. The other thing I'd say about American universities in particular is they are, to a large extent, the envy of the world. When I travel the world, many countries, the government officials and the highest ranking people in the country send their children to American universities to study, even if they're going to come back and literally run the country at a future date. So it's really been an amazing system and produced an awful lot of good. So we're going to do a lot of dissecting, deconstructing, criticizing of it, but it's in that context.
--:-- Marc Andreessen: A great case study of that, Ben, is I think Xi Jinping's daughter goes to Harvard, I believe. And then, particularly when we talk about the top universities, which are the ones that draw most of the press coverage, they have what economists call an externality, which is their graduates end up running a lot of the country.
--:-- Ben Horowitz: Yeah. Right.
--:-- Marc Andreessen: Almost every Supreme Court justice either went to one of a very small number of super elite law schools, usually Harvard or Yale. If you look at the CEOs of the Fortune 500, if you look at top politicians, presidents, I think Harvard alone is responsible for eight presidents. And then there's this policy setting function that they play where the expertise at the universities in the form of the professors and the research is used to set a lot of public policy. The decisions made at these places basically end up determining a lot of the future of the country.
--:-- Ben Horowitz: I mean, they are elite universities that produce the elites.
--:-- Marc Andreessen: Yes, that's right. And the elites end up running a lot of things. So that's another reason we want to talk about this. The implications of what's either going right or wrong at the top universities matters, not just for the universities and for the people who go to those universities or teach at those universities, but also the citizenry as a whole is very exposed, for better or for worse, to the implications of what happens at these places. So certainly a topic that I think everybody should at least think about somewhat.
--:-- Marc Andreessen: The structure for what we're going to do today is I've made my list of the Dirty Dozen or 12-step program. I made a list of the dozen key functions that I think are most central to what modern universities are. Let me start by saying basically where did the modern university come from? It's actually quite an interesting story in and of itself.
--:-- Marc Andreessen: The very short form of it is that the original universities started in England like 800, 900 years ago. The American universities actually started 400 years ago. American universities are, in some cases, older than the country. Harvard, in particular, is the leading case study on this. I think Harvard's the oldest current one. Harvard is, I think, 400 years old. Basically what happened is these institutions have been evolving for hundreds of years. What they basically are today is a bundle of functions and products and services and staffing and economics that's been evolved over the course of literally hundreds of years.
--:-- Marc Andreessen: I'll give you a sense of the evolutionary steps quickly. Just take Harvard as a case study. Harvard started as a religious institution, basically training for Protestant Puritan religious leaders in the U.S. And that wasn't knowledge at the time, right? The Bible was the best source of knowledge in the world.
--:-- Ben Horowitz: Yeah, if you read the original charter of Harvard, this is all right there on the Wikipedia page. It basically was chartered as an actual religious instruction, a religious institution, a religious training.
--:-- Marc Andreessen: It kind of went hand in hand with the creation of what became known later as the WASP Anglo-American aristocracy that colonized New England and basically ran the country and conducted the Revolutionary War ultimately. That was very heavily Protestant Puritan. Harvard was a key note of the propagation of those values and of that culture and of that religion. It ran that way for a long time.
--:-- Marc Andreessen: It and its peers then broadened out. Through the course of the last 150 years or so, they threaded in two foreign models, elements of two overseas models. One was the classical education model from the English universities, particularly Oxford and Cambridge. The idea of teaching classic politics, history, economics, philosophy, literature, the key topics that in England for a long time have been viewed as the way that you train leaders. Every leader in England, every prime minister, essentially came through this particular program they have at Oxford called PPE, which is politics, philosophy, and economics, I think. The classical education role of these places came from the English model.
--:-- Marc Andreessen: More recently, starting about 100, 120 years ago, the influence started showing up much more of the German model. The German model was for technical education, for training scientists and engineers. Most elite universities in the U.S. now, at large universities, they famously have both a liberal arts component to what they do, but they also have what we now call STEM: science, technology, engineering, mathematics. The modern American university is a hybrid of a religious institution, a classical education institution, a humanities education institution, and then a technical education institution.
--:-- Marc Andreessen: At the place I went to, University of Illinois, it was actually very interesting. There were actually two physical sides for the campus. There was the liberal arts side, and then there was a street that divided, and then there was the engineering campus on the other side.
--:-- Ben Horowitz: At Illinois, were the STEM buildings much less nice than the liberal arts building? Because that was the case at Columbia.
--:-- Marc Andreessen: At Illinois, the engineering buildings were much nicer.
--:-- Ben Horowitz: Oh, they were nicer. Okay, interesting. So it depends who gave the money.
--:-- Marc Andreessen: Yeah, so this was actually a big deal. At least at Illinois, this was a very big deal because I can tell you the liberal arts people were very mad about this. The liberal arts buildings were just collapsing. They were ancient and collapsing and there had been this building frenzy at the engineering department over the preceding 10 years before I got there. There were all these incredible, shiny, spectacular buildings. I remember people on the other side of the street were super mad about this.
--:-- Ben Horowitz: Oh, that's really funny because when I was at Columbia, Columbia has built a gorgeous new campus now, so it's a little different, but the old buildings were gorgeous. They were from Alexander Hamilton days and the new building was just the ugliest thing you could ever see. And that was the engineering building.
--:-- Marc Andreessen: Yeah, maybe that tells you that maybe that's a difference between a land grant, fundamentally technical university with the sort of tacked on liberal arts, versus a liberal arts legendary institution with tacked on technology.
--:-- Ben Horowitz: Exactly. Yeah, that's right.
--:-- Marc Andreessen: So these are good examples of this hybrid that's emerged. And then, since the 1960s in particular, the universities have taken on a more potent set of social, political, ideological roles, which we'll talk about as we get into. So there's a modern take on this too.
--:-- Marc Andreessen: The point of this is as a result of how these institutions evolved, they're bundles. If you look at it as an industry, they're bundles. They do a lot of different things. The bundle evolved. In business, that's a good way to figure out what you should do: let evolution work on your side and figure out what works and what doesn't, add to the things that work and subtract the things that don't. But the other thing that happens is sometimes you just inherit the bundle. Sometimes as a leader, you want to relook at the bundle and whether this actually is the bundle that makes sense or whether things should be split out or added to the bundle. We're going to talk about it in terms of the current bundle, and then we'll talk about the potential unbundling.
--:-- Ben Horowitz: One of the very interesting things with regard to the bundle, and you can think of the bundle as like the cable bundle where you get your ESPN and HBO and all the things in one, is that the bundle was created pre-internet. When you and I went to school, that was significant because there was this thing where you could only get knowledge. The best books, the best information was all, you had to go to school to get it. In fact, if you wanted access to the internet, when we went to school, you had to go to university. It was the only place that had the internet. So we're in a really different world than we were even 35 years ago, and that puts tremendous pressure on the bundle.
--:-- Marc Andreessen: Yeah, that's right. A great example is Illinois had a famously huge library. I remember it was actually in the marketing material for both recruiting students and professors was the quality of the library. Because if you went there, you could do certain kinds of research that were not possible if you didn't have access to the library.
--:-- Ben Horowitz: Yeah, yeah. Which is a very different world. But like the cable bundle, you could only get HBO if you had cable. So that made the bundle very different than if you can get the HBO app. Those are not the same worlds. And the university is in that same situation, but people don't point it out as much.
--:-- Marc Andreessen: Yeah, that's right. So let's dive into the bundle. I've identified my dozen kind of things in the bundle. Ben, we can add things as we go. There are actually many things we could easily think of. We just thought of one: the library. I didn't even have on my list. But there are many more elements of the bundle that I haven't even prioritized here. But these are the dozen that are top of mind for me.
--:-- Marc Andreessen: Ben, let me just run you through the headlines on these real quick so people can have a roadmap to what we're about to talk about. Then I'll come back to the first one and we'll dive in.
--:-- Marc Andreessen: Number one, credentialing agency. Credentialing students, graduates for employers. Number two, the actual courses themselves, the education. Number three, what I call the research bureau, which is the research component that most modern universities have. Most universities are a hybrid of teaching and research.
--:-- Ben Horowitz: A huge charter is to create new knowledge. Often how the kind of technical part of the university distinguishes itself from industry. They refer to industry as applying knowledge that was created at the university, although not always true, but it's the paradigm they love.
--:-- Marc Andreessen: Yeah, that's right. We'll talk about this, but professors get hired and get tenure in large part on the basis of their research, in contrast to their teaching. It's not uncommon to have professors who maybe are better at research than teaching. It will not surprise anybody who's been in a college environment. As the student, sometimes you wonder who got the good part of the deal.
--:-- Marc Andreessen: Fourth, what I call the policy think tank. This is the role of universities in setting public policy, which we'll talk about. Number five is what I call the moral instructor. This is the legacy of the fact that these institutions actually started as religious institutions. Today in most mission statements in most universities, they might not outright say that they're teaching religion or morality, but they'll say things like they're trying to inculcate values or they're trying to foster citizenry. They'll use terms like that. That's basically all code for moral instruction.
--:-- Marc Andreessen: Number six is what I call the social reformer role. This is the role where they not only instruct morality, but they also try to implement it themselves directly. This is where this very hot topic of DEI in particular comes in that we'll spend a little bit of time on.
--:-- Marc Andreessen: Number seven, what I call the immigration agency. This is the key role played by foreign students, which is actually really critical and not talked about enough. It turns out that foreign students at universities generally pay full freight. So it's a big deal. International recruiting of students now is a very big deal and very core to the economic structures of these things. There's another aspect that we'll get into when we talk about credentialing, which is they pay full freight and they don't always go to the actual university. The universities have set up these parallel universities with different criteria, which is very interesting.
--:-- Ben Horowitz: That's right. This actually turns out to be very important in the economics of these places because it's not clear that these places work without these associated programs we'll talk about.
