Silicon States

by Lucie Greene

  Beyond altruism and a bold mission, these businesses have all recognized that education is a lucrative segment to disrupt. The global education market is worth $4.4 trillion, according to investment bank IBIS Capital, and the fastest-growing sector is e-learning. In 2015 McKinsey valued the U.S. education market at $1.5 trillion, growing at 5 percent annually. EdTechXGlobal and IBIS Capital further say the education tech market will grow to $252 billion by 2020.

  It’s an autumn afternoon in Palo Alto. On University Avenue, the main drag, a historic 1930s movie-palace-turned-bookstore has been reborn as HanaHaus, a coworking hotspot with a café courtesy of Blue Bottle Coffee. The interior is a blend of exposed industrial beams, white walls, and the Mission Revival–style building’s carefully preserved features. A nest of grey armchairs stands next to a wall emblazoned with “Creativity comes from conflict of ideas.”

  HanaHaus is packed. And full of the sartorial choices you’d expect. There’s an ocean of Patagonia, khakis, and Facebook-emblazoned backpacks. Step out into the open courtyard and meetings are happening at most tables. Shernaz Daver, the CMO of Udacity, arrives. Udacity is an adult online education platform with affordable, skill-based “nanodegrees” (short-term courses that focus on learning a specific tech skill). It teaches the programming skills in line with evolving industry employer needs, while offering credentials that the companies recognize and endorse (or even fund). It is one of a growing group of companies from the Valley rethinking traditional education, or coming up with new segments and submarkets.

  Udacity’s focus is a little different in that it positions itself outside the school curriculum. It’s aiming at adults (college-educated or otherwise). It offers its nanodegrees or certificates in subjects such as Android basics (a course showing people with no programming experience how to develop apps for Android smartphones), predictive analytics for business, the basics of AR app development, virtual reality development, artificial intelligence, and software for self-driving cars. It does so at a fraction of the cost and time of traditional schools. Courses are taken online, supported virtually by coaches and other students. People learn through working on hands-on projects, which are then evaluated.

  “We have this archaic packaging where people go to school for four or more years to get a degree,” says Sebastian Thrun in an introductory video. “We at Udacity give our graduates the absolute latest skills that are in demand here in Silicon Valley.”

  Udacity’s partners include Amazon, Google, IBM, and Mercedes-Benz. Its offer feels much like a consumer-facing shop—like a virtual supermarket or cool technology store selling off-the-shelf classes, rather than the more bookish presentation of traditional academic institutions featuring people at desks and smiling in class. The Android program is in partnership with Google and has an associate Android developer certification at the end. It costs $750, which includes three months of access, three courses, three projects, and the Google certification exam.

  There are even customer ratings and holiday specials—and subscription models for $199 a month. Many courses come with a guarantee of employment within six months or your money back. Graduate within twelve months and you get 50 percent of the tuition fees back.

  Every course at Udacity is focused on employment—becoming equipped to work in new areas of tech and being job-ready at the end. “Virtual reality is the future of creative content,” promises Udacity in its sales copy for the VR course. “There is massive growth in the space, and job opportunities are skyrocketing, making this the perfect time to launch your VR career!”

  It’s almost like a modern-day apprenticeship company. Like Amazon, Udacity has clearly spotted an opportunity: employment increasingly requires our skill sets to be fluid and constantly adapting. And it’s one with massive potential longevity if workers consistently need to learn new skills.

  “Jobs are changing,” says Daver. “The U.S. labor organization says people change jobs seven times in their career. The average tenure of a job in the Valley is eighteen months. Everybody has to learn new skills. Suddenly you enter this new area called lifelong learning; that’s where we play. We’re dealing with an area that says, ‘education doesn’t stop when you’re twenty-two.’ That’s our belief.” But Udacity is not just selling to people in the Valley. All courses are done online so they can be taken remotely and are, in theory, open to anyone.

  Udacity’s relationship with partner brands and employers is also novel—and maximized to connect students to new career opportunities.

  “We call the nanodegree a credential. It allows you to get the skills you want in an average of three to six months. So it’s not a degree. It’s not a bachelor’s, it’s not a master’s, it’s not something that’s backed by a college. We have companies come in and they help create content with us. Google is a content partner; Facebook is a content partner. Say today you wanted to learn the latest in Android—it’s pretty hard to learn it in college. And you’re in the workforce and you’re thirty-two years old. Where do you go? Do you quit and basically go back to college? You can’t. So you can come to Udacity and we give you the latest skills because we’re doing it with Google.” (Google is, after all, the company updating this technology.)

