The promise (and refreshingly low hype) of online education

By Sarah Lacy , written on April 1, 2013

From The News Desk

At some point in 2011 education went from "Oh God, no!" to kinda hot in Silicon Valley.

It has a lot of the ingredients the Valley loves:

  • A controversial premise from a major Valley thinker that higher education is, for the first time in history,¬†not worth the price of admission
  • A few VCs being contrarian enough to start funding a sector that has never produced great returns
  • And some genuinely fresh ideas, whether noble efforts like Fidelis College, already-proven money generators like, disruptive market places¬†surrounding education¬†like Chegg, YouTube sensations like the Khan Academy, or just plain rockstar geniuses like Sebastian Thrun deciding to devoting his life to his own online education company, Udacity
  • Not that this always determines where venture money goes, but there's also a clear problem and a clear global need for better solutions.
We're not seeing as many education companies as we are, say, Kickstarter clones or ride sharing companies, but a lot of the biggest VCs have cautiously picked and chosen winners, making some big bets in this space. Some are on the tool and app side, and some are aimed squarely at solving the big problems.

Which big problem? Pick one. High school and elementary school are broken. College is broken. There's a major distribution problem that the Internet is finally poised to revolutionize, and there are renewed calls to rethink basic vocational training. There's also money to be made in groups like General Assembly, teaching people to code and hobbyist sites that teach obscure, one-offs like knitting or photography.

Last week, I met with Robert Brown, the winner of General Assembly's contest to whisk one lucky hopeful to Silicon Valley. He is a young developer fresh out of school eyeing a possible future in startups. I've met millions of them over the years. In the past, they say they prepare themselves by reading all the tech blogs. Brown is like the upcoming savvy generation: He spends his time taking classes on Udacity and Coursera to hone his skills all the way from Myrtle Beach, South Carolina. These companies enable the dreamers of a few years ago to push themselves to be do-ers.

What is not to like about that trend?

Well, a few things, from a business sense. Pairing true quality education with a quality venture-style business model is about as much of a challenge as trying to build a digital media company that doesn't monetize via page views. It's still an open question whether it can actually be done. Consider the biggest success story to date in higher education: University of Phoenix. Plenty of critics note that University of Phoenix spends more of its money and time trying to get students in the funnel rather than retaining them or giving them a high-quality education.

And while elementary and high school education may be the biggest worry -- it's also the one most VCs won't touch with a ten-foot pole, because it is beholden to two things the Valley hates: Unions and government. Particularly after the disappointment in clean tech, almost no one on Sand Hill Road is interested in selling to or relying on the government for success.

College is less thorny, but every bit as emotional. People whose self worth is tied up in possessing or providing a half-million dollar Ivy League education don't particularly love the idea that it should be made available for free online to the rest of the world.

This will not be one of those loco-social-mobo sectors where there is a ton of investment, and a whole Y Combinator class jumps on the bandwagon en masse. And really, that's a good thing, because it's a sector too important to be destroyed by the Valley's quick attention span hype cycle.

PandoDaily is devoting this month to digging into the online education trend, thanks to a sponsorship from Accel Partners. We'll explore where it seems to be paying off and where it seems to be floundering and bring you in-depth interviews with some of the people transforming the world of learning the most. If you have story ideas or suggestions feel free to email our editorial team at tips(at)

And ICYMI, visit our previous special reports on The Art of Starting Up, Ecommerce 2.0 or, and the Secrets of the Sharing Economy, which we'll be wrapping up this week.