--:-- Marc Andreessen: Number eight, sports league. I'm not the sports guy, but Ben very much is. Ben will weigh in very heavily on that. There's been a lot of controversy around college sports in recent years. Number nine, the hedge fund, which is to say the endowments, which have become a very big deal over the last 30 years in particular.
--:-- Marc Andreessen: Number ten, what I refer to, and I went to college, so this was me, as adult daycare, or young adult daycare. This is where you send your 18 to 24-year-olds as a substitution for just going out and getting a job.
--:-- Ben Horowitz: To get them out of the house, exactly.
--:-- Marc Andreessen: And then number eleven is what I call the dating site. This is the role that the universities have played both in being a place where people actually date and choose mates, but also they get the credential for future choosing of mates. We'll talk about that because that turns out to actually matter quite a bit.
--:-- Marc Andreessen: And then we'll close on what I call the lobbying firm, which is basically the role the government plays in all this, and in particular, the role that government funding plays in all this, and then what that means for the relationship of the government and the universities. That's a very hot topic. There's a very active congressional investigation going on into the universities right now over all this recent drama. There's always this question in the back of everybody's heads in academia, which is, okay, we at academia really do run on federal funding. What would ever happen if that ever got compromised or cut off?
--:-- Ben Horowitz: Yep. It's a freak out whenever it pops up. It popped up a little during the Trump administration. I was a trustee at the time. It was a fairly scary situation.
--:-- Marc Andreessen: Why don't you describe what happened? Because that gives people a sense of the stakes of what we're talking about.
--:-- Ben Horowitz: Well, Trump was talking about a variety of things. One was an endowment tax. And then there were other things to change the way the research grant process worked and the amount of money that got allocated to various schools. That just has huge effects on the economics. Universities almost never do layoffs. They only get bigger. So what you would regard as a run-of-the-mill business downturn is something that they're not really equipped to handle at a university. I would just put it that way.
--:-- Marc Andreessen: Okay, we'll come back to that. So let's start with the credentialing agency. This is a very interesting topic. A lot of what I know on this I learned from an economist named Brian Kaplan who's written a book called *The Case Against Education*. He's a tenured university professor at George Mason University. He spent his life in academia, so he's not exactly a bomb thrower. But he gave his book a very provocative title. It's a very comprehensive walk through the economics of education and how the system works.
--:-- Marc Andreessen: I was very struck by the argument that he basically makes in the book, or at least how I interpreted it, which really stuck with me. The default view of the value of a college degree is the learning. You go for four years and you get the learning that translates to employable skills. Then you get a job that employers recruit on that basis. It actually turns out it's very hard to validate empirically the value of the learning. The evidence for that is there's something called the sheepskin effect that economists talk about. The sheepskin here refers to the diploma, the actual you graduated, you actually got the diploma.
--:-- Marc Andreessen: The observation is that if you go to college X and program Y for four years, eight semesters, and you graduate, you make whatever, say $100,000 a year coming out the other side as an average salary. It turns out if you compare those graduates to students who go for seven of the eight semesters, on average they'll get something like half the salary. For those graduates, if the full graduate amount is $100,000, they'll come in at like $50,000 or something like that. It varies by field, but it roughly correlates to that.
--:-- Marc Andreessen: The argument Brian Kaplan has made is if you stare at that, there are two possible explanations. What you'd expect is if this is just all about the education, the person who didn't graduate but took seven of the eight semesters should get seven eighths of the income.
--:-- Ben Horowitz: Yeah. Right?
--:-- Marc Andreessen: Instead, they get half the income. So there's two possible explanations. Either a full half of the actual valuable information is delivered in that last semester.
--:-- Ben Horowitz: The senioritis semester.
--:-- Marc Andreessen: Yes. Anybody who's been through college knows that's not true because that's the semester everybody slacks off. If anything, the opposite is true. Or the sheepskin effect, which is the actual value is more in the diploma. It's more in the fact that you actually graduated.
--:-- Marc Andreessen: The way that the economists view this basically is the main credential of a university degree is in two parts. It's in the fact that you were admitted and then it's in the fact that you graduated. By the way, on the admissions thing, you can see that same thing in Silicon Valley where there's this credential that's become very popular, which is "I was admitted to MIT, but I didn't go."
--:-- Ben Horowitz: Right.
--:-- Marc Andreessen: Or "I was admitted and I went for a year and dropped out." It turns out there's no penalty for VCs like us. The fact that you got admitted to MIT is itself a credential, even if you never went, even if you never actually completed the thing. So it links back to the sheepskin effect.
--:-- Marc Andreessen: The objective clinical view of the value of the credential is that the education plays some part, but there are these two other really critical things. There's the fact you got admitted, and then there's the fact that you graduated. In psychological testing terms, psychometrics, what that basically means is that the admissions process is basically an IQ test. And then the graduation, actually getting to the diploma, is a conscientiousness test.
--:-- Marc Andreessen: The reason we can be confident in saying that admissions is an IQ test is that traditionally admissions was based on standardized testing, which is tests like SAT, ACT, GRE. Those tests, from a clinical standpoint in clinical psychology, psychometrics, are all proxies for an IQ test. They're all roughly equivalent to a straight IQ test. Highly correlated to an IQ test, 0.8 or more correlation. Historically, the fact that somebody got 1,400 or 1,500 on the SAT, and that correlated to an IQ of 130 or something, and therefore they were qualified to go to a certain tier of university. As long as that standardized testing component is in there and those tests are real, that's a real signal of basic intelligence. And then the fact that they completed the four-year degree is a real signal of conscientiousness.
--:-- Marc Andreessen: I think there's a really fundamental thing that's breaking right now that's not getting enough attention. Employers are starting to really think about it, but I think a lot of people who run universities are not thinking about enough yet.
--:-- Ben Horowitz: We're thinking about it. We're thinking about it. Yes, both. We're thinking about this both for ourselves and then also for all of our companies who hire. I think a lot of universities, number one, they are voluntarily ending the use of standardized testing for admissions. There's a whole political, social overlay as to why that's happening. At a lot of even the top institutions now, they very deliberately are not doing admissions based on any sort of standardized testing, which means they're not applying the IQ test. Maybe that's the right thing for them to do, but what it means is they're giving up on that as part of the credential. The IQ component of the credential is being voluntarily surrendered.
--:-- Ben Horowitz: And then the other thing that's happening, and this is very clear in the data, is just grade inflation. The trend over the last 50 years has been increasingly that just everybody gets A's in everything. And of course, if you just get A's in everything, it's a lot easier to graduate.
--:-- Ben Horowitz: You're much less likely to drop out or get forced out. And so I think what's happening is colleges, universities in the U.S. right now are voluntarily surrendering both the admissions IQ component of the credential and the graduation grading component of the credential. And I think the implication of that in terms of what that credential means in terms of future employment is, I think, very underestimated.
--:-- Marc Andreessen: So Ben, over to you.
--:-- Ben Horowitz: Yeah. And what do you think drives the grade inflation the most? I've been thinking about that quite a bit. Do you have a view on that from what you saw at Columbia?
--:-- Marc Andreessen: Yeah. I mean, I think that a lot of it has to do with incentives, right? So if you're an instructor, you get these student evaluations of teachers, and they get published. And if students don't like you, you're regarded as a crap professor. The easiest way to get a high student evaluation is to give them an A. The amount of stress and bullshit you have to deal with if you give somebody a D, because they're going to come to you and complain and harass you, why do it? You don't have to. So just give everybody an A, you get a high evaluation. There is no incentive for an instructor to give a hard grade.
--:-- Marc Andreessen: And then there is a kind of, once one professor starts taking that easy incentive, then everybody does it. We see this in companies where you have a soft manager who promotes a bum employee. Then every other employee goes, well, that bum got to be a vice president, why not me? And then that takes off. So I think it's kind of like a natural organizational evolution if you don't have some very strict standard on grading. I think it just naturally went there, but I'm not sure.
--:-- Ben Horowitz: Well, I'll give you two other incentives. I think that's right. And the role of ratemyprofessors.com, I think it's pretty central now. But I'll give you two other incentives I suspect. One is future donations, right? Your other constituency here is the parents.
--:-- Marc Andreessen: Yeah.
--:-- Ben Horowitz: And then by the way, these students later on become donors.
--:-- Marc Andreessen: Right. Yeah. And, like, I think that most professors are not that directly connected to the fundraising process, though.
--:-- Ben Horowitz: Right. But, yeah, that could be. But it also, here would be a reason for the administration to not be holding the line on it.
--:-- Marc Andreessen: Oh, for sure. Angry parents. It's like the last thing you want to deal with is an angry parent who donated a ton of money. That's no fun at all. So in that way, definitely the same thing.
--:-- Marc Andreessen: And then the third is, I've heard this from professors, is that for bad grades, you can be hauled in front of administrative proceedings. You can get in trouble, because you can open the door to fairness, equity, classroom conduct complaints. The students and their parents can complain and start an administrative proceeding. They could give you a false harassment complaint because you gave them a D. Hostile classroom. The HR policies basically provide an avenue for legitimate complaints, but also, if you're a professor, you must be thinking, what's the last thing I need in my life is to open the door to somebody saying something like that.
--:-- Marc Andreessen: To me, that's my analysis. And then this is the thing, the grade inflation has been a 50-year trend. The charts there are actually pretty linear. And so this has been going for a long time. People have known about this. And it's not a problem as long as the credential is still intact. But I think it's at the point now where it's damaging the credential. It's slip, slip, slip all at once.
--:-- Ben Horowitz: Yeah. And I think that, well, so there's another thing, which I got in a huge argument about when I was a trustee. To Columbia's credit, they did the right thing in that case, but all of the schools have this. So there's Harvard College, Columbia College, these things are almost impossible to get into. They accept on the order of a thousand students a year. Every high school graduate in the world wants one of these slots. That's the credential. But there are also these extension schools, which are not taught by professors. They're taught by somebody from Goldman Sachs who wants to do a little side education work. And they can let in tons of people. They're far larger than the actual university college program. And they all have them. Harvard has it, Columbia, et cetera.
