MOOCs Industry Breakdown (Part 1 of 5) – What are MOOCs?

This is part 1 of a 5 part series taking a deep-dive look at the MOOC industry; please see the other posts for more information on MOOCs:

Part I  – MOOC definition, background
Part II  – Landscape – Competitors, players, news, etc.
Part III  – Top Goals, challenging modes of thinking
Part IV – Users – Who are they, what do they want?
Part V  – Product & business model brainstorming

Kickoff

I thought I’d kick off one of my first posts of my newly rebooted blog with a topic that I’m enthralled with: MOOCs

MOOCs are a new wave of online ed-tech startups that bring online education to the masses by offering college courses online, for free. They have been both the darlings of the media and the targets of massive backlash over the last two years. Many have claimed that they are thrashing and cannot find a business model, but I believe they hold massive potential and are just starting to find their stride in the complicated world of ed-tech.

Given the incredible amount of confusion and wild predictions about the space, I wanted to take a deeper dive into the industry to understand it better. With a better understanding – of both the landscape as well as the users – it should shed some light on possible products and solutions to the challenges the fledgling industry faces.

To do that, we need to understand the industry, players, and users.

So, this is going to kick off a massive, five-part, deep dive into the MOOC industry. If you ever wanted to know about MOOCs, this will be your go-to primer.

We’ll define and give some background on MOOCs, take a look at the landscape, challenge current perceptions about the industry, look at the users of MOOCS, and evaluate possible business models and revenue streams for them.

So, without further ado, let’s jump right in.

How we’ll go about it

Our ultimate goal here is to understand the industry well enough – especially the problems facing the users – to be able to come up with possible new products or solutions for them. That means we are collectively going to put on our product management hard-hats, and we need to first gain an understanding of a few key things. Specifically, we need to have deep knowledge of four key areas:

  1. Users
      – Who are they? What do they want? What value do they get? Motivations?
  2. Landscape
      – Competitors, products, players, trajectories, recent news
  3. Business fundamentals
      – What are the business levers of your company or other companies in your space?
      – Which carry the greatest weight? What does the biz’s funnel look like? How do you pull those levers to generate more business?
  4. Your Organization’s Top Goals
      – ARPU? Engagement? Scale/Growth? Product/Market Fit?

We need to know those four key areas because it massively influences how we’ll think about our possible solutions. We need to understand our users, and work incrementally backwards from their problems, through the landscape to the primary goals and motivations of the business. Ideally, we’ll be able to find a solution where there is enough overlap between the business goals (revenue, positive unit metrics) and user goals (learning, career advancement, etc.).

So here’s what we’ll cover:

  1. Part I (this post) MOOC definition, background
  2. Part II Landscape – Competitors, players, news, etc.
  3. Part III Top Goals, challenging modes of thinking
  4. Part IV Users – Who are they? What do they want?
  5. Part V Product & Business Model Brainstorming

 

So Let’s get started…What are MOOCs?

For the uninitiated, MOOCs stand for Massive Open Online Courses. Moocs are exactly what they sound like: courses – covering a dizzying array of topics – offered completely for free to anyone who wants to take them online. They are provided by a new crop of ed startups (both for profit and nonprofit – that have experienced an explosion of popularity, press, funding, and typically enroll tens or hundreds of thousands of students at a time.

The most fascinating part (aside from the sheer amount of student participation) is the response from higher education. You see, these classes are often produced in close participation with some of the leading universities in the world, as virtual copies of real courses offered by those institutions. Right now you can take courses from Harvard, MIT, Stanford, or any number of dozens of other accredited, highly respected universities.

Of course the catch is that you cannot get university credit for these courses. Major universities participate in this because they see it as a form of marketing and branding. If they can lure inspire an additional 5-10 students of the thousands who take their courses to apply/ attend in-person at ~$45,000/year, they recoup their investment in producing the course quickly and improve their applicant stats/pool in the process.

 

Why am I fascinated?

I was first introduced to MOOCs early this year when I was in the process of founding my startup, Shapd. Shapd was a 3d-printing software startup that aimed to create apps to allow non-technical consumers to design and order jewelry quickly and easily. Essentially we were attempting to greatly simplify the process of CAD, which needless to say, is a challenge.

The problem was, we needed a proof of concept (an MVP) but I had never coded before. I certainly didn’t have any experience with the requisite skills (computational geometry, 3d graphics, CAD, etc) that were required, and most of the engineers I spoke to had no experience with it either. I was willing to roll up my sleeves and do some hard learning / work, but I had no idea where to get started.

Enter Udacity and their Interactive 3D Graphics course. It was everything I needed and I absolutely devoured it. With the knowledge I gained from the course, we could build an MVP to test our assumptions). We finished it a couple months later and it produced real 3d-printed goods in metal (it’s now opensource and located HERE).

