Tag: signal

The Ever Moving Goalposts of Arguments for College

 

You have to go to college to get a good job and make money

Actually, college grads have an average of $35,000 in debt and 60% of them have no job or jobs that don’t require degrees.  Those silly earnings statistics have the causation backwards.

 

But you still need to learn skills for the real world!

Actually, employers report that college grads are completely unprepared for what’s needed in the real world.  You can learn all the skills you need better, faster, and cheaper through an apprenticeship.  College tends to foster all the worst skills; the type that make humans dull rule followers, easily replaceable by machines.

 

You can’t be so one-dimensional and materialistic.  The liberal arts are important to becoming well rounded person.

Precisely why you shouldn’t go to college.  Student knowledge of liberal arts is the same when they exit as when they enter school, and none of them like going to class anyway.  Anyone who is interested can read books and articles or take classes for free or incredibly cheap and get a far better liberal arts education.

 

It’s not about the knowledge, it’s about the network!

College networks are incredibly limited and uniform.  Anyone can build a rich, diverse network through work, travel, social clubs, or any number of ways that don’t cost six figures or take five years.

 

It’s not about the specific job, skills, knowledge, or network, it’s about the glories of the unique campus environment, the parties, the football, the four year escape to live and grow up!

Anyone can move to a college town and have all that and more without ever paying tuition or registering for classes.

 

Employers still need a degree as a signal of hireablility!

Actually, fewer and fewer require it and even those that do care far more about things that actually signal value creation.  A degree is one of the weakest signals on the market and the most expensive.  There are more ways than ever to get great jobs and stand out without wasted time or wasted dime.

 

Some jobs have mandated legal requirements for a degree!

Yes.  Yes they do.  And they shouldn’t.  Of course, many of those jobs are “prestige” careers that students don’t actually enjoy but feel like their parents need them to pursue like law or medicine.  Even there, opportunity to innovate and work in those industries as an entrepreneur without the costly credential exist and are growing rapidly.

 

But old people and parents might look down on you if you don’t do it!

Yep.  They look down on just about everything young people enjoy, create, and do well.  They’ll adjust.

The Two Great Secrets of Higher Education

  1. Tuition is paid for one reason: to buy a signal.
  2. That signal is not worth the investment compared to what you can create elsewhere.

These two great secrets are known to almost nobody.  A few people know secret number one, but falsely conclude that the signal is still the best option.

A small but growing number of people partially understand what’s behind secret number two, but because they do not grasp that the product universities sell is a signal, they compare only alternative social and learning experiences to universities, not alternative ways of creating a signal.

The combined understanding of both of these secrets will completely revolutionize the way people think about and engage in education, career preparation, work, and life.

The Signal Secret

  1. Tuition is paid for one reason: to buy a signal.

A small number of economists and thinkers have identified that higher education is valued because of its signalling power.  That is, the college experience does not form people into more valuable or learned individuals capable of doing good work, but it sorts people into groups and attaches degrees to those who were already capable.

Signals are not bad things.  They are very valuable.  Employers need a way to narrow the pool of applicants and weed out the least likely to succeed.  There is a correlation between completing college and being a better worker on average.  But there is no causation.

Harvard doesn’t make you more likely to succeed.  The type of person who gets accepted into Harvard is already more likely to succeed.

Almost everyone objects to calling the product universities sell a signal.  They claim it’s a big bundle of goods.  It’s a social experience.  It’s a network.  It’s knowledge.

It is indeed a bundle of these things and many more, but these are all fringe benefits.  None of them are the core product being purchased.  When you pay to get your oil changed and the waiting room has coffee and magazines it’s a nice perk, but it’s clearly not the service you are purchasing.  If the auto garage didn’t have these comforts you might still go, but if they only sold coffee and magazines without oil changes, you wouldn’t.

College is the same.  Whatever other activities and benefits students may derive from their experience, none of them are the reason they are paying to be there.  They are paying for the signal, period.

It’s easy to prove this point.  List every other element of the higher education bundle.  Sports, parties, talks with professors, lectures, books, living with other young people, etc.  Now ask which of these would be possible if you never paid tuition?  All of them.  Move to a college town, sit in on classes, join clubs, go to events, read books, and live the college life to your heart’s content.