--:-- Ben Horowitz: They are mainly foreign students, mainly Chinese students. And they purposely label the degree so it's very hard to tell that it's not the credentialed one. Columbia University Masters in Statistics was the big debate we got into at the extension school, because the people in the engineering school were like, what the hell? That's the same degree that we're giving out in title. How is an employer going to distinguish? And the truth is the Chinese employer cannot distinguish. That's really hard for them. And so you do that enough and it ultimately waters down the credential. In the United States, we can distinguish. We got a student coming from Harvard. We talk to other Harvard students, make sure they knew them. It's possible to sort, but it's not possible to sort for everybody. And they were purposely obfuscating it because it's a huge moneymaker. These schools, everybody pays full freight. There is no scholarship, no financial aid. And it's very scalable because they can let in as many students as they want. But it ricochets back into weakening the credential.
--:-- Marc Andreessen: Yeah. And a lot of this, you alluded to it, but I'll just focus on it for a second. A lot of these are international students. And the core of a lot of this is, if you're a Chinese employer, you might not understand the gradations here. Now, having said that, Chinese employers can use the internet just like everybody else. And so that's the kind of information asymmetry that the internet historically has been very good at demolishing.
--:-- Marc Andreessen: I think that is going to be thematic in this discussion, which is a lot of the things that the university could rely on get undermined by the internet, which is causing things to come to a head. Maybe not right now, but certainly soon.
--:-- Marc Andreessen: And then Ben, on the overall credentialing point, what's your view? We deal with both a lot of tech companies and also a lot of non-tech companies. Where are CEOs and hiring managers in corporations on this topic of the value of the university credential now versus 10 years ago, and then where is it going?
--:-- Ben Horowitz: It hasn't changed materially yet, in my view. But for the first time in my career, people are really discussing it. And you hear CEOs going, wow, the kids coming out of college this year are not what I'm used to. They're not. And I'm getting kids from weird places, not Harvard, not MIT. It used to be in Silicon Valley, Facebook, you're on the board of Meta, they used to only hire people from Stanford and MIT, or Harvard, Stanford, MIT. Nobody has that role anymore. That role is gone. I don't know any company that you have to be Stanford, Harvard, or MIT to be an engineer there. More and more people are not finishing school, coming straight out of high school. So I would say the aperture, which is really great, by the way, has opened.
--:-- Ben Horowitz: But the other thing is that I am hearing anecdotally, Stanford students aren't what they were. I got an engineer from Stanford, but they're not ready to go in the way they were before. So I think there's definitely a credential degrading that's already occurring. First time, though, with this class that just came out. So it's pretty nascent. And it hasn't really changed hiring practices much other than people are casting a wider net. But a Stanford degree is still very powerful. But you could see it's like a glimpse of the future for the first time. I've never heard that before.
--:-- Marc Andreessen: And if we project forward, if current trends continue, what do you think will be the take among leading edge employers in five years?
--:-- Ben Horowitz: Well, I think if you take out the SAT, that's a pretty big change. So it's a little unpredictable. What are they admitting people based on? Do you have to have high scores on the AP exams? Do you have to have a very rigorous curriculum? I know at Columbia, it really mattered the quality of the high school that you went to, even when they had SATs. So the question is, is whatever rubric they're using to replace the SAT as good at identifying very gifted students? Or is it worse? I think we don't know that yet.
--:-- Marc Andreessen: But would you predict in five years that employers are still just basically deferring to the degree for a recruit's IQ and conscientiousness? Or do they feel like they're going to have to validate that otherwise?
--:-- Ben Horowitz: I kind of think they're going to have to validate it. Just because it's different. On entry-level jobs, you can do some fairly rigorous testing, particularly for an engineer or something like that in the interview process. But look, Stanford, you had a huge benefit of the doubt. I think Meta at one point took any engineer from Stanford. It was that good of a signal.
--:-- Marc Andreessen: Yeah, it was an amazing signal.
--:-- Ben Horowitz: So I don't think they'll do that anymore. I think Google, just to close on this topic, Google now formally does not take college degrees into account, or at least they've said they're neutral or ambivalent. They'll equally rank people without degrees. They do their own testing. So I think that's going to become much more of the norm, where companies do their own testing. It's not legal in California to do a general IQ test for a specific job, but you can do pretty rigorous job-specific tests that certainly include something that tests the ability to process information quickly.
--:-- Marc Andreessen: Okay, well, I'm sure this will come back up again, so we'll move to number two. The actual education, the courses themselves. One lens on this is part of the bundle. There's actually a bundle of four different kinds of education and coursework. There's the classic humanities, liberal arts, which is derived from the English model. There's what we now call STEM, science, technology, engineering, math, which is derived from the German model. Then there's social sciences, which is a bit more of an American innovation, a hybrid of humanities and STEM. Fields like psychology, sociology, economics, public health, education, developed as "sciences." Anything that has "science" in its name isn't science is the joke. There's no physics science or chemistry science. It's only political science.
--:-- Marc Andreessen: The classic tension is the political scientists absolutely insist that they're scientists just like the physicists, and the physicists insist absolutely you're not, because you're not science. It's not like you have a hypothesis that's testable and you could run an experiment and find out if your predictions come true. If it's not that, it's not science. But whatever, capital S science. There's a whole digression we could go on about where this all came from, but they're in the middle somewhere.
--:-- Marc Andreessen: And then there's what I would call the trade school, which is basically law, medicine, business, and performing arts. If you go to one of these places specifically for a law degree, that's very specific, or to become a concert pianist or a doctor. So there is this bundle within the educational courses component, which are four quite different kinds of curricula.
--:-- Marc Andreessen: That basically takes us to the problem here. One problem is the sheepskin effect we already talked about, which is a strong suggestion that for some degrees and some institutions, the education is not as important as people might think. The market of employers certainly doesn't think it is, because you just look at the compensation data.
--:-- Marc Andreessen: But then there's this other monster problem. This problem has been discussed for decades, but it feels like it's coming to a head, getting much more politically potent, which is the student loan crisis. You have a very large number of graduates carrying large amounts of student debt. In the really bad case, it's debt that compounds and grows indefinitely over the life of the student. And you can't get rid of it with bankruptcy.
--:-- Marc Andreessen: On the one hand, there's been this big controversy. For a long time, federal student loan debt cannot be discharged through bankruptcy. It's the one form of debt that can't. On the other hand, you now have direct bailouts. In the last three years, the current U.S. administration has been doing a series of bailouts where they've been doing arbitrary top-down erasure of the debt. They call it "forgiveness," which makes it sound wonderful. What it means is other taxpayers are going to put the bill for it. And that's always sensitive in the American system, because the American polity is composed in part of people who went to college and in part who didn't. People who didn't go to college might not be so keen about having their tax money used to forgive student debt for nonproductive degrees.
--:-- Marc Andreessen: And honestly, there's a moral hazard issue. Among people who took on college debt, there are the people who paid it off versus the people who didn't. The people who paid it off don't get forgiven. So there's this weird incentive where it's like, well, if this is the new way it goes, then I'm a sucker if I pay off my own student loan debt because in the future there'll be another bailout. So this has become a pretty potent political issue. But I think underneath this is the question of, are all of these degrees and institutions actually generating graduates who can command market wages that make this entire thing an economically and politically viable proposition?
--:-- Ben Horowitz: Yeah, I think that's the exact question we should be debating. The whole forgiveness thing is insane in the sense that you're not actually addressing the real issue. It's the ultimate band-aid. Yes, you're buying votes. Yes, you're giving some people relief. But the fundamental issue is it's now become clear that for a large swath of the population, college is not worth the money. You would not have a college student loan crisis if whatever you paid for college paid you back in the form of a job that was worth far more than the degree. But what's happened is for a huge percentage of the degrees, the degree is worth less than the job.
--:-- Ben Horowitz: So we as a society are running a scam and ripping off a huge percentage of our young people who are going to college with the clear expectation that they're going to get a higher quality job and be able to pay for college. But that's absolutely not the case. And that's the real issue. If we don't address that, you can forgive this batch, but what about the next batch and the next batch? It's still not worth the money. That's the great thing that has to be reckoned with. Tuition, the quality degree has got to be pretty hard to pay back $300,000. That's a lot of money to go make back working for a living.
--:-- Marc Andreessen: Which I think gets into the student customer. There are many customers, but as a student, what do I want? Maybe 1% of the students want to become scholars, and 99% of the students want jobs. For that set, the value proposition is getting extremely shaky across the university system, which is why we have the student loan crisis. There's been an amazing inflation of tuition, which has grown at two or three times the general inflation rate, which is insane in the face of technology that ought to be able to reduce the cost of education dramatically. It's all on the internet and it's all in ChatGPT. There is no knowledge that you can't just get from your smartphone very cheaply and easily. So why am I paying $300,000? It is for the credential. But the credential itself, depending what you get your degree in, may not be worth $300,000 at all. And that's a big problem.
--:-- Marc Andreessen: A couple of things to that. One is this inflation thing. The cost of the degree rising faster than inflation is a continuing process. Compounding really gets you. $300,000, $350,000 is the cost of a four-year private college degree right now in the US. But if current trends continue, and there's no reason to expect they won't, that's on its way to a million dollars. Relatively quickly because of the compounding. Even if you work for us, that's hard to pay off.
--:-- Ben Horowitz: Exactly.
--:-- Marc Andreessen: Right now it's a one-way treadmill. The financial structures of these places generally assume that this kind of superinflation of cost is going to continue, and they're building cost structures that assume that. And that's starting to show up in the application rates of the percentage of kids applying to school already.
