Live from Milken: One-on-One with Bill Ackman

Key Moments

0:00 - Intro

1:04 - Federal Funding as a Lever of Influence

8:07 - Board Insulation at Harvard

13:08 - Limiting Class Size

14:25 - Fairness in Admissions

18:27 - Where We Go From Here

Transcript

Jeff Selingo

It's Jeff here. We have two special episodes of Future U. from the Milken Global Institute. This week, Milken is an annual gathering of CEOs, high profile investors, political leaders, the Hollywood elite, and believe it or not, among that group, higher education leaders. This year I moderated both a one on one with the investor and Harvard alum and critic Bill Ackman, as well as a panel discussion with the presidents of Dartmouth College, Stanford University, UC San Diego, Yeshiva University, and the CEO of ETS, the education testing service. First up is my conversation with Ackman. Thank you to the Milken Global Institute for sharing this audio with us. To watch these sessions or any of the sessions from the meeting, go to milkeninstitute.org.

Jeff Selingo

So did you catch any of that conversation, Bill?

Bill Ackman

I caught the last five minutes.

Jeff Selingo

So you wrote in January 2024 on X that DEI was a powerful movement that has not only pervaded Harvard, but the education system at large. Since then, we've seen rollbacks of DEI efforts at universities across the country, some in response to what states are doing, some in response to what the Trump administration is doing. Has it been enough in your mind?

Bill Ackman

Look, just to back up, I'm in favor of diversity, I'm in favor of equity, that is fairness, what I think of as equality of opportunity, and I'm in favor of an inclusive environment. But what the DDI ideology became, DEI ideology became was fundamentally, I believed, illegal and racist in various elements. And I think the result has been, I'd say, a reaction at a state and federal and corporate level.

Jeff Selingo

And so you don't think the universities are necessarily doing enough on their own so far?

Bill Ackman

It depends on the university.

Jeff Selingo

Okay. How about Harvard in particular?

Bill Ackman

I think there's still a problem. Yeah, lots of problems.

Jeff Selingo

We've seen Harvard and other elite universities in the news over the last couple of weeks. Part of the pressure campaign from the Trump administration has been to try to strip, you know, billions of dollars in research. And then last week, you know, the nonprofit status of Harvard, you know, these.

Bill Ackman

Are obviously, and yesterday, no future and no future funding.

Jeff Selingo

Right.

Bill Ackman

Don't even apply.

Jeff Selingo

These are huge levers. But you, the presidents were just talking, they're kind of unrelated in some ways to what is actually happening on the campuses. Right. These are obviously levers the federal government has.

Bill Ackman

I think they're, I think they're directly related.

Jeff Selingo

Talk about how they're directly related.

Bill Ackman

Sure. So imagine you're a, you live in, you're a plumber that lives in Mississippi and a portion of your Tax dollars are going to fund, you know, Harvard when, you know, I view federal funding of a private university is not a right for Harvard to receive it, it's a privilege. And Harvard effectively is a fiduciary for the taxpayer dollar. And so when Harvard wastes massive amounts of money on administrative bloat, if you talk to any member of the faculty, they'll tell you, you know, the nightmares they have to deal with, dealing with bureaucracy. You look at the compound annual growth rate in the FTEs and administration versus faculty. The faculty growth at Harvard has been nominal, but the administrative growth at Harvard has been enormous. On that issue alone, I would question federal funding. Why should the federal government be allowing their dollars to be wasted? And then you go through all the anti Semitism, pro Hamas protests, an environment where students can't learn, a lack of enforcement of their codes of conduct, the DEI and other sort of issues, the lack of free speech on campus for the nominal top university or one of the top universities in the country to be ranked last by FIRE's Free Speech Assessment each year is a profound embarrassment. Why should taxpayers around the country be funding a private university.

Jeff Selingo

Even though they're funding, and if you've obviously seen the Harvard website in the last couple of weeks where they kind of redesigned the whole thing, talked about their impact on health and advancement in the world. Right.

Bill Ackman

Harvard's not making the impact, the impact is coming from individual researchers, brilliant scientists who are doing great work, who would be delighted to do their work elsewhere. Right. And if Harvard takes away science funding. I'm sorry, if the federal government takes away science funding at Harvard, you think.

Jeff Selingo

They''ll just move somewhere else and they.

Bill Ackman

They'll go to Vanderbilt, they'll go to Duke, they'll go to Dartmouth, they'll go elsewhere. And Harvard is a bunch of old buildings, some nice real estate, and, you know, great faculty and students, and as if the faculty are portable, the students don't have to apply, and it's a bunch of old buildings.

