The Siege of Academe

Tuesday, September 4th, 2012

Kevin Carey examines Silicon Valley’s attempts to besiege Academe:

Minerva sprang from Nelson’s observation that higher education was increasingly a realm of mismatched supply and demand. Recent decades have been generally peaceful and prosperous on planet Earth. There are a lot more people with the desire and ability to pay for higher education than there used to be. Elite American schools are the unchallenged market leaders, which is why applications to Harvard have increased by double digits annually for years, with growing demand from China and other fast-developing economies.

In response to this surge in demand for its product, Harvard has done the following: absolutely nothing. It hasn’t expanded the size of its freshman class by a single student in the last twenty years. With a few exceptions, this is true for all elite American schools. They don’t have to get bigger, they don’t want to get bigger, and, anchored as they are to immovable physical places, they can’t get bigger in any meaningful or not absurdly expensive way. Yale, one of the exceptions, is currently in the process of expanding its undergraduate enrollment by 15 percent, or about 800 students. This involves building two new “colleges,” the rectangular gothic buildings in which Yale undergraduates live and study, at a cost of more than $600 million—or twenty-four times what Minerva got in seed money, an amount that was repeatedly described to me as shockingly large.

Minerva is designed to soak up this growing excess demand. Nelson plans to signal elite status through a combination of rigorous admissions standards and a nail-tough academic curriculum. While the courses will be conducted primarily online, students will live together in shared housing units in cities around the world. They’ll start in their home country and then rotate to different cities in later years, finishing with a capstone project in their chosen major. Nelson figures this can be done for less than half of what Ivies charge students, and that if Minerva ends up with a student body of 10,000 undergraduates it will be a financial success.

In many ways the plausibility of Minerva comes down to a pure numbers game. The world is very big, and the number of students served by elite American schools is very small. They turn down nine out of ten potential customers now, and the number of global aspirants is only starting to grow. Nelson expects that 90 percent of Minerva students won’t be American. Even with the inevitable discount applied to newness and online-ness, even with a high bar to get admitted and a second high bar to graduate, at some point the sheer weight of numbers solves everything. Ten thousand is a small amount in a world of seven billion people.

Indeed, scale is the oxygen feeding the combustible mix of money, ambition, and technology-driven transformation in the valley. Low margins, uncertain business models, limited marketing budgets—all of these limitations and more can be overcome by scale. And the rapid growth of mobile telecommunications technology means that the number of people in the world who are potential customers is quickly moving toward the number of people in the world.

Minerva isn’t the only project in this city—or in this neighborhood, even—playing this numbers game. One company I visited had start-up costs so low that it never even had the need for venture funding; in valley parlance, it was “100 percent bootstrapped.” Quizlet, as the company is called, was started in 2007 by a Bay Area high school student named Andrew Sutherland. The first product was flash cards. If you were learning the names of animals in French, for example (the sophomore-year high school assignment that motivated Sutherland to create Quizlet), you’d create a digital flash card by entering “penguin” on one side and “manchot” on the other. By the time Sutherland was a college junior, the site had three million monthly users. Now the company is a typical San Francisco start-up with black chairs and MacBook Airs. It makes enough money to rent space and pay salaries by running small ads on the site and by selling a premium version for $15. The ads and subscriptions aren’t expensive, but they don’t have to be when you’ve got millions of users and host everything in the Cloud.

To drive home the point of just how cheap it is to be Quizlet, one of its executives asks me how much money the United States spends per year to educate a single student in K-12 education. About $15,000, I say. That’s more than what it costs us per month to host the entire site, serving millions, the executive responds. Quizlet has no sales force, a very small marketing department, and more than seven million monthly unique visitors. (There are about fifty million public school students in the United States.) Quizlet, in its busiest months, during the school year, is among the top 500 most visited sites on the entire Internet. Now they’ve expanded beyond flash cards. You can create study groups, convert your content into multiplayer games, and search for cards and games that other people have created. We think we can get to 40 million users, then 100 million, says the executive. The question that drives the company, he says, is this: How can we create amazing learning tools for one billion people? This is the way most of the people in the valley talk.


  1. ASDF says:

    Ivy league educations are valuable because they are scarce. Signaling.

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