--:-- Marc Andreessen: So this also goes to this thing, and I've been guilty of this already, it's so easy to do, which is it's so easy to talk about whether kids should go to college or not, and whether kids should get a degree or not. But of course underneath both of those is which college and then which degree. If you dig into which college, there's a tiering in the college system where there are four or five different tiers of institutional quality, and corresponding income and job offers coming out the other side. And degrees, a computer science degree and an English degree, the English degree may be as spiritually valuable as the computer science degree, but it just doesn't carry the same economic opportunity out the other side. And those are two very different financial propositions. And they cost the exact same amount.
--:-- Ben Horowitz: Which is part of the weird thing. And it also gets into the customer question. One of the very interesting things for me being involved in universities, at Columbia and UCLA, is the way that the slots get allocated. The demand for computer science degrees is extremely high compared to the demand for anything that ends in "studies" degrees. But that's not how the resources at a university get allocated. They get allocated based on fundraising. Can you get an alumni to give you a professorship? And then can you politic your way into more resources within the university system, which is extremely political? And so you end up with generally a shortage of engineering slots and a plethora of other slots. So you want to go to Harvard, but you can't, or you want to go to UC Berkeley or UCLA, you want a computer science degree. You can't get into computer science, but you can get into Berkeley, but you got to pay the same amount. This is where it gets really wacky.
--:-- Marc Andreessen: So I think there's pressure building to disaggregate the question of college into what tier of college. And then I think there's going to be growing pressure to disaggregate what exact kind of degree. There's really a two-dimensional matrix. The economics of both the student view and the institutional view vary a lot depending on where you land in that matrix. And that's not generally how this stuff is discussed or analyzed.
--:-- Ben Horowitz: It really gets to you've got a huge bundle that you provide to a huge, very diverse, weird set of customers. Not diverse rationally, but you have to satisfy students, donors, faculty, sports fans, everybody. So it's a pretty hard product to build. And some state systems have started to carve back on some of the degrees. They're starting to cancel some of the degree programs that they think don't pay off economically. In those states, that's been controversial because it's going to tend to hit humanities and liberal arts the hardest. And that becomes very controversial. Are these institutions walking away from their core education mission if they're only focused on the economics? So I think there's a lot of potential future pressure here.
--:-- Marc Andreessen: Yeah, and that's a little bit, what is the purpose of the university? Through the lens of the student, they really want a job. If they're going to fork over that kind of money, they really need to get a job. Whereas if the university was free, then it would be a different story. And then what is its function in society? To build the right morals, to well-rounded people, all these kinds of things come up. There's been a lot of criticism of us in our world that we're not well-rounded enough. That's been a pretty steady criticism from the press that if we had majored in humanities, then we would have designed social networks to be better. I'm not sure about that, but that's a criticism anyhow.
--:-- Ben Horowitz: Yes, exactly.
--:-- Marc Andreessen: I will not take the bait.
--:-- Marc Andreessen: Okay, number three, research bureau. This is the research that's done. There's a tiering or a set of different things, but this is the university-level research that happens in the hard sciences, physics, chemistry, math, and also computer science. Then also in the social sciences. Whether the physicists would agree with it or not, the social scientists think they're doing the same kind of research. And even in the humanities, the professors and grad students write papers and publish in journals and get evaluated in a very similar way. The workflow and form of the product is basically the same.
--:-- Marc Andreessen: This concept of the research university is somewhat derived from the German model, but particularly the American research university is heavily based on the thinking of a guy named Vannevar Bush. He was FDR's science advisor, a character in Oppenheimer. Matthew Modine, I think, played him. He and his colleagues basically designed the modern research university as we understand it today, coming out of 1945, and created the modern federal funding complex of things like the National Science Foundation, National Institute of Health, DARPA, and so forth for funding research.
--:-- Ben Horowitz: Yeah, and those are very important. We need to get into that because that's corrupted some things itself.
--:-- Marc Andreessen: Exactly. The way I think of looking at how this is going, because this is so central to the model, is right now, globally, there are 3 million published academic papers a year. How many are read? That's the thing. 3 million specifically published in journals. They go through an editorial process, a peer review process. American universities famously have this process for new professors they call "publish or perish." You start out as assistant professor, you've got full professor tenure, and then maybe an endowed chair. The way you climb the ladder as a professor is through your research. The way you demonstrate your research is by publishing papers. If you talk to professors, they complain about this a lot. There's just a lot of pressure to publish papers, whether there's anything actually meaningful in them or not is sort of secondary.
--:-- Marc Andreessen: And then there's this question of, where are the results? If you chart the number of papers per year over the last 50 years, it's one of these lines that's straight up to the right. Are the results up to the right? There have been lots of studies. Robert Gordon is an American economist. He wrote this big book that basically says the actual amount of scientific progress coming out of that, if you try to measure it, is basically flat and maybe down. So it seems like there's some divergence taking place.
--:-- Marc Andreessen: There's a couple of ways to think about that. One is what's called the replication crisis. This kicked off in 2005 when a Stanford professor named John Ioannidis wrote a now famous paper with the title, "Half of All Published Research Results Are Wrong," where he did a statistical analysis and basically asserted that claim. There have now been extensive replication studies in many fields, and it varies by field, but somewhere between a quarter to a third on the low end, and up to two-thirds or three-quarters on the high end, of all published research doesn't replicate. Which is to say, if you run the same experiment again, you don't validate the results. So there seems to be an actual quality control issue.
--:-- Marc Andreessen: Then there's the impact question, Ben, that you brought up, which is, how often are these papers cited?
--:-- Marc Andreessen: And then you can do citation counts. And it turns out most papers are never cited. And then you can also do readership counts, like library lookups, journal lookups. And it turns out that it's like, I don't know, half the papers are never even read.
--:-- Marc Andreessen: And then you've got this additional problem. And this is where things get controversial. But look, you have a lot of published journal articles these days that are, for example, in this category they call autoethnography, which is basically people talking about their own opinions on things and sort of observing themselves as subjects. And this is a lot of the research that happens in the sort of humanities and liberal arts these days.
--:-- Marc Andreessen: And those papers, you could have an opinion of them, which is just like, wow, this just seems like sort of navel gazing. Not that there's nothing really useful. It's like, I have an opinion. You have an opinion. Let's both write our opinions and publish them and call them papers. But there's also a reason I bring this up, not just to pick on them. It also just turns out they have basically zero future citations. And so they're not cited by anybody else. There may be something brilliant in them, but they're not leading anything.
--:-- Marc Andreessen: There's something in the flywheel of progress. Adding to the knowledge of the world, right? If they were being read and cited, that would be a good sign, but they're not in a lot of cases being read and cited. You and I both know people who have come out of the university system who would express this quite strongly, which is like, it does appear that there is some sort of crisis going on. Basically there's something broken in the research engine, not in the process but in the outcome.
--:-- Marc Andreessen: And in particular, the replication crisis at the heart of it. If the science doesn't replicate, it's not science. It's not real. Something else happened along the way. And then that opens the door to, well, was this... look, there have been cases of overt fraud. There have been criminal cases that have flowed from this where it turned out that people were deliberately lying. In a lot of cases, it appears they're not lying. Maybe they just don't realize that they're publishing fluke results.
--:-- Marc Andreessen: Anyway, I'll just say this. There has been a 20-year, coming up on 20 years now, of debate in the scientific community as to what's going on here. So yeah, let's pause on this topic because it's so central to the mission of the modern university.
--:-- Marc Andreessen: On the negative side, the other problem is that government funding turns out to be highly corrupting. Because what happens is the way the funding works is there's a panel of government bureaucrats that takes proposals for research and then approves them. And as venture capitalists, that's not going to lead to anything good because they're basically only funding ideas that they understand, which are very incremental, shallow, uninteresting things to research as opposed to real breakthroughs.
--:-- Marc Andreessen: And I know this very well because I'm on the board of PISC, which is Sean Parker's Cancer Institute. And we've adopted the model of the Howard Hughes Medical Institute, which also funds research. And we pick researchers. So it's like picking an entrepreneur: pick the smartest researcher and fund them to do their work. Because science is not "I'm going to do this and I do this." It's "I'm going to go explore this problem and I may discover something." And that's how everything's been discovered. You never do what you set out to do.
--:-- Marc Andreessen: And so the whole government funding process is incredibly corrupting and bad and massive, and it drives so much of the research that's done in universities because it's a gusher of cash. So it cannot be resisted, but it's set up in a very horrible way. So that's a problem.
--:-- Marc Andreessen: I will say, we should state that we have funded many things that have emerged from universities. We've funded a company doing CRISPR from the inventor of CRISPR. We funded Databricks out of Berkeley, which was research done on computer science and scalable systems in their AMP lab. We funded AnyScale, which is out of the Basis lab. We funded Martine out of Nick McEwan's lab at Stanford. So obviously our money is where our mouth is. And there's some very good things coming out of universities still, like really important breakthrough research technologies, things that save lives. So it's not a zero.
--:-- Marc Andreessen: I just want to make sure that we're clear on that. I think that it's massively inefficient. A lot of the research is completely useless. A lot of the fields that are being researched are completely useless. But I do think on this one, there are so many genius scientists in universities that we have to be careful to, as a society, ship the money to funding the people who really need it, whose research we really need, and away from this wasteland of ridiculousness.
--:-- Ben Horowitz: Good. Okay, let's tie that off for the moment and then let's go to number four. So number four: policy think tank. This is a very interesting thing that happened. This started about 100 years ago. It's a Woodrow Wilson idea, right?
--:-- Marc Andreessen: Yeah, it's a Wilson era thing. Almost exactly 100 years ago is when this started.
--:-- Ben Horowitz: And in particular, there's a book called *Public Opinion* written by a guy named Walter Lippmann that sort of defined this at the time. Let me introduce the topic by saying the following: today, it's just totally normal to read in the newspaper that there's some social issue, poverty or something health-related. And then they will quote experts in that field. And those experts, by definition, are university professors. By default, those are always university professors. And so the professors are kind of the oracle of wisdom in that area.
