Can Venture Capital deliver on the promise of the Public University?



An Open Letter to Daphne Koller Co-Founder and Co-President of Coursera and Professor of Computer Science at Stanford University

Dear Professor Koller,

Because I share your vision of creating a world in which all have access to an excellent and empowering education, I would like to propose a new online course for you to make freely available through the Coursera platform. Its title is “The Implications of Coursera’s For-Profit Business Model for Global Public Education.”

You and your company’s compelling pitch to consumers suggests that the private sector—that is, venture capitalists and not taxpayers—can deliver a more equal world in which income will be based on the skills and knowledge people actually acquire rather than the unnecessarily-scarce credentials for which they are eligible and can afford to pay. It is natural to hope that in this more equal and more productive world, incomes could rise for everyone willing to acquire the necessary academic knowledge and take the tests to prove it. This, in fact, was exactly what was promised by the original California Master Plan for Higher Education, using taxpayers’ money, when it was adopted, in 1960.

My proposed course would ask students how and why venture capitalists are willing to provide an even greater abundance of knowledge in the service of greater economic and social equality than is the State of California.

As the course progresses, however, students would come to see that reducing income gaps through education is not the main problem that massive-open-online-course providers are trying to solve. That problem is, rather, how and when to price the content that you are giving away in your current (prepublic offering) phase of development.

Free MOOCs weaken the link between scarcity and quality on which the business model of all higher education, both public and private, unfortunately depends. By making your course-completion certificates widely available, you could threaten the ability of public universities to charge as much as they do now for keeping high-quality credentials relatively scarce.

But public colleges that are becoming more expensive and less accessible create a business opportunity for MOOCs, by widening socioeconomic spreads in access (based on selectivity), price (based on tuition), brand (based on reputation), and value (based on expected future earnings). Successful business models in the test-preparation and student-loan industries break down those spreads into ranks and then offer students the opportunity to jump, say, two ranks in a given scale, such as brand or expected income, by overcoming only one gap in another scale, such as SAT scores or tuition payments.

My students would soon see that a solution to Coursera’s pricing problem is to add to the spreads a new, and potentially global, database of performance spreads, based on the nearly continuous testing of students online.

Eventually, the students in my Coursera class would learn that data that they now provide to the company free—perhaps so that it can grade them—will be the private property of Coursera, which can then sell it back to them in the form of “services,” which could include their own performance record but also different “views” comparing it with that of students at better universities, those with higher test scores, or with advanced degrees. The possibilities for renting that information back to Coursera’s own students are endless, as are the possibilities of marketing your data and consulting services to makers of other educational and financial products.

My students would also learn that the foremost obstacle to immense profitability for Coursera’s investors is the need for someone such as the taxpayer to continue to maintain an educational system of high-enough quality and high-enough price so that Coursera can claim to provide something nearly equivalent for less.

Here students would get a lesson in politics: Fortunately for Coursera, there are now five bills pending in Sacramento that would require (in various ways) that the University of California, California State University, and California Community Colleges give “full academic credit” for online courses that are “equivalent” to their own.

If some students think California should go slow on MOOCs until we educators better understand their optimal use, I’d have the opportunity to teach them some important lessons about the role of money in politics. They would learn that the governor is involved in rushing MOOC legislation through, as are (almost certainly) the kinds of venture capitalists backing Coursera.

Students in my course would also realize that the business logic of “for free” is that, once all the students of the world can get an “equivalent” education, Coursera will be able to set a price for it. And that price will likely turn out to be much more than the world’s students currently pay for for-profit training institutions.

If my course is as successful as I hope, you may soon be approached by students who will ask:

  • Will you and Coursera’s other co-founder, Andrew Ng, be able to resist the pressure from your investors to charge more than zero for educational products that can be dynamically priced in changing markets? Or will you simply sell the company to someone who sees its potential value?
  • Will you then reinvest to achieve more global educational and social equality?
  • Will you teach students the difference between seeing education as the ability to arbitrage successfully among immediate choices and the many other forms of sustained thought that may be harder to measure, including the type of critical thinking my course would attempt to provoke?
  • A few students may come to ask the large, general question that their successful analysis of Coursera’s business logic implies: Should the public be willing to pay for Coursera’s for-profit academic content, just as it does for the cable-TV services that have replaced the public airwaves?

    You can give them your answer. When they ask me, I will say: I want to keep public higher education public. From my perspective a large part of Coursera’s appeal lies in your vision of an informational Commons to which access should no longer be restricted based on the scarcity of places at existing universities and colleges.

    I personally wish that this part of your vision were coming from the leaders of UC. Instead, they are trying to sell students on paying higher tuition because of the demonstrated role of elite universities in generating income inequality, while also persuading the Legislature to increase “access” (enrollments) so they can generate even greater total revenue from the increasing tuition they charge individual students.

    Here I agree with your implicit criticism of public higher education. Public education has all but lost sight of its egalitarian mission.

    I disagree, however, with your implicit claim that privately financed MOOCs can fulfill the promise once made, and now abandoned, by public higher education, to be an engine for reducing social and economic hierarchy.

    The question is not whether we who teach in public higher education can or should resist the creation of a truly “free” informational Commons, but whether we can keep it public in innovative, egalitarian ways that run counter to what you and your rivals are planning and doing.

    What I advocate is government investment in, and protection of, a system of providing common knowledge for the greater good of all in the way that public-university systems once hoped to do. Just possibly, that could be done through platforms such as yours, but only if the information that you are gathering and appropriating for private ownership is socialized on a global scale.

    A true educational Commons would be a force for reducing academic hierarchy and income inequality. I’m all for that. You say you are too. But is this what you are telling your partners in finance and university administration?

    I will know my course has been successful when my students understand Coursera’s business model as an exciting venture-capital investment opportunity through which to increase privately held wealth and lock in existing educational hierarchies.

    >Author Bio: Robert Meister; Professor of Political and Social Thought in the Department of the History of Consciousness at the University of California at Santa Cruz and President of the Council of UC Faculty Associations