In Chapter 1 of 19 in his 2010 Capture Your Flag interview with host Erik Michielsen, education entrepreneur and Global Campus founder Maurizio de Franciscis shares how his economist training has proven useful starting a company. De Francisicis uses macroeconomics to understand global education supply and demand issues and the associated transaction costs. He highlights a UNESCO report that $200 million in scholarships go unclaimed each year. Identifying the money left on the table and the high transaction costs finding a college education give him cause to create a business that matches talented international high school graduates with top universities and scholarships.
De Franciscis graduated from Universita degli Studi di Roma - La Sapienza - and earned his MBA from INSEAD.
Erik Michielsen: How do you apply your economics education in what you do as an entrepreneur?
Maurizio de Franciscis: I think that the first way I apply it considering what I do with global campus is microeconomics. To me the problem of education looks like a micro economic problem because I see that kids want to study somewhere, a place that is best for them pretty much. And don’t care where it is, in which country.
So it is become from the point of view of the of the buyer, if you want, of education. It’s a global market. And from the point of view of the sellers, they are trying to internationalize but they don’t quite view it as a global market yet. And the mechanisms that enable a global market are not there. And so from my point of view when I looked at the market and said there is a problem here between the kids who want the education and the institutions that offer it, there is no communication. I said okay where is the evidence for this.
And I saw there are about two hundred million dollar of scholarships at the UNESCO tell us are not claimed every year. And that is because people don’t know about these scholarships they may be eligible for. And then there are very high transactions costs because families in emerging countries pay intermediary school agents quite a bit of money and these agents then sell the lead on to universities, increasingly here in the states but even more in Europe for quite a bit of money as well. And so as an economist the first thing you observe is there is money left on the table, the money on scholarships, and there are high transaction costs that is an indicator that the market is inefficient. Even if you didn’t just want to stop at the tuition.