"Your Company Needs a Space Strategy” with Matthew Weinzierl, Senior Associate Dean and Chair of MBA Program at Harvard Business School
Willy Walker: Good afternoon. Welcome to another Walker Webcast. It is my great joy to have my friend Matt Weinzierl join me today to talk about, “Oh, boy, a lot of things,” space, tax policy, running the MBA program at Harvard Business School, and so much more. Matt, let me dive in and do a quick bio on you, and then we'll dive into our discussion.
Matt Weinzierl is senior associate dean and chair of the MBA program at the Harvard Business School, where he is the Joseph and Jacqueline El Bling Professor of Business Administration in Business Government and the International Economy Unit, and a research associate at the National Bureau of Economic Research. His research focuses on the optimal design of economic policy, in particular taxation, with an emphasis on better understanding the philosophical principles underlying policy choices. Recently, he launched a set of research projects focused on the commercialization of the space sector and its economic implications, which are viewable at www.economicsofspace.com. He has served on the Commonwealth of Massachusetts Tax Expenditure Commission, the board of the National Tax Association, and on the editorial boards of the Social Choice and Welfare and the National Tax Journal. Prior to completing his PhD in economics at Harvard University in 2008, Professor Weinzierl served as the staff economist for macroeconomics on the President's Council of Economic Advisers and worked in the New York office of McKinsey and Company.
So, Matt, I have so much to go into here, but I want to roll back and get to it, you spent over half your life at Harvard. Your life started out in Minnesota. You went to Harvard undergrad, and you decided to major in economics. Talk for a moment about the kid from Minnesota getting to Harvard University and what that was like. Because I've heard you talk to the faculty at Harvard, not just at the business school, but at the faculty back over in Cambridge. Where you talk about the sense of what Harvard's all about and how it's got incredible scale and incredible resources. But at the same time, throughout someone's career there, you might have a moment where you don't feel like you belong. President Faust said that to you once and you in one of your speeches. Talk about how you felt you belonged to Harvard the moment you got there from Minnesota.
Matthew Weinzierl: First of all, Willy, thank you so much for that lovely introduction. And it's such a pleasure to be here with you, your viewers, and your listeners and to talk about all the great topics that we love together. Yeah, going back to Minnesota, it's a special question right now because your viewers may not know if they're not Minnesotan, that right now is the Minnesota State Fair, which is the second largest state fair in the country. And I'm missing it this year because we started a bit early here at HBS. So, it's a particularly bittersweet moment to talk about my home state. But yes, I'm a proud son of Minnesota. I grew up there my whole life in Plymouth, Minnesota, went to a wonderful public school system, Wayzatapublic schools, and was, from an early age, excited, driven somehow by intellectual pursuits and by the search for truth and knowledge. Early on, I got really excited about what college could be. And my parents sometimes make fun of me that in seventh grade, I sent away for college catalogs. Because I was thinking about this so early, so that's the deep backstory you can always think of.
Willy Walker: Let me jump in there Matt because it's so interesting. I have all these young men and women who come to me and ask me about, I think I might want to go to business school. One of the greatest pieces of advice I ever got as I thought about going to business school was Donald Brown, who was, I guess, an associate professor. He was a visiting professor at HBS who counseled me on looking at HBS. He said, “Get the HBS application and read it, and it will tell you what they're looking for in their students.” And of all the advice I got as it relates to applying to business school, reading the HBS app, reading the Wharton app, and understanding what they were looking for in their students was super helpful to how I lived my life and studied my life over those three years between undergrad and graduate school. And it's really funny that you wrote away applications when you were a seventh grade to figure out where you wanted to go to college.
Matthew Weinzierl: Now, you're still right. And I'm really glad you tell people that really because and that you got that advice. We do actually put a lot of thought into what those applications ask for in the signals they send to people because it is a two-sided matching. Obviously, these schools are hard to get into, and there are a lot more people who would love to come than we can let in. But also, it should be a good match. You should be at a school that really fits with your goals. And I'm glad to hear that.
Going back to the question you asked about, have I ever felt like maybe I didn't belong at Harvard in the story that you referred to. That was a really important time. And I do tend to share this with my students. I came out here for undergrad and majored in economics. I was pretty sure I wanted to be an economics professor. But as I was going through undergrad, I was advised if there's something else, I wanted to try to give that a shot before grad school. So that's when I went to McKinsey, which you briefly mentioned in the bio, and it was an amazing experience, but I wanted to come back and feed that need I had to study big questions that were gnawing with some somewhere deep in there. And so I remember at the first meeting of all the graduate students, the first day of grad school, the president of the university, Drew Faust at the time, was up at the big lectern in the big lecture hall. And she said to all of us, “There will come a time during grad school when you don't think you belong here, when you don't actually think you can even make it. And you'll be tempted to give up and to drop out, basically.” And I just want you to know when the time comes that we have this conversation that we're here to help you push through and make the most of this opportunity. And I think most of the people sitting in that room don't expect that moment to come. They've been lucky enough to get into the school, and they think they're here to push forward. But I remember two years in, I had exactly that moment. I was really struggling with a couple of the classes I was in, and I thought, “Gee, maybe this is not the right path,” even though I'd been on it at that point for six or seven years. But I remembered that speech.
Willy Walker: How about when you met with the chair of the department that you were in the economics department when you became an associate professor, and he said to you, “Hey, Matt, there are a bunch of really smart people here. You might not be a nobody in economics at Harvard. You might want to think about doing something else.” How'd that one go over? And by the way, Matt, before you answer that, an interesting thing. I don't know whether you have ever heard of it, but Jeff Bezos had the exact same conversation with his advisor at Princeton. And in that moment, pivoted. I want to say that he was either studying economics or math. And his advisor said to him, “Jeff, you're a smart dude, but you're never going to be the smartest of the smart.” And he pivoted, went to D.E. Shaw, and obviously started Amazon. Maybe if you've taken that professor and gone away from academia, you would have started Amazon.
