Ten years ago USC and UNC bet on a startup to help them build an online graduate degree that was as good as their on-campus program. Ten years later 2U (NASDAQ: TWOU) is a public company that works with 22 universities to support 47 programs.

After building Hooked on Phonics, Chip Paucek founded 2U with Jeremy Johnson (now Andela CEO) and John Katzman (now Noodle CEO). The bet was that with institutional will and great technology, online education could support powerful learning.

In the early days, they found that faculty often had a fear of loss more than a fear of change. Engaging faculty in the production of high-quality courses usually dispels doubts.

Paucek sees their work as the third wave of online learning. The first wave was the for-profit schools with a lot of bad asynchronous courses that yielded bad outcomes. The second was massive open online courses (MOOCs) which expanded access but had low completion rates. In addition to 2U, Chip sees Purdue-Kaplan as another example of an interesting third wave partnership.

Live people mediated learning makes the difference according to Paucek. He came to appreciate that for himself while completing an online MBA while taking the company public.

Programs aiming at licensure (like nursing) have strong clinical placements–key to driving strong student outcomes said Paucek.

The high engagement, live video pedagogy is designed to eliminate the back row where students can hide (they call it #NoBackRow). While it varies by program, many degrees are roughly half synchronous and half asynchronous. Learners often spend a lot of time on the phone with each other and instructors.

2U appreciates brand stewardship, “These are not our programs,” said Paucek. The company provides a combination of technology, recruitment, and student support services that yield an 84% student retention rate.

Do Degrees Still Matter?

Paucek thinks degrees will matter for decades, particularly in areas of licensure. Adding to programs for nurses and physician assistants, 2U will be launching an online veterinary medicine degree.

But the company is moving beyond graduate programs to certificate programs. 2U recently announced a deal with Harvard to deliver a non-degree certificate in business analytics. The new executive certificate program is designed for business leaders, including MBA graduates, seeking to modernize their analytics skills and learn new ways to analyze, interpret and take advantage of increasingly complex data across all industries.

In the anytime anywhere learning category, 2U recently announced the acquisition of Cape Town-based Get Smarter, a leader in collaborating with universities to offer premium online short courses to working professionals.

2U produces a great podcast on emerging issues called The Front Row. It often highlights experts from university partners.

There are very few venture-based EdTech companies that have gone public. 2U’s success is a positive sign for the sector. “As a percent of GDP, the dearth of public companies in education doesn’t make sense,” said Paucek. He added that being a public company has been great for 2U causing them to build better systems and become more predictable.

The high production value format, the full engagement pedagogy, and the wrap-around services have made 2U a leader in this third wave online learning.

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