A View from the Top

Tuesday, March 8, 2022 - Future U. welcomes Richard Levin, fomer president of Yale and the former CEO of Coursera, to dissect some of the challenges staring down higher ed right now: legacy admissions, rising tution costs, skills-based training, online learning and more.

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Transcript

Michael Horn:

All corners of higher education are experiencing their own pressures and opportunities right now, from selective institutions in the Ivy League that often drive the mass media narrative to those in the world of online learning workforce development and adult learning. Sometimes those worlds are so disparate that it's difficult to have a conversation that is both comprehensive and coherent about the future of higher education in America.

Jeff Selingo:

This isn't a new tension of course, but it does seem that with much of higher education at an inflection point right now, the decisions leaders make in this environment are incredibly important. That means making sense of the broader landscape and the drivers. To help us have that comprehensive wide-ranging conversation, we're really excited to welcome Rick Levin, who served as president of Yale for 20 years, and then served as Coursera CEO for three years during inflection points in both of those organizations histories.

Sponsor:

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Jeff Selingo:

I'm Jeff Selingo.

Michael Horn:

I'm Michael Horn. Jeff, I want to take you back to 1994. The scene in New Haven is dark. Yale University's buildings are literally crumbling. Its finances are in shambles. A Yale student, Christian Prince had been shot and killed in 1991 in New Haven. The relationship between town of New Haven and Yale, it’s frayed to put it kindly. And at least one trustee wondered aloud whether New Haven was the place to even have a top university. Yale's prior president Benno Schmidt, basically fled from his post. And into the presidency walks Rick Levin in 1993, who had initially been looked over for the job by the search committee because he didn't seem presidential enough and he didn't have that president-level experience. And then one year in, 1994, on the cover of GQ magazine is the headline, “The death of Yale.” And the article reads once the bulldog of the Ivy League, Yale university now finds itself riddled with debt, doubt, and denial.

Michael Horn:

And yet over the next 20 years, Levin leads a complete turnaround at the university. Sparkling buildings, investments in the sciences, not just a financial rebound, but incredible fundraising. And with David Swensen’s stewardship, Yale becomes the envy of endowment management. And there's a restoration of New Haven and a relationship between the university and the town that breaks a lot of the historical tensions. And he manages to create a really global institution. And then as you know, just a year after he stepped down, he took over his CEO of Coursera, the leader of the MOOC providers that I think it's fair to say was trying to find its business model and its real value proposition in that world. And within three years he sets it on a path toward explosive growth, clear strategic value, and focus, and ultimately an IPO.

Jeff Selingo:

Yes, Michael, soon after Rick took over as president at Yale was when I was really starting to dig into higher ed, first as a reporter covering higher education, and then as editor at the Chronicle of Higher Education. And what was clear is that we often speak of higher education as a system, but it's anything but a coherent one. There are several different sectors of higher education that share certain things on the surface, but in practice often have very little to do with each other.

Jeff Selingo:

Their challenges are different, their purposes are different and their opportunities are even different. As a result, there are only a handful of leaders who really jump between them in such a prominent way and experience success in both. And given the enormous challenges and opportunities staring down at higher ed right now in this very big moment of change, we really wanted someone who can help us think about what it means to lead across these different areas of higher education. And Rick seemed to be a good voice for just that.

Michael Horn:

I think that's right, Jeff. And it's why I'm so excited to talk to Rick Levin today or as I knew him as an undergrad President Levin. And for those who don't know, and for full disclosure, when I was a reporter at the Yale Daily News, I got the chance to cover President Levin and half of his cabinet as a sophomore. And in practice that meant Rick and I literally talked on the phone roughly four times a week, not just about whatever I was writing on, but also to get comments from him for all of the other stories that reporters were working on.

Michael Horn:

And it was an incredible commitment, I would say, from Rick to students. And through that experience, I really came to appreciate his leadership style, his perspective, but frankly, Jeff, I also learned a ton about the university, higher education more broadly, and what it takes to create change in a really complicated organization with lots of different voices and perspectives. And he's continued to be helpful to me and my own career ever since. So with that is prelude. Rick, thank you for joining us on Future U.

Rick Levin:

Glad to be here.