Matthew Weinzierl: Yeah. Look, it is right. It is true. To your point, it's not as though I haven't run into situations where, in fact, I did need to pivot. Sometimes, you do need to listen to the messages you're getting, and the story that you tell is a funny version of that. I joined HBS. I joined in 2008, I was a few years in, and I spoke to the intellectual leader of our department, who has now passed. But he was an amazing macroeconomist, Julio Rotemberg, and a dear mentor. But he did level with me. He said, “Look, you've chosen a field within economics with a bunch of the highest IQ people in the field, and that's not you.” It was a sobering conversation. But anyway, I tried to find my own niche, given those constraints.
Willy Walker: Talking about that, though, go back to 2018 because I do think I want to take this from you into HBS and the push-pull on innovating versus standing with a standard curriculum if you will. But as I look at 2018 and the two things you wrote about in 2018. One of the papers you wrote was Popular Acceptance of Inequality Due to Innate Brute Luck and Support for Classical Benefit-based Taxation, which was published in 2018, and the other is Space, the Final Economic Frontier. How did you pivot from tax policy and being an economist to focusing on space and the new frontier?
Matthew Weinzierl: Great, well, I appreciate the questions. All such fun things to talk about. So a little backstory: the interest in taxation and in these principles of why we tax and how we tax, which you mentioned at the very beginning. That's part of the first paper you mentioned, which is how we think about inequality. How do people respond to it? What are the philosophical principles informing policy that responds to it? So we can talk a lot more about that if that's of interest. But part of all of that, while I was at HBS, I developed a course for second-year students called The Role of Government in Market Economies, where we talked about all economic policy, including taxation, and confronted these big questions about what we are trying to do with economic policy and society. As I was teaching that course in the mid-2010s, about 2014 and 2015, I wanted to have a case study, your listeners probably know this, you probably know this, but HBS is primarily case method-based pedagogy.
I wanted to write a case study on public-private partnerships. When does the government really collaborate with businesses and the private sector. And just at that moment, SpaceX is starting to land rockets on barges in the ocean. And it occurred to me that I had always thought of space as a purely public sector activity. And lo and behold, here we have this commercial activity happening. And I thought that would be a great case to write for my students. It would be exciting. It's about space, and we could dig into the public-private partnership aspects of it. And once I got started on space, I got hooked because there are fascinating things happening there. Whether you're a businessperson, or an economist, or a member of humanity. And I kept writing about it. And that led to the second paper you talked about.
Willy Walker: So I want to go into space in a moment before we dive down to that. You talked about starting a course. I remember my first year at HBS when we had a course called WoIE, which was about Work in the Information Economy. And it was exactly what needed to be taught in 1993. At the same time, you may know you weren't there at the time, but you may know that WoIE went over was like a brick. It crashed and burned basically about class two. All the first-year MBA students were screaming and yelling about the fact that this was the worst content and the worst courses you could possibly imagine. And WoIE, I believe you may have changed it over the years to kind of rejigger it, but I think what WoIE was not taught the next year to the first year in 1994. And I've heard you talk about the fact that there is a system at HBS that if a junior professor writes a case, that the case is taught for at least two years, that even if the case goes over really poorly, like the entire curriculum of WoIE does, the school still sits behind it because they don't want junior professors to have a case that is just sort of say, “That was awful to get out of it.” It also pushes your faculty to be innovative in teaching the case. If it wasn't taught well in 2023, maybe it needs to be updated for 2024. Let's give it another shot and also push the faculty to teach it. How was it creating a whole new course? That's no minor undertaking. How much work goes into creating a new course at HBS?
Matthew Weinzierl: Great. That's a lovely question. You mentioned a lot of really important things. On a two-year norm thing about cases, I think that the one aspect I would also mention is that the world changes so fast. One thing I've noticed is that we've made various innovations over the past several years, which may be something we'll have time to talk about here. And sometimes, the first run out, there are bugs. Things don't go so well. But also, not only can you fix those going to the second year, but going into the second year trying something often, the ground has shifted a bit underneath. Students are more open to a case that might have been a little ahead of its time, almost in that first run out. And I think that's true of courses and cases. I found building a new course at HBS to be tremendously fun. I think most of us are there as faculty because we are really excited about the topics that we study and teach about, and we think they're important.
Being able to craft your own course from scratch and think about the overarching intellectual framework and what we're trying to teach here. Several years ago, I took over a core set of one of our first-year courses. Not WoIE, but BGIE, the one that you mentioned in your introduction. This is the Business Government & the International Economy, which is a longstanding and very successful course. And I inherited the course and head position of that. One of the first things that struck me was, “I'm responsible for the next few years for what we use these 40 precious hours to teach the thousand HBS MBA students of this class.” What an incredible responsibility and privilege it is to have these 40 hours to teach the stuff that you think is most important about how the world works or how companies work, depending on your course. And it's really a joy to build a course and to teach a course. It's a lot of work because you've got to write new cases. You've got to figure out how they all fit together. You've got to think about the teaching plans. Our students rightfully have very high expectations for the classroom. And so you're very nervous the first time you go out, whether it's going to work or not. But I will say that when I built the courses that I teach, whether it's the role of government or now a course on space that I've taught for the past few years. Those I teach in the second year, which is the elective part of the curriculum for our non-HBS viewers. Where the first year is that required curriculum where I think that WoIE was taught, the stakes of building a new course for that, are all the higher because it's all thousand students, not just those who've chosen to come in. And so that is a bit of a difference in those two.
