Monday, October 22, 2012

Educating the System








Okay, so I have a little bit of a biased interest here. Let me caveat. But, I was recently presented with a question of how the future of education was going to work. With all of the MOOCs out there, sponsored by MIT, Stanford and Georgia Tech, it's a valid question. As a soon-to-be full time MBA student, I have a lot of concerns, clearly-- will the amount of money that I'm about to invest in my education (probably close to $120-160K for two years) pay off? Will it allow me to [fill in blank here]? 

So let's think about it. From this student's perspective, I have always been raised in a household where there was no such thing as too much education. It went without saying that I would graduate high school with good grades, go to a good college (preferably on scholarship, since my family couldn't really afford higher education...Strangely though, even though we couldn't afford it, it was never a question that I would go. I sometimes wonder if I hadn't gotten a scholarship, what my family would've done), work for a few years and then go back to get in an advanced degree in something (preferably business, medicine or law). So far, so good. I understood this plan at a young age and pursued it--not because I wasn't creative enough to think of something else and just wanted to take the path of least resistance, but because I recognized the value early on. At least, I recognized the value of high school and college. I've had colleagues and friends debate with me over the value of an MBA, and their concerns are valid. There's not much you learn at b-school that you wouldn't learn out of a book, you're really just doing it for the network, if you're doing it to be an entrepreneur just take the $120K and put it toward your start up...the list goes on and on. Regardless, I see that there is value for me, and that is a discussion for another time.

For the schools themselves, these are tough times. The public ones are getting slaughtered on budget cuts, the private ones are scrambling to make sure the alumni stay happy and the funds keep flowing in. Often times, this leads schools to continue bumping up tuition. The average 4 year university increased tuition by 15% between 2008 and 2010, whereas the average top 20 MBA has increased by 5.7%-- outpacing the increase in graduating salaries and national inflation. The average class size is going up-- even at the top institutions that try to keep class sizes small for the sake of a "more intimate learning experience" in order to meet the increasing demand. Once they get through their 2 years, many students, especially those outside of the top 20 or even the top 10 are struggling to find jobs due to the bad economy. From an employer's perspective,  they can choose from the cream of the crop-- they now have the power to demand that their new hires have both experience and a great education, because the supply is so out of whack with the demand. Therefore, the new graduates that have fantastic credentials but may be lacking (just slightly) in the experience department with 2-4 years are getting shown the door. From a student's perspective, they're saddled with heavy debt, unable to find jobs and invested in what they thought were safe choices by doing "practical" concentrations like Finance or Accounting. In summary, things aren't looking so good for the students either.  

But what about the professors? There are waves of students that have decided that their path would lie in an advanced degree-- a PhD that could (should?) give them a way-one ticket to face the other direction in the lecture hall. Entry-level tenure tracks start at $54K a year, and this is all most students can hope for after dedicating 4 years of their lives to essentially educating themselves on how to educate. The American Association of University Professors estimates that the ratio of openings to new doctorates is 1:4. According to the Survey of Earned Doctorates (SED), half of all PhD recipients in the humanities are over age 35 and have foregone many things that normal 35 year olds have done-- stable paychecks, buying homes, starting families. Looking at the big picture-scape, The Economist reports that there really is a minimal financial gain between a Master's degree and a PhD, which insinuates that all PhD holders are hoping to teach/research. In my specific case, I'm really looking at the quantitative fields, Finance, Business & Economics, etc., but even these "hard subjects" have complicated minutiae. Some claim that Accounting is supposedly better than a doctorate in Finance, while others argue that it's really a progression issue-- it is much more rare to go from Finance to Economics but not the other way around.

So isn't there any light at the end of this tunnel? Any opportunity at all for someone who wants to make a difference, give back to their community and contribute to the norm of thinking? Well, the future for doctorates is a crowded one. The World Future Society claims that doctoral degrees hit an all time high in 2008, after rising for 6 straight years. Interestingly enough, the non-science and engineering (humanities) doctorates have decreased-- perhaps as a reaction to the "hard skill"-based economy that the recession has created. In the most telling article, The Chronicle of Higher Education performed a survey of doctoral candidates across California, and the results were slightly bleak. On the upside, a lot of the anxiety that comes from receiving a doctoral degree is what you can do with it afterwards, and many schools such as Berkeley and UC Davis are focusing on preparing their doctoral candidates to enter a fierce job market through workshops, seminars, guest speakers and a lot of hands on career guidance. 

