In 35 years in business, Scott Galloway has not shied away from saying what he thinks. He has, he admits, said “some very aggressive things” about people in companies. But he never got a cease-and-desist letter until he ranked universities on their survivability in the wake of the COVID-19 pandemic.
Then, he got three of them within 24 hours.
“The level of arrogance, righteousness, self aggrandizement, is unparalleled in higher education,” Galloway says.
He also knows his career is a testament to opportunities higher ed can provide. He is a bestselling author and a serial entrepreneur. He hosts his own podcast, “Prof G,” and one with tech journalist Kara Swisher called “Pivot.” He hosts “No Mercy No Malice” on CNN+. To us at Poets&Quants, he is first and foremost a marketing professor at NYU Stern. In 2012, we named him one of our World’s 50 Best Business School Professors.
But, he says, he may be any of those things if higher education had been anything like the bloated, elitist mass it has become. When he attended UCLA more than three decades ago, the acceptance rate was 76%, and he had to apply twice to get in. Today, its acceptance rate is around 12%, he says. (Recent P&Q analysis showed that acceptance rates at the top 50 U.S. MBA programs shrank even more last year.)
One of his more recent ventures seeks to combat some of the major problems with higher education in general and business education in particular. Section 4 is on an online platform created to make elite business education more accessible to the vast majority of people who either could never afford it or who, for a variety of reasons, could never get in. The online education platform claims to provide 80% of the value of an MBA at 10% of the cost at 1% of the friction.
“I’m very righteous or very indignant about this: Higher ed is the tip of the spear for our society. It produces our presidents, our leaders, our CEOs of nonprofits. Do we want it to be populated by two cohorts: The children of rich kids who are 77 times more likely to get into an elite university or the freakishly remarkable? Or do we want remarkable opportunities presented to just good kids?” he asks.
“I wouldn’t be talking to you if there was that same bullshit rejectionist attitude that has infected all of higher ed” when he was applying to school.
Last week, P&Q was able to snag a little time with Galloway in between his many other commitments. We talked about everything from the value of the traditional MBA, which programs should be worried, and what he got wrong about the pandemic’s effects on business education. As always, he doesn’t mince words.
Our conversation, presented below, has been edited for length and clarity.
How would you evaluate the state of the MBA today? Do you think it has the same value as it used to, particularly in the mid-tier schools that aren’t, you know, Wharton, Harvard or Stanford?
Everyone wondered when we were going to hit the point where we raised our prices so dramatically that we priced ourselves out of the market. We may have actually hit that, but it’s situational. If you’re a top 20 school, you can still justify those price tags. I would bet the second tier schools are really suffering because they got used to sort of arbitraging or scooping up the people who didn’t get into top a 20 school.
When I went to UCLA–five years undergrad, two years of grad school, and total tuition of $7,000–there was a massive consumer surplus, or social surplus, in higher ed. It was worth a lot more than that. Slowly but surely, the faculty and administrators starched out that social surplus so they can have big endowments and departments, pay themselves more, and lower their accountability.
I think the second tier schools are going to really suffer. There’s going to be a consolidation of power. The top tier schools have never been stronger. I mean, typically what happens whenever you have digitization, or innovation in any field, there’s a winner-take-most phenomenon. That is, with hybrid learning and with new programs and with people thinking, “Okay, if I’m going to go to school, I’m only going to go to MIT or a good school or I’m not going to go.” You’re just gonna see a lot of tier two programs shut down.
What I have seen for the first time at good schools–and this has never happened to me before–is I probably get one call or email a week from someone who is in between their first and second year who’s saying they’re thinking of dropping out. It’s not that they don’t like the program. It’s just that they have a good job, or they have an opportunity for a good job, or they want to join their buddy who started a crypto thing, and they’re like, “I don’t want to borrow another $75,000.” You never saw that before.
Do you think this is a function of the cost of the traditional MBA these days, or of content as well?
I would say it’s a function of some good things, and that is the economy is so strong. If you think about it, 40 years ago, one in three jobs needed a college degree now it’s two in three. Now, we’re at full employment, and we’re at negative unemployment for people with these types of skills. So if you’re the kind of person who can get into a good or great business school, it probably means you’re in your 20s. It probably means you already have a great education. It probably means you have proven work experience, you’re hard working, you’re ambitious. The corporate world is just so horny for you.
It used to be that you couldn’t do anything but be an analyst, or a very, very junior level employee at an investment bank, unless you went and got an MBA. That’s just no longer the case. The COO of Goldman doesn’t have an MBA. I mean, they don’t want you to go back to business school. So, it’s a function of, one, the opportunities for what I’ll call “the information age worker” that business schools have traditionally attracted.
Also, we have exploded tuition, and I think we have finally bumped up against that price ceiling. The top schools are still worth it and can still turn away 70-80% of their applicants. But everyone wondered when we were going to run out of headroom, and I think that’s finally happened.
At the same time, you have a ton of money pouring into online education. The part time MBA programs are getting hit hard, and so is Executive MBA. That’s where you’re seeing a kind of meltdown. When Kellogg gets some of their better professors and packages together a mini college experience for executives of PepsiCo and 3M, and brings them on campus for three days, serves them lunch, and gives them a “Chief Digital Officer” certificate of learning or completion, and then wants to charge them $30,000? I mean, that’s just not working anymore.
Next page: What should MBA programs be teaching? + Are B-schools innovating to adapt to new realities?