The Economics of Education
I've been studying the economics of information for the past four years, after a eureka moment that had me asking questions about the nature of money and social media incentives.
This has manifested in several ways for me. I'm building PreloVC and Score My Deck, which is looking at the economics of information via the lens of startup investing. When you understand what investors are looking for and how they filter information, there's an opportunity to make better investments.
I've also been creating content, because that's one of the other keys I realized four years ago. Putting my ideas online is a positive sum action that can lead to connections, opportunities, and serendipity.
And I'm creating Build In Public University, because the education system completely fucked me over for $150K in student loans, so I'm going to show them why their system is broken, build a better one, and simply outcompete all of the predatory student lending organizations out there (there are a lot of them, because it's a vulnerable market).
Here's something that I finally realized, about 35 years into my life: the economy works fine for you if you take the time to understand it. If you don't, it chews you up and spits you out.
That's because it's all designed incorrectly. Scarce systems have been created and optimized, which ends up optimizing for money instead of people. That's what led to my creation of the concept of "abundant systems".
That's why I've spent so much time optimizing the economics of Build In Public University. I wanted to ensure that I was able to create an abundant system, and I've developed a model that this works with.
When I look at money, I look at it this way: who can deploy that money more efficiently for the goal of the person with that money?
So when I set a tuition price of $10K for the first iteration, I did so because that's the number I believe I need to have access to in order to deploy the resources as efficiently as possible. That way there's enough money in the ecosystem I can build the relationships I need in order to offer services at a discounted rate from the public. And it's in line with the cost of a year at a local community college, so that's a good price anchor.
That's something I want to offer the professors of the university: a guaranteed audience, a payday, and super high quality feedback on the course content when they want to launch a new course. It can be an early access type of arrangement billed at a lower rate against the money paid in as tuition, leading to better feedback for the professor because it's a guaranteed class of people focused on their internal learning process while taking the class. This creates an introspective student that is also ideally primed to learn and take action on the knowledge shared. Ideally, this leads to a success case for the professor, and increased social proof. The success story is shared by the university. That means each success is a "win-win-win", as discussed by DefenderOfBasic.
Institutions, Trust, and Money
Stored money is a form of trust. When you pay money to a business, you trust you are going to get what you were promised. Companies that don't deliver, don't last long. Institutions are likewise a store of trust.
But when we are promised one thing by the institutions we trust and delivered something else entirely?
Trust breaks down. Institutions crumble and need to be replaced. Nature abhors a vacuum, and it's important to store the trust of society somewhere. Trusted information doesn't need to be verified, but it can be.
That's why Build In Public University is transparent with everything I'm building with it. I want that information to be public and verifiable. I want to create a trusted institution and that starts with transparency. I need to undo the lost trust in the concept of a university.
The BIPU Model
The baseline model is structured as follows: 50% of tuition goes to the professor whose signup link is used. 10% goes to the university for overhead costs. And 40% is left for the student to deploy as educational capital. This can be used on things like courses, workshops, and even tools. By spending this money within the economy of the university, you'll be able to get a better learning experience and at a lower cost, because we've optimized a lot of the highest costs out (marketing, discovery, trust-building).
By setting aside this money for the professor/creator, they can do 1 of 2 things: pull it out to use for living/business expenses or spend it on work within the university environment. And this is how students will be able to evaluate their skills.
So the incentives of the university are to have as many students sign up through the professor's link as possible, because the more that stays in the economy, the better. That means we want to more than cover the expenses of the professor, because when they don't need to take any out, they'll be able to keep it within the university. That's where I believe student work will get funded.
The target situation is to have professors put out a problem statement, and a minimum bounty. Hopefully, we'll have multiple students or groups of students working on solutions together, which, if they hit the minimum requirements, will be awarded the minimum amount. But the goal is to exceed the expectations as much as possible, hoping that the professor will allocate more resources to the student doing the work, or potentially even more of an ongoing working relationship.
I'm optimizing for as many transactions to happen within the university economy as possible, because that's where I can prove out the models I've created around the economics of information. And I'm comfortable doing so, because I'm starting from this base assumption:
The people who join Build In Public University want to be more highly valued by the world.
This might be money-wise, this might be influence-wise, this might be something else. But they want to increase their value.
As such, there will be close contact with each student, as long as the student needs it. I'm offering unlimited support, because my goal is to create an institution that helps students create financial independence. If they continue to need tons and tons of support, I'm not achieving the goal I've set out to do. So I'm willing to bet as much of my time as I need to. All students will be given access to my calendar, and will be able to bring me in to consult on anything they'd like.
In addition, this understanding of the student will come down to their specific desired outcomes. The university can help with the work of building trusted networks and distributing knowledge of who is undervalued by the economy. Lots of companies will be looking to scoop up underpriced talent, which is fine, as long as you maintain the power to make changes if/when they don't value you as much.
It's my personal belief that the concept of a "job" is now in the past, and the future is a bunch of independent people working on what they want with who they want, and living the life they want to live, but that's also not the current reality. So I'm happy to help people find jobs that can fulfill them with the stability and structure they need.
One key thing to remember: your economic value is determined by two things: what you can do, and who knows what you can do.
Build In Public University is designed around the idea that you can focus on what you can do and how well you can do it, and we'll help document and distribute that information to the people you want to see it.
And the economic model was designed to support that, with the final piece of the puzzle being my venture studio, Idea Nexus Ventures. Eventually, the goal is to have the university invest in the ideas of students more formally (if that aligns with the goals of the students), leading to a self-supporting sustainable system that lives as long as it continues to provide value for everyone involved.
And since it's being designed to do so, I feel confident saying that it will.
Think you might be a Hitchhiker at heart? Learn more about the culture we are cultivating here. My calendar is available there if you think you might be interested.
