Are venture capital funded MOOCs a good idea?

Guest post by Bill Ferster

The pressure from skyrocketing costs and competition from e-learning efforts at universities have made online educational technology a source of much discussion. Teresa Sullivan, the president of the University of Virginia, was summarily fired in a coup d’etat in 2012 (and subsequently rehired because of protests from an outraged faculty and campus community) ostensibly because the university’s governing board of visitors perceived her not to be embracing online education rapidly enough.

If one is to believe the press, from obscure educational journals to the New York Times, the teaching machine for the start of the twenty-first century is the MOOC. Massive open online courses are the latest contender, where courses from commercial companies and prestigious universities such as Stanford, MIT, and Harvard are offered online to huge numbers of participants, often thousands at a time. There are those who view MOOCs as the savior to managing the ever-spiraling cost of higher education, and others who see them as sowing the seeds of the demise of the university as we know it. The truth, of course, lies somewhere between.

It is important to see some of these potentially threatening educational innovations (such as MOOCs) in the same way that their providers see them: as experiments. Daphne Koller, co-founder of venture capital-funded MOOC developer Coursera, views the MOOC as an unprecedented opportunity to use large numbers of people to scientifically test what works. She proposes conducting controlled experiments she refers to as “A/B testing,” wherein a change is made to instruction for some population of students and not for others. Because of the large numbers of students not typically available in traditional educational research, the results of the change can be tested empirically for its effectiveness and the overall instruction changed accordingly.

To me, the more concerning issues about the commercial MOOC providers is the source of their funding: venture capitalists. Venture capital is provided by investment firms to fund early stage companies. These firms typically invest in a large number of startups with the assumption that 90 percent of them will fail, but the 10 percent that thrive will yield a return on investment of at least 300 percent (known in their parlance as a “3-bagger”). This strategy has been extremely successful in the high-technology sector and in large part is responsible for the phenomenal products and companies that have emerged from Silicon Valley. Venture capital firms provide a strong support network to help guide new entrepreneurs, but their model has its darker side.
There is an inherent instability in any “disposable” relationship. The funded companies typically cede a significant amount of control in exchange for the millions of dollars they receive. When the company delivers the kinds of profits that the funders see as significant, that control can be very constructive and nurturing. But if the company underperforms or takes longer to deliver, it can find itself among the “walking dead,” with just enough capital to stay in business but not enough to grow, closed down completely, or merged with another of the firm’s portfolio of funded companies.

The venture funding method has worked well in high-technology, but I worry about the effect of this volatility on education. Students have traditionally relied on the longevity and stability of their institutions, and the basic venture capital model may weaken those properties. This issue will become all the more important as MOOCs inevitably begin to offer accreditation and other forms of credentials validating student efforts.

fersterBill Ferster is a research professor at the University of Virginia’s Curry School of Education and the director of visualization for the Sciences, Humanities & Arts Technology Initiative (SHANTI). He is the author of  Teaching Machines: Learning from the Intersection of Education and Technology and Interactive Visualization: Insight through Inquiry.