Self-driving education trumps self-driving cars: Thrun goes all in on Udacity with a $15M round

By Sarah Lacy , written on October 25, 2012

From The News Desk

The other day I wrote that Silicon Valley VCs and entrepreneurs just don't set out to help poor people in far corners of the world. That's not to say they never do, but I argued it's usually a happy accident. I swiftly got a note from Marc Andreessen telling me I was wrong. As I mentally scanned down the list of his highest valued investments -- Facebook, Zynga, Twitter, AirBNB, Groupon, etc -- I didn't see a lot of to disprove my theory.

And then -- moments later -- I got the news that Andreessen Horowitz is investing $15 million in Sebastian Thrun's Udacity. Okay, Marc, I'll grant you an exception to the usual rule.

Thrun may be Northern California's answer to Elon Musk. He's a Stanford professor, was a Google VP and Fellow, and the inventor of the self-driving car. But he has put all of that aside to be the CEO of Udacity -- his audacious move to reinvent higher education on the Web.

The company offers online education courses in subjects like computer science, math, general science, programming and entrepreneurship -- you know, areas where there are actually loads of jobs available.

Given Thrun's varied interests, I asked how long he planned to be in the CEO chair at Udacity. "As long as my board doesn't want to fire me, I want to run this," he says. "I want this to be my legacy."

While that may be the transportation world's loss, you can see why Thrun is so excited about the model he stumbled onto when he decided to put several of his Stanford courses online back in 2011. Udacity was designed to be very different from most online education. The YouTube clips are short, and students learn by solving problems not by listening to endless lectures. There's no time limit on how long mastering a course takes -- Thrun wants everyone to get an A+, and for some that may take longer than others.

It's not about replacing traditional education as much as it is about scaling it to corners of the world where it just doesn't exist in a consumable, free form. Come to think of it, that's pretty much everywhere. "If you are an automotive engineer in Detroit and you are laid off, how can you become a computer engineer? It's not that easy," Thrun says.

He argues he's expanding the market for education. "My cable company doesn't turn away from me, my power company doesn't turn away from me, my water company doesn't either," he says. "But college says 'We're done with you please leave.' If you look at it from that perspective, (this trend is) empowering universities at the same time."

Time Magazine has a very long piece on Udacity but the biggest way it differs from traditional online education boils down to this: The courses don't suck and they are free. That's night and day from some of the more successful companies in the space. (I couldn't for the life of me actually find this cover on Time's site but here's a PDF. Keep winning the digital wars, Time.)

To Andreessen's point: Udacity flies completely in the face of what I wrote earlier about Valley entrepreneurs, true as my statements are historically. Thrun's ability teaching kids who live in oppressed or poverty stricken countries isn't a nice side effect of a business aimed at the rich, the way Twitter's role in the Arab Spring was a happy accident of building a ubiquitous real time communication platform. It is aimed squarely at those kids.

Or I should say, it mostly flies in the face of what I wrote. Even Thrun says the global appetite for the courses caught him off guard initially. "I had no clue who well it would work or how much it would effect me as a person," he says. "I was getting personal emails from Pakistan and India and some parts of the world I'd never seen telling me that we'd completely changed people's lives. It's amazing how many people win the world actually need something like this and don't get it."

But kudos to Thrun, once he saw that impact, he decided to make this his life's work. "Education is the number one empowering thing you can do for humanity," he says. "It is probably the most important thing I'll do in my life."

There are a lot of disruptive things about Udacity, but the free price for Stanford level courses may be the most extreme. Udacity already makes some money from corporate sponsors and job placement, and Thrun will experiment more with those models.

Sure there are a few haters on Udacity. People who value the structure of lectures and the length of a semester balk at the approach. "(Stanford President) John Hennessey calls online education a tsunami and depending on where you are you might find it devastating," Thrun says.

But amid mountains of student debt and a polarized job market that's leaving millions disenfranchised, many people feel that something about higher education has to change. And unlike a lot of alternatives, Udacity is offering something academically excellent and vocationally-aware that won't put students in $500,000 of debt. It's education that's proven both academically robust and surprisingly viral. It's hard not to root for that.

This is the second round of funding Udacity has received, the first was from Charles River Ventures and Steve Blank. In total the company has raised $21.1 million. As part of the deal Andreessen Horowitz general partner Peter Levine will join Udacity's board.

Over 753,000 students have signed up to take a Udacity course to date-- although Thrun cares far more about how many actually stick with it and graduate. "I definitely want to be in the upper tens of millions, but we won't have comparable numbers to Facebook ever," he says. "The investment per student is enormous. I would love to issue half a million certificates. That would make me so proud."

[Image Source: ASPA National]