Willy Walker: I think it's interesting talking about the 40 hours you have, but in your commencement address last spring, you talked about the 638 days that the class of 2024 had at HBS. One of the things that I thought was interesting was, if you will, the responsibility you put on the students in the sense that you hearken back… I went and listened to what you said to them when they first started HBS in 2022. You basically sat there in Klarman and said to them, “There is a responsibility for having the seat that you sit in, and the next 638 days are going to give you an opportunity. But with that opportunity also comes a responsibility.” Talk about that, Matt, because I think it's a somewhat different tone. When I was there, there was this like, your privileged. Congratulations on getting into this place. And we heard Michael Dell speak on the second day we were there, and I was like, “Wow, this is pretty cool. I get to see these people, isn't this a great privilege?” But there wasn't that give or take related to having a responsibility to make a difference in the world.
Matthew Weinzierl: Yeah. I'm really glad to talk about that, Willy. It's one of the things that we really view as most important, and I've been lucky. This is my third year overseeing the MBA program, and the two years before that, I oversaw the first year. My highest priority at some level has been trying to instill that idea in our students. We have a phrase I'll mention in a second, maybe the key phrase that we try to leave our students with. But first, I'll just share for a second one thing that we just did. So, we just welcomed the students to campus last week for this year. Very exciting. And gave some of the speeches you were talking about.
Willy Walker: Did you use the theme line with the class?
Matthew Weinzierl: Very similar.
Willy Walker: I hope so.
Matthew Weinzierl: Part of it also is creating the right expectations. I use many of the same words and phrases as well, even on what we call admitted students weekend. For the students who've gotten in but haven't yet decided whether to come, I want to be very clear, this is what this place is all about. And if that doesn't match, going back to our earlier conversation, what you want out of business school, that's okay. There are other business schools. There are other opportunities for you. This is a place where we take these things very seriously. I'll say more about that in a second. But I want to mention that last week, when we were welcoming students, Jana Kierstead, who is my partner in all things MBA on the staff side, was giving her introductory remarks to the students, and she's just wonderful in so many ways. And she said this quite a poignant thing. She said, “we are thrilled you're here. Every single one of you belongs here. But I also want you to know that there were 2,000 or 3,000 other candidates who were equally qualified and would love to be here but couldn't be, so make the most of this time you have. Don't squander any of this opportunity.” I think that it really makes you sit up straighter, I think, and really value the seat that you've got at our school.
So, anyways, the phrase I was going to mention that we've been really trying to elevate is the idea that the way we turn the potential of these amazing students who come to our school into our mission is to educate leaders who make a difference in the world. The way we cross that bridge is through what we call hard work with humility for humanity. It's hopefully a memorable thing. We put it on banners. We talk about it a lot. Our dean, Srikant Datar, talked about a commencement last year. Sometimes I joke, and maybe your listeners will recognize a little bit, that those are not. If you ask a typical person to describe an HBS MBA graduate, those might not be the first words that would pop into their mind. And that's our job to turn around. That's our job to show, which is not actually true. Amazing students. Amazing alumni that I know- they work hard with humility for humanity. And that's what the school is really all about.
Willy Walker: I find it interesting. I went to the websites of Wharton and Stanford in preparation for this to see what they had out there. Wharton has “Two years of growth, a lifetime of learning.” Stanford has “Change starts here.” And HBS has “We educate leaders who make a difference in the world.” It's interesting. I've always thought that the business school was actually a leadership school, and the fact that it's called the business school is somewhat of a misnomer because it really is focused on training leaders to take leadership roles across industry and society. Someone from my class is the prime minister of Greece right now. And it's interesting that there is such a focus on leadership. Does that impact how you think about the curriculum in the MBA program?
Matthew Weinzierl: Yeah. And it's actually quite an interesting topic for those viewers who are especially interested in this area of education because I think there is even some debate within the school about how much to lean into what you describe. This is really a school of leadership, and business is an important vehicle, but it's not really a business school. Versus others who feel like “Yes, but it's important that we retain the core education and actually lead businesses.” In part, we want to reinforce the idea that business is a force for good in society and that capitalism and markets can, in fact, create tremendous value in themselves, which can be really important ways to make a difference. And I think that's a tension that we balance. But you're absolutely right. When you look at the curriculum, and you look at some of the courses that are the most popular courses and that our alumni tell us are, in fact, the most important courses to them, they are often the leadership courses. When they're students in their mid-twenties, I think it can sometimes feel that they're a bit less practical. I'm studying to be a CEO, but I'm not going to be a CEO, probably for quite a while, if ever. And so, how can I apply this next year when I need to get a job as an associate or whatever. I would like more finance or whatever. But when they come back for their reunions, they say, “Turns out it's all about people. It's all about inspiring people and being a leader in so many different ways. Those are the courses that really stick with me now.” And you're right, that's a big part of education.