The thing that has converted me into a believer in the power of MOOCs was the delta in what Udacity offered and the next-best alternative… which were old academic papers. Since then I’ve been using Udacity and other MOOC providers to take courses in my free time. I’m almost done with a CS101 course to learn basic programming concepts, and I’m looking forward to continuing with more advanced programming concepts after (in addition to “for-fun” classes like Psychology or Design). I believe lifelong learning is a core principle of living life to the fullest, and I see no better way to do that than through MOOCs.

 

Brief History

So how did Moocs start? Of course online education has been around in one form or another for many years, but many would argue that Moocs started in 2011 with then-Stanford professors Sebastian Thrun and Peter Norvig. In actuality, the first class to use the term “MOOC” was a course called “Connectivism and Connective Knowledge/2008” from the University of Manitoba in 2008 (read more here), but I’m going to focus on Thrun.

This Fast Company article tells the story perfectly: “It begins with a celebrated Stanford University academic who decides that he isn’t doing enough to educate his students. The Professor is a star, regularly packing 200 students into lecture halls, and yet he begins to feel empty. What are 200 students in an age when billions of people around the world are connected to the Internet?

So one day in 2011, he sits down in his living room with an inexpensive digital camera and starts teaching, using a stack of napkins instead of a chalkboard. “Welcome to the first unit of Online Introduction to Artificial Intelligence,” he begins, his face poorly lit and slightly out of focus. “I’ll be teaching you the very basics today.” Over the next three months, the Professor offers the same lectures, homework assignments, and exams to the masses as he does to the Stanford students who are paying $52,000 a year for the privilege. A computer handles the grading, and students are steered to web discussion forums if they need extra help.

Some 160,000 people sign up: young men dodging mortar attacks in Afghanistan, single mothers struggling to support their children in the United States, students in more than 190 countries. The youngest kid in the class is 10; the oldest is 70. Most struggle with the material, but a good number thrive. When the Professor ranks the scores from the final exam, he sees something shocking: None of the top 400 students goes to Stanford. They all took the class on the Internet. The experiment starts to look like something more.”

After that course, Thrun left Stanford and proceeded to found Udacity, one of the four major MOOC providers. Shortly afterward, Daphne Koller and Andrew Ng founded Coursera, the MOOC provider with the largest student footprint by far, followed suit by a $60M joint non-profit venture between Standford and Harvard called EdX. Those three companies, in addition to Khan Academy and a number of quasi-MOOC companies like Udemy, formed what we now think of as the MOOC industry.

The Industry Now

While still very new, the industry has been at the center of a media storm virtually since their inception. MOOCs were crowned the Saviors of Education by the press since they were introduced, and have been at the center of some extremely inflated predictions. However, as the new industry has understandably gone through their initial steps and growing pains, the media backlash has seemed extreme in light of those predictions.

I won’t go into the debate in detail, but there are plenty of solid links on the industry below if you want to learn more.

 

Overview

General overview on Moocs – Mooc News and Review

Brief History of Moocs – Mooc News and Review

Brief Comparison on Mooc Providers – EducationDivide

General

Standford Seeks to Reclaim Mooc Brand” – Chronicle of Higher Ed – Nov 4, 2013
     Stanford open about competing with Coursera, Udacity

The Future of Online Education is Campus” – Inc – Jul 30, 2013
     Data on 2U, Coursera University pricing | Argument for flipped-classroom

An Early Report Card on Massive Open Online Courses” – WSJ – Oct 8, 2013
     Generic article with very good usage data.

Moocs – Too Much Hype or Not Enough?” – Wired – Oct 22, 2013
Interesting Analysis of Moocs – deflating expectations from academia

Students Rush to Web Classes but Profits May be Much Later” – NYTimes – Jan 6, 2013
Analysis of Mooc BizModels

Moocs and Their Discontents” – Aljazeera – Oct 21, 2013
Good analysis of Moocs, in-depth article

College Accreditors Block Innovation, So Bypass Them” – Forbes – Oct 3, 2013
Excellent article about the shifting accreditation landscape in the US

Facebook could become a distribution vehicle for Moocs”- Wired – Nov 1, 2013

London Predicts Mooc Recruitment Landfall” – Nov 7, 2013
Good data on economics of London Moocs

“A Surge in Growth for a New Kind of Online course” – NYtimes – Sep 25, 2013

 

Reaction to Moocs (random assortment)

Reaction from Blogger on Personal Experience with Moocs – April 2013
Experience producing a Mooc from a Professor – Oct 28, 2013
Reaction from programming professionals on SAP MOOC – Oct 24, 2013
Blogger Discussing Academia’s Response to Moocs: Fear – May 13, 2013
Blogger’s Response to Mooc Completion Rates
Article on Corporate Response to Moocs
Negative Reaction from Academic
Negative Response from HBS Professor

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