  Daver tells me that they have a broad audience that includes everyone from Silicon Valley engineers to ex-cleaners and immigrants. “We have a student out of San Diego; he used to work in McDonald’s and he wanted to get a new job. He took a front-end developer nanodegree (a credential for website building). He got 50 percent back on his tuition, so instead of spending $2,400, he spent $1,200. He got a job at a tech company in San Diego and now earns three times his original salary. That’s a large part of our business overall.” Udacity is also used by developers who need to update skills, taking advantage of the fact that they can study toward their credential when they want. “You can do it in your own time,” says Daver. “You can do it at night; whenever you want to. And that’s how we work it.”

  There are big scaling ambitions for Udacity. Daver says that it aims to become the international go-to place for job skills, so “wherever you are in the world, you immediately think Udacity. Just like today, if I say search, you immediately think Google.” She adds that already many Udacity students come from China and India.

  In an atmosphere of anxiety about great swaths of people not having the necessary skillset to ride out the current industrial, automation, and tech booms, targeted individual education is an exciting prospect. It’s one the government should be actively supporting, as driverless cars, automated kitchen equipment, and automated trucks become imminent, to enhance training and equip citizens for some of the highest-paying jobs in a fast-growing sector. Udacity should surely be focusing on America’s Rust Belt. Of all the places being left behind by tech’s fast pace of evolution, it’s here, with declining industries and aging factories, propelled by the withering of coal and steel. These areas have, arguably, not been addressed by educational policy change either. And therefore their citizens are not enjoying the spoils of Silicon Valley. And if the government is not assisting the reeducation of this population, surely the Rust Belt and lower-income citizens left out from progress should represent a philanthropic focus for tech leaders and ventures. But, as is usual with tech, there’s a socioeconomic bias. Yes, people from India and China can study nanodegrees. It’s because they have agency and there’s also a widely established practice of bringing affordable developers from these countries to Silicon Valley. Rust Belt workers are a less glamorous group; they certainly fall out of the desirable marketing demographic many Silicon Valley companies aspire to align with. They might have built the Hoover Dam during the Depression, but today they’re facing an uncertain future.

  “We talk to a ton of government people,” says Daver, adding that Hillary Clinton had previously talked about nanodegrees in her education manifesto.

  Shouldn’t traditional universities be doing this? “Universities have a very different focus. Can you upend 200
years of the way colleges are?” Not in the short term, and the appeal of these alternatives is undeniable. But Silicon Valley is entering a landscape of entrenched university branding and entrenched regard for traditional qualifications, Oxford and Harvard degrees among them. “The biggest challenge is people accepting these credentials,” admits Daver. Having launched in 2014, the nanodegrees are now being purchased in markets including Germany, Brazil, India, and China, and starting to be recognized in a more official way. The other big thing, says Daver, is trust; students need to trust what they learn at Udacity, and trust that it will lead to job opportunities, while employers need to trust Udacity credentials among potential staff.

  From a student point of view, there’s also a financial imperative involved here. American student debt is at $1.3 trillion, affecting 43 million people. Couple that with rising cost of living and stagnant salaries, and alternatives to the traditional, expensive, lengthy degrees might become a more economical but successful option for the new world we live and work in.

  Skype Harvard

  Based some distance from Udacity in central San Francisco, a company called Minerva is pitching itself as an alternative to the usual liberal arts degree. But there are many of the trappings of Silicon Valley’s educational outlook here, too. Rather than sit-in lectures, students engage in “active learning” and are taught to problem-solve and pick apart complex systems so as to understand them. They engage in intensive seminars via their laptops, where they debate, vote, discuss, take tests, and are graded by a tutor. There is also no library, no college newspaper. The city is the campus. Students travel each semester to Minerva’s locations in seven cities across the world: Buenos Aires, Berlin, Hyderabad, London, San Francisco, Seoul, and Taipei, and stay in dorms dotted around each city, completing coursework supplemented by programs reflecting the given location. This costs less than a traditional degree (about $29,450 per year including dorm accommodation—traditional degrees vary wildly but on average run $18,000 to $44,820 per year in 2017–18, according to the Carnegie Classification and College Board). However, Minerva isn’t going up against the online university market, which is generally associated with affordability. In fact, it describes itself emphatically as not an online university. It’s going head-to-head with Harvard. (An audacious boast. But Minerva’s shtick is that it’s harder to get into and will give you a better education.) Minerva claims to have created an entirely superior system of higher education, and tech is a key tool in making it so.

  Broadly speaking, Minerva is split into three: Minerva Schools in partnership with Keck Graduate Institute (KGI) offers traditional undergraduate and graduate degrees in subjects such as arts and humanities and applied analysis and decision making. The Minerva Project, backed by Benchmark Capital, TAL, Zhen Fund, and Learn Capital, is a VC fund for new-wave learning companies. The final part is the Minerva Institute, the nonprofit arm chaired by former senator Bob Kerrey, which offers financial aid to deserving applicants taking part in Minerva School degrees.