Willy Walker: It's really funny you say that. I'm just for a second, going to dive in on two anecdotes from when I was there. One is I went to Bill Bruns, who was my Finance I professor, and we're going through all this highfalutin stuff about accounting. And this was before you had to pass the accounting entrance exam to show that you knew where T accounts were. And I went up to Bill Bruns after my class, and I said to him, “Are we ever going to get the T accounts and like getting into the real brass tacks of accounting?” And Bill looked at me, and he said, “Willy, that's not the pedagogy of the Harvard Business School. In your job, you will hire accountants. You won't be an accountant.” And I looked at him at that time, and to your point, I was 26 years old. First of all, that sounds like the most arrogant thing I have heard in my life. But then, at the same time, you don't go to HBS to “learn accounting.” You go to HBS to learn how accounting plays into being a leader in whatever field you want to be in. The other one was I took a class called Board of Directors. And I thought the Board of Directors was going to be this incredible course about how you've set up great governance. I also thought that the people were going to bring in these incredible luminaries in business. Then, I got the opportunity to meet some of these people. So Jim Robinson, who was the CEO of American Express at the time, came in, and I'm sitting in this class, and he's talking about the board of directors at American Express. And I am sitting there listening to him. And I said, “It might be with great luck, 30 years until any of this stuff he's talking about right now has any implications to me.” I said to myself, “I picked the wrong course here because what I'm learning right now I really am going to have a very long time between now and when I could ever apply it.” Lo and behold, I've sat on a bunch of publicly traded boards a lot longer than before Walker & Dunlop did not become a publicly traded company and actually could pull from it. But it was one of those experiences, Matt, where I said to myself, “Why am I learning this now at 27, that was my second year, rather than something else that is a little more practical, but it does go back to the pedagogy of the school and what the school is trying to teach.
Matthew Weinzierl: Yeah, that's such a great anecdote. I love that story. Both of those stories are also a reaction to arrogance. That's awesome. This is something I've thought a lot about, obviously, I guess, given my position. Look, to be frank, I think it's a challenge to communicate with 20-year-olds, especially those who are really rocketing in their careers. Why should they take two years to come to a program where they're going to be in classes that it's not immediately obvious that it will accelerate the place they are in their career right now. Why does that make sense for them? But actually, I think that there is such deep value there, even in the classes that you were just talking about. And really, I've come down to basically thinking there are three reasons for that. The first is this idea. I'll come back to our dean because he wrote a book several years ago on reinventing the MBA. And one of the things he talked about is higher-order skills. One of the reasons you come to an educational institution like ours or others is to develop not just practical skills and knowledge but these higher-order skills of judgment, listening to other people, and wrestling with ideas that are unfamiliar to you. And that's really hard to get in the everyday scrum of business, especially with such global diversity and diversity of views as we can bring into our classrooms. So, building those higher-order skills, which will pay off throughout your career. I think we all in leadership positions know that. The second is that, as you said, what we try to do is create a curriculum that is relevant in year one, in year ten, in year 20, in year 40. And it's hard to know exactly, especially with the dynamism of the economy, exactly when those different pieces will be relevant. But they're all in there somewhere. You wrestled with these cases in these different courses somewhere. Then, the final thing, and this is something that I think is hard to appreciate until you're a part of the community. Why should we get such incredibly high-potential students? We often say. “We want the world's highest potential young leaders to think of HBS as a default step in their educational journey.” Why? But then you might ask, “Why should we get those wonderful students?” And I think it's because when you bring these people together, magic is created. They lift each other's sights. They start to think, “Wow, what kind of a difference could I make in the world, given all these extraordinary people around me have such high ambitions for themselves.” And that's the thing that happens, I think, in our community. That's really quite exceptional, and it makes you think about the amazing things you can do.
Willy Walker: When you think, I hadn't planned on talking about executive education, but I want to make this conversation not just, if you will, HBS specific, but let's just say I'm a business leader listening to this, and I'm sitting there hearing Matt talk about bringing together exceptional people. He or she thinks they have exceptional people on their team, at their company. You have thousands of mid-career executives come to HBS every year, and you bring them together in a classroom, whether it's in the AMP program for presidents and managers, just pure executive education, or companies that bring teams of people to HBS. What is it that someone could replicate? And I'm not trying to say don't go to an executive program at HBS because, obviously, you want to promote that. But if I'm sitting here saying, “Gosh, this is an interesting conversation about getting great people and exchanging ideas.” How can someone simulate that in their business? Is there something that happens on the HBS campus that someone could sit there and say, “I've listened to this webcast, and I'm going to go take some of the thoughts that Matt talked about what they teach, how they think about teaching the old with the new. And we as a company need to think about continuing to do what we're doing today, but also innovating as we do it.” What would be something that a leader could think about that they could do at their company?
Matthew Weinzierl: That's a really great question. I am glad you brought up Exec Ed, too, because I think when the school tries to pursue its vision when you think about what that vision statement is, educating leaders to make a difference in the world. It doesn't say, educating MBA students who make a difference in the world. I think the impact that HBS has been fortunate to have is through spreading that pedagogy and that learning to tens of thousands of executives who come to campus even for just a couple of days. My neighbor, by chance, went to a session a few years ago, and she came over afterward. She said, “That was the single most impactful three days of my professional life.” It was such a wonderful thing for me to hear. Also, our publications, HBR, and all the cases have a broad reach of the school and a lot of dimensions. It's one of the privileges of working there. But I think within a company, you ask how you could without tapping into the HBS campus. One thing that many of us do as faculty, which I also find really rewarding, is visiting companies, maybe just for half a day, maybe even just for an hour, depending on what works for them, and engaging the company in conversations around some of these pressing issues. And, of course, depending on your firm, you might have different needs, whether it's macroeconomics or leadership or technology and operations, whatever it is. But bringing in faculty from HBS or from a more local school is easier for you and giving your employees a chance to take some of that time to step away a bit and really engage each other on some of these bigger questions and how they think about it. We were joking with our students last week. It is so rare to put your phone down for 80 minutes and just have a great conversation with a group of smart people that's well-structured about a big question or two. And that's what we get to do every day, which is an incredible privilege. But you can do that in fits and starts, even within a company, and still really create a culture. I think of intellectual exchange and problem-solving.
