First, let’s unpack the jobs-to-be-done (JTBD) of attending universities. People don’t want a university degree. They “hire” universities to achieve an outcome or desire, i.e. to get recognitions, scholarships, financial aids, meet new (cool) friends, become smarter, secure high-paying jobs, increase earning potentials, and raise social status.
Universities aren’t getting more accessible as they evolve. They become more expensive, require a four-year commitment, are slow to adopt digitization, and incur student debts upon completion. These pain points have led to the “unbundling” of higher educations where companies reinvent the university offerings: degree, knowledge, learning experience, student’s life, and job placement.
Turning students’ JTBD into profitable companies
In fact, most online courses, training programs, and e-learning platforms are unbundled from the university’s products. They verticalize certain functions within the campus such as:
- Tech and engineering education: Codecademy, General Assembly, Coding Dojo, Flatiron School, Springboard, Lambda School, Fullstack Academy, App Academy, Kenzie Academy, Devmountain, Byte Academy, Bottega
- Continuing education: Udemy, Khan Academy, Skillshare, Coursera, LinkedIn Learning, Udacity, OpenClassrooms, MasterClass, Mindvalley, Curiosity Stream, Learning.ly
- Alternative of MBA programs: UCL MBA, altMBA, No-Pay MBA, Y Combinator Startup School, On Deck, Business Intensive, Rutgers Specializations, London School of Business & Finance
- Cohort-based courses (CBCs): Building A Second Brain, Write of Passage, On Deck, Ascend, Building for the Creator Economy, Ship 30 for 30, Crypto Academy, Product Management Fundamentals
- Adjacent market, teacher-creator platforms: Kajabi, Teachable, Podia, Maven, Disco, Thinkific, Classcamp, Teachfloor, Gurucan, LearnDash, Teachery
- Upskilling employees: Degreed, Emeritus, Udemy Business, Coursera for Business, EdCast, Valamis, Cornerstone On Demand, Docebo, InStride, Everwise, Edureka, OpenSesame
- Virtual career fairs: Brazen, CareerEco, vFairs, 6Connex, Premier Virtual, Easy Virtual Fair
- Student accommodation & housing: Uniplaces, Amberstudent, Roomi, Study Abroad Apartments, University rooms
- Alumni networking: Golden Key, Alumni Channel, Graduway, Alumbase
- Language schools: Duolingo, Babbel, Busuu, Rosetta Stone, Memrise, Italki, Preply, Verbling, Livemocha
- Career counselors & job placement: Career Karma, Handshake, FULLBRIDGE, Dice.com, AstrumU
How did we get here?
To understand the future of education, let’s zoom in on the transition of unbundling of university into three specific timelines:
- Unbundling of University 1.0: Once upon a decade ago, massive open online courses (MOOCs) emerged as university experiments. Udacity and Coursera were founded at Stanford University. EdX was created by the Massachusetts Institute of Technology (MIT) & Harvard. Academic programs were made available online. Students began taking online courses.
- Unbundling of University 2.0: Rise of Nexflix for education. Verticalized online learning platforms were created. MasterClass is e-learning for creative life; Duolingo for language schools. Curriculums were created to meet the demand of the digital workforce (i.e. freelancers, creators, creatives), lifelong learning, and personal growth, rather than purely job skills.
- Unbundling of University 3.0: Rise of cohort-based courses. They are live-based, taught by industry experts, peer-to-peer learning experiences with a group of people who are going through the same journey. Online learning went from passive to active participation. Peer group accountability drives completion rates. Community is the moat. For example, Building A Second Brain, Building for the Creator Economy
What problems do they solve?
- Democratize education. Access to academic programs, knowledge, upskilling, and certification should not be limited by your income level or where you live. Udemy, Coursera, and other institutional MOOCs (Harvard Free Online Courses, Standford Online) provide free courses.
- Credentialing. Online certification programs such as Data Science, Google Data Analytics Professional Certificate, Strategic Management ****help individuals earn professional certificates and become job-ready for in-demand careers across any field in less than one year.
- Secure opportunities. Not all e-learning platforms connect online learning with opportunities. Career Karma provides training programs, tools, and coaches to help you land a tech job in the next 12 months. Lambda School offers a team of experts who can help you source, interview, and land a job. Degreed connects learning and career growth to business opportunities.
- Provide successful learning outcomes. MOOCs require self-paced and self-regulated participation. Therefore, completion rates are low and drop-out rates are high. Also, the learning outcome is hard to measure. Cohort-based courses solve these problems with live-based e-learning, interaction with tutors, accountability from peers to ensure active attendance and knowledge transfer.
- Provide a support system. Most online educations stopped at solving the learning and job opportunities problem. On Deck goes beyond these touchpoints and provides a vetted support system (i.e. curriculums, network, intros, workshops, resources) throughout a person’s career lifecycle: job searching (First 50 Fellowship), career transition (industry-specific programs), start a company (Founders Fellowship), become an investor (Angel Fellowship), scale a company (Scale Fellowship).
- Provide educational funding. For example, Lamda School’s Income Share Agreement (ISA) model and On Deck Founders Fellowship "Runway Grants” model. Participants pay $0 upfront tuition fees in exchange for a percentage of successful outcomes (we’ll cover more below).
