I wanted to challenge myself on several counts about the value of “higher education” like a PhD or a shift towards Management streams. The trigger was this article which spoke, rather provocatively about unbundling of the “education”. First, examine this:
But there are cynics who believe it’s something else entirely. In The Case Against Education, Bryan Caplan argues that the real value of education, for the people who get it, is signaling, not skills — memorably, he argues that a college is not so much a sculptor as an appraiser.
There’s good evidence for this, both quantitative and anecdotal. For example:
- The “Sheepskin effect,” where the single semester that accounts for the biggest share of the college earnings premium is the last one. Do schools save all their most valuable knowledge for the last few months, or do employers check a box that says “college graduate”?
- The relationship between income and years of education is much stronger for individuals than for countries; a college graduate is richer than a high school dropout, on average, but to a much greater degree than countries full of high school graduates are richer than countries where most people leave school earlier. This implies that people use education to compete for a relatively fixed pool of opportunities.
It makes me question the value of a PhD. There have been many arguments and counter-arguments. There is no “one-dimensional answer”, but as the job markets contract in academia, it is likely to be an under skill, rather than an upskill in terms of “signalling to the employer”. There are many shades of grey here.
But perhaps, education is good collateral to survive with the skills. Higher education with a niche is somewhat questionable. My intent to explore this question was my constant endeavour to get a streamlined approach towards academia (my first love); share in ideas and combinatorial efforts to create something different to make an impact on patients affected with cancer. However, universities (and hospitals as a corollary) operate in silos which makes it difficult to break down the walls.
The revenue model (tuition fees) is usually not consonant with the “value” that the university is providing but is settled to account for the marketing and bureaucracy expenses. I know, it is a direct statement, but how do you ascribe value to an MBA, for example, in purely monetary terms? The “market” decides the “starting salary”, but it is exclusive of deductions. I am not part of the industry, but the employability of the PhD is even less unless the companies are looking for pure “niche specialists”. This, too, is subject to market risks.
There’s another fascinating insight from the linked article:
This raises an interesting comparison with (YC graduate) Lambda School. Famously, Lambda’s tuition is in the form of a capped income-share agreement; you pay a fraction of your increased earnings, up to a set maximum. This implies that Lambda is helping students earn more, but with a pretty normal distribution; it’s mezzanine debt. YC charges in the form of equity, and their returns are dominated by a few extreme successes.
This says something about the returns on signaling compared to skill-building: it’s hard to learn a million-dollar-a-year skill from school (perhaps the people who could make a million dollars a year are so insatiably obsessed by their chosen career path that they’ll learn it fastest on their own).
Your “luck” and perhaps hard work determines your success with your startup, for example.
I came across an interesting “grammar” based startup that helped users to overcome the writer’s block. There was a PhD behind the startup. It was an exciting idea but very poorly executed. I wrote back a couple of times to the team, but it didn’t pan out. It is not correlative that as a PhD, the owner couldn’t offer customer support that I required but was perhaps resistant to the idea that the product, out of the door, could see some improvements.
That brings me to another issue and here’s something I’d discuss in detail- on the genesis of an idea. I’d link to what Paul Graham has written here (I have covered those concepts briefly in the previous iterations).
The way to get startup ideas is not to try to think of startup ideas. It’s to look for problems, preferably problems you have yourself.
Solving problems is the “name of the game”. For example, I created an application to quantify clinical parameters (patient-reported outcomes) because clinicians tend to underestimate issues faced by patients (especially the medium and long term effects). The problem exists, but we haven’t found a reliable solution. My only question- would a PhD have helped?
I think, yes. It requires considerable resources to get an application off the ground; test, notify it in the app store, apply for grants and convince people who view digital health from the prism of “classicalism”.
That’s why the blog. I bounce a lot of fresh ideas here because they, at times, represent something else in the background. It helps me to see connections between different issues (and needless to say, writing is a damn good exercise for the brain). PhD, however, offers the “depth”. In Paul’s words:
When you have an idea for a startup, ask yourself: who wants this right now? Who wants this so much that they’ll use it even when it’s a crappy version one made by a two-person startup they’ve never heard of? If you can’t answer that, the idea is probably bad. 
You don’t need the narrowness of the well per se. It’s depth you need; you get narrowness as a byproduct of optimizing for depth (and speed). But you almost always do get it. In practice the link between depth and narrowness is so strong that it’s a good sign when you know that an idea will appeal strongly to a specific group or type of user.
But while demand shaped like a well is almost a necessary condition for a good startup idea, it’s not a sufficient one.
Here’s another beautiful insight:
So if you can’t predict whether there’s a path out of an idea, how do you choose between ideas? The truth is disappointing but interesting: if you’re the right sort of person, you have the right sort of hunches. If you’re at the leading edge of a field that’s changing fast, when you have a hunch that something is worth doing, you’re more likely to be right.
In Zen and the Art of Motorcycle Maintenance, Robert Pirsig says:
You want to know how to paint a perfect painting? It’s easy. Make yourself perfect and then just paint naturally.
This brings forth a chicken-and-egg situation. How do you market your skills when you are just an unknown entity? Through your CV? Articles? Journal publications?
