What is a modern university? ETCH Weekly Update 8/15

Plus thoughts on CZI's layoff and a few hot takes

Hello!

I hope that you enjoyed Sunday’s edition of Weekend Reading. This Weekly Update newsletter includes stories about the Chan Zuckerberg Initiative’s recent layoff and how many US universities are engaging in a spending arms race rather than investing in differentiated visions.

As a reminder, Tuesday’s Weekly Update is for paid subscribers only - if you are a free subscriber, see below for how to upgrade.

On to the update!

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Note to paid subscribers: You may have noticed that I’ve been collecting reader feedback over the last ~month. This feedback comes at a critical juncture, one quarter after I split the newsletter offerings between free and paid.

I’ll share more takeaways from the survey when we’ve formally tallied the results, but wanted to talk about one theme that emerged quickly and held up as the number of respondents grew: Funding + M&A news is the most critical information readers are looking for from ETCH.

This space - the Weekly Update - is important to me for developing new theses about Education. But, I think I over-corrected away from dissecting deals when the newsletter split between free and paid. I’m going to try out a few things over the next few weeks to steer towards more funding analysis, hopefully finding a sweet spot somewhere in-between.

I welcome your feedback on this effort and any other topics!

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1. Most clicked link from Weekend Reading: Chan Zuckerberg Initiative lays off 48 education team members

Context: The Chan Zuckerberg Initiative (CZI) is a philanthropically-minded for-profit organization. The organization invests in Education, Science, and Community via grantmaking, technology development, and more traditional venture rounds. This layoff appears to have targeted the Education team. Based on LinkedIn, 48 members translates to 5-10% of total CZI staff and an unclear percentage of the Education team.

While I understand why folks click on layoff news, it always makes me a little sad to write about. This update is no different, though it is more interesting in its mysteriousness than more typical layoffs like Pearson’s, which are usually driven by money.

In contrast, CZI is well-capitalized and Meta’s stock is up 145% so far this year, suggesting money may not have been the predominant force behind the layoffs. It seems more likely that this layoff represents a change in strategy. Unfortunately, the organization did not have much to say about this in their comments to the article’s reporter.

But I will note that both the Gates Foundation and Emerson Collective, CZI’s nearest peers in Education philanthropy, have made bigger-swing investments in a specific part of the ecosystem recently - Gates pivoted to Math last year while Emerson doubled down on its investment in Amplify in 2021. It would be exciting to see CZI take a bigger swing at a part of the Education world where they feel they have a specific right to win.

2. Colleges spend like there’s no tomorrow

Context: The median state flagship university increased spending 38% between 2002 and 2022. Most managed this increase in spending by raising tuition, which increased by 64% over the same period at the same set of universities. The article implies that at some point these two trends will not be able to continue.

A question that I’ve been pondering for as long as I can remember is, “What should a modern university look like?”

This question is hard! We know - and this article does a good job pointing out - things many people don’t like about modern universities. We don’t like administrative bloat, non-academic spending, or settling expensive wrongful termination lawsuits with sports coaches. We don’t like building e-sports lounges, dorms with Tempur-Pedic beds, or remodeling 32,000-square-foot Italian monasteries. We, apparently, don’t like investing to drive increased enrollments.

I’m going to zag a little and say none of these moves - even the administrative bloat! - are inherently bad. I think what makes the examples galling to people is that they don’t fit their conception of what a university is. Why does the University of Oklahoma need to own and remodel an Italian monastery?

I think the root of this problem is that university leaders are not doing enough - or lasting long enough - to sell their vision for why these things exist. To be less friendly to these folks, I’m not always convinced they *have* a vision for why these things exist. The President of the University of Oklahoma admitted as much about his monastery, saying “Would I go and do one of those right now? No…It wouldn’t be the best use of capital dollars.”

The monastery is almost too easy of an example of vision gone awry; the pattern is usually much trickier to suss out.

For example, the University System of Georgia recently announced that it would add 11,000 additional students in the next five years. That’s an admirable goal, with some compelling tactics - recruiting in-state and leveraging direct admission - but I’m not sure how much it differentiates the Georgia system from others.

Similarly, a host of regional schools are turning to recruiting out-of-state students to shore up their finances. It is sort of morbidly entertaining to think about the musical chairs this strategy turns into, but, ultimately, “recruiting teenagers from New Jersey” is not a vision.

So, what is a vision for a modern university?

The obvious answer here is the “mega” online universities and the “Ivy+” cohort. Those are good answers! There is a clarity to the mission of SNHU, WGU, and the Ivies that makes it easy to understand why they would invest in certain things. It makes sense that SNHU would have a massive student support operation. It makes sense that Harvard would be planning a massive research campus expansion. These things could be perceived as extravagant at other institutions, but they make sense at these schools because of their respective visions.

Unfortunately, I don’t think “become a Mega/Ivy” is a viable strategy for universities outside of these cohorts. Unless you happen to have the most successful hedge fund manager of all time as a professor emeritus, the level of investment required is simply out of reach.

Another answer to the vision question is to lean into the affinity groups an institution tends to attract. Setting aside the recent Supreme Court rulings, some of the more interesting recent university growth successes share this trait. Small religious institutions have faced challenges, but Liberty University continues to grow in spite of its leadership struggles. High Point University seems to have carved out a distinct niche for itself. HBCU enrollment is also on the rise.

The question of “What is a modern university?” is harder now than it ever has been. On some level, it is hard for me to fault university leaders for entering the facilities arms races. I’d like to believe I would have turned down the monastery retrofit, but you probably could have convinced me to invest in an esports space for most of 2010s.

All the same, my hope is that at some point the doomsday narrative about US universities eventually frees leaders to invest in more exciting visions.

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Hot Takes

• I am not sure how college sports will survive if football and basketball (and their associated revenue) split off from the rest of the ecosystem, as seems increasingly likely. These two sports finance the vast majority of athletic department budgets; it feels like it might be easier for a school to get rid of athletics entirely rather than to try and find alternate financing.

• I was excited to read about a social network - Fizz - that is growing quickly and no one in my demographic uses. I mean this in all seriousness; the last few attempts at new social networks have felt too focused on the Tech Twitter demographic. Fizz is focused on building for college students, where most other strong social networks have originated.

• I find myself wanting to buy into the argument for universal childcare, but can’t tell how much my being a new parent is biasing me on the topic

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Question of the Week

Results of last week’s question: The good people of ETCH want AI!

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