Jeff Selingo:

So Rick, there are a lot of places where we could start. But I think our listeners will be curious to have you weigh in probably on a bunch of issues that are facing higher education today and hear you address them through the perspective you bring and the lessons you learned from your own time leading Yale and Coursera serving very different student populations of course. So let's start with some of the big questions I think being asked of selective institutions like Yale right now with a focus perhaps on admissions, since I've written a lot about that. The Supreme Court is going to hear a case about affirmative action. That's perhaps not new, but they're going to do so with a very different makeup of justices, of course, from the past.

Jeff Selingo:

At the same time, there's been a lot of point to criticism of the role of legacy and admissions. And we're seeing both bills at the federal level, but also even in Connecticut. And the extreme selectivity of places like Yale and the lack of growth at those places and at top universities right now. So we have a lot of pressure obviously on getting in. And of course then we have test optional, waiving the SAT and ACT requirements. And we're starting to see maybe those changes might stick. They're at least going to stick for the next couple of years. We'll see. So how as a leader, would you think about these questions and the pressures about how these institutions select their classes and what do you think of these specific challenges, whether it's legacy admissions, test optional, affirmative action, et cetera?

Rick Levin:

Well, thanks Jeff. Of course, you've written very incisively about all of these issues and I follow what you write very carefully, but I think it's a big problem. We only have limited resources at the top institutions and we have many more highly qualified students than there are spaces in those elite institutions. The obvious answer, which you hinted at to relieving the pressures is to expand. And I must say I've been a huge advocate of that. In my first years at Yale, we really didn't have the financial resources to do it because at a place like Yale, there's really no economies of scale. It's so intensive in terms of the matching of students to faculty, the physical resources we provide in terms of residential colleges, that when we did a cost study, we found basically if you expand the student body, almost every expense goes up in proportion.

Rick Levin:

So it doesn't really save a lot of money. So we had to wait till the university was in stronger financial condition. And by the middle of the 2000 decade, we began planning for two new colleges and we did finally open them in the subsequent decade, expanding the student body by 15% percent. Princeton had made a previous move of similar magnitude just a couple of years earlier. And I applauded that. I encouraged it in all my colleagues at the other elites to do that. And we had on the boards, when I left, plans for another two colleges. So we would've gone another, it would've been 12% at that point. The talent is there, the faculty would welcome being a bit larger. We're still a lot smaller than our counterpart state institutions. So in general, I do think expansion would be the best answer for relieving the pressure.

Jeff Selingo:

And Rick, let me just pause you there because do you feel like after the experience, not only at Coursera, but over the last couple of years during COVID and the rise of hybrid and online education, that that physical experience matching those students with faculty face to face, do you feel like expansion has to happen in the same way that it might have happened when you were there? Or do you think there are opportunities given technology to perhaps add some hybrid in there that gives you a little bit more flexibility?

Rick Levin:

Yes, I do. And I think if you could change the norms of behavior at some institutions, and for example, use a trimester or a four quarter system that would utilize facilities more effectively, there would be some benefit to that. It's been tried. And the only place that's, I would say partially successful at that is Dartmouth, but most places aren't very successful. So, that is an option. We'll talk about this I'm sure as the conversation goes on, but I think that the technology has an extraordinarily important place in the system of not only higher education, but what the bridge calls further and continuing education, the education of adults throughout their lifetime. Very important place, but it's place in the actual operation of the great universities of this world, the Ivy's, Ivy plus, the Oxford and Cambridge, it's limited.

Rick Levin:

You have technology-enabled classrooms, smart classrooms, they can do some great things, but I don't see the model changing because the model is about more than just conveying content. The model is about developing critical thinking skills, about forming character, about giving people scope and opportunity to do things on their own initiative, to form groups, to learn how to operate in teams and organizations, all of which are things that are more easily done face-to-face than through technology.

Rick Levin:

And so while I'm a huge advocate for technology for its purposes, I'm also a huge advocate for the intimacy of the liberal arts educational model for whom we can make it affordable and for those who are being educated to, and I hate to say it because people don't like elitism, but by those who are being educated for leadership in society, and for taking leadership roles. There are many other important roles, and there are other modes of modalities of education to help people accomplish those. So, sorry, we strayed a bit from the admission subject.