  Visit the Minerva headquarters in central San Francisco, and Ben Nelson, founder, chairman, and chief executive, passionately explains Minerva’s mission to reengineer the future of education as we know it, as well as the problems endemic to the current system. “A university today is first and foremost beholden to its faculty, then beholden to its donors. So that means that it has to increase costs while obliterating standards,” he says. “Today, students spend 20 percent less time on their studies than they did when I was an undergraduate. At the same time, grade inflation is rampant.”

  Nelson says universities, even the best ones, are “running the world into the ground. And these are people who are inherently very intelligent.” They are doing so, he thinks, with outmoded ways of teaching, bloated, expensive campuses, and a curriculum filled with the wrong skills that produces mediocre candidates who cannot think critically. They are focused on learning things by heart, not learning a way to think. And, by being so nepotistic and wealth-focused, are creating a closing loop of increasingly mediocre talent. His answer? Universities should be elitist, he says, but in a way different from our current hallowed institutions that focus on privilege and connections. They should be about finding individuals who are special for the way they think, learn, and lead. “You only need to go back in history to see example after example after example of the same kinds of things. It’s individuals who move things forward.” But, he says, it’s rare that these individuals emerge from a legacy of multiple generations. They are anomalies. But it’s often wealthy elites, and their children, that attend the most prevalent universities. In this respect, Minerva aims to be an egalitarian, modern alternative to universities with a relentless focus on excellence, regardless of background.

  So far, so great, in theory. But concepts such as critical thinking and problem solving (which may be instinctive along the full spectrum of socioeconomic structures) are not understood universally, or easily articulated by those who do not have access to quality education, or who might not even have the wherewithal to stumble onto Minerva’s website. Traveling to Seoul, Istanbul, and beyond sounds fantastic and mind-expanding. But also quite rarefied.

  Although Minerva is backed by venture capital, Nelson says emphatically that it is not a typical Silicon Valley venture. Minerva is in the tradition of the universities once set up by Benjamin Franklin and Thomas Jefferson. Their aim was to “take the best raw material of society and train it to make decisions of consequence. Train it to create and lead the major segments of society. It was never about the dissemination of information.”

  How does Minerva return to this original purpose? Nelson talks about developing a scaffold on which students build their education and also understand the world around them. At Minerva students learn the common curriculum in their first year before moving into formal analysis, formal systems (such as logic and reasoning and advanced use of statistics), critical thinking, and components. They learn empirical systems (systems where you take ill-structured data—the world around you—and figure it out) and how to create and test hypotheses, how to evaluate conclusions, how to solve problems creatively, and so on. And lastly they learn about rhetorical systems—or how to communicate effectively. “We want to teach students to think critically,” he says.

  Students are expected to arrive at Minerva with an advanced understanding of subjects (by reading up on their agenda) before they are asked to engage in these skill-building classes. The classes are about combining that knowledge with analysis, problem solving, and discussion. Tutorial sessions are one unique thing at Minerva that Nelson is most proud of. By virtue of being in online video chat format rather than around a table, every student’s response and engagement is instantly intelligible, and they can be put on the spot at any moment. He rails against the fact that because students are online, many people dismiss Minerva as simply an e-university. “Nothing like this has ever been done,” Nelson insists.

  He adds: “This is the thing about Minerva. We use technology because it’s superior to not using technology.”

  The best part? It’s much, much cheaper to run than a traditional university. Professors can work from anywhere. There are no classrooms. “If you look at the crushing layers of costs associated with building a campus, maintaining it, beautifying it, they’re all gone,” says Nelson. “And if you compare our students’ campus to the best campuses in the world . . . Show me a better university museum than the San Francisco MoMA, or the British Museum which students visit when they go to London.”

  It’s important to point out that, still, given the chance and a few hundred grand to spare, most people would love the connections, facilities, clubs, and networking that an institution like Harvard offers. Soft power. And it has nothing to do with the quality of education. Or not everything at least.

  But not every university is Harvard. And many graduates, saddled with debt and struggling to get jobs, are already reviewing their expensive branded educations with a starker e
ye. Plus, as employment shifts (as it is) toward more contract-based work, entrepreneurialism, and new industries, traditional university brands will arguably matter less and less. It will only matter to Wall Street and established law firms, if at all, that an applicant went to Princeton.

  With the rising costs of universities and the rapidly changing labor market, people may think more carefully not only about taking a degree but also what sort of degree they take. They may also question the purpose of universities and assess what will best equip them for life and, more important, work—whether that means being able to write code, to think critically, to gain practical skills, or to judge what will make them the most well-rounded individual. And sometimes the best way to assess what kind of higher education one needs is to take a year off.

  Gap Year

  UnCollege, another San Francisco education startup, is one of a rising number of institutions that fit with this wider remit, focusing on intensive, skill-based courses to set students up for college or other endeavors. Essentially, UnCollege offers a supercharged nine-month gap year program that, it says, “helps students identify areas of interest, accelerate their learning, and be happy at the next stage in life.” Students “take ownership of their education.”