Edupreneurs rewrite the rules of classroom learning

Entrepreneurship is never easy work, as most Software Hamilton readers know all too well. For many, success is largely about knowing the market and developing a specific “in.” The next article, written by higher ed editor Emma Collins, takes a look at how the marriage of education and technology is opening up a plethora of new opportunities for entrepreneurs and savvy small businesses. Emma recently published the MBAOnline.com annual rankings of MBA schools, and knows a lot about the growing online educational landscape.

Edupreneurs use a business education to rewrite the rules of classroom learning.

Common wisdom would have one believe that the internet boom of the mid-to-late 90s went bust some time around the turn of the millennium. Yet as the country has become increasingly accepting of blended and online learning in recent years, education-tech startups have become big business. Investments in education technology companies throughout the US tripled within the last decade, with venture capitalists pouring in $429 million into tech companies in 2011, up significantly from $146 million in 2002. In many cases, these startups offer cutting edge services and products designed to deliver education to all who seek it.

While a wave of education-tech companies hit in the 90s during the larger internet boom, most went under quickly due to a lack of sustainable business models and technology that was simply too primitive. “There were just a bunch of things that were, candidly, thrown against the wall,” says Michael Moe, co-founder of the investment-advisory firm, GSV Asset Management. Since then, though, tremendous advancements in high-speed connections and rapidly developing cloud-based software are creating numerous opportunities for education-tech startups.

Michael Staton, founder of a startup called Inigral, asserts that a growing acceptance of online learning, as people have grown more comfortable with the online marketplace and culture, has also allowed new startups to flourish. Over the past decade, online education has found growing acceptance, with online education growth far exceeding the growth of higher education overall. A Babson Survey Research Group study found that from 2009 to 2010, student enrollment in online courses surged 10.1%, while total enrolment in higher education increased only 0.6% over the same period.

However, despite rapid growth, online education has continued to face a number of detractors in academia. The study reports that “While there has been a slow increase in the proportion of academic leaders that have a positive view of the relative quality of the learning outcomes for online courses…there remains a consistent and sizable minority that see online as inferior.” These criticisms have been exacerbated by stories of for-profit colleges preying on naïve students in order to garner federal financial aid. In late 2011, the US Education Department issued new regulations to keep distance educators in check, while pressuring college accreditation organizations to tighten their rein on online schools.

In 2008, for-profit schools graduate an average of 22% of their students, well below the average for graduation rates at traditional public and private non-profit schools, which average 55% and 65% , respectively. The University of Phoenix, one of the largest and most popular for-profit online schools, fares somewhat better, with a rate or 38%, but has still drawn criticism for putting profit ahead of education by mainly using part-time instructors and an accelerated academic schedule that races students through course work in approximately double the time of a traditional university.

However, many of the recent crop of online education start-ups are developing innovative business models and democratic course structures to avoid the pitfalls of for-profit online schools. Startups like Coursera, edX, and Udacity are collaborating with traditional universities, including many of the most prestigious in the world, and in some cases open-sourcing their coursework, allowing anybody to contribute and improve lessons. These companies, most of which have only been in operation since early 2012, offer free massive open online courses, or MOOCs, through partnerships with schools like Harvard, Princeton, Stanford, Cal State Berkeley, and many others. Furthermore, most of these companies offer their courses free of charge, aside from nominal fees for optional on-site testing, in some cases, for those looking to officially certify the completion of their coursework.

Many analysts and educators have openly questioned whether the models of these companies are sustainable, however, a few successful companies are already illustrating effective models. Echo360, developed in partnership with the University of Western Australia, for instance, allows educational institutions to capture professors’ lectures and distribute them to students via computers and mobile devices. Over one million students at 500 institutions already use the service, and the company pulls in about $15 million in annual revenue. The organization has even receive $31 million to fund an initiative to reach 50% of US college students within the next five years, suggesting the company will be around for the foreseeable future.

Udacity, Coursera, and EdX have not yet proven profitable, but have already ingrained themselves into the rapidly changing landscape of higher education that their long-term survival seems assured. Courses from Udacity, for example, have already been translated into 44 languages across the globe, while an early artificial intelligence course offered by Coursera through Stanford attracted 160,000 students from 190 countries. Unlike for-profit schools or the early education-tech startups of the 90s, these companies are not looking to compete for student enrollment with traditional schools, but instead are working with top universities to bring education to all with the desire and ambition to pursue it. In the coming years, these startups may revolutionize the way we view higher education throughout the world, making for truly democratic, diverse and open classrooms.