Willy Walker: I think one of the other things people can potentially do, and I just thought of this, was look in the case library about a case that might be relevant to your company or your industry and just do a case study, if you will, on that.
I was with Phil Washington, who's the head of the Denver Airport Authority and runs Denver International Airport. When I was taking TOM (Technology & Operations Management), Kim Clark, who was the dean of the MBA program, was my TOM professor, and he'd done a case on the building of the Denver International Airport and the automated baggage system. The automated baggage system was built between 1993 and 1994 failed when they launched the airport in 1995 and had been scrapped for the last 20 years. And they're right now getting the automated baggage system back up and going at Denver International Airport. And I turned to Phil and said, “Have you ever read the case on the baggage handling system at DIA?” And he's like, “No,” I said, “I'll get you a copy of it so you can sit down with your team and look at how it was actually first imagined and structured. And then now you're bringing it back online.” But how does it all fit into the future of Denver International Airport? He was like, “That would be such a fascinating exercise with my management team to go read that case study.” So I got to go pull it out and ship it over to Phil. I think that would also be a way for companies to sit there and get their teeth into something that's more than just saying, “What should we think about today? But let's take a look at an actual case study that's relevant to our industry.”
Matthew Weinzierl: That's brilliant; I love that idea. We are always looking at HBS faculty for interesting case leads as well. There are countless examples of that where a company or an organization is trying to do something innovative or new, and they're not sure if it's going to work, and they write a case study with a faculty member. It wouldn't have to be an HBS faculty member. Obviously, it could just be internal. But using that as an opportunity yourself to engage with your decision-making and how it's going and then being able to reflect back on that. I think that's an awesome idea. I like that.
Willy Walker: As we're talking about that, actually, the first case we did in that class, which you talked about in your commencement address in May. So I know that you're still teaching it as National Cranberry. One thing that I really wanted to find out was when National Cranberry was written. Do you know when National Cranberry was written?
Matthew Weinzierl: I don't know, I probably should.
Willy Walker: 50 years ago this month. It's birthday is right now. It was published in August of 1974. It's incredible to me that a Case and there are many of them that have been in the core curriculum of HBS for 50 years. And I think it's so interesting, Matt, that you're constantly looking to innovate, and I want to go to space in a moment. But then, at the same time, in the core curriculum, in operations management, there is this one case which I to this day have ingrained to your point in my head as it relates to how mind-spinning it was for me to read that case for the first time and understand what process flow was and what bottlenecks were, all related to National Cranberry. When I heard your speech that you're still teaching it 50 years later, it was really quite something.
Matthew Weinzierl: Oh, you're so right. Like any organization that's had success in delivering value to its customers and to its constituents more broadly, there are parts of HBS that I don't think we'll ever change. It's been over a century now that we have had this first-year curriculum that everyone goes through that establishes the foundations of business, of leadership, of the context in which firms operate. And we think of that. We call it the RC, the required curriculum, as really the heart of the heart of the MBA program. What unites our alumni across generations, and what really prepares them in general with that foundation that they need to be these leaders. And I don't see that changing. And that includes cases like Cranberry because they teach something that is evergreen and just connecting. a couple of our conversations, when I created my course in the elective curriculum, one of the things I did was go back into the library of cases and tried to find a couple of those lost gems that hadn't been taught for a few years, but that I knew would teach something really powerful. There was also an old case written in the late 80s about the Soviet Union. Its struggles for growth and was about to collapse. They didn't know it at the time, but they could foresee it. It hasn’t been taught for a number of years, and now it's the first case I have taught in that course. It has been for a decade because it's just such a powerful case study.
Willy Walker: Let's talk about innovating and going to the future. I heard you on one of your interviews as it relates to your space curriculum, and you were thinking about trying to change building leaders to make a difference in the world, to make a difference in the universe or the galaxy, which I thought was so great. I'm not sure HBS is ready to make the change to that Matt, but good luck with trying to get Dean Srikant Datar to accept that you're going to go to making leaders for the Galaxy.
But talk about that in the sense that you wrote in an HBR article that said, “Every corporation ought to have a space strategy.” And to be honest with you, when I heard that Walker & Dunlop are no Amazon, but at the same time, we're a pretty good-sized publicly traded company, and my board has never talked about our space strategy. We've never talked about how you are going to finance multifamily in outer space. Then, as I sat there and listened to you talk about the downstream impacts. On one of the webcasts, I listened to, the interviewer had gone and pulled up the various components of the S&P 500 and pushed you on how would e-commerce or how would this industry implement a space strategy. How it has to have caught a lot of attention since you started teaching this course. First of all, what students are you getting in that class? Are they former people who worked at Lockheed Martin and have come to HBS for their MBA? Are they astrophysicists from MIT who are cross-registering or are they just some finance dude like me who says, “That sounds pretty interesting.”
Matthew Weinzierl: We first launched the course. This will be our fourth year, and the first year we got it was very experimental. We had maybe 25 students, and I think they were mostly just curious. We had a couple of space people, but there weren't that many space people in the program, actually, people who had worked in space or whatever. The next year, we got 60 students, a much broader sample, and now we're over capacity. So I think I could put 200 people in that room. Therefore, they come from every group you talked about. Part of that is because HBS turns out once you start looking, it actually has quite a heritage in the space sector. We have alumni in lots of positions of authority within space. And if they had done amazing things in the sector. Therefore, there was this potential to make HBS a real hub for the study of the business of space. Now we really are attracting, I think, a lot of students from not just the Lockheeds of the world but SpaceX and Blue Origin and some of the really exciting startups in space as well.
