Wednesday, January 25, 2012

My small challenge to the "university" business model

I am not a great fan of the university business model as a delivery mechanism for learning. The model can be traced back to the middle ages and is built around physical location and arbitrary requirements for graduation (that have less to do with learning and more to do with maximizing university revenues and faculty comfort). I know! I know! I am a beneficiary of the system and I gain from the low teaching loads and a tenure system that is indefensible. With four children, I am also a consumer of the same system and I am flabbergasted at how little accountability is built into it. How many classes have you taken (or your children taken) where you should have received your money back because of the quality of the learning experience? How often have you been able to get your money back?

For hundreds of years, we (as consumers) have had no choice. Universities have operated with little competition and substantial collusion. There is no other way that you can explain how little variation there is in tuition fees across US universities and the rise in these fees over time. Outside the US, the fees may be subsidized by governments, but the quality of the learning experience is often worse, with the rationale being that if you paid little or nothing for your education, you should eat whatever crumbs fall of the table in you direction. But I think that the game is changing, as technology increasingly undercuts the barriers to entry to this business. I am not just talking about online universities (which, for the most part, have gone for the low hanging fruit) or the experiments in online learning from MIT, Stanford and other universities. These are evolutionary changes that build on the university system and don't challenge it. I am talking about a whole group of young companies that have made their presence felt by offering new tools for delivering class content and learning. I am convinced that the education market is going to be upended in the next decade and that the new model is going to do to universities what Amazon has done to brick and mortar retailers.

To back up my point, I am running an experiment this semester with the classes that I am teaching at the Stern School of Business: Corporate Finance, a first-year MBA class, and Valuation, an elective. I have taught these classes for more than 25 years now and have tried to make the material and the lectures available to the rest of the world, but I have never formally tracked those taking these classes online. In fact, if you were not an MBA student in the class, taking the class online would have required you to forage through my website for materials and keep track of what's going on. And I would have no idea that you even were taking the class... So, I want to change that..

Last semester, I used a company called Coursekit to package and organize my class and was impressed with their clean look and responsiveness to my requests. This semester, which starts in a few days, I have created a coursekit page for each class that is focused on just online students. I will use this page to deliver content (lecture notes, handouts and assignments that those who are in my physical class get), webcasts of lectures (though not in real time, but the links should show up about an hour after the actual class ends ) and even the exams (you can take them and grade them yourself). The site also has a social media component, where you can start or join discussion topics, which I hope will provide the element of interaction that is missing when you do an online course. When you do get to the home page for Coursekit, you will notice my mugshot in the entry way. I promise you that I have zero financial interest in the company but I really want to see it succeed, because I think the education business needs to be shaken up.

The first session for both classes is on Monday, January 30. If you want to take these classes online, here is what you need to do:
a. Corporate finance class
What is it? This is my "big picture" class about how financial principles govern how a business should be run. It looks at everything that a business does, through the lens of finance, and classifies them into investment, financing and dividend decisions.
Who can use it? I am biased but I think that everyone can use a corporate finance class: entrepreneurs starting new businesses, managers at established businesses and investors valuing these businesses.
How do you join? Go to the site ( Enter RWHZYG as your code and you can then register for the class. Once you are registered, you will automatically be put into this page, every time you enter the site.

b. Valuation
What is it? This is a valuation class and it is about valuing any type of business: private or public, large or small and across markets. My focus is on providing the tools that will allow you to create your solution to valuation challenges, since new ones keep popping up.
Who can use it? While investors interested in valuing companies may be the obvious target, I teach the class more generally to be useful (I hope) to managers running the businesses and those who are just curious about value.
How do you join? Go to the site ( Enter EH7WZN as your code and you can then register for the class. Once you are registered, you will automatically be put into this page, every time you enter the site.

Just to be clear, my first obligation is to the students in my MBA classes and I will not stint or compromise on that obligation, but I view delivering a great learning experience to those taking the class online as a close second. Note also that you will not get any credit from NYU for taking this class. While I will give you the grading templates to grade your own exams and evaluate your own assignments, I will not be able to give you direct feedback on your work. But then again, the price (at zero) is set right. So, these classes definitely come with a money back guarantee. In fact, the more the merrier... So, pass the message in this post on to any friends who may be interested. See you in cyber space on Monday.


mani said...