When you take away the credential at the end, it becomes clear how easy it is to get all the other aspects of college for free or very low cost, and often better.

This is also evidenced by the fact that everyone is happy when class is cancelled.  What other good do people pay for upfront and then cheer when it’s not delivered?  It’s because the classroom lectures and tests are not the good being purchased.  They are an additional cost that must be borne in order to get the real product, which is the piece of official paper.  The signal.

Young people may or may not enjoy some or all elements of the college experience.  But the reason they go and pay is because, in their minds, they have to.  They have to to get the signal, because without the signal you can’t get a decent job or be seen as a decent human being, so the prevailing narrative goes.

The signal is the product.  Until that is understood, no amount of tweaking or reforming or innovating any of the other parts of the higher education bundle will matter.

And it turns out, you don’t need the signal college sells after all.

The Alternatives Secret

  1. That signal is not worth the investment compared to what you can create elsewhere.

Everyone is thrilled to show you charts and graphs and statistics about the correlation between degrees and earnings.  None of that matters.

It doesn’t matter because aggregates are not individuals and because data can never show causation.

What happens to the average of some aggregate does not determine what course of action is most beneficial for an individual.  The average Ferrari owner earns a lot more than the average Honda owner.  No one assumes this means buying a Ferrari is a great way to improve your earning potential.

To the individual, the question is not whether college is a good investment for all young people on average.  The question is whether you can build a better signal with less than four plus years and five plus figures.  Turns out, that’s a pretty low bar.

The degree signals that you are probably a little above average for someone your age.  Maybe not even that as degrees proliferate.  This means if you are average or below average in ability, creativity, or work ethic, the degree signal may help you get a better job than you could without it.  (Though it won’t help you keep it.)

If you are above average in ability, creativity, or work ethic the degree signal sells you short.  It makes you blend in with all the lower quality people coming out of the same institution.  (Not only that, the college experience itself tends to foster habits that make you less able, creative, and hardworking.)

Young people today have at their fingertips tools to create signals far more powerful than generic institutional credentials.  Consider the impact of a tailored website that demonstrates the value you have created?  Better yet, a website or product that demonstrates to a company the value you will create for them?

Consider the value of working alongside a successful entrepreneur or industry leader for free or low pay for a year or two and parlaying that into a full-time gig?  Companies hate the searching and hiring process.  They’d always rather promote someone within who has a proven track record of value creation.  Compare the cost of low wages for a year or two to the cost of no wages and huge debt for four.

Businesses need value-creating employees.  They use degrees as an early proxy to eliminate some chunk of applicants (though even this practice is declining for big and small companies alike), but they only use them in absence of a better, clearer, more powerful signal.  When one exists, it trumps the academic credential.  When you realize all they want is proof of ability to create value, the world begins to open up.  How many ways are there to prove that you can?

It’s not only about getting hired.  Professors are quick to tell you that wages are not the only thing that matters when it comes to happiness and success in life.  They are correct.  Yet chasing the degree as the only signal often leaves people with debt that requires a relatively high wage to service, thus cutting off options and opportunities to explore and experiment.

Not least of these explorations is the wonderful and growing world of entrepreneurship.  It’s easier and cheaper than ever to create your own product or launch your own venture.  It’s also more and more valuable.  Machines and software can do rote tasks.  Humans’ greatest value add is creative problem solving and innovation.

The ability to freelance for a living, launch a micro business, or create a major enterprise is expanding every day.  There is no benefit to the degree signal in the world of entrepreneurship.  There are no HR departments wading through resumes looking for checklists.  Here, in fact, the college experience can be more of a detriment than a benefit.  It tends to restrict the imagination to known methods, restrict your network to same-aged people, restrict your financial flexibility and risk-taking, and cut into many of the easiest years for trying something bold when the cost of failure is lowest.

A 20-year-old who launched a KickStarter campaign, built an app, created a website, apprenticed for a small business owner, read 50 books, or even just has an amazing online presence signals more value creation potential than a 22-year-old with a BA and a 3.7 GPA.  Yes, you can supplement the college experience with these other things, but classes and obligations (not only time but financial and parental) get in the way of fully unleashing your independent signal-creating potential.

The Real Revolution

The real revolution in higher education will not come from better delivery mechanisms for lectures, or new platforms to sell the same signal.  It won’t be disrupted by online versions of the brick and mortar establishment.