Jeff Selingo:

So I want to come back to the idea of these pressures on the seats. So we've seen this huge increase now of test optional, and as a result, huge increases in applications, when again, no more seats, but now we also have this issue around legacies, which seems to not go away at these selective institutions. And now we're starting to see this push both at the federal level and at the state level in Connecticut to ban legacy admissions. So these two things are playing at each other right now on these seats. What are your thoughts on that?

Rick Levin:

Well, legacy is the easier of the two? Let's take that.

Jeff Selingo:

Wow.

Rick Levin:

I think at most elite institutions, Ivy's, the preference given to legacies has done nothing but diminished steadily over the past 25-30 years because of the extraordinary surge in applications, the obvious influx of talent and opportunity for building strong classes. So, whereas the weight that legacy has in the probability of admission is probably less than half what it was when I started as president. And it's probably not very strong at all. What is a fact is that in the data, at least my data are nine years old now, since I've not been president for then, but up to that time, it was very clear, on average legacy students had better test scores, better high school grades, more activities, more athletics. You name it, go through the list of criteria and things that we look at. The legacy pool was markedly stronger than the average pool. So some disproportionate representation of legacies is almost inevitable-

Jeff Selingo:

Inevitable.

Rick Levin:

... if you're doing it straight on merit. And why is that? Well, because the education of parents conferred an advantage on those people of growing up in a household of highly educated folks. So it's not surprising. So I think that it's inevitable that it's a strong pool. It's also true from the study that my daughter, Sarah and Bill Bowen did 20 years ago now, that surprising result was that legacy students not only were more qualified in the applicant pool, but they outperformed their predicted college class rank when they got there. Whereas athletes, the main subject of their study, did the opposite. They were lower than the pool and they underperformed when they got there. So anyway, the legacy problem is taking care of itself is what I'm suggesting.

Jeff Selingo:

So maybe we should keep legacies and ban athletics?

Rick Levin:

Well, I had a pretty strong position on that and tried to reduce the number of recruiting slots at Yale, really without success. I did recruit... Yale was below the Ivy league averages and across the board in sports when I took this position, but I couldn't really convince my colleagues that we ought to de-emphasize athletics somewhat. I love athletics and I think excellence has its place and I think that athletes we admit are superb people and great athletes and very good students to boot. But, the question is what's the opportunity cost of admitting 200 plus athletes a year to a school like Yale? Wouldn't 100 or 120 be okay? This is sort of the question.

Michael Horn:

Yeah. I can affirm, I was going to say, Rick, that you are a big Yale sports fan though from when I covered you. So I remember that well, but I also remembered the stance. I want to shift a little bit, but come back to this costs question, because you mentioned the lack of economies of scale of expanding at a place like Yale. But as you know, and you needle me for sometimes, a lot of institutions catch a lot of flak around rising tuition and rising costs more broadly.

Michael Horn:

And we recently had Ron Lieber, the New York times columnists on the show and he decried the opacity behind what an individual student will actually pay for college on the front end when they're going through the application process. Now, Yale of course, has done a lot to bolster financial aid. A lot of that started under your time as president. Jeff was recently on campus in New Haven and just remarking how students from families with family incomes less than $200,000 often found Yale far more affordable than their local public options. So I'm just sort of curious as you step back from maybe just the Yale context and think more broadly, how do you think about these issues of rising tuition and costs across higher education and how to make higher ed more affordable?

Rick Levin:

Yeah, the case of the extraordinarily wealthy schools with large endowments, Harvard, Yale, Princeton, Stanford, MIT, it really is true that the net cost of education of is lower than state for low income families and even middle income families-

Michael Horn:

Much higher than that. Yeah.

Rick Levin:

... is more affordable than even the state alternatives. But when you look nationally, of course, it's a very different picture. And it's interesting. I haven't updated the data them about four years ago when I gave the Clark Kerr lectures at Berkeley. But I did update it then. And in the 15 years prior to 2017, what I found was state institutions, public institutions had a net increase in tuition, a tuition increase of averaging four and a half points more than inflation and financial aid at the same time went down relatively, so that the net price that is tuition minus financial aid for the on average for a student was, was actually growing at five and a half or about five and a half percent per year. Now, interestingly in the same time had private schools raised their tuition two and a half percent faster than inflation, but the net price was zero, increase was zero, because financial aid increased just as much.