We have a cohort of maybe 15 to 20 people who have been involved in aerospace before they ever came to HBS, and I'm lucky to get most of them in my course. A lot of them are also in our joint engineering MBA program with the School of Engineering, the MSBA program that we have. But then there are some cross-registrants. We love bringing in the MIT Aero Astro people because they are brilliant, and they bring that technical side. Some people from the Kennedy School of government. Because space is inherently also political and geopolitical, so bringing that lens in. And then, yes, that group of people like you. They're not really sure how space might figure into their career or their life, but they're intrigued, and they know that it's one of those things that they might be a little bit ahead of the curve. So they want to get that basic survey course view of what's going on.
Willy Walker: The economics of space. You talk about it being the last frontier. There are a lot of questions/potential criticism as it relates to some of the space exploration going on, particularily if you will, by the space tourism people saying, “We got enough problems on Earth. Let's figure out how we actually house people in safe homes and the changing environment before we figure out how we launch a million people to Mars, as Elon Musk has outlined as his objective in the next 30 years.” How do you deal with that? Shouldn't we be putting time and effort into what we have right in front of us? There was an article this morning, Matt, in the Wall Street Journal about the second fastest growing community in the United States, is this small town in Texas, which has no water and an average temperature of 112 degrees. And it talks through things like, “What's it like to live there.” But people are finding they talked about one couple who'd moved from New Hampshire. And they're like the space we get here, the economics here, the freedom of choice, and all that kind of stuff. It's almost like what you talked about in one of your podcasts: we're going to create these communities up in space where people can go. And if you want to live in a totally socialist community, you can go there, whatever. I think they're actually doing it in Texas, where people can actually go and live the way they want to live. The issue with it is that it is the most inhospitable environment, which is the same as space. And so why not, instead of Bezos and Musk spending billions and billions of dollars to figure out how we do it in outer space, figure out how you do it in this small town in Texas.
Matthew Weinzierl: Yeah, it does sound like Mars the way you describe the weather.
Willy Walker: Yeah, it does very much.
Matthew Weinzierl: It's a really important question because, unfortunately, I think the coverage of Space, so to speak, has focused largely on the joyride part. Or the most speculative part about settling Mars or creating these giant colonies in space. And partly that's because the space nuts, like the people who are really excited about Space, are really excited about that. They always have been since the 60s. You go back to the Apollo era immediately after we started the Apollo program and landed on the moon, there were these visions of colonies on Mars and colonies in space. That's always been a part of the space world. But it misses the big message to everybody else, which is that space is really just another place like Latin America or Europe or anywhere else. It's just another place that happens to have some really remarkable natural resources that we might use for the betterment of all of humanity. Just to be clear about what I mean by natural resources, there are some physical resources in space, like helium three, that actually might be valuable for nuclear fusion. And we'll get there someday when we're mining those. But I actually mean something much more practical, which is the position that your satellites can be in space. And what that can mean for the transmission of data for Earth observation. Whether that's for monitoring climate variables. Whether that's for satellite broadband to connect people, like in rural Texas where they may not have fiber. But they could be connected to the internet just as much as anybody else with Starlink. Whether it's also the microgravity of space and what that might enable in terms of manufacturing pharmaceuticals at lower prices or in ways that we haven't been able to do before. And there are startups doing exactly that. There's a lot of technical stuff in there. The way to think about it is when you're mixing things here on Earth. Gravity is constantly causing them to separate or settle out. Whereas up in space with microgravity, things just kind of mix more naturally. And so you can imagine different manufacturing processes working better up in space. So whether it's data from and through space, or manufacturing in space, there are a ton of things that we can do up in space that will benefit us here on Earth. And that's why I'm actually so excited about it. Of course, I hope someday that we are exploring the cosmos. That would be really exciting and great for us as a species from a philosophical and spiritual perspective, but there are practical benefits as well.
Willy Walker: Do you side with either one? I love hearing you talk about the spiritual side of it. And then also the new frontier. The growth is particularly in the United States; growth is sort of innate in Americans, and we like to grow and have been built into growth, which is good. And the idea of growing in space is great from a humanity standpoint. Do you side with Musk, “I think it'd be great to have a place to send a million people to Mars for the life benefits, etc.,” versus Bezos, “Let's keep the planet Earth. It's the most habitable planet that we know in the galaxy. Let's try to keep it as the place where humans come and actually live. And let's take all the dirty stuff and put it up in space.” When I heard you explain it that way, I thought, Matt that clearly put Blue Origin in a distinct view for me than what Musk and Branson are trying to do on this space exploration side. Do you side on one side or the other?
Matthew Weinzierl: I don't think I do. I don't mean to cop out. I guess I think they're both important. And I think maybe I can explain a little bit why I think that. It's interesting, Bezos, the mission statement. I don't know how many of your viewers followed the space startups, but Bezos’ space company is called Blue Origin, and he founded it about the same time as SpaceX, 25 years ago now. And the original mission and still, at some level, the mission of Blue Origin is millions of people living and working in space. Now, they appended to that over time for the benefit of Earth. And I don't know if that's a response to some of the criticisms that you raised at the start that, like, wait a minute, let's keep the focus on the 99.99% of humans who live here, or whether it is, in fact, a shift in how he views it or exactly what it is. But I think that deep down, Bezos and the people at Blue Origin have always also been fired by this idea that it's not just about what we can do for Earth. It is also about the very long run, this infinite frontier that we can go explore and make anew. And I think it's important to actually have both of those visions because part of what brings talent and capital and energy to the space sector are those more grandiose ideas. That's part of why the two probably wealthiest people on the planet are willing to pour billions and billions of their own money into a sector that I think does have benefits for everybody on the planet. And I wouldn't want to lose the passionate part in exchange for the practical part.