--:-- Ben Horowitz: And then the media basically picks up the expertise from the expert professors out of the universities. And then the politicians basically receive that through the media. And that's the content for the proposals that the politicians take forward. Like that's where the proposals come from. And then when you're trying to pass the law, you're like, "Well, this is based on research. This isn't just my opinion. This is based on research that took place in the whatever political science or health policy department at Harvard or whatever it is." And so it's validated.
--:-- Ben Horowitz: Now, if you go back historically, prior to about 1920, this was not how things worked. In 1850, if somebody's trying to pass a law, they're not quoting a professor. It would be like quoting some random person. It's just not something people would have done.
--:-- Marc Andreessen: Yeah, like some random person, right?
--:-- Ben Horowitz: But basically, what Walter Lippmann did in this book is he claimed, and I think this made some sense at the time, that in the old world, societies were simpler, everything was smaller, countries were smaller.
--:-- Marc Andreessen: Governments were smaller, yeah.
--:-- Ben Horowitz: Governments were smaller, and you didn't have all these systems. You didn't have fully modern developed economies. You didn't have healthcare systems. You didn't have education. You didn't have all these systems that got built between 1880 to 1920. You didn't have mass media and mass manufacturing and all these big systems. And so basically what he said was, look, the modern policy issues are now more complicated than normal people can understand. There's no normal person, in particular no normal voter in their day-to-day life, who's going to be able to have a coherent opinion on healthcare policy.
--:-- Ben Horowitz: And so he said, basically, we need a priestly class of secular experts who actually have the full-time skills, knowledge, and bandwidth to be able to do all the work to understand these issues and then make recommendations to the politicians. And then the politicians' job is to sell that to the public. And he said that will be a superior method of governance than letting voters decide anything.
--:-- Marc Andreessen: You could make a steelman argument to say that that worked really well at that time, because if you had super smart people in these various positions, then maybe it's better.
--:-- Ben Horowitz: Well, this is an interesting question. There's a lot of dispute over even what happened in 1830. That idea was immediately followed by the Great Depression, I'll just point out.
--:-- Marc Andreessen: The Great Depression, exactly, World War II, right?
--:-- Ben Horowitz: So yeah, exactly. And so there's a historical debate about whether that worked then. But then there's a pressing debate as to whether that's working today. And I would just say that there's a very obvious flaw in that logic today, which is an empirical observation that the faculty at American universities is now radically polarized in one political direction. Radically. And we can post a graph on this maybe, which is the numbers are really radical. There are fields in which it's 30 to 1 liberals to conservatives, or 50 to 1, or 100 to 1.
--:-- Ben Horowitz: And so it's just empirically in the data. The idea of having conservative faculty in these places is basically no longer the case. They can't get hired. They can't get promoted. They can't get tenure. And so increasingly, the policy recommendations coming out of the policy think tank components of these universities are very sharply partisan and extreme. And look, if you're on that side, you're obviously in favor of that. But it's hard to believe that the universities will continue to be accepted by the political process writ large as the advisors in the way that they have in the past.
--:-- Marc Andreessen: Yeah, no, and also, this brings up the Roland Fryer case. Here we have probably one of the most important issues of our generation, which is this whole question of police brutality and how does race play into that. And literally one professor in the country did definitive research. And not just a professor, but one that most people in the field regard as a true genius, an exceptionally hard worker who ran a great lab. And he also happened to be black, so kind of credible on that front.
--:-- Marc Andreessen: And he came to some very interesting definitive conclusions about what is the root cause of the problem. And he got basically steamrolled by the politics at Harvard. And by the way, then what happened subsequently is his recommendations or his ideas were not taken by society. What was taken were people who did far worse or no research, but were experts. And the result was the defund the police movement and the subsequent radical increase in murders of black people over the last two years, which is probably the greatest domestic tragedy that we've had. And that's what the system put out.
--:-- Marc Andreessen: So I think to your point, the truth can't come out, or the truth is somewhat illegal in the current university policy system, depending on what it is. And not all truths are illegal, but some truths are way illegal. And the consequences are dire. And it's something that is very personal to me, but I think this just happens to be one of the more visible times the system failed, but I'm quite sure it fails in other cases that are just as important.
--:-- Marc Andreessen: Yeah. And I'll talk about this at the end. But if you look at trust ratings, Gallup does trust surveys of the American voting population's view of universities. And the numbers are in collapse. But in particular, the numbers are in collapse among people on the right. And if you're on the left, you're like, "OK, that's fine. It doesn't matter." But it turns out people on the right also vote. They're also a big part of the tax base. And if the system loses credibility among half the population, half the voter base, it's hard to see how there will be continued political support for the level of funding that currently exists.
--:-- Ben Horowitz: Yeah, yeah, yeah, no, I think so. Definitely a big problem. But I would just say again, there's obviously great research going on in universities, which is a huge asset to the country and ought to inform policy. And so we do have to be careful with the baby in the bathwater on this one because there's not really another set of institutions that does this kind of work.
--:-- Ben Horowitz: So then I'm going to bundle the next two together: moral instruction, and then I'm just going to go straight to social reformer. So I would say moral instruction is, like I said, there's this historical role that a lot of American universities started actually as religious moral institutions. They're not formally religious institutions today, but they maintain sort of a moral instruction role. And then what I call the social reformer is sort of the implementation of the moral instruction. So they take a step past simply having an opinion about the ordering of society. They're actually taking actions to try to change the ordering of society.
--:-- Ben Horowitz: And in particular, the hot topic here is DEI. And of course, DEI is a very hot political topic right now for two reasons. One is the massive controversy over the Supreme Court case on admissions and the use of diversity or adversity scores in DEI programs generally, legal challenges on those. And there's going to be more cases like that coming up. And then the other is this current crisis about the more recent events. But I am going to... Ben knows far more about this stuff than I do. So, Ben, why don't we talk about what you think is most important here.
--:-- Marc Andreessen: Well, so, just kind of starting with morality. One thing about humans is morality is complicated, very complicated. And it's complicated at different scales of society. It changes. And so I think Lindy's strong moral values are actually fairly important, which is why the Bible gets a lot of criticism these days, mainly for things that they said in those days, particularly about various topics that we've changed our minds on since. But in totality, for something that's that old, and it's the same for the Quran, it did get a lot right. And that stood the test of thousands of years.
--:-- Marc Andreessen: And so now we're kind of inventing morality as we go. And I would just say what happens when it becomes a moral issue is you can't debate it. This was a problem with the Bible too. You can't debate what's in the Bible. It's what God said. Like, what are you talking about? Shut the F up. And I think that these new moral issues are also hard to debate for many reasons.
--:-- Marc Andreessen: And on DEI, let me just kind of talk through where that gets problematic. So it's very hard for people to question any of the DEI orthodoxy because you get accused not of being an apostate or blasphemous, but of being racist or sexist. And that's probably in modern society worse than being an apostate or blasphemous. And so people don't really think about how the systems around that work.
--:-- Marc Andreessen: And just to give you an example, you have to think about DEI like if you're an employer and you're trying to hire the best, most talented workforce possible. What are your assumptions about your DEI program that you go into with? And this is something that I've studied extremely hard in my life and my career. And what we implemented at the firm, nothing on this kind of thing is anywhere near perfect. But look, we're the most diverse venture capital firm in the world. And we know this from Maxine Waters, who requested all the diversity numbers and basically played that back to us. We're a large scale, 550 people, so it's diverse. We do not have a head of DEI and so forth.
--:-- Marc Andreessen: And it's because we start from a different assumption than these DEI programs start from. And ironically, the assumption that we start from is the non-racist, non-sexist assumption, which is we believe the talent is out there. And if you believe there is talent in the world that is in different categories, then the approach you take to the system is basically threefold.
--:-- Marc Andreessen: One is you have to have the right criteria for the various jobs. I think Kara Swisher had this thing about meritocracy. Well, you and I don't hire ourselves for every job because we're not that great at networking. And we have a firm whose whole business is networking and we hire people for that. And that's a very different criteria than something that we would just replicate ourselves on.
--:-- Marc Andreessen: Secondly, from a recruiting standpoint, you need to go far and wide and find the best talent. If you look in the exact same place, if you hire everybody, you're going to get the same kind of people. So you have to expand the scope of where you're going to go find the talent.
--:-- Marc Andreessen: And then the third thing that you have to do is you have to create a work environment that's great for people who are from different backgrounds. And this is where the universities go horribly wrong. That's kind of how you would design the system. And that's sort of how we've designed our system.
--:-- Marc Andreessen: And when we think about the diversity at Andreessen Horowitz, we never think of it in terms of, "Oh, this person is as good as the white man who would do the job." We think, "There's no white man that could do that job." Like building the Cultural Leadership Fund, that's not even possible. And so it's a very different lens, but it starts from a belief that the talent I need is out there in different populations.
--:-- Marc Andreessen: If you, on the other hand, took the assumption that the talent is not there, you'd do exactly what the universities do. And I know this from the way they hire their faculty. What would you do? You'd make race and gender explicit criteria. Two things that objectively have nothing to do with the actual job that you're hiring for, but are substitutes for the fact that you don't believe the talent is there. And that's what they do.
--:-- Marc Andreessen: And then what is the side effect of that? The side effect, and this is what's happened in all the universities, is if I am the diverse candidate, the woman professor, the black professor, Hispanic professor, as soon as I get there, everybody knows what our process was, what our hiring criteria was. And I'm a second class citizen. And that's the worst fucking shit. And so then the retention is bad. And I saw this at Columbia. The retention is terrible for all your diverse hires. It's way worse than your retention for your regular hires.
--:-- Marc Andreessen: And then how do you fix that? More racism. So then you go, "Well, we need to start not bringing in anybody who's not of this criteria." And then you're just in this weird degenerate state based on a morality that you weren't allowed to discuss. And so because luckily, because I run the firm, I discuss it with you, we can get around that and we can do things. But they're all starting from a racist, sexist set of assumptions that the only way to bring in diverse people is to make race and gender criteria. Which, by the way, isn't true. And it's objectively not true because we're 550 people, more than half are women. You and I are the founders. We're white men. Jewish does not count as not white.
