How is it that Harvard and MIT founded EDX as a non-profit organization, were supported by 500 universities in the world, and then sold the venture for 800 million dollars?
2U, a company that makes university programs accessible to the online market, acquired edX in July 2022, the pioneer venture of Harvard and MIT from 2012 for open online courses, for an eye-popping amount of 800 million dollars.
From the deal, 2U gets access to edX’s 50 million users (most of them outside the US), 1,200 corporate clients, 500 partner universities, and, of course, a world-wide brand. 2U’s course catalog is valuable for growing markets such as India and Southeast Asia and edX’s registered learners will be a welcome addition.
edX is at a disadvantage against Coursera, the provider of online courses and educational programs – for profit. 2U’s expertise and experience in marketing and supporting students will make it possible to compete against Coursera. Some of the collaborations with the universities were made possible precisely because edX was a non-profit, but in the face of the growth of the online education market, it seems that edX will eventually be converted into profit platform. Significant regulatory and taxation questions will need to be resolved before the deal closes.
The ecosystem of higher education is undergoing massive change. As with any significant change in the ecosystem, will be those who will be more successful and those who will lose and even extinct. These systems are about relationships and the change that is taking place is that we are seeing non-profit universities, which previously shied away from for-profit suppliers, are now happily partnering with OPMs (online program management) or even for-profit suppliers in some form of acquisition.
There are a lot of talks these days about creating a marketplace for post-secondary education, like Amazon created for retail. This may or may not be 2U’s ambition, but the company has become a dominant player in the higher education ecosystem. However, any company hoping to create the dominant market for higher education faces at least three challenges:
- Higher education is a heavily regulated industry, especially in the US.
- Education is a complicated “product” by nature, with many intensive human components. Algorithms cannot do what a trained faculty member or counselor can do when students have difficulty learning or experience a crisis, especially when it comes to disadvantaged students who need more support
- Traditional higher education is slow to change, slow to move, and slow to adapt, but it is a massive and influential industry and will not sit idly facing of existential threat.
The writer, Paul LeBlanc, is the president of Southern New Hampshire University in the US, one of the largest universities in the US and often described as one of the most innovative, serving approximately 180,000 students, mostly online, but also in traditional programs.