Rick Levin:

So for lower and middle income families, the real problem has been the rise in state institutions. And I tried to unpack the source of that. And it's pretty interesting actually. If you look at state budgets over the long periods, since the 1980s, what you see is just a steady erosion of support for higher education and what is taking its place? Healthcare. So, the share of healthcare in state budgets has more than doubled in the past 30 years to more than 20-25% now of state budgets. And what you see is healthcare, education, transportation, infrastructure, primary and secondary school education. All of these elements have shrunk as a percentage of state budgets. My conclusion in this talk was if you want to fix higher education, you have to fix healthcare.

Rick Levin:

And it's a sort of a cheat, I suppose, but the erosion of state supports a real problem. At the same time, by the way, the Pell Grant system, which served us so well for so many years... I'm really preaching to the choir here. I know, Jeff, but the Pell Grants cover a much smaller share of tuition these days. So for the lower income families, it's the public sector that's failing and there are lots of solutions that I know the Biden administration is considering substantial increases in Pell Grants and all of that. And it would be important to do all that.

Jeff Selingo:

So Rick, if I could just quickly follow up there, because during the pandemic, the haves among higher education, in terms of institutions, they just got more. We talked earlier about more applications, but they also had these huge endowment returns, for instance. While, many colleges were struggling. The rich institutions just seem to continually get richer, whereas the struggling and middle institutions really do seem to be in an increasingly tough place with pretty challenged business models if you talk to their leaders and board members.

Jeff Selingo:

So as you think about this from a higher education system point of view, thousands of institutions in the US, publics and privates, what's the way forward for both the haves, which are probably a pretty small group, and the have nots? Is it that some of the have nots just go out of business, do the haves take over some of the have nots, which we're starting to see a little bit of in terms of acquisitions, in some cases? What do you think have bends to, and I know this is a system in quotes, but what happens when you have a growing divide between the haves and have nots among institutions?

Rick Levin:

I think the system could... Well, as you say, it's a complex set of systems, but let's take the privates first of all. That's probably the gloomiest picture in some ways is for the tuition dependent, medium-to-low quality private institutions, which are struggling with the economics. And they're also struggling with the demographics. The American college age population is not going to be rising substantially over the next period of time. And our immigration stance is problematic. We may or may not be letting enough foreign students in to take up the slack. So I think in some ways it's almost inevitable that that sector, the four-year, private liberal arts college, and even the four year private comprehensive university, that's not in the high quality tier is they're going to have trouble.

Rick Levin:

I think dozens, maybe even hundreds will close over the next couple of decades or three decades or merge or be absorbed or whatever, like you say. So I think that's a bit problematic. There is a conversion strategy. I have a very strong vibe that's idiosyncratic here. I think that we ought to pay much more attention to vocational education. And I learned this from my experience at Coursera, when I saw how much demand there was for skills training from people who had been through college and were trying to improve their career prospects. But I've actually studied the Singapore system of vocational education. And I must say, it's such an attractive alternative. It's so far superior to our community college system as currently constituted, because it is linked closely with industry. You go to the ITE, Institute for Technical Education in Singapore, and you see state of the art equipment in virtually every trade and profession.

Rick Levin:

You have Marriott Hotels equipping them with an entire mock hotel with every type of facility where they're training people for the hospitality industry. You see GE Aircraft has put in a whole constellation of equipment so people can work on being aircraft engine mechanics. It's phenomenal. And the placement rate into jobs after this kind of education is like 93 to 95% whereas our success rate with community colleges, it's below 50%. My big vision for reform the higher education system would be to give up the myth that community colleges are a gateway to four year colleges. They are for a very small fraction of the students.

Rick Levin:

And convert at least many of them to vocational education that really links to jobs and get people launched in careers. Now, we're not talking about necessarily low-skill jobs. Every one of these jobs practically in this Singapore school uses technology. Technology is going to be part of even low-skilled jobs in the future. So a really visionary approach would I think look at just something really substantial at that level, because that's half the students or more are in that system.