--:-- Marc Andreessen: But we just had the right criteria. We were very, very careful on our criteria for the job. We had many things in the criteria. We have a whole process for generating criteria that basically aims to make sure that we can find the best talent wherever it is. And then we go get that talent. And then because everybody in the firm is hired in any given position on the exact same criteria, we have no retention problems among any of our various people we have here. And we're just all a16z'ers. We're not like, we don't have ERG groups who are needing it. That's not a thing.
--:-- Marc Andreessen: And so, long way of saying, if you can't discuss it, you can't design the right program. And this is the whole problem with morality. If morality becomes religion, you just have to have faith in the doctrine. But this doctrine was invented by a bunch of people who just made the shit up like two weeks ago. Not people from 2000 years ago who have stood the test of time. That whole doctrine in the Bible lasted many years before they ever read it down. And so it had kind of, they only wrote down what they could remember that worked. And so that's why it works. And we don't have that process now and it's a huge problem.
--:-- Marc Andreessen: And I think that has to do with every moral position in the university. And it becomes very quickly indefensible, which is what's happening right now.
--:-- Ben Horowitz: Yeah. So as everybody knows, this is now a hot time. The set of trends that you're discussing have been building, growing for a long time. Some of these programs were created as far back as the 1960s and they've been escalating and evolving over the course of even longer than you and I have been alive in some cases. And then the last 10 years, they intensified tremendously. And then in just the last three months, all of a sudden there's this moment where at least some people are throwing up a flag and saying, "Okay, it's time to rethink this."
--:-- Ben Horowitz: What's your prognosis for the next couple of years? Based on your experience being inside the tent at one of these places in the past, do you see lip service and then more of the same, or is this the opportunity for rethinking?
--:-- Marc Andreessen: To rethink it requires real leadership. Even in our firm, it's important. I always keep explaining it because it's so important and it's so different. And look, we own the firm. Nobody can fire me, nobody can fire you. It's much harder. You come in as a president of a university. First of all, you can get a vote of no confidence from the faculty. You can get fired by the trustees. So there are a lot of ways you can lose your job. They're very fucking prestigious, cushy jobs. Nobody wants to lose them. And so the level of leadership and risk that you'd have to take to overturn essentially the current university religion is pretty risky.
--:-- Marc Andreessen: And people have seen people like Larry Summers famously got fired from Harvard for questioning the religion. And not even questioning the religion. He just made a statement that said, "Well, if you look at the data, this is what it says. That could be a possible explanation." I think it was something along those lines. But he got fired. And so I think it's pretty hard to change unless public sentiment really, really swings on it.
--:-- Marc Andreessen: I think it would be very hard for Columbia to change on that front. It's a great university. But when I was there, I brought it up. I was like, "Can we start with the fact that we have a bad attrition problem among our black faculty that we hire? Don't we think that's a problem? Before we figure out how to recruit the next one, shouldn't this be a good place to work for the fucking last one? Why don't we start there?" And how do we get to that? And they shut me down. And I shouldn't say "they," it's 24 people and so forth, but the leadership was like, "Shut the fuck up. You're so far outside the religion that we can't even hear a word you're saying." And that was one of my points of high frustration there.
--:-- Marc Andreessen: But it's really hard. It's a big system. And everybody believes one thing. And it's been drilled into them. And there's a lot of literature on it. It's hard to be a systems thinker if you haven't designed large systems, if you haven't run large systems, and you haven't dealt with the consequences of them being wrong. And I think that that's one of my biggest lessons in life: if you're not a practitioner in that, if you're not designing and running a system and dealing with the consequence of it, then you're never going to face that fucking reality.
--:-- Ben Horowitz: Yeah. That makes sense. And then there's going to be just one final note. Harvard was ruled against the use of race in admissions, but they did open the door to the use of so-called adversity. So the diversity programs are, in some cases, illegal now. The adversity programs are being created to replace them.
--:-- Marc Andreessen: Yes, the admission thing is a whole other world than the hiring one. And one that I have to say I'm not as familiar with, other than reading the Supreme Court cases and so forth, because the trustees weren't really involved in admissions. So I would just say university admissions are pretty weird. From my reading, one thing that's really interesting, which I think is misconstrued or misunderstood, is this legacy thing. Because people think, "Well, if you're a legacy, you get in." It's not being a legacy. It's being a giant donor. And you're really a giant donor if you're... those tend to be legacies, but that's really what it is. They kind of obfuscate it.
--:-- Marc Andreessen: And the universities do this by calling it, "Oh, we have this many legacies." They're not legacies. They're people who gave them $10 million. And I think that's the price, $10 million to get your kid into Harvard, or maybe it's $20 million now. Inflation. And it's a pretty big percentage of the students because it's not that big a class, right? A thousand students. And who are your giant donors? 100% of the giant donors get their kids in. And so that's a real knock on the meritocracy itself.
--:-- Marc Andreessen: And then if you add in the adversity program and so forth, eventually the people who objectively would qualify in, there's not many. There's eight slots for them. And everything else is some kind of weird thing. And that, back to your original point, is like, well, what does that do to the credential? The original Harvard students made a lot of money, and so you have this huge donor base. But then does that corrupt the ability for the next set to make money by destroying the credential?
--:-- Ben Horowitz: Yeah, yeah, yeah. And then, by the way, are you selling a bill of goods to the new students, promising them that they're going to be valued that way? And then it turns out the employers are going to figure this out or are figuring it out in real time, right?
--:-- Ben Horowitz: And you already have that problem in many schools, right, where the degree is not worth the money. We have a student loan crisis and all this thing. And then you're going to really, right, exacerbate it. Okay, good. I'm going to skip. I was going to try to pick up the pace here a little bit to close it out. I'm going to skip Immigration Agency because we talked about that.
--:-- Ben Horowitz: Sports league. Let's spend a moment on that because that's a... sports has become such an integral part of how a lot of these places operate and part of the financial structure. And then I'm not a sports guy, but I've been following... there's sort of, it seems to be recurring, I don't know, I might say both tension and scandals around compensation for student athletes and in the recruiting process.
--:-- Marc Andreessen: Yeah. Well, it's changed too recently. So historically, it started out very innocently. You're a university, you have sports, athletics. I think it's a kind of great part of the well-rounded education. It goes back traditionally all the way to the Greeks, I imagine. And it's a great experience to play college. Everybody, and it's amazing. Like if you look at the donors, by the way, this is another thing I know from being a trustee, a crazy percentage of the donors are people who played college athletics at the school. So it really, the people who have the most school spirit are the athletes by far. Not even close. So it's a really important component of the university historically.
--:-- Marc Andreessen: But what happened is professional sports then emerged kind of after college sports. And then college sports became feeders to the professional sports. And then college sports basically became professional sports themselves. So college football television ratings are much higher than NBA ratings for any given game. So it's that big. And then the coaches, right? It's not like, and they call it amateur athletics, whatever. But the coaches, like Jim Harbaugh just won the national championship, he makes like $10 million a year. So that's not a university salary. That's like a professional football salary. That's as much as any professional coach makes.
--:-- Marc Andreessen: So then the athletes get paid nothing. Okay, but they're students, right? Well, they're not students because to play at Michigan or Alabama or any of these schools, practice is 40 hours a week. So when the hell are you studying? That's a great question. And you're practicing games and travel and the whole thing. So you've got this, obviously, you're running out of the back door, and out of the backyard, you've got a professional, like a major professional sports league where you're using essentially slave labor. Like you're giving them free tuition. Some of them. But they're taking great health risk and so forth. So that just became a whole issue.
--:-- Marc Andreessen: And then in California, they, so a couple of things happened. They kind of made legal, I think first in California and now nationally, this name and likeness thing. So it used to be the colleges wouldn't let you sell your name and likeness. They could sell your jersey, you couldn't. And so that changed. So some of the very, very top guys, the most famous college athletes, which is a tiny handful of the whole population, make a lot of money now. Or real money, like good compensation.
--:-- Marc Andreessen: And then in college football, they have this thing called the portal, which you can sign up for and you can just transfer schools, like trade yourself to another team, whenever you want or once a year or whatever. And so it's fully professional sports. There's no hiding it. You've got some guys getting paid. You've got transfer portal and so forth, but not everybody gets paid. A lot of them don't get paid. And it seems really unfair, right? There are labor laws in the United States of America. And then there's also, you ought to be able to bid for salaries on athletes because anything else is pretty un-American. You can't restrict somebody from getting a job. It's clearly a job. It's not an education.
--:-- Marc Andreessen: And there's little schools. I mean, Columbia football is not like that. It's more like high school football. But for sure, University of Michigan, Alabama, Georgia, like these are professional programs. And so what do you do about that? Do you actually share the money with the student athletes who are your employees? Or do you continue to run this essentially a scam and have them play with great injury risk, put in a huge amount of time, make you a ton of money and keep going? So it's certainly coming to a head now.
--:-- Ben Horowitz: And it's fair to say that the revenue from these programs is substantial as a percentage of the operating budget?
--:-- Marc Andreessen: Oh, yeah, yeah, yeah. Like it pays football, football basically. I think the economics of football pays for every other sport and then some.
--:-- Ben Horowitz: Yeah.
--:-- Marc Andreessen: And so if, for example, if, not that this would happen per se, but just to illustrate it, if a law were passed that universities didn't have sports programs anymore, they would lose some significant percentage of their budget.
--:-- Ben Horowitz: Yeah, yeah, yeah, yeah. Particularly at the big schools. And alumni donations. So a big part of alumni donations is for sports, as you know. Your father-in-law was a huge booster supporter of Stanford and the sports programs there.