The real revolution will look as varied as the people participating in it.  It will begin when people understand the two secrets of higher education.  When it is realized that college is selling a signal and that signalling your ability to create value can be done far better in myriad other ways, the world will bloom with alternative methods of getting young people from where they are to where they want to be.

Instead of 16, 17, and 18-year-olds stressing about how to get into colleges, they should focus their energy on how to begin building a better signal.  Instead of 19, 20, and 21-year-olds stressing about majors and minors and GPA’s, they should focus their energy on creating value and building a way to prove it.

What are you signalling?

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Want more?  Check out Praxis, a one-year apprenticeship + professional development + coaching educational experience for young people who want more than college.

Why Innovation Beats Politics in Reforming Higher Education

(The following article is adapted from a speech given on July 31 at the Pope Center’s Friedman Legacy Day event in Pinehurst, North Carolina.)

There is a powerful lesson in the emergence of companies like Uber for those who wish to reform higher education. All the focus tends to be on political and policy debates, but meanwhile innovators are busy working around the status quo without waiting for permission or consensus. 

Government granted monopolies are inefficient and unfair. The cartel structure of the taxi industry is a clear instance of the economic losses, higher prices, and lower quality that results. Policy wonks and would-be political reformers have been writing papers about this for decades.

All the arguments and efforts of reformers largely fell on deaf ears.

Then Uber came along. A startup completely outside of the political system and not interested in winning economic arguments or policy battles simply put a better experience into the hands of consumers. No academic or bureaucrat had to be convinced, and no politician had to fight union interests to pass a bill.

The status quo never saw it coming, and by the time they caught on, it was too late. Uber is here to stay.

This is a powerful case contrasting two approaches to changing backward institutions. Cab customers don’t care about economic arguments or cartel regulations. They just want to get from point A to point B. They may complain about the experience, but dissatisfaction won’t be enough to warrant hours spent educating, lobbying, or protesting.

The status quo persists because the regulatory regime concentrates the benefits on a few special interests while the costs are spread over millions of individuals with busy lives.

Uber, by providing an alternative experience directly to the consumers, made them the beneficiaries of a better system. Alternative experiences are a powerful force for change, even more feared by the status quo than critical ideas and theories. That’s why the Soviet Union banned not just free-market textbooks, but blue jeans, jazz, and Marlboro. When citizens experience the alternative, suddenly they are dissatisfied with the stagnant options on the table.

So what does innovation look like in higher education? How can alternative experiences be created to force academia to get in shape and better serve customers?

To answer this we need to first establish what the actual good being sold is. Taxis and Uber sell the same basic service, transportation from A to B. What are people buying from college?

Contrary to what many people—including professors—assume, students aren’t buying knowledge or skill. They’re not buying a network or even a social experience for the most part either.

To prove this you can simply ask why anyone would pay tuition. You can move to a college town, go to parties, hang around the campus bookstore and student union, and even sit in on classes and do assignments for free without enrolling.

The reason students don’t do this is because none of those experiences are the product they are purchasing. In fact, class is often seen as an additional cost that they must endure to get the product, which is why they are excited when it’s cancelled.

The product being bought is the credential. The credential drives the entire industry and is what causes millions to go deep into debt for an experience they often don’t love and admit doesn’t make them any more valuable in terms of tangible skills.

College credentials are valuable due to their signalling value. Your degree sends a signal to the world that you are, ostensibly, better than a similar person without the credential. This signal has some meaning; making it through college means you’re probably better than someone who lacked the intelligence or drive to do so–but it’s a shockingly low bar.

The proliferation of degreed people and the decline in ability among incoming freshman has turned college into little more than what high school once was.

I remember sitting in a classroom and having an epiphany as I overheard the hungover conversation of some classmates. Those people, I realized, were going to walk out of the university with the same credential as me. So all I was really buying was a piece of paper that said I’m no worse than that guy with his half-sober head on the desk.

Employers readily admit that degrees tell them little these days. Everyone seems to have one but few have relevant skills and experiences. Many, especially small businesses and startups, don’t even use it as a baseline anymore. Even those that still do require something more on top of it to signal who is really high quality.

Getting back to our Uber example, until the alternative was created and made accessible to consumers, no one was dissatisfied enough to demand taxi reform. Students today are in a similar place. A growing number are dissatisfied with the product.