Michael Horn:

Yeah. And I think it's interesting, Rick, because also that clarity of mission could allow them to focus all their operations on that rather than being pulled apart in different directions with shoestring budgets in many cases, and really focus. And it's interesting, also, from my time in Korea, looking at the Meister schools and how they have semiconductor labs in these schools where people are going with state-of- the-art technology, it changes the prestige equation also a little bit on what's good and so forth. I want to stay just one more beat on this technology question before we jump into Coursera and skills gaps and some of those conversations. And you're still connected to Yale. Your wife still teaches there. You obviously know a lot about online learning. We talked a little bit about the technology before.

Michael Horn:

I just want to come back to it in this sense, which is we've seen startups like Minerva University really change the way they use technology. And I don't know that decreases the costs of the teaching and learning experience per se, but it's a very different use of technology in a small scale, seminar format and things of that nature. Do you see any room for that technology being used at a place like Yale? And do you think that'll be the reality? And if not, I guess I'm more curious your ideal and what you think will actually happen and why there might be a gulf, if there's any separation between what you think will become reality and what you hope to see in the future?

Rick Levin:

No. Well, there's clearly room for innovation and lots of... And I think the interesting innovation's going to come from faculty who get interested in technology and in figuring out creative ways to use it in the classroom. I've seen classes at Yale more on the science and technology STEM-type classes where students gather, you've got a set of interconnected computers, one on each conference table and the groups of students work on a collective problem on their equipment. They can broadcast to a screen, they can share solutions with the other groups.

Rick Levin:

And very intriguing with the right instructor, this can be really stimulating and fun and great learning experience for students. So, yeah. Are things like that going to emerge? Absolutely. And I think universities can invest in the staffing to support that activity, which Yale has done, and many other schools have done with enhanced teaching and learning centers that support pedagogical innovation. So I'm a big fan of that. There's certainly a place for it. Whether it's going to completely reshape the classroom experience, I don't know. My wife's not going to be teaching that way anytime soon I don't think.

Jeff Selingo:

Well, Rick, we're going to use this moment to take a quick break. And when we come back on Future You, we're going to talk to Rick Levin about his time as CEO of Coursera. We'll be right back.

Sponsor:

The episode is also supported by salesforce.org. salesforce.org is proud to partner with institutions like yours to build a better future for all. We believe creating a technology enabled, personalized, and continuous experience throughout the learner life cycle is so critical to driving student and institution success from anywhere. Learn more at salesforce.org/hired.

Jeff Selingo:

So we're back on Future You with Rick Levin, the former president of Yale and former CEO of Coursera and while honestly anything here could be a good segue into your time leading Coursera, the last question was as good as any. So let's go there. You turned a lot of heads when you decided to become the CEO of Coursera. So let's start with what drove you to take on that role and what was it like leading a for-profit company that was based on dramatically increasing access to higher ed? It was obviously a place that worked with a lot of institutions like Yale, but its mission and focus and value proposition was very different at the time you joined the company.

Rick Levin:

I was excited to take that opportunity. I didn't expect when I left Yale end up being an internet CEO of a startup company that had 50 employees. It was a big change in M.O., but I had pioneered online education, high access with outreach education at Yale. And what I learned when we started in 2000 with a little experimental venture with Stanford, Oxford, and Yale, producing courses for our own alumni called All Learn. And it wasn't financially successful and the technology was still primitive. And so internet streaming was jumpy and jerky. So it wasn't a great product. It didn't succeed. But what I learned was the faculty who were involved, thought it was amazing to have contact with students all over the world and that they then emailed with and corresponded with and they thought, wow, I'm actually reaching external audiences. What a great thing.

Rick Levin:

And so then when the MIT OpenCourseWare came down in the early two 2000s, we followed very quickly with Open Yale, which was to put some of our very best lecture courses, primitive again, classroom capture, we just took a camera into the classroom and recorded them. But the same thing happened, of people, from all of a sudden it was out there on the internet for anyone to see. And many of our courses had thousands of hits and many of our professors were getting emails from people all over the world saying what an amazing thing that Yale was opening up this precious resource to people. And I began to think about it conceptually and thought, this is a way to scale the university. What is the cost disease all about? The cost disease has to do with fixed proportions between faculty and students.