--:-- Marc Andreessen: Right. Like in sports, he's very attached to it. And by the way, really great example. He was a great college athlete at Stanford. Stanford gave him that scholarship. He always felt tremendous loyalty to the school. There's very few people who aren't athletes that feel that loyalty. So it's a tricky problem because it's not just the economics from the football revenue. It's the economics from the donations that football generates, both from alumni who want that program to be good because they went there and they played for that team.
--:-- Ben Horowitz: I'm going to skip the hedge fund. Spend a moment on adult daycare. So I just highlight a couple of things in the adult daycare theme. So just maybe everybody knows this, but I just, from where I grew up, it's just kind of very clear. There's two very different young adult experiences for people in the U.S. There's the go to college and be in a college campus environment between the ages of like 18 to 22 or even 18 to 24 and kind of be in this kind of not quite adult. It's like a supervised environment. There's a lot of things taken care of for you. So it's sort of not the real world.
--:-- Ben Horowitz: And then there's just this totally different experience that people in middle or lower middle class or lower class have. They just don't do that. And so you're 18 and you get a job and you get an apartment and you're in real life. And so there's this big discrepancy. And of course, the lucky kids, the fortunate ones, are the ones who go through the college part. They just have a completely different and much more pleasurable experience for the course of that than just going to work.
--:-- Marc Andreessen: Right. In part because of the jobs that you get, like if it gets because of the credential, if you don't go to college, the job isn't even as good. And so you have to start working sooner and the job isn't as good.
--:-- Ben Horowitz: Right. Yeah. You're doing something hard. Yeah, you're out in the heat. It's like real life. And then like a lot of people have observed, and we hear this, you mentioned we hear this from employers, but like a lot of people have observed that there is something happening. There's an entitlement indulgence culture that has gotten very intense that a lot of people are experiencing from graduates. And that's probably been the case for a long time. And we're probably, you and I are probably examples of it at one point in our lives. But it seems like it's gotten much worse in the last decade.
--:-- Ben Horowitz: Jonathan Haidt has written about this at length, who's a professor, I think, at NYU, studies this issue, and he's a psychologist. And the way he describes it is he says, basically, the way that these environments are run now, he refers to it as reverse CBT, which is sort of reverse cognitive behavioral therapy.
--:-- Marc Andreessen: Yeah, I'll spend a moment on that. So what he says is cognitive behavioral therapy, CBT, is the one form of therapy that clinically replicates. So it's the one form of therapy that will reliably make people feel like basically function better psychologically. And it basically, it's essentially applied stoicism. It's basically taking responsibility for your own life. And so it's basically getting you out of the mindset of blaming other people for your problems and more into the mindset of taking charge of your own life and figuring out how to process through your issues and focus on outcomes.
--:-- Marc Andreessen: And so he says the culture at universities now in a lot of cases, especially for undergrads, is what he calls reverse CBT, which is teaching you that basically you're a victim and you're oppressed. And if anything bad happens to you, it's somebody else's fault.
--:-- Ben Horowitz: Right. It's systemic oppression.
--:-- Marc Andreessen: Right. Or it's bias. It's this or that, or it's you're in the wrong group. Microaggressions. Microaggressions or whatever. It's this entire cluster of basically things that have people basically convinced that they don't have control, right? That basically life is out of their control. And then he points to this like rapid escalation in reported rates of reported mental illness and reported basically like need for therapy, mental illness, mental health services. And so he basically says something is going very wrong.
--:-- Marc Andreessen: And then you also have these recurring scandals happening on campus with what you might call the do-it-yourself on-campus justice system, right? Which is, if you don't go to college and you're 19 and you get accused of sexual assault, you're dealing with the police. If you're 19 on campus and you get accused of sexual assault, you're dealing with basically campus HR.
--:-- Ben Horowitz: Yeah, yeah. And the university is actually required to adjudicate rape.
--:-- Marc Andreessen: Yes, correct. So, yeah, so basically Title IX, Department of Education, requires universities to adjudicate rape cases on campus and other forms of potential alleged offenses like that. But no university has its own court system.
--:-- Ben Horowitz: Yeah, we like fucking try and make it up as we go. Yeah, it's not good.
--:-- Marc Andreessen: So there's not even a formal, so therefore there's no guaranteed due process. There's no objective standard of evidence. There's no lawyers. There's no defense. You don't have a right to an attorney. And so there have been kind of recurring scandals in lots of different directions on this. So there's this hothouse kind of psychological, legal HR environment that's been created that again, just according to objective metrics of things like reports of mental distress, seems like it's going very badly sideways.
--:-- Ben Horowitz: Yes, let me pause there and see what you think.
--:-- Marc Andreessen: I definitely agree with that. I mean, I think that, and look, the other thing that you have to throw in there is like, you've got students, no parents, and a lot of alcohol and drugs in college. I mean, and so that, look, I mean, we know from the work environment, that if you want sexual harassment, serve a lot of alcohol at company events. That's the way you get it. And so it's that you just create an environment with drinking and drugs where you actually do have, no matter how good the kids are, you just end up with incidents. And then those incidents are adjudicated in some kind of weird kangaroo court. And then all that implies. And the savvy students can obviously manipulate that system if they wanted to. So, yeah, like that part. Although, again, it's really tricky because in any college, it's a tiny percentage of the population that gets involved in that. But everybody knows about it. So it has an effect.
--:-- Ben Horowitz: Yeah. Well, again, just a reason I bring it up, it just goes back to the credentialing, right? Which is just like, what are you getting, what kind of person, what kind of human being are you getting on the other side of this who's been through a system that sort of calculates a set of values that result in very high levels of emotional distress? Like, what does that mean for employment workplace culture? Are employers going to have to screen more aggressively for behavioral characteristics if more and more of the graduating students have experienced very high levels of emotional distress going through this process?
--:-- Marc Andreessen: Yeah, I have heard about that more recently in hiring college grads. I have to say that the college graduates we've hired at the firm, I haven't seen that at all. I mean, the young people we have, I think, wow, I'd never get a job here. These kids are so good. So in terms of direct experience, I don't see it yet, but I'm sure it's out there. Or it seems like it's likely.
--:-- Ben Horowitz: Yeah. Okay, and then I'm going to skip dating site, which is one of my favorite topics, but we will tackle that every time. And we go to the final one, which is lobbying a firm. So let me outline a bunch of thoughts here and then Ben, I'll get your take.
--:-- Ben Horowitz: So most importantly, like, look, everything we've described, the entire bundle runs on taxpayer money. So basically there's multiple streams of taxpayer money, but there's four big ones that I always focus on. So one is federal student loan funding, which is now in the trillions of dollars of subsidies for federal student loans. So in other words, students would not be able to afford anywhere near the level of attendance rates that they have without that program, which is hugely expensive to the taxpayer and which now has direct bailouts attached. And so that's a very expensive taxpayer program.
--:-- Ben Horowitz: Federal research funding, which is very large. And by the way, very significantly, federal research funding isn't just funding for research. The administration takes a rake at these institutions of the research funding that's actually quite large. And so they get a big percentage of it. And so that goes to pay for a lot of administrative expenses and administrator salaries.
--:-- Ben Horowitz: And then there are two key tax exemptions. There's a tax exemption at the operating level, which is these institutions are nonprofits. And then there's a tax exemption at the endowment level, which is their endowment compounds on a tax-free basis, like a foundation.
--:-- Ben Horowitz: And then there's a really critical detail to who gets access to all this, which institutions get access to all this federal support and all this money. And that's the technical term is accreditation. These are the institutions that have access to everything I just described are all accredited institutions. If you dig into the detail of that, there's a very interesting little quirk to it, which is these are institutions accredited by the Department of Education, but the Department of Education, Federal Department of Education, does not itself do the accreditation. What it does is it outsources the accreditation to associations, the third-party associations that do the accreditation. And those third-party associations are made up of, and you will never guess, universities, right?
--:-- Ben Horowitz: And so just as an example, just to pick an example, Harvard, I looked it up last night, Harvard is accredited by something called the New England Commission on Higher Education. That commission is a nonprofit which is composed of 200 colleges and universities such as Harvard. And so that makes it kind of hard to start a new accredited university.
--:-- Marc Andreessen: Correct. This is sort of viewing this as a venture capitalist. That's exactly right. Like, could you start a new university and get accredited today? And the answer is almost certainly no. I would get no federal funding. And it would be non-economically viable, right? And then, of course, in economic theory, you have a term for this, which is cartel. And so there's an education cartel, in much the same way that there's an oil cartel or whatever. So, like, that's the setup.
--:-- Marc Andreessen: The fiscal situation at these places is actually quite interesting. So we talked already, student costs, tuition, and everything else increase much faster than inflation. But these are nonprofits. And so they're not trying to drop money to the bottom line. And so instead what they do is they also inflate their operating costs to go right along with the student costs. And so what they're doing basically is because they're able to escalate tuition rates so dramatically, they can escalate the entire cost base at the equivalent rate.
--:-- Marc Andreessen: And I think it's important to note they're able to escalate tuition rates so fast because I believe it's in the Obama administration, and the federal government basically said that the government would lend anybody the money to go to college who needed it. So basically, it's unlimited. The universities just basically raise tuition because you have to go to college like it's in the ethos of the culture that you can't get a good job without going to college. So everybody has to go to college. Everybody can afford college because we'll lend you the money. And so therefore we can charge whatever we want.
--:-- Ben Horowitz: Yeah, you have an infinite federal, you have multiple trillions of dollars infinite federal backstop for the student side of it, including now with the bailouts. And so you basically just get to write these checks to yourself from the taxpayers. Only for accredited universities. For the universities that accredit themselves.
--:-- Marc Andreessen: And then what happens is a lot, if you talk to anybody involved in these places, what you find is that a lot of the expense escalation is not, where the expense escalation is not going is towards taking on more students, right? Or for that matter, taking on more research. Where it's going is to take on more administrators. And so the sort of administrative component of these places, the sort of bureaucratic structure, that's where the cost inflation is really kind of going wild.