The problem is that most students don’t become dissatisfied until they’re already in college and realize it’s not all that valuable. Or worse, they only realize that after they’ve graduated with a load of debt but little knowledge, skill, or ability to create value.

Most college students still believe that the credential it gives them is the one and only way to get from point A to point B. They thoughtlessly apply like New Yorkers used to hail cabs.  That’s where competition comes in. Today, it’s possible for young people to build their own signal that is more valuable than a degree.

No longer do you have to rely solely on an institution to vouch for you and open doors. You can let your product, your reputation, your individual ability and brand speak for themselves.

Consider the popular story of the woman who couldn’t get through the application process for the fast-growing tech startup AirBnB. She had a great degree, but so did all the other applicants. So she built a better signal. She researched the industry and built a basic website describing her take and how she’d add value to the company.

It turned into an internet sensation—infinitely more valuable than a generic resume listing a degree like everyone else.

LinkedIn pages, GitHub profiles for coders, personal websites, and modern communication tools make it easier than ever for young people to create value, build a network, and make it easily accessible and verifiable to the world. No longer are they confined to purchasing prefabricated credentials from large institutions.

Competition in higher education means competing ways to signal value to the world. The alternatives are limited only by imagination.

The force of government loans, grants, subsidies, and laws that artificially enhance the value of degrees, along with the force of the public religion that the college degree is the only way to a respectable, successful life, have made it hard for most to see the opportunity to create alternatives. Yet they are emerging.

Sometimes they emerge with great fanfare, like tech investor Peter Thiel’s fellowship program that pays kids under 20 $100,000 to dropout and start a company. Sometimes with less notice, like the many coding schools, online courses, and combination work/education/professional development programs.

As this proliferation of alternatives continues, it spells nothing but good for young people, employers, the economy, and yes even for some professors and universities. Really good schools that offer a truly valuable experience will thrive while colleges that function mostly as credential mills lose market share.

What’s left when the credential ceases to be the magic ticket is anyone’s guess, but we do know only those providing real value to the educational consumer will survive. That’s a good thing.

Build a Better Signal

Why pay a university to do something you can do better yourself?

From Medium.

A college degree is a signal.

It’s a signal to the world of your value in the market. It conveys information about your ability, skill, and intelligence. There is a lot of noise in the world of work, and it’s hard to figure out who’s worth working with. A degree cuts through some of that noise and puts you in a smaller pool of competitors.

The thing is, this signal is not that valuable. It’s also very expensive.

Not long ago a degree may have been the best signal most people could get. There weren’t many ways to demonstrate your value to the market, so a degree was one of the better bets. Things have changed dramatically. Technology has opened up the world. The tools available to you now have lowered search and information costs, and you can create signals of your own that are far more powerful than a degree.

What’s Better?

A person with a strong GitHub profile has a signal that beats a degree. If you’ve launched a startup, even if it lasted only six months and ultimately failed, you’ve done something that sends a more powerful signal than a degree. If you’ve raised money, sold products, done freelance work, produced videos, run social media campaigns, mastered SEO or AdWords, built a website, designed logos, started a nonprofit, been published in a handful of outlets with good content, had valuable work experience, or even just have an amazing online presence via a personal website and/or excellent LinkedIn and social media profiles, you have a signal more valuable than most degrees.

If you are not very talented or ambitious and you are unable to do anything like the above, a degree might be the best signal you’re capable of getting. When you realize that all the other students half asleep around you in class will walk away with the same signal, it becomes clear that it doesn’t carry that much weight. It says, “I’m no worse than everyone else with a BA.” If getting a BA is a really hard task for you and building something better is overwhelming, the signaling power of a degree might be worth it. But if you are able and willing to do more — if you are above average and can excel in most environments, than you have in your power right now the ability to build a better signal than a degree.

You have at your fingertips tools that young work-seekers and employers a few decades ago didn’t. Never has it been easier and cheaper to start a business, offer freelance services, learn to code, show off your writing or artistic skills, and build a portfolio of value created.

Don’t Just Tell Them, Show Them

Consider the woman who created this website in an effort to get hired at AirBnB. Her resume listing her academic accomplishments and other common signals was lost in the noise. So she built a better signal.