Rick Levin:

It's because as we still have 50 in person classes at these elite universities, but what if we had 50,000 person classes? And the same faculty could teach many more people, even in this low intensity way of just recording the video content. So I was convinced of the potential of this to reach a broader audience. And I thought it was a great way for the university, which is criticized for holding in to a limited number of people the extraordinary content it's faculty produce, give it away, give it to people, let people have... It's only part of what we offer. And it's the easily shareable part. And faculty publish their books, why not publish their lectures? And so I was sold this was a great idea.

Rick Levin:

So when Coursera came along, Yale, we had to have a faculty committee to take nine months to decide whether to join, but we did. And so we were off and running in that show. When I got to Coursera... Well, we can talk about the business model maybe down the road, but I learned a very important lesson there that there were really two audiences. There were the lifelong learners who, which is what we'd seen at Yale, the people who want to take Diana Kleiner's course on Roman architecture, because it's really interesting, and she's a great teacher, but then there were actually equal numbers of people who wanted career credentials, who wanted to advance their careers. And so they were looking for STEM-type courses or business courses to do that. And that was a key insight that came very quickly once I was at Coursera and actually was at the center of shaping the business model.

Michael Horn:

Rick, I think that's a perfect segue into the next question that I'm curious about, which is remembering the all learned days, by the way, I think I covered that partnership actually at the Yale Daily News, but I think it's fair to say that when you came into Coursera, like Yale when you came in as president there, it was in a place that was struggling. It had an incredible brand, it had grown users, it had incredible partnerships with places like Yale, great professors teaching on the platform, but it was a bit adrift in trying to find that real business model and what you just alluded to that value proposition. Who really wanted to take these courses? And so I'm curious, take us through how you conceptualized that opportunity and found that learning for those people that wanted credentials and then to advance in their career and how it perhaps changed then the direction you took Coursera itself?

Rick Levin:

Well, first a little revisionist history. It wasn't really struggling. It was suffering from the media hype cycle. The New York Times did a piece in 2012 saying, the year of the MOOC and predicted the whole world was going to change in three years. This was just barely two years later, not even. 19 months later. And yeah, we didn't have a hundred million learners then, but we had gone from a million and a half to where were you when I came in, 6 million learners in two years. So, it was growing, it was doing okay, but it was giving the product away. And it just started thinking about a business model when I got there and about the possibility of charging for some of our courses.

Rick Levin:

And first insight that we had about that was just looking at the data that among our most popular courses did bifurcate into the fun liberal arts courses on the one hand, and the career readiness courses. So that Andrew Ng machine learning course and one of our first multicourse sequences, the John's Hopkins data science specialization were big winners in terms of people joining. So we introduced a paid version of the course that gave you a certificate from the university. Unfortunately, we had already in place some kind of... Coursera gave a piece of paper to you if you finish these courses. We had to eliminate any reward for free and pretty quickly migrated to idea of audit versus course versus credential.

Rick Levin:

So we didn't want to abandon the free access, because we thought it was a great lead generator for future business. And besides it was fulfilling our mission, which was to provide access. So, with most Coursera courses, not the degrees, but most of the regular courses, you can audit the course for free. You can watch the videos, but what you can't do is take the assessments and get a certificate. And people pay for the latter and it worked. That proved out as a successful idea. We still only monetize maybe 10% of our learners. It's not like everybody's paying, way more people are watching the stuff for free than are paying, but we're half a billion dollar a year revenue company now.

Rick Levin:

So, the model is working. And then it was an interesting going to try to convince our universities, yes, we want your content, but we especially want your content that will monetize. And maybe you should want that too, because it will help you in the long run. And that was an interesting sell job in and I think in fairness I was a good person for that role because I was trusted by the... I was not a business person coming in telling him, hey, try this, you're going to find there's something in it. And because I was one of them and I think that really did help make the company.

Jeff Selingo:

So what do you think Rick then about where they're leaning in now? And it really seems, again, going back to leveraging all those student names that they have or potential student names that they've had and collected over the years, it seems like Coursera is really leaning into the OPM space. And being able to stand up some very low cost online degree programs for universities, thinking of the iMBA, for example, at the University of Illinois, but also many other institutions as well. Clearly it has this big user base to acquire students, lower the cost of marketing, which is such a huge cost for most of the OPMs, and offer everything from free to degree. So what do you see the space shaping up to be, and what are some of the biggest opportunities for Coursera for whatever you can tell us?