There are many ways to create multiple revenue streams for education companies. For example:
- Freemium. Most common in MOOCs. Udemy, Skillshare, Udacity offers free course catalogs and upsell users to premium paid courses.
- Subscription. Udacity's “nanodegree” program starts at $399/month. Masterclass Plus is $21.20/month with 100+ classes, offline viewing & members-only discussion. Udemy for Business costs $360/year for 5-20 users. Skillshare charges $8/month for unlimited access to thousands of online classes. Mindvalley charges $499/year for 12-month access to online/offline content, live workshops, community.
- Marketplace commissions. Coursera is a managed marketplace, which means institutions and courses are vetted before getting published on the platform. Coursera’s take-rate is 40% for degree courses; 50% on business subjects and universities keep the rest of the revenue. In 2020, Coursera made $293.5 million in revenues, up 59% from 2019 of $184.4 million. Udemy earns commissions by partnering with course instructors. Instructors get 97% of revenue (when sales occur through their own promotions) and receive 37% of revenue (when sales occur through discovery on Udemy itself).
- Income Share Agreement (ISA). For example, Lamda School. You’ll pay $0 upfront tuition fees for getting technical education in exchange for a percentage of your salary until you are hired. Once you’re hired, you’ll pay back the company on a monthly installment basis. Payments will pause if your annual income dips below $50,000. On Deck offers $25,000 Runway Grants for their Founders Fellowship. If participants start a company, the $25,000 converts to 1% equity.
- One-time membership. Most cohort-based courses are using this model. altMBA charges $4,450 for a 31-day online leadership course. This includes the workshop and course materials. Building a Second Brain charges between $1,500 and $6,000 to access live interactive sessions, video lessons, workshops & online communities. On Deck costs $5,000 for their 5-week Angel Fellowship to access curriculums, private communities, networks & resource directory.
There are massive opportunities for building in the EdTech space. This section explores the market evidence, what the future of education will look like, and answers the “why now” questions (most important slide in a pitch deck) for your investors:
- The workforce is shifting to the knowledge economy. More and more people will choose to work remotely, freelancing, and become independent professionals. They will rely on online certification for work opportunities on top of University degrees. Solutions that help people equip in-demand skills will become more common.
- User acquisition for EdTech products is becoming easier. Adoption is now built on consumers (students, teachers, parents) rather than institutions (colleges, universities, governments). Today, students can Google the best online course platforms and enroll in a class; teachers can search for teaching apps and download them from app stores.
- The future of education is community-driven. Cohort-based courses have proven that people are willing to spend between $1,500 (Build a Second Brain) and $10,000 (On Deck Scale) to be part of a peer-to-peer (P2P) learning experience. Solutions that help people learn, grow, socialize & achieve together will thrive.
- Data-driven credentials will replace resumes & certifications. In the digital workforce, people hire engineers based on Github profiles; designers from Behance profiles; marketers from Twitter/LinkedIn posts. Solutions that help professionals to verify their expertise in a peer-to-peer format and create social signals will rise.
- Curation. We are bombarded by a gazillion of online courses and learning resources on the Internet. Therefore, re-bundling needs to happen to overcome the abundance of information. Solutions that help people personalize, find, match, rank, and recommend will solve the discovery problems—i.e. what should I read, learn, study, work on, etc.
- Education will be project-based, not curriculum. As the remote workforce rises, the one-size-fits-all curriculum is becoming irrelevant. Assessing learning outcomes will depend on individuals’ ability to succeed in a project: from researching, ideating, collaborating, creating, and launching. Solutions that provide sandboxes for project-based learning will emerge.
- Remote learning & e-learning is not temporary solution during COVID-19. Consumers are already familiar with Zoom lectures. It becomes a societal and consumer behavior shift to find alternative educational solutions that cater to digital natives, i.e. the Gen Z.
- Blue-collar workers upskilling. E-learning platforms for construction, logistic, factory industry, and freight forwarding workforce. Create mobile-first training modules with visual-driven and gamified curriculums to help labor workers advance their career ladders and increase income levels.
- Hopin but for student clubs & societies. A virtual online platform to start a student organization, host events, create communities & live networking. Club organizers can create an event page, start a live stream, access the analytic dashboard, collect feedback, send calendar invites, etc. Students can browse/join events, chat with members, start video/audio calls, and join breakout rooms.
- Dribble for scientific research. Create a project-based online community for researchers to share their scientific papers abstract in the format of shareable highlights, annotations, summaries, and visual stories. Research teams can browse, filter, favorite and tag projects. Scientists can raise awareness for their work, collect feedback, start a discussion, get inspiration from the community.
- Teachers Pay Teachers but for higher education. Provide an online marketplace where teachers create, sell, and buy original educational resources. Educators can browse materials by subject, content format, ratings, add to cart, and checkout.
- Project-based resume. A marketplace where employers can submit projects and offer cash prizes. Potential candidates could apply and collaborate with others to complete the project. Each project is like a hackathon and there’ll be pitch day and evaluation upon completion. Participants can share their profiles with a link that highlights their work, people they have worked with, and reviews/recommendations from supervisors or managers. With “proof of work”, it’s more compelling than reading a static resume.