Copied the German research university model in 1869. Built prestige through exclusivity and invented the case study method. Created an elite network that became more valuable than the education itself.
What Changed
Faculty captured the institution through tenure and hiring power, shifting left from 10:1 Democrat ratio in the 1990s to zero conservatives in some departments. The endowment became a $56B hedge fund, making the university structurally dependent on returns and donors. When President Gay defended students blaming Israel for October 7th attacks, mega-donors revolted.
Where it Landed
President resigned after six months, shortest tenure in 388 years. Trump administration froze $2.2B in grants. Harvard sued and won in court, but applications dropped 5%. The velvet rope is fraying.
The Principles
1.
Employee capture kills institutions. When faculty gain unchecked power through tenure and self-selection, they optimize for themselves, not customers or mission.
2.
Customer concentration is fatal. Structural dependence on government grants and mega-donor money means you serve their agenda, not your stated purpose.
3.
Exclusivity as product has limits. When the network matters more than education, you're vulnerable the moment the network's reputation cracks.
Builder's Takeaway
If you're running an institution, watch for:
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Employees who can't be fired gaining veto power over leadership
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Revenue concentration making you captive to one funder's politics
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Brand value built on scarcity alone, not actual product quality