The doctoral predicament is interesting because I think it perfectly highlights the many ways that the US has failed in their structuring of the educational system. Contrary to other countries like China, where the government more or less tells their population what their lives will be like after entrance exams, the US is almost a promised land where students can choose based on their passions, interests, strengths. Unfortunately, many people out there want to go into academia, but there simply aren't enough positions for all of those that would like to contribute back to their communities. As a result, you get a group of highly educated people who've sacrificed a lot for their profession unemployed. The "lucky" ones are paid a pittance and rarely receive the job stability they desire to the decreasing trend of tenureship.What kind of society can we be? What can we hope for in the future if we don't reward those that will teach the future? I guess only time will tell.

Payments Predators and More



The landscape for All-Things-Tech, which is, awkwardly acronym-ed to be ATT (no comment) has been alive and kicking this week!! More than anything, maybe it’s because of the cold, these technology firms have been getting mighty comfortable with each other. Maybe too comfortable.
The real question I ask is, are they being friendly? Are they just trying to keep up? Or are they being predatory? Let’s see the breakdown:
 
·         Groupon recently announced that they were going to move into the Payments business with the launch of their new payments platform: Groupon Payments
o   Predatory: Groupon’s value proposition is simple—they pledge to match the lowest cost option for any merchant to accept credit cards will deliver overnight credit card deposits daily. Although the reasoning behind this move is not a surprise (they process a lot of payments, yo!), Groupon’s size and experience is what will set it apart in terms of its ability to scale and provide valuable customer service. Groupon will be partnering with hardware developer ROAM (who has created readers for others in this competitive industry) to develop an audio jack reader (a la Square) as well as a case based reader (a la Verifone’s PayWare). By offering processing at a discount, Groupon is gunning for bigger processors (First Data) and alternative folks (Square). Its true test will be whether consumers trust a company known as a consumer product brand to handle their sensitive payment information.
·         Facebook jumps in on couponing through Offers, adds additional rider on when it will allow people to use their “free” Offers service
o   Keeping Up/Predatory: Facebook jumping into Offers this past May is really not that surprising (other than the fact of why it took them so long). Adding a rider on their “free” offers service requiring merchants who want to be featured to buy advertising….well that’s a little different. In terms of advertising, Facebook like advertising not only because it makes up approximately all percent of their revenue, but also because they like to gather that data on their users…just like Google. The true test for Facebook will be to see whether merchants are willing to pay for the right to be featured, or if, since they have to pay anyway, they’ll just move to the Google shop down the street.
·         Microsoft completes release of additional details on “Surface”, Apple releases a “special event invitation” to discuss iPad Mini
o   Predatory: Microsoft wants to get in on the tablet game, which is predatory. Apple is trying to simultaneously defend its position among the tablet market (currently the majority of the tablet market, despite its high cost hardware) and move into the tablet market that as defined with Samsung’s 7” (which was taken off shelves due to Apple’s angry lawsuit-ing, even though the judge ultimately ruled for Samsung. Needless to say, Apple is appealing)
o   Friendly/Predatory: This one is another one of those halfers because MasterCard is being relatively friendly with the telcos in that I don’t think that MasterCard wants to get into the telco business. MasterCard has already launched an NFC payment app with Singapore’s Starhub and Everything Everywhere in the UK and Deutsche Telekom in Europe. In this case, MasterCard is simply leveraging more partnerships and NTT Docomo is leveraging MasterCard’s network. That being said, MasterCard really wants to undercut the potential opportunities through its established, NFC-based PayPass service. MPesas and Google Wallets around the world are getting nervous because, although MasterCard is a friendly for NTT Docomo, MasterCard is not a friendly for other mobile payments players in the emerging markets.