Jeff Selingo

Okay, let's talk about the board. The board at Harvard, which you've been a critic of. Governing boards, though, at colleges and universities, probably. There's many people in this room who sit on their governing boards of their universities. They're kind of balancing many constituencies, including alumni. Shouldn't they have the final say over how a university is run?

Bill Ackman

The board has the final say in how the university is running, and the federal government can decide where to put their money. There's no entitlement to funding at Harvard. I mean, it's very disingenuous for Harvard to put up a website and saying you're funding the government's funding cures for cancer when a very high percentage of the dollar is going to cover wasteful overhead and going to cover degree programs that are advancing ideologies that are anti American. Should the federal government fund a private university that is teaching students to be anti capitalist, anti the core sort of principles of America? Harvard can do that as a private university, but should federal dollars. Money is fungible. The notion is the federal government money is only going to fund breakthrough research. It's just false.

Jeff Selingo

But don't you, I mean, first of all, about a third of Harvard graduates every year go into finance. Do you really think they're, they're teaching them to be anti capitalist?

Bill Ackman

I'm not worried about the, well, let's put it this way. They're not in the Middle Eastern studies department, they're not in the social studies department, they're not in the gender studies department, they're not into the history department.

Jeff Selingo

But part of the problem here is that some of these issues are focused in certain departments, not the entire campus. And again, the federal government is pulling these levers that are affecting scientists. And if you talk to any of these scientists, they're like, we have nothing to do with this. And now suddenly my funding is gone.

Bill Ackman

They do have something to do with it.

Jeff Selingo

And you think they could pressure the university?

Bill Ackman

Absolutely. Okay. What's happening now is the people that caused the problem are causing harm to the people that didn't cause the problem. Now, I would argue the faculty should be responsible for itself. And a lot of scientists said, look, I'm just going to focus on my research, I'm going to let the university do its thing and I'm just going to stay focused. And when you're a member of an institution, you're a member of a faculty body and there's a subset of the faculty body which might only be 10% of the faculty that's taking the university down. You should do something about it.

Jeff Selingo

How about alumni then? And the board? Right. What happens the next time an alum, you know, you had very powerful arguments to the board during the crisis that Harvard's faced over the last couple of years. What happens the next time alumni say, well, we want this to change or that to change? How should boards respond? Whether it's the faculty, whether it's the students, whether it's the alumni. Who, how does, how does, how should a board govern a university today?

Bill Ackman

It should do the right thing without regard to any of those constituents.

Jeff Selingo

Okay.

Bill Ackman

I did not want, you know, the piece.

Jeff Selingo

Do you think they listened to you?

Bill Ackman

The piece I wrote in January of 2024 was viewed 46 million times. It had like 300,000 comments or something like this. It was, you know, 5,000 word thing. I just got inspired and I sent it in and I can write it because of what I learned at Harvard. So it's a very important kind of institution. But the reason the board should do the right thing, they should listen to ideas from everyone, but they should do the right thing as fiduciaries for the university. The problem with the governance structure of Harvard is you have a dozen people that it's a self selecting board unlike every other corporation, at least public corporations in America. There's no mechanism to run a proxy contest and replace the board. And what happens when you have a board that can self appoint itself? It becomes insular. And with a $53 billion endowment, they think, okay, we can just do whatever is on our mind, whatever politics we want to pursue, whatever ideologies we want to. We're indifferent. And the reality of Harvard is it's in a financial crisis right now. It may not yet know it, but it is. I talked about this yesterday on CNBC. Their endowment is highly illiquid, poorly invested. It's not worth when they're going to sell a piece of their private equity funds, they'll get a meaningful discount to where they carry those assets. The result should be a mark to market of that endowment. It's called a $53 billion endowment. It's probably a $40 billion endowment. A true where they might be able to liquidate these assets. Harvard has $8 billion of debt and they're funding their operating expenses by issuing debt every six months. It seems that's not a recipe for survival. Now they've lost all future grants, their tax exemptions at risk. It's all self induced gross mismanagement. And I think that the administration is doing precisely the right thing. Now, was the President in the second letter to Harvard overreaching in his ask? Yes. When was the last time President Trump was not overreaching in an ask? Okay, that's how he, you know, runs. Okay, that's where he runs. But what does the President want to do? He wants to effectuate change. He wants to get to a negotiated outcome that's in the best interests of, you know, the country.