Rick Levin:

Jeff, you put your finger on the secret of Coursera's success in this space, which is... And we intuited this back in 2015 when we started with the Illinois degree. So 2014 I came in, we had just started with these multicourse sequences. We found that we could monetize by bifurcating the courses into audit and paid versions. And then in the summer of 2015, we undertook a strategic review. What else should we be doing? And by the way, we got Illinois interested in this degree with this disruptive concept of coming in at $20,000 for a two year MBA program, total, and realized that we could recruit students for precisely reasons you had. Because we had millions of email addresses and we didn't have to pay too much for marketing to get the students. Between the Illinois website, and their outreach, and our email list, we filled up the classes at that scale that was five times the throughput of their residential program.

Rick Levin:

So, and then we thought, what do we do next? And that's where we basically explored all of possible options. And it really led to a model that says we're going to be a full service educational provider at the higher education level ,with a set of content that ranges from individual courses to multicourse sequences, to professional certificates, to degrees. And so we have the spectrum and in many cases, the content's stackable, like parts of the degree you could actually take as a specialization and so forth or at least the non-assisted part, the part that's asynchronous and it can be done on your own.

Rick Levin:

So, we had a spectrum of content, and then we also thought about channels, where do we go, who do we market to, but we can come back to that. So as for the OPM, so the top of the pyramid here is of course the degrees, which are the most expensive product, and yet ones with potentially greatest potential for reshaping a person's life.

Rick Levin:

You put your finger in the secret, which is the low marketing costs allowed us to charge disruptive prices and convince universities you can scale and run your degree. And what we've seen, the consequence of this is it's not like we're driving you out of business or anything. But I think our example is directly responsible for 2U’s acquisition of edX. I think they saw they needed to have the same full spectrum offering with the mailing lists that could lower their marketing costs. And so they're now a direct competitor from across the whole spectrum of what we do. And I think other OPMs are going to find... And many of them are seeing that they need to do other things, shorter form content in order to increase their user base.

Jeff Selingo:

The problem, I guess, is that there's no other edX or Coursera out there for them to acquire. And that edX acquisition costed you a lot of money.

Rick Levin:

You know where there are things happening is India. There are some really good companies in India in all parts of the space. And there's consolidation going on there too. And some of those companies, one or two of them may well emerge as a direct competitor.

Michael Horn:

Rick, I think that's a good transition to the last question where we want to wrap up, because we've done a remarkable job, I think, of talking across the ecosystem in a relatively short amount of time. You joked beforehand, this could take a couple hours, but we talked a lot about the stories that people are talking about. I'm curious on your radar, what are stories that people aren't talking about, but maybe should be?

Rick Levin:

Oh, well, I hate to keep coming back to my pet idea, but I think vocational education from high school throughout a life is critical. And it's not like people aren't talking about it, but the higher ed sector isn't talking about it as much as it should be.

Michael Horn:

Right. K12 has started to talk about it, but less higher ed.

Rick Levin:

And there are many people in the Department of Commerce, Department of Labor and policy circles worrying about re-skilling American workers and the need throughout the lifetime to continue to develop skills. And that's Coursera's bread and butter, are the people taking these courses and these master's degrees is when they're 35 years old without having to leave their jobs in order to upskill. And I think universities are slowly coming to the realization that the role of the university and society is not the education of 18 to 22 year-olds. It's the education of everybody over 18.

Rick Levin:

And we're not going to be the exclusive providers of education at the adult level, but we have an important role to play in that ecosystem, particularly the master's degrees, but also professional certifications. So the lesson prior education is there's a tremendous scope here for expanding your footprint and expanding the nature of the things you do, many of which they're not only widen access and thus be socially beneficial and consistent with your mission, but also will raise revenue and help to offset the rising costs of traditional higher education.

Jeff Selingo:

And with that, we'll wrap it up. A big thank you to Rick Levin for spending a good chunk of time with us on Future You, and we'll be back next time with your questions and more. Until then, thanks for listening.

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