Harvard's Billion-Dollar Machine

4 min read

I’m going to step off script for a moment to share something I found really interesting.

Let’s talk about Harvard. You might think it’s just a university, but zoom out, and you’ll see something very different. Picture this: A mix of a church, a hedge fund, and a luxury daycare. Strange, right? Let me break it down.

The Church: Tax-Free Heaven

Universities like Harvard are tax-exempt. That’s right, no taxes on donations, tuition, room and board, or even their hedge fund profits. It’s like a church, but instead of faith, it runs on prestige and profits. They accumulate cash without sending Uncle Sam a dime.

The Hedge Fund: $50 Billion Strong

Harvard’s endowment is a monster, about $50 billion. And they don’t just sit on that cash; they invest it. Think of it as Harvard’s own hedge fund. They invest in everything from private equity to venture capital, real estate, and more. Last year alone, this endowment made $2 billion. To put that in perspective, Harvard’s hedge fund out-earns Twitter and Snapchat’s total revenue. Yeah, Harvard’s a school, but 80% of their income isn’t even from education.

The Luxury Daycare: $70K a Year

Parents pay upwards of $70,000 a year to send their kids to this ‘daycare’ called Harvard, hoping they’ll come out on the other side ready to conquer the world. It's a high-stakes game of “pay us now, and your kid will have ‘Harvard’ on their resume forever.” and speaking of resumes, a lot of their revenue comes from executive education. Pay up, attend some classes, and you can slap ‘Harvard’ on your LinkedIn.

A Century-Old Money Machine

Harvard’s not just about degrees; it’s a publishing powerhouse too. The Harvard Business Review and their case studies pull in $300 million a year, and they’re selling these case studies like hotcakes to business schools worldwide. Their executive education alone makes $464 million. Not bad for a side hustle, right?

The Secret Sauce: Perpetual Growth

Now, get this: Harvard could theoretically stop charging tuition and still operate, all thanks to their endowment. They only tap 5% of it annually, ensuring the endowment grows and lasts forever. Even when the market tanks, Harvard’s hedge fund barely flinches, down just 1.8% last year, while everyone else was bleeding.

The Circle of Influence

Here’s where it gets wild. Harvard’s deep ties to the world of hedge funds and private equity mean it’s a self-perpetuating cycle of power and money. A huge chunk of hedge fund managers? You guessed it, Harvard grads. It’s almost like a closed loop where Harvard educates the elite, and the elite funnel back billions to keep Harvard on top.

Here is a breakdown:

Conclusion: A Business in Disguise

Harvard is more than a school. It’s a $5.8 billion a year business with a hundred-year head start, tax-free status, and a brand that’s untouchable. They’ve cracked the code on revenue, and while we think of them as an academic institution, Harvard’s really a hedge fund disguised as a university, wrapped in prestige.

In the world of business, it doesn’t get better than Harvard.