Jeff Selingo

And do you think Harvard fighting back is not necessarily in the best interest? In their best interest?

Bill Ackman

It's a complete disaster. It's like the federal government. Imagine it's like Bill Gates fighting the government in the way he did years ago. And Microsoft was heading at a very bad place. The right thing to do when your principal regulator shows up as a company or when your principal funder shows up and raises a series of legitimate issues that the students, the faculty and the alums and the public are aware of is you say, you're right. We need to fix administrative bloat and inefficiency. We need to zero base budget Harvard so we don't waste a dollar of federal money. We need to create viewpoint diversity at Harvard because you can't provide a proper education unless you expose students to diverse views. We're going to start recruiting, you know, we're not going to have a social studies department that's entirely Marxist. We're actually going to have some other thinkers there. We're not going to let the Economics department become a Marxist enclave at Harvard. Marx was a brilliant guy. He wrote a lot of good books. Let's hear what he has to say. Let's compare those ideas to other important thinkers. Right. That's not happening. Let's create an environment in which students don't have to self censor themselves in the classroom. When faculty only feel comfortable, as they tell me, speaking behind closed doors, when appointments are based on meritocracy and not based on a sort of intersectionality pyramid. Right. That's not how to build. That's not how to create excellence.

Jeff Selingo

So if any. You mentioned Bill Gates and Microsoft. If any company had the litany of problems you just laid out, the board or an activist investor would come in.

Bill Ackman

Yes.

Jeff Selingo

Not happening at a place like Harvard or any other college or university, because most of the boards.

Bill Ackman

It's happening. I'm the activist.

Jeff Selingo

Okay. Would you encourage other alums to do the same thing at their institution?

Bill Ackman

They are. They just have fewer followers.

Jeff Selingo

We mentioned on the way up, you mentioned you've written about admissions. I've written a couple of books about admissions. You wrote Admissions way back in 1988 as your senior thesis at Harvard, which.

Bill Ackman

By the way, has been very carefully reviewed for plagiarism. And I'm very pleased to say that all the footnotes were spot on.

Jeff Selingo

Well, that was good that you learned that.

Bill Ackman

Thank God.

Jeff Selingo

Again, learned that as an undergraduate at Harvard, you wrote about how admissions quotas to limit Jewish student population in the 1920s echoed what some saw as the unfair treatment of Asian Americans in the 1980s. And this idea of fairness in admissions. Right. This is like central to the stuff I've written about as well. It's just really hard at these elite colleges where you are inundated with applications from all over the world and you only have so many spots. In fact, the same number of spots that they had when you went to Harvard.

Bill Ackman

Let's pause there. Okay. You have an institution whose budget has grown enormously since I graduated. Same size, okay, 37 years ago, supposed to be a great institution. Give me an example of another company or institution of any kind that's a great institution that has not grown to meet demand in 40 years, longer than 40 years. The class of 1600 has been the class of 1600 forever. Okay? But the other thing that's happened, this is a fundamentally American institution that's up until recently, almost entirely been supported by American federal government and American sort of donors. Yet the percentage of foreign students in the class has grown enormously. The population of our country has grown enormously. So that 1600, the numerator, has been reduced in terms of the number of Americans being served, and the denominator in terms of our population has grown. So Harvard, in terms of meeting its mission of educating the future leaders of our country, is failing just arithmetically.

Jeff Selingo

And so do you think it should expand?

Bill Ackman 

A crisis is a terrible thing to waste. And I have to put quotes because these are not my words. But it's a very important point, and Harvard needs to be fixed before it can grow.

Jeff Selingo

Okay. But going back to the fairness issue, not only has it remained the same size, more applications than ever before, by.

Bill Ackman

The way, here's another problem. The alums, and this is a discredit to the alumni, love the idea. And on the board every year, they're so proud to talk about how the admission rate, the percentage of people who applied this year, is the lowest ever. They're very proud of that. That's a disaster.

Jeff Selingo

Well, the other thing they're very proud of is that Harvard, what that means.

Bill Ackman

Is they're not fulfilling the demand for their product, okay? They're not providing opportunity to a growing number of people. So you have this incredibly wealthy institution with a massive endowment now levering up to meet operating expenses, losing its funding, and it's not delivering what it was set up to do by the original founders of the institution. But why should this entity, which is failing, be subsidized by taxpayers? It makes no sense.