--:-- Marc Andreessen: There are multiple large institutions too that have been identified in public, Stanford and Yale, that now have more administrative staff than they have students, right? And so, the joke at those places is, we could literally replace, we could literally have a personal concierge for every student. And so you're talking tens of thousands of administrators. And again, the administrators are raking funding from every other part of the complex, everything from sports to research to tuition to everything else.
--:-- Marc Andreessen: So anyway, but the point is the operating cost is escalating. These places are not running on high margins. They're actually spending the money that's coming in. And then the endowments, the endowments are big, but they're not that big relative to the expense base, right? And there's only like 10 big endowments in the country, right? And there's only 10 big endowments.
--:-- Marc Andreessen: And then there's one other trick. There's one other twist, which is a lot of the assets of university endowment are restricted.
--:-- Ben Horowitz: Yeah, they're earmarked.
--:-- Marc Andreessen: Exactly right. They're earmarked by the donors for specific programs.
--:-- Marc Andreessen: And so they're not, it's not, the endowment is not a giant pot of money that the administrator can do whatever he wants with. Most of that money is actually off limits. If you talk to people who run these places, they will, I'm not saying anything I don't think that they would agree with. Like these places are actually quite, they're not levered in terms of debt, but they're levered in terms of a very high dependency on the entire structure that they have in place right now.
--:-- Marc Andreessen: And if there is ever a crack in the number of students, if there's a crack in access to federal loan funding, if there's a crack in research funding, if there's a crack in sports funding, if there's a crack in the tax structure, like these places are not as fiscally stable as they seem from the outside. And they seem, quite frankly, just from the outside, they seem unable to constrain any of this. They just seem like they're on a one-way treadmill on everything that we're describing.
--:-- Marc Andreessen: And then now on top of that, at least some institutions, you have these donor strikes, right? And so you have this kind of open question as to whether the donor flows are going to happen. And then let me add one more thing, which is where I start to get worried for my friends who run these places. So Gallup does this. They do these surveys every year on trust in institutions among the American voting public. In 2015, 57% of American voters had a positive view of American universities, 57%. In 2023, that's 36%.
--:-- Ben Horowitz: Well, statistically significant drop.
--:-- Marc Andreessen: Yes, so that is a, yes, for the math majors in the audience, that is a 21% drop in eight years. And so if you're running a business, at that point, you're freaking out, right? You're tearing your hair out and ending up with a haircut that I have because that's just like, oh my God, what's happened?
--:-- Marc Andreessen: I'll just give you a couple other data points on that. You can find this on the Gallup website. There are drops in every subgroup. So there's no subgroup that has a higher view of universities. Everyone is a drop. And then among people with no college degree, it's a 25-point drop. And, of course, if you're running a college, you're not used to thinking about people with no college degree because they're not your constituent. But the problem is they are voters, and they are taxpayers, and they are a large percentage of the population. And you do need their support in order to keep the sort of funding aspect of this rolling.
--:-- Marc Andreessen: And then there's this question of like, okay, 57% to 36%, 21-point drop in eight years. Is that anomalous or is that going to continue? And you could hypothesize that that was a one-off, but you could also say, wow. And that's before the current media blitz.
--:-- Ben Horowitz: Oh, this is all pre-October 7th. This is all pre the recent stuff, yes.
--:-- Marc Andreessen: So if you poll today, yeah, if you poll today, it would be hard to imagine the numbers are higher. It would be easy to imagine that they're lower. But let's even say, so what's the baseline? Is the baseline a 3% drop per year? If you just go in the last eight years, eight years, 21%, it's like a whatever, two to three, two and a half, two and three quarters something percent drop per year. And so if you project that forward in the next decade, you could lose another 25 points. So that 36 could drop to 11.
--:-- Marc Andreessen: By the way, 11 is like where Congress is, right? Like, right. And so like there are institutions in the U.S. that have like 11, 10, 9, 8 percent. People don't pay for them or like don't pay for them directly. Congress has a huge advantage. They get to set their own laws. The rest of us are subject to that. And so I think there's a really fundamental. I think if I were a leader of one of these organizations or on the board or just as a public spirited citizen as I am, and I want these institutions to succeed. I think there's a really fundamental, critical thing that you have to look out in the next five to 10 years and say, okay, if these current trends continue and if popular support drops from 36% to 30% to 20% to 10%, which is a real possibility, is there, therefore, the political will in the country and support to maintain the current structure, and in particular, the current funding structure?
--:-- Marc Andreessen: And I think you need to close your eyes and imagine that you lose the operating tax break, you lose the endowment tax break, you lose potentially the research funding, you lose the student loan. Like all of these things could come to a political head, I think, essentially at any moment with the pressures that are in place right now.
--:-- Ben Horowitz: A candidate could win based on a promise to defund the university if you're not careful, right?
--:-- Marc Andreessen: Yeah, exactly. And of course, again, we've tried to not talk that much about partisan politics in this thing. But to the extent that these places have become very partisan political actors themselves, they're having an alienating effect on a large part of the voter base and a large part of the political structure of the country. So I think there's an existential question. And look, it's not that these places don't have lots of levers that they can pull and lots of things that they can rejigger. But to your point, like kind of what's the level of predictive power and then sort of leadership willpower that you need to get in front of problems like this? And I think that's a very open question right now.
--:-- Ben Horowitz: Yeah, yeah. No, it's scary. I mean, you have to, like, I would just go back to the gigantic amount of goodness that's in the universities. And all these problems could certainly undermine that in a kind of fundamental existential way. If these trends go unchecked, very, very bad things could happen. So, which gets into, okay, what do you do?
--:-- Marc Andreessen: Yeah. So we're pushing, we're coming up in two hours. And so I think we should probably not have the long form, what do you do conversation this time. I would just volunteer, add whatever you'd like, but I would volunteer two things, which is one is, well, there are actually three questions. One is the reform question, which is like, okay, what, if you were still on the board of Columbia, what would you be trying to do? And like, what's the reform opportunity? And look, which of these problems do you actually want to tackle and whatever, so forth, all the interesting questions that flow from that.
--:-- Marc Andreessen: Second question should be, would be like, look, should there be more universities? Like one of the issues is just like, there just aren't, as you said, there just aren't enough slots. Maybe part of the answer is create new institutions and maybe you figure out a way to get them accredited and so forth, or figure out another funding model or maybe they happen in other countries or whatever. And so could you start new competitive institutions that maybe are able to solve some of these problems if it's too hard to reform the current ones?
--:-- Marc Andreessen: And then the third, and this is probably, we should set up another session on this, but then there's also like, is there a potential, is there basically potential for entrepreneurial opportunity here that would basically be a side effect of unbundling? And so, for example, could you take the credentialing component of it and have a business or entity of some kind that just did that? Could you take the educational course thing, break that out separately? Could you take the research part, break that out separately? The policy part, right? The immigration part, the sports part, the social aspect of it.
--:-- Marc Andreessen: And there are, by the way, there are founders and startups in a bunch of these sectors. We funded Overtime, which is doing that in the sports area.
--:-- Ben Horowitz: Yeah, exactly.
--:-- Marc Andreessen: And so like, does it make sense to think about either more startup companies in these sort of unbundled categories? And by the way, maybe it's not all for profit companies. Maybe also we just need like literally more nonprofits. Maybe you need actually sort of independent entities. Maybe hypothetically there should be more independent research institutes or independent science institutes. You mentioned HHMI. Like maybe funding should go to, maybe there's a different way to do research funding. There should be a much bigger philanthropic component to research funding in place of the government's role. And there are people, Patrick Halson has a big, and his wife have a big new biotech research institute at Stanford along those lines, or associated with Stanford, but it's a separate thing that they're funding.
--:-- Marc Andreessen: And so there's these very interesting questions along the way. And so anyway, for the entrepreneurs in the audience, as you're listening to this, is to just think, okay, think about each of these functional components of the modern university. Like historically, when there's this sort of systemic situation going on, there's often entrepreneurial opportunities to kind of split off aspects of it and break them out into separate categories.
--:-- Ben Horowitz: Yep. I think those are all good. I mean, just kind of going back to your question for me, which is, okay, if I was a trustee still at Columbia, what would I advise them to do?
--:-- Ben Horowitz: And I think that a huge part of the problem is the number of constituencies that a university has. You have the student, the parent, the donor, the trustees, the sports fans, the faculty. You're trying to optimize this very elaborate bundle for all those constituents. That has to be focused.
--:-- Ben Horowitz: I think the way out is to focus on the student. If it was my business—and a university is different than a business, but it has a lot of the same characteristics—if you lose the student, you're done. That's the end of the whole thing. It doesn't matter what the faculty think. It doesn't matter what the alumni think. It doesn't matter what the donors think. If you're not attracting and developing the brightest minds in the world, game over.
--:-- Ben Horowitz: My view would be to refocus the whole university on the value proposition to the student and the kind of student we produce. How do we attract the best, give them a value proposition so when they come out they make an outstanding living, easily pay back their student loan, and everybody wants to hire them? Let's go back to that. If you had that as the focus, a lot of the problems would solve themselves.
--:-- Ben Horowitz: Now, very difficult to do because the university is a hierarchy and it's not a hierarchy. There's an administration, there's faculty, faculty have tenure. When you have tenure, you're very hard to remove. There's a huge constituency of administrators and politics. There is no owner, no founder. These things were founded a long time ago. There's nobody who can just exert their moral authority to get that done.
--:-- Ben Horowitz: It is a hard problem, but it's solvable because the assets are so strong. They've got the gorgeous campuses, the amazing faculty, the incredible global reputations. There's a lot to work with, but these are real problems.
--:-- Ben Horowitz: I think that's a good point to end on.
--:-- Marc Andreessen: All right, great. Well, thank you. I hope you enjoyed it and we'll be back to talk about how to solve it.
--:-- Ben Horowitz: Sounds good. Thanks, everybody.
