For years, Silicon Valley has failed to breach the walls of higher education with disruptive technology. But the tide of battle is changing. A report from the front lines.
It’s three o’clock in the afternoon on Easter, and I’m standing on a wooden deck in the Corona Heights neighborhood of San Francisco, looking out toward Nob Hill. A man is cooking large slabs of meat on a gas grill as two dozen people mingle with glasses of bourbon and bottles of beer in the cool, damp breeze blowing in off the ocean. All of these people are would-be movers and shakers in American higher education—the historic, world-leading system that constitutes one of this country’s greatest economic assets—but not one of them is an academic. They’re all tech entrepreneurs. Or, as the local vernacular has it, hackers.
Some of them are the kinds of hackers a college dean could love: folks who have come up with ingenious but polite ways to make campus life work better. Standing over there by the case of Jim Beam, for instance, are the founders of OneSchool, a mobile app that helps students navigate college by offering campus maps, course schedules, phone directories, and the like in one interface. The founders are all computer science majors who dropped out of Penn State last semester. I ask the skinniest and geekiest among them how he joined the company. He was first recruited last spring, he says, when his National Merit Scholarship profile mentioned that he likes to design iPhone apps in his spare time. He’s nineteen years old.
But many of the people here are engaged in business pursuits far more revolutionary in their intentions. That preppy-looking guy near the barbecue? He’s launching a company called Degreed, which aims to upend the traditional monopoly that colleges and universities hold over the minting of professional credentials; he wants to use publicly available data like academic rank and grade inflation to standardize the comparative value of different college degrees, then allow people to add information about what they’ve learned outside of college to their baseline degree “score.” It’s the kind of idea that could end up fizzling out before anyone’s really heard of it, or could, just maybe, have huge consequences for the market in credentials. And that woman standing by the tree? She’s the recent graduate of Columbia University who works for a company called Kno, which is aiming to upset the $8 billion textbook industry with cheaper, better, electronic textbooks delivered through tablet computers. And then there’s the guy standing to her right wearing a black fleece zip-up jacket: five days ago, he announced the creation of the Minerva Project, the “first new elite American university in over a century.”
Last August, Marc Andreessen, the man whose Netscape Web browser ignited the original dot-com boom and who is now one of Silicon Valley’s most influential venture capitalists, wrote a much-discussed op-ed in the Wall Street Journal. His argument was that “software is eating the world.” At a time of low start-up costs and broadly distributed Internet access that allows for massive economies of scale, software has reached a tipping point that will allow it to disrupt industry after industry, in a dynamic epitomized by the recent collapse of Borders under the giant foot of Amazon. And the next industries up for wholesale transformation by software, Andreessen wrote, are health care and education. That, at least, is where he’s aiming his venture money. And where Andreessen goes, others follow. According to the National Venture Capital Association, investment in education technology companies increased from less than $100 million in 2007 to nearly $400 million last year. For the huge generator of innovation, technology, and wealth that is Silicon Valley, higher education is a particularly fat target right now.
This hype has happened before, of course. Back in the 1990s, when Andreessen made his first millions, many people confidently predicted that the Internet would render brick-and-mortar universities obsolete. It hasn’t happened yet, in part because colleges are a lot more complicated than retail bookstores. Higher education is a publicly subsidized, heavily regulated, culturally entrenched sector that has stubbornly resisted digital rationalization. But the defenders of the ivy-covered walls have never been more nervous about the Internet threat. In June, a panicked board of directors at the University of Virginia fired (and, after widespread outcry, rehired) their president, in part because they worried she was too slow to move Thomas Jefferson’s university into the digital world.
The ongoing carnage in the newspaper industry provides an object lesson of what can happen when a long-established, information-focused industry’s business model is challenged by low-price competitors online. The disruptive power of information technology may be our best hope for curing the chronic college cost disease that is driving a growing number of students into ruinous debt or out of higher education altogether. It may also be an existential threat to institutions that have long played a crucial role in American life.
I’m here at this party and in the Bay Area for the next few days to observe the habits, folkways, and codes of the barbarians at the gate—to see how close they’ve come toward finding business models and technologies that could wreak such havoc on higher education. My guide, and my host at this party—he organized the event for my benefit—is a man named Michael Staton. With sandy-blond hair, blue eyes, and a sunburned complexion, Michael is thirty-one—old by start-up standards—and recently married. He’s the president and “chief evangelist” of Inigral, a company he created five years ago to build college-branded social networks for incoming undergraduates. But just as importantly for my purposes, he’s also one of those people who has a knack for connecting with others, a high-link node in a growing network of education technology entrepreneurs who have set their sights on the mammoth higher education industry.
One of the bedrooms in the house where we’re mingling and drinking was Inigral’s headquarters for the first eight months of its existence, back when the founders were “bootstrapping” the company, which is valleyspeak for growing the business on their own using credit cards, waitering tips, plasma donation proceeds, and other sources that don’t involve the investment dollars that can shoot a start-up toward fame and fortune at the price of diluting the founder’s ownership and control. The longer someone can manage to feed themselves with ramen noodles and keep things going via bootstrapping, the more of their company they’ll ultimately get to keep—unless someone else comes up with the same idea, takes the venture capital (VC) money earlier, and uses it to blow them to smithereens. The start-up culture is full of such tough decisions about money, timing, and power, which are, in their own way, just as complicated and risky as the task of building new businesses that will delight the world and disrupt a trillion-dollar market.
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