Pilot and Pivot: What Udacity’s Move Means for MOOCs

Sebastion Thrun speaks onstage at TechCrunch Disrupt SF in San Francisco, CA on Monday, September 10, 2012. (Photo by Max Morse/Getty Images)
© 2012 TechCrunch CC BY 2.0

It’s been a month since Sebastian Thrun, cofounder and CEO of Udacity (and the “father” of MOOCs) announced the “great pivot”: his company would henceforth focus on educating a technically competent workforce in partnership with leading corporations.

Thrum’s apparent abandonment of the “Grand Vision”—free, universal access to a university education—sparked wails of protest and disappointment. But now that the dust and hyberbole have settled, we can see Thrum’s decision for what it is: a smart business move.

Udacity is a business after all, which means that its investors expect revenue and profit, at least eventually. The MOOC (Massive Open Online Course) funding frenzy—part of an estimated $1.1 billion in ed-tech venture capital in 2012 alone—was driven by the prospect of a major disruptive innovation in higher education, itself a trillion dollar market. Even if the business model wasn’t obvious, the promise was (and still is). And the fact that some of the most prestigious “disruptees”—including Harvard, MIT, and Stanford—were firmly on board, made the situation even more intriguing. Why should we be surprised—much less discouraged—that Thrun, like many entrepreneurs, experimented, learned from his failures, and is now adapting his model in the hopes of making Udacity profitable and sustainable?

It all comes down to supply and demand. A recent study by the University of Pennsylvania reported that appallingly few students even completed MOOCs: the range was 2-14, percent, with an average of 4 percent. A separate UPenn survey found that most of those who soldiered on to the end were neither undergraduates nor those in need of remedial education. Instead, they are often older, have already earned a college degree, and are striving to enhance their skills and employability.

Moreover, the specific classes that have the highest completion rates generally fall into the STEM (Science, Technology, Engineering and Math) domain: there are clear “right answers” that can be taught, practiced, applied, and replicated. (In contrast, humanities courses focus more on asking the “right questions,” exploring, and learning through both faculty and peer interaction—not strong points in the MOOC pedagogy.) And while it’s wonderful to study Shakespeare’s sonnets, both companies and working individuals are more willing to pay for professional development and more motivated to produce a return on their investment.

On the demand side, companies have been complaining loudly about the growing “skills gap,” especially in STEM fields. Having an opportunity to help shape—and eventually customize— the curriculum for their current and future work force is worth the seed funding. This model also ensures a sustainable revenue stream because companies will pay for employees to access the courses as part of their ongoing training investment. And the good news: many of these courses will continue to be available as MOOCs for free to an even broader, global audience.

In the coming years, expect to see even more MOOC platforms and providers—both for-profit and non-profit—moving toward the executive education and professional development market. The result will be a proliferation of new revenue, licensing, and pedagogical approaches—not to mention a lot more pilots and pivots.

Infographic with major players in the MOOC universe and funding sources

In fact, Stanford has long been a leader in this area—for 25 years, the Stanford Center for Professional Development has offered online and in-person Master’s degree and certificate programs in engineering and technology in partnership with major corporations like Hewlett Packard.

  • Udacity, which spun out of Stanford, is also partnering with AT&T and Georgia Tech to offer a Master’s degree in computer science for a mere $6600.
  • Coursera, the largest MOOC purveyor (with Stanford DNA and more than 500 courses and 5 million students), proclaims in bold on its home page, “Stay up-to-date in your field. Forge a new career path.” The New York Times reports that Coursera is experimenting with “flipped” courses for U.S. consulates that combine online MOOCs with in-person facilitation.
  • NovoEd, another Stanford-spawned, venture-backed platform in Menlo Park, just inked a deal with the Stanford Graduate School of Business, among other top U.S. business schools, to produce MOOCs for public and corporate executive development programs.

Worldview Stanford is excited to be part of this wave of innovation. By creating learning experiences for professionals that combine online content with an immersive experience at Stanford, Worldview helps professional get smarter about the issues and dynamics shaping the world. And maybe we can even throw in a sonnet or two.

What do you think about Udacity’s pivot toward professional education? Is the dream of free universal university access viable in the long-term? Will the humanities be left behind and does that matter?

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