Willy Walker: How big is the space industry today?
Matthew Weinzierl: It's a great question, and there's some debate about it. So, if you read industry reports, it's $400 or $500 billion of revenue a year. Of course, drawing lines for where the space sector ends is the whole ballgame there when you're thinking about that number. And so, depending on how many of those downstream applications you include, the number can get bigger. So, to speak to the ways that you're saying, “Every business should be a space business.” Uber uses satellites like crazy. So, is Uber a space business? Maybe. Maybe not. Those are the questions you have to decide. There is actually official government data on the size of the space economy. There's a branch within the Bureau of Economic Analysis in Commerce that Tina Highfill has been running for the past several years trying to put together official data on the size of the space economy. It's much smaller, so they draw the boundaries much more tightly, and it's more like $120/$130 billion a year.
Willy Walker: And what about the law of space? You mentioned in one of the webcsts I listened to the Moon Accord, and the problem with the Moon Accord was every country in the world that hadn't gone to the moon signed it. And the ones who have didn’t sign it. I want to mine an asteroid. The US has said that if I spend the time and energy to go do it, I actually own it. But that hasn't been accepted as international law. Where does it stand if someone's putting millions of dollars or even billions of dollars into going and trying to either create a hotel in space or mine an asteroid in space, and what are the property rights?
Matthew Weinzierl: And it's a great question. And I should say these are all such awesome questions, and this is why I think it's so great to have one person in each company thinking about these things. Make sure that it doesn't have to be their whole job, a little bit of their job, because you never know as you dig into it where you'll find an idea. Total tangent, but I was reading a case, getting back to reading interesting case studies. I was reading a case study about Walmart. Back in 1984, many of you viewers may know this: Walmart used satellites to create a proprietary private inventory management system that their suppliers had free access to so they could speed up their resupply of stores. 1984, that was amazing foresight. So maybe every company.
Willy Walker: There's one other thing on that market that shocked me. Walmart hit an all-time high last week, and I was listening to CNBC, and they made this stat, which I couldn't believe. Walmart's market cap got to $600 billion, which is an all-time high. And the Walton family still owns 48% of the stock outstanding, 48%. I was stunned that a company that's basically still a family-owned company all these years later with professional management obviously running it incredibly well. But the idea that the family is held on to 48% of the stock of that company I was amazed.
Matthew Weinzierl: That would be fascinating case in its own right. 48%, that's really interesting are held out. Where are we, property rights?
Very brief. And I don't mean to do a book plug here, but I will. I don't think you know about this necessarily, Willy, But we're coming out with a book on Amazon called Space to Grow in February right now, where we talk about all these things. So, property rights in space, the actual governing treaty in space is the 1967 Outer Space Treaty. That's the big international law on space, and it forbids any claim of ownership or sovereignty in space. So, I cannot claim that I own an asteroid or any territory on the moon. One little fun fact: when the US planted its flag on the moon, it was explicitly not claiming any sovereignty or U.S. territory like planting flags used to. It was, in fact, much more of it supposed to be a gesture of global unity in reaching the moon. Anyways, there was a moon treaty that, as you said, some countries tried to pass, which would even limit further economic activity in space, but that didn't make it through. And then, in contrast, in 2015, the US passed its own, as you mentioned, unilateral law, which is part of the Commercial Space Launch Competitiveness Act, told US companies that if you're flying under our flag into space, you can go to an asteroid, mine it, and you can sell what you get from that asteroid as if you know you have a property right over it, basically. And you can't claim sovereignty over the asteroid, but you can mine the resources. So there's a little bit of fuzziness there. Some countries were very unhappy with that, but other countries followed suit. And so we'll see. There are a couple of exciting developments in asteroid mining. Some startups are raising pretty serious money to go get some of these resources. And once they start doing it, we'll see exactly how those laws play out.
Willy Walker: You talk about every company ought to have someone thinking about these issues, at least to think them through and make sure that they're not falling behind the curve. The final place I want to dive into is a little bit of AI because when we were at the Dean's Advisory Council meeting back in May, your team did a fantastic presentation on how HBS is teaching AI. I'd love for you to share a little bit about how HBS thinks about teaching AI. And then what would you say to listeners as it relates to you’ve got people who know OpenAI and Microsoft to this world, a couple of them who were in that room, who are spending massive amounts of money to be a leading edge of the development of artificial intelligence. Then there are the people like Jamie Dimon, who was in the room, who may not be developing AI but are going to be a big bespoke user of AI to make JPMorgan that much more relevant. And then you have people like me in there who don't have the resources to either innovate on AI or make it bespoke to Walker & Dunlop. But I need to be a user of AI, and I need to wait for Microsoft to come out with a tool that I can then pull down to impact the way Walker & Dunlop runs its business on a day-to-day basis. How are you teaching AI, and what would you say to the people listening, as it relates to either getting freaked out that they're not on the bleeding edge of AI or waiting because it's going to come to a theater near you?
Matthew Weinzierl: It's great. And I want to be clear: I'm also not an AI expert. So, I don't want to overstate how much wisdom I can share, but I can tell you what we think about it at HBS.