Prof Damodaran - been a long time, and hope all's well. Great step in the right direction. The market's moving there as well - see companies such as 2tor, Colloquiy, etc. I'll be curious to see how your experiment goes.


Phil said...

Hi Prof Damodaran

I get blank pages on both those links, whether I'm using Chrome or Firefox. Are the links correct?

Looking forward to the courses!

Francisco Viyuela said...

Great initiative, as always Prof. Damodaran leads the way. Making knowledge and learning tools available to everyone can only help us.

Many thanks for Prof. Damodaran for being committed to changing the education industry.

Phil said...

Seems like the links are working now - I think Coursekit was having issues.

Aswath Damodaran said...

The site got overloaded for a while but it should be up and running again.

Anonymous said...

"For hundreds of years, we (as consumers) have had no choice. Universities have operated with little competition and substantial collusion. There is no other way that you can explain how little variation there is in tuition fees across US universities and the rise in these fees over time." - Rings true. Wish you the very best in your new venture (and as a former student thank you for your website with the recording of the lectures, data spreadhseets and more realword practical assignments and projects etc)

Steve said...

Are are class times in EST?

Aswath Damodaran said...

I don't know whether the times get changed online, based on where you view the site but the corporate finance class is from 10.30-12 EST, Mondays and Wednesdays, and the valuation class is from 1.30-3 EST, Mondays and Wednesdays. The webcasts will be up for viewing about an hour after the class ends.

Anonymous said...

Wow! Thank You!

Akhil Parekh said...

Thanks Professor for setting this up !! I have been reading and learning as much as possible about value investing since last couple of years. I am 100% sure that this class will be very valuable to me. But I read somewhere that the links will be taken off after 1 hour of the class timings? Is it possible for you to keep the link for at least the day of the class. This would help people like me who will be working in offices during class timings. Thanks once again !

Aswath Damodaran said...

The links will show up one hour after the class ends and be accessible for the rest of the semester. They don' t get taken down one hour after the class ends.

Anonymous said...

unfortunately cannot log in back into coursekit with my login/password. (im not using facebook) .. and there is no support page to call/eamil for much for this new thing called coursekit!

Aswath Damodaran said...

The userid is your password, right.. and if the password does not work, it looks like it emails it to you. (That is standard operating procedure with any website....) Does that not work? If it does not, please let me know and I will check to make sure that it does.

Maddie said...

Hi Prof Damodaran,

It is a great initiative from your part to upload your videos. It would be of great help to many students across the world (including me!) to get an insight into Finance.


Senith Mathews said...

Dear Prof,

You were a pioneer in sharing your knowledge with a wide audience. I remember going through your Stern website back during my MBA days in 2003/4/5!! You have just pushed further by making this more organized & accessible and I am sure many many more will benefit from your generosity. So a big thank you from students all over the world!

After two years in management consulting, I started a tutoring service and already send students to your site for data or topic reviews. We will spread this information online through our channels as well.

I haven't signed up for the course yet as I'm traveling. But if there are no discussion forums, or teaching-assistant type support, I will be happy to set up something free for the participants.

Thank you once again!

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Karthik Balisagar said...

Dear Professor,

The link is taking me to a blank page, please let me know if the link is correct. I am using Internet explorer.

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Aswath Damodaran said...

Try again. Link seems to work for me.

Anonymous said...

Prof Damodaran Sir,

Maybe you are aware of this already but I would like to say that you are one of the most talked about professors in my MBA class and I have quite a few friends from other schools who have expressed similar sentiments.Thank you for all the things you do.

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Bri Olewale said...

tried to get on the course for finance but comes up blank maybe because of overload, will try again later

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Corporate finance classes,is the better option for learning business financing tips.So what is the major difference between corporate finance class and valuation class?

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Anonymous said...

Dear Prof. Damodaran,

Im a lecturer in finance (fresh phd) here in the UK. I think your initiative is really (and I mean *really*) fantastic. I am teaching Financial modelling and I will definitely direct my students to some of your classes, but please dont make me look too bad after they compare our classes! :)

Really, again, congratulations for the initiative. This is how I want to be one day.

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