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A Wave Crests: Silicon Valley, Postsecondary Education And A Half-Trillion Dollars

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Expect A Gentler Valleywag In 2015

Editor’s note: Shawn Drost is co-founder of Hack Reactor.

It’s easy to forget that these are early days for the Internet. We still have different ideas on what it is or how it should work. The web is governed by an iterative improvement process that moves faster than any other invention in human history. Ed tech is no exception.

I’d like to direct your attention to an interesting phenomenon: since 2012, most ed-tech companies have quietly rewritten their product promise from unbridled learning for learning’s sake to a path to a job or career goal — website copy now essentially says “jobs, jobs, careers, jobs.”

That transition may be related to another 2012 development: the rise of accelerated learning programs (ALPs), including General Assembly and Dev Bootcamp. ALPs explicitly measure student employment outcomes, including placement rate and average salary, and they work. The ALP phenomenon has helped influence this product pivot in the ed-tech sector. When one of my students gets a job, I get a giant bear hug and the credit for getting them there, and other educational tools are sidelined.

It’s not a coincidence that 2012 brought both the beginning of the end of the MOOC and the start of the ALP: the zeitgeist had latched on to the connection between jobs and education. Postsecondary education has been off-balance from decades of seismic change, and 2012 kicked off three back-to-back State of the Union addresses pushing universities to reduce student debt and take accountability for student employment outcomes.

This chronology sets the stage for an interesting future. Postsecondary students have unambiguously stated their priorities: jobs, jobs, careers, jobs. But the incumbent university system is hesitant to adopt this new focus as paramount. Silicon Valley has cottoned on to this imbalance, and has its eye on the postsecondary education market — worth a half-trillion dollars every year. Read on for a sneak preview of the next few years, and an exploration of trends surrounding the 2012 transition. But first: a historical primer on college.

Postsecondary Education and Jobs

It may not look like it, but it is also early days for our postsecondary education system. You might imagine that universities have been around about as long as democracy and indoor plumbing, but in fact, our higher education system has been completely redefined over the last 70 years. Around that timeframe, the proportion of high school graduates attending college went from a small minority (in 1940, only around 5 percent had completed four years of college) to a majority (65.9 percent are currently enrolled in colleges or universities). The source of college funding changed from family wealth to federal loans.

Most importantly, the goal of attending college moved from holistic education and a future in academia and research to career development and jobs. If you ask students why they’re going to college, the top five reasons include “to be able to get a better job” (No. 1), “to get training for a specific career” (No. 3), and “to be able to make more money” (No. 4).

Opinions differ as to whether the higher education system is meeting those students’ career goals and achieving those outcomes. It’s settled science that a degree raises a student’s lifetime earnings. However, only 11 percent of business leaders think college graduates have the right skills for work — compared to 96 percent of chief academic officers who believe graduates are prepared for the job market.

Redefining a Sector: “Postsecondary Education” to “Career Education

Ed tech efforts were diverse and accomplished by 2012, but that year brought about a major discovery: there was no institution in America dedicated to providing career education to the millions of vocal, potential customers. This central shift to recognize the demand for career education affected a diverse group of players in the space, and ultimately it pushed all edtech companies to adopt the below trends.

Trend: Quantified Student Outcomes

When the tech industry began looking at the postsecondary market, they started from the existing model — flaws and all. MOOCs literally offered college classes on the internet. This seemed promising, and The New York Times declared 2012 “the year of the MOOC.”

Indeed, it lasted almost exactly one year, and by 2013, Udacity’s CEO had declared the product “lousy.” This conclusion was almost entirely based on one fact: low completion rates. Measuring and delivering simple student outcomes seems obvious, but it drives intense attention to quality and becomes a primary force upon any product or program. In Udacity’s case, a hard completion requirement required that Udacity hire real human mentors, which drove a much higher price point and a number of other major product changes.

Trend: Employment, Not Just Education

In order for Udacity to support the higher price point required by their new quality bar, they had to offer a compelling ROI to students. As such, their tagline went from “Higher Education for Free” to “Advance Your Career.” Unlike colleges, ed tech adopted this new charter in a hurry and with no ambivalence.

Codecademy represents an example of this trend from another lineage in ed tech. Its founders had worked at startups like GroupMe, not at universities, and you could tell that they were looking at coding education like a conversion optimization problem. Codecademy launched with a free product, but how would they make money from the millions of users that they taught? Pushed by the same forces as the rest of us, Codecademy recently revealed its first fee-based program (tagline: “Transforming your job prospects in the process”) and a new resource portal to advertise it (tagline: “Start programming now, get hired in months”) alongside ALPs and other career education programs.

Trend: Hybrid Online/Offline Institutions

Codecademy and Coursera are two web-based ed-tech entrants that have subsequently created physical learning environments. On the other side of the fence, ALPs began as brick-and-mortar schools, but some are moving into a hybrid format.

Earlier this year, Hack Reactor launched the online version of its immersive curriculum, Remote Beta, a web-based ALP. Other companies in the ALP sector are following suit, like Dev Bootcamp’s Localhost, which recently launched.

Here Comes the Future

To recap, the postsecondary system has been asked to adopt the new charter of career education, but for very understandable reasons — it has resisted this mandate from students, business leaders, and the President of the United States.

Against this backdrop, the market forces are so strong and clear that they have reshaped Codecademy, Hack Reactor, and Udacity — three deeply distinct products prior to 2012 — into educational programs that could be siblings. Expect to see some of the $500 billion a year currently spent on college tuition winding up in Silicon Valley, at institutions that offer career education, measure and ensure excellent student outcomes, and mix online and offline approaches.

If you thought it was dramatic when taxis became tech companies, just wait until it happens to colleges.

Featured Image: Bryce Durbin