The first thing two years ago, when I think all of us started really thinking about this carefully, the first thing we did was try to define the principles that would guide the decisions we made about this. And we basically came up with a number, but there are a couple that I think really rose to the top. One is that we really believe HBS students should be leaders in the adept and responsible use of this technology. They're not going to be using it at HBS in the same way that they will use it in their careers because they're in an educational environment. But we want to use this time that they're here to really prepare them to be on the cutting edge. That's why this year we have a new course that's required of all of our first-year students on data science and artificial intelligence for leaders. And really giving them a foundation in what is the technology? How is it developing? How would you use it in your business? What does it mean to use AI to make your businesses operate more efficiently and innovatively? And how can you, after these two years are over, learn how to stay abreast of the cutting edge of technology? That's also part of what you need to learn here. It's not just that we don't want to give people fish; we want to teach them how to fish. And then, in our second year, of course, we have lots of offerings where people can go deeper into particular aspects of those tools. The second thing that I would mention is that we provided GPT4 to all of our first-year students last year, and we're trying to build on that progress this year. It just becomes part of the way that our students think about interacting with the material, even in their curriculum, not just in that course but in all of our courses. We really want AI to elevate. This second principle is to really elevate the HBS education, not undermine it. I think there's been a lot of concern in educational circles about what AI would do, but we feel like it's another accelerator of learning. Now you're able to query the AI about the case study and really push yourself so that our conversations can get all the richer and all the harder in the classroom. I think that's really exciting and probably what it will be for most people in the business world as well.
And then the last thing I'll just mention is we want to show, not just tell. So HBS has always tried to be an example to our students of excellence in operations in all things that we do. And part of that now is digital transformation. One of the big initiatives of our dean when he came in was to full scale digitally transform HBS and how it operates, and also to create this initiative called D^3 that is focused on using AI and technologies to push the research frontier of the school forward, which in some ways is a big part of what we are trying to add to the world. And so exemplifying to students how we do it. Looping them into that as part of it as well.
Willy Walker: Really interesting about you having everyone use GPT4 as they come in. It reminds me of the fall of 1993. Unfortunately for me, 30 years ago, we got our laptops, and we had AOL beta. So, we had the first email system out of AOL installed on our laptops when we arrived on campus in the fall of 1993. And obviously, particularly people who were younger than me and younger than you don't even think about a world without email and the internet. But that was very innovative back then. And being able to communicate on email seamlessly with our classmates and I can't even remember when my parents got email back then, but it wasn't like I was chatting with my parents on email when I first showed up at HBS in 1993. But it's interesting the way that technology has come in and needs to be adopted. And when we started working with it, it was sort of like, “What are we going to do with this stuff?” And like, “How does it happen? I don't know, it was quite something like that.”
Matthew Weinzierl: Totally.
Willy Walker: 30 years.
Matthew Weinzierl: Totally. I think our conversations connect because I think AI and space are actually, in some ways, closely related. Like in both of these sectors, if you want to think about it in economics terms, this amazing shift out in like the supply. Technology has moved so fast, it has lowered costs so much in AI and space of doing activity sometimes, we never even imagined we could do it. And now we've got to get the demand side kicking in. Like basically, people have to figure out how exactly they're going to use these technologies in value-creating ways. I've been working a lot with companies to try to figure that out on the space side. And I think we're trying to figure that out, as most institutions are on the AI side. And I see our students spanning this fascinating spectrum. We've got the power users right who are just deep into it. They can't wait to make the most of it. And then you've got the people who still haven't really dipped their toes very much in except for a couple of fun queries. And then the big group in the middle that knows there's a lot of power there, but they need some help getting up that curve. And that's one of our goals.
Willy Walker: Super neat. Final question, Matt: I know you're an Olaf Stapledon fan and read a lot of his sci-fi novels. Are you reading sci-fi right now? Are you reading something about tax policy, or are you reading a novel and thinking about your next BGIE course?
Matthew Weinzierl: I'm reading a great space classic. It's called The Heavens and the Earth, which is one of the greatest. It's a Pulitzer Prize-winning book about space history by McDougall. It's a tome, so I'm not sure I would necessarily recommend it to your average listener as something to pick up. But I will mention the sci-fi thing that's newest on my agenda. I was listening to a politician being interviewed after the convention, and she was saying that when she was a little girl, her parents with her watched the Star Trek Voyager series, which had the first female captain of a Star Trek ship, and that they did that intentionally with her so that she would get that leadership example. And so I thought, “Well, I have a daughter. I love Star Trek. We should do that, too.” And so I started watching Voyager, very recently again, trying to pick out those best first episodes that I can show my daughter soon.
Willy Walker: Great. I so appreciate you taking the time. What you're doing back in Boston is fantastic. Great having you here. It was great hearing all the innovation as well as holding on to the old as I think about this conversation Matt, for me, “To innovate in my industry, we've always tried to innovate.” And as I hear you talking about a space program or about AI, it's these big issues that we obviously need to talk about in the boardroom. At the same time, there's so much of just focusing on the market opportunity in front of us and executing on it every single day. And it's that push-pull between the innovation side and sticking to what your knitting is and what you're excellent at and continuing to do that. And it feels like that's exactly what HBS does. It keeps that first-year core curriculum of the things that all of us need to learn. And yet, at the same time, in the second year, you had better open your mind and think about where this world is changing so rapidly to be an effective leader. And it's fun to hear you talk about those two sides of the equation, if you will.
Matthew Weinzierl: Thanks, Willy. I really appreciate all the great questions and the conversation. And that's exactly what we're trying to do at HBS. I hope that all of your listeners will find a way to get involved with us and learn along with us.
Willy Walker: Thanks, Matt. Have a great day. Thanks, everyone, for joining us. See yah.
Matthew Weinzierl: Thanks a lot.
Willy Walker: Bye-bye.