Jeff Selingo

But let's go back to fairness for a second, because another couple of those spots, more than a couple spots. Many of those spots, according to research, are reserved for alumni, children of alumni, grandchildren of alumni, legacies, as well as athletes, most of whom come from high income families. Do you think things like that preferences for both athletes and legacy should be eliminated?

Bill Ackman

They should probably eliminate preferences for alums. Absolutely. And I think that admissions. There's too much again, this sort of. I think the only important criteria that should be considered other than, you know, performance in terms of educational achievement, leadership skills. You know, there are certain, obviously qualitative factors are important and, and sort of sorting candidates. The only adjustments that should be made in my view should be based on the socioeconomic. Like if you come from a poor and disadvantaged background and you still do well, that person should get an edge because succeeding. If your parents are partners at a top law firm and you had a $750 an hour SAT tutor and there is such a thing, believe it or not, you know,

Jeff Selingo

They actually even make. more, by the way.

Bill Ackman

Maybe they. Okay, inflation, the, you know, that student going to Scarsdale High School versus someone at a school that never sent anyone to a lead university that's from a single parent family that, you know, mom is a housekeeper. Okay. I would meaningfully tip that person, that student, young person coming from that kind of background. But to me, you shouldn't tip for any other reason. Okay, right. It doesn't, you know, if you're so.

Jeff Selingo

Even if you're a person of. Even if they can't feel the baseball.

Bill Ackman

If you're a person of color and your father runs a very successful private equity firm, should there be a tip because of your skin color? No.

Jeff Selingo

Okay, so no tips for alums and no tips for athletes.

Bill Ackman

I think first of all, I got more out of rowing for Harvard in four years than I arguably. So look, I'm a big believer that athletes can. There are a lot of skills you learn that help you in life. And again, if the institution is about creating the leaders of the future, I do think athletic talent matters. And also the spirit of the institution matters. And having teams that people get excited about help bring the institution together. So look, I believe in an admission process that is not entirely an SAT score and a grade point average, those are relevant measures. But there are other measures of success, of grit, of your ability to succeed. But the fact that your parents paid for you to be in Sub-Saharan Africa, you know, at some thing for the summer so you could write an essay on it, I mean, that's become, it's a gimmick. The consultants that kind of shape the people that apply, I think, you know, that process has kind of lost its way.

Jeff Selingo

And you would hire people if they ended up not going to Harvard and they went to another institution as a result, .

Bill Ackman

You still hire them 100%. We hire based on personal qualities, capability and what someone's achieved in their life, not based on the brand name.

Jeff Selingo

Okay. Are you still hiring people from Harvard?

Bill Ackman

We've never hired someone from Harvard actually.

Jeff Selingo

We have two minutes left. We talked with the previous panel. Higher ed has been kind of a crown jewel of American ingenuity and the economy for since World War II. Where does it go from here? What do you think? What do you think higher ed looks like in the next 10 years? What do you want it to look like? And do you think it can still, even without potentially government funding in some areas, researchers going perhaps to other countries to do research, fewer international students here, whatever it might come out to be. What does that look like to you?

Bill Ackman

First, I think the higher ed system, particularly at elite colleges, I think is broken. The notion. I'll use my example. I know Harvard chart today it's $82,000 a year to go to Harvard. $330,000 for a college degree. It's absurd.

Jeff Selingo

And you don't think that's worth it at Harvard?

Bill Ackman

No. Absurd. So the only way Harvard has grown is by raising the price of the service it offers. A business that's only grown, raising price that hasn't delivered more service and the quality of the service has gone down, is an institution in need of major change. And you know, I've seen some great examples. You know, we had president of Dartmouth on the panel. I think they're doing a very good job. I've spent recently with. I spent some time touring the Vanderbilt campus and a very talented, thoughtful leader running the campus. I spoke to a bunch of UATX students and I support. You know what Neil and they are kind of doing there. Competition, you know. This is the best time in history to start a university because there are a lot of very unhappy faculty at many different institutions that are tired of the bureaucracy. They're tired of the DEI stuff. They want to focus on teaching and research. They don't like the one. So faculty, as long as you can deliver an economic attractive package and a good neighborhood, some nice housing, faculty are very recruitable. The best students will apply to the best kind of programs. And most elite colleges have a bunch of old buildings that have significant amounts of deferred maintenance. You're better off starting with a blank canvas, so to speak.

Jeff Selingo

Bill Ackman. Thank you for joining me today at Milken. Thank you, everybody.