I have a strong opinion about journal publications. Frankly, I don’t see merit in rinse and repeat type of articles. The purpose of the journal is to “educate” to bring out a new perspective of what we don’t know about what is known. Does it call from “niche skills”? Or one just writes about what everyone has attempted.
I’d instead choose a way to have a research proposal from a prospective student (if I were to choose). It would show what problems are anticipated even before the project has hit the ground. I think, for a PhD, it is important to assess and understand the likelihood of the issues that the individual is likely to face and how to overcome them.
Another issue is that of strict regimental approach towards “admissions”. As I mentioned- tuition fees are just one part of the struggle. The “stipend” is barely enough to keep you off the roads, but that’s not worth the penury. It means then, taking on debts that only increases the risk of defaulting on the principal. Not worth it, in my opinion.
Luck favours the prepared mind. Successful people (in PhD or in startups) are adept in solving real problems. That should be the end goal.
Last but not least. Here’s from Paul again:
“Entrepreneurship” is something you learn best by doing it. The examples of the most successful founders make that clear. What you should be spending your time on in college is ratcheting yourself into the future. College is an incomparable opportunity to do that. What a waste to sacrifice an opportunity to solve the hard part of starting a startup — becoming the sort of person who can have organic startup ideas — by spending time learning about the easy part.
I’d instead focus on skillset. Like my deficiency in running a “trial”. Truth be told, the stars seem to align for certain people with an active department of statistics (with their own PhD’s in survival analysis, for example) that never ceases to churn out metanalysis and survival trials. Are they relevant? In a different universe, yes. Do they have “practise changing recommendations”? Not always so. It is because of “GIGO” (garbage in and garbage out) (Many studies, usually included in the metanalysis have selection biases).
Paul sounds ominous:
Beware of research. If an undergrad writes something all his friends start using, it’s quite likely to represent a good startup idea. Whereas a PhD dissertation is extremely unlikely to. For some reason, the more a project has to count as research, the less likely it is to be something that could be turned into a startup.  I think the reason is that the subset of ideas that count as research is so narrow that it’s unlikely that a project that satisfied that constraint would also satisfy the orthogonal constraint of solving users’ problems.
That is why a PhD should be able to offer you a real opportunity to build on deficient skills AND solve the user’s problems.
Why MBA’s fail (and should you pursue one?)
MBA is a generalist; a manager. Here’s from The Economist:
According to the Graduate Management Admission Council (gmac), an industry association, American mba programmes received 7% fewer applicants this year than last. Nearly three-quarters of full-time, two-year mba programmes reported declines from coast to coast. Not even the most illustrious ones were spared: hbs (located in Boston) and Stanford’s gsb (in Palo Alto) both saw applications dip by 6% or so. Schools face growing competition from overseas and online programmes—and, as Mr Benioff’s critique implies, questions over hidebound curriculums. “We’re being disrupted left, right and centre,” confesses Susan Fournier, dean of Boston University’s Questrom School of Business.
I have used the example of an MBA because it was quickly recognised and is most representative of a “generalist”. They are highly paid too (notably, the number crunchers).
Here’s another sobering truth:
Americans, too, are cooling on MBAs. More than half of American schools report fewer domestic applicants. Soaring tuition costs, which have far outpaced inflation, put them off as much as they do foreigners. A top-notch MBA will set you back more than $200,000 (including living costs). Even with financial aid, many students are saddled with $100,000 debts at graduation.
At HBS, home to perhaps the most hallowed MBA, Mr Nohria accepts that the market for its traditional offering is shrinking. In a sign of the times, his school has frozen tuition fees. He sees a dramatic expansion for “unbundlers” of online education, who “separate knowing, doing and being”.
For those who are cynical enough, it is clear that being in Harvard (or any other fancy IVY league) is the price you end up paying for creating networks. Yes, it does suit those who actively seek out, but others are happy being moderately successful too.
Does the PhD versus generalism settle? In all fairness, no. I will perhaps revisit my quest to get into academia because I love working on ideas. Probably, a PhD is the best opportunity to work on the idea quotients and develop highly specific skill sets. But in many ways, it is like a start-up. To survive, you need a blend of being a generalist too. As usual, there’s a spirited debate on the MBA requirement here.
Before I sign off, here’s a great insight from the Wall Street Journal:
What does it take to be a successful Waffle House manager?
Speed, for one thing. To meet the goal of serving every customer in eight minutes or less, the waitstaff doesn’t bother punching orders into a computer. They write them down in a shorthand code and read them aloud to cooks, who remember them by arranging condiments on empty platters. A face-up mustard packet signifies pork chops, for instance.
If the restaurant is busy or short-staffed, managers are expected to dive in. The company’s training program teaches them how to analyze P&L statements, but it also prepares them to cook, clean and wait tables. “Not a job for the lazy,” one reviewer said.
Here’s to the generalists. These skill sets are often developed on the job as the pressures demand. Here’s another sobering thought:
At Waffle House headquarters, entitlement isn’t an issue. Every executive, including the CEO, visits the restaurants. They wear the same uniform as hourly employees. And if it’s busy, they bus tables and take orders.
As Mr. Ehmer once said: “It’s hard to get an inflated opinion of yourself when you’re washing dishes every day.”
The debate’s not settled!