AirBnB website beats a resume

The website is far more valuable than any degree or honor roll listing. AirBnB took notice, and I can guarantee that website alone has created more job offers and interest than she can handle. In fact, so entrenched is the degree-as-signal mindset that this woman’s effort went viral immediately. The competition among degree holders is fierce, while the competition among those who build a better signal is almost nonexistent.

There is nothing in her story that required a degree. If you want to work for a cool company, you can do something like this yourself right now regardless of educational status. Why settle for a dated, baseline signal that says you’re no worse than every other degree holder?

What Happens to College?

Here’s the interesting thing: The more young people begin to build better signals, the better college will become.

Fewer people will go because most students attend to purchase the signal and that only. But those who stay will be there for the best reasons. They’ll be there because they love the college experience, the lectures, the professors, and the rest of the bundle.

Losing all those customers who are just suffering through the courses to get the signal will hurt the bottom line of most universities. Some might go under entirely. But for those who care deeply about higher education in its best form, this will be a welcome change. Schools will get sharper and better as they face competition. Instead of contenting themselves with delivering mediocre product because they have consumers who feel captive to the need to get that degree, colleges will begin to become more accountable to the customers there to gain knowledge.

Professors — good ones at least — will love this change. Students in their classes will be the ones who actually want to be there for the value of the classroom experience itself. Severing the credential from the classroom will enhance the quality of both.

How Do I Do It?

Most young people don’t know how to take advantage of this new world where they can craft their own signal. They’ve spent years in a conveyor belt education system that has instilled in them a rule-following, paper accolade chasing mentality. They see degrees and grades as safe, as fallbacks that will magically keep them afloat in hard times. They overestimate the signaling power of paper and underestimate their ability to create product. Product beats paper in the world of signals.

Entrepreneurship is becoming more than just an activity that a tiny number of company founders engage in. We once shifted from farming to factories, then from factories to offices. Today a shift from corporate offices to remote workers, freelancers, intrapreneurs and entrepreneurs is happening fast. Those who learn to think entrepreneurially, whether or not they ever launch their own company, and see themselves as their own firm, regardless of where their paycheck comes from, will build the future.

It’s hard to internalize and act on the opportunity in this new world. That’s one of the main reasons behind Praxis, the entrepreneur education company I launched. We want to help you build a signal that is more valuable than a degree. We want to help you do it in one quarter the time and for zero cost. We want you to have fun and become excellent in the process. We want to help you use the tools available and create your own future.

That’s why we place participants with growing companies to get work experience. That’s why we help them create personal development projects, tangible skills training, portfolio projects, and personal websites.

Praxis is just one way to help young people take advantage of the opportunity to build a better signal. The options are limited only by your imagination. Find one that works for you.

Carpe Diem

The future is bright. You have in your hands the power to create your own brand, to broadcast it to the world, to demonstrate your ability to create value. You can built a better signal than the generic one in the hands of tens of millions of other young people.

What will it be?

Praxis is Democratizing the Degree

Above all a college degree is a signal.  People buy one to signal to the world – their parents, peers, employers, investors, co-workers – that they are a valuable, smart, skilled person worth working with.  Yet the signalling power of the degree has been dropping fast.  Ask any employer and they’ll tell you they have less and less trust in a degree to accurately signal a high-performing, value-creating person.  They prefer experience and demonstrated proof of knowledge, but instead they are asked to simply trust a credential that’s supposed to verify knowledge and skill they can’t see for themselves.  The whole system is based on trust, which is why it’s so vulnerable and ripe for innovation.

Why is Bitcoin a breakthrough? Because unlike all other methods of payment, it’s a trustless system. You don’t need to simply believe people and institutions, you can have demonstrated proof. It’s s platform for open, peer-to-peer verification.

That’s what we’re doing for credentialing at Praxis. The closed door, black box model asks everyone to trust universities and professors to accurately reflect knowledge and skill through tests, grades, and degrees, yet no one gets to actually see the process.  We’re opening it up to the world.  It doesn’t matter what your professor or institution thinks, it matters what the people who actually want to work with you think.  Let’s let them in.  Let’s let them give the grades.  Let’s decentralize this thing.

We’re not trying to create new and better credential gatekeepers. We’re tearing off the gates.  I describe what we’re doing and why in a bit more detail below.

You can also read and watch more about what we’re doing here.