[Updated, see below] Traditional four-year universities have always had to compete for students. They’re vying not only against each other, but against community colleges, the military, online institutions like University of Phoenix, and, in an age of increasing economic pressure on the middle class, the work world. (Some 34 percent of U.S. high school graduates in 2012 chose not to enter college, or could not afford to.)
But now universities have a new and potentially more worrisome rival: Silicon Valley.
I’m not just talking about the companies that are putting lectures online, such as Khan Academy, Coursera, and Udacity. These purveyors of massive open online courses (MOOCs) tend to portray their offerings as supplements to a classical undergraduate education, or as extensions designed for audiences who wouldn’t otherwise have access to university-level instruction. That’s an idea existing schools understand and are pursuing on their own, through efforts such as edX, the joint project at Harvard, MIT, the University of California, Berkeley, the University of Texas, and other schools to publish MOOCs and interactive learning materials.
No, these days universities also confront a much more direct challenge, from venture-backed companies using technology to reinvent the full undergraduate experience—from the structure of classwork to the composition of the faculty, the look and feel of the campus, the standards for evaluating students, and the way the whole package is priced in the market.
The best-funded and most-discussed of these challengers is the Minerva Project, founded three years ago by serial entrepreneur Ben Nelson, the former CEO of photo-sharing startup Snapfish, which was acquired by Hewlett-Packard in 2005 for a reported $300 million. Nelson, 38, has called Minerva a “perfect university” that will trade huge lecture courses for small faculty-led seminars, and physical classrooms for online video exchanges. The for-profit company won $25 million in seed funding from Benchmark in 2012, and three weeks ago it admitted 45 students to its first class; it expects roughly 19 of them to arrive in San Francisco in September for the beginning of their freshman year. [Update 4/23/14: Minerva said this week has decided to double the target size of its founding class, which will now include two sections of 15 to 19 students each.]
I had a long conversation with Nelson at Minerva’s downtown office on March 28, the same day the company was welcoming its first group of admitted students to San Francisco for a preview of the Minerva experience. Nelson has claimed that Minerva sets “the highest bar of any university in the world,” and he told me the first group of students were “spectacular talents.” Some 58 percent of them are women, and the same proportion, 58 percent, come from outside the United States. Three of the students have already started their own companies, and two hold patents.
When the students come back in September, they’ll be living together in a converted apartment building on Nob Hill. And that is perhaps Minerva’s only concession to the traditional paradigm of the four-year residential college.
The students won’t attend classes, exactly; instead they’ll use their laptops and webcams to log into Minerva’s Web-based platform for virtual seminars. [Update 4/23/14: Minerva has posted a video illustrating the seminar experience.] They won’t be graded through papers or tests, but instead by faculty reviewing recordings of seminar interactions to see whether they’re picking up key concepts and habits of mind. They won’t even stay in San Francisco: for their sophomore year the entire class will be transplanted to another world city, such as Mumbai. (The actual locations of Minerva’s second, third, and fourth campuses haven’t yet been announced. [Update 4/23/14: Nelson announced this week that Minerva's first two international residence halls will be in Berlin and Buenos Aires.])
The big idea at Minerva is that an immersive, four-year undergraduate education is still the best way to prepare the next generation of leaders, but that today’s elite campus-based universities are doing almost everything wrong. In Nelson’s eyes, most U.S. universities value research over teaching. They charge excessive tuition. They waste money on sports programs, classroom and office space, and lavish facilities for students. They exclude top applicants from other countries, unless their parents are likely to become big donors. And perhaps most egregiously, in Nelson’s mind, they charge students for lecture-based knowledge that should be free to everyone, while neglecting the task of building a coherent curriculum or teaching critical thinking skills.
Nelson has all the bravado of the archetypal Silicon Valley CEO—a Mark Zuckerberg, a Jack Dorsey, or a Travis Kalanick—who’s out to disrupt an existing industry and break a few things in the process. Though he’s a product of the Ivy League (he attended the Wharton School of the University of Pennsylvania), he’s dismissive of traditional fixtures of university life such as fraternities and tenure. He has a fondness for grand pronouncements, and he speaks in present tense about plans and programs that have yet to be tested with enrolled students.
And yet: bravado is probably a useful trait when you’re going up against a true behemoth. The U.S. higher education business collects hundreds of billions of dollars a year in tuition and state and federal grant money; has raised prices at a pace far exceeding the rate of inflation; and has been notoriously slow to adapt to new technological and economic realities. It’s clear that Nelson and the initial faculty leaders he has hired—including respected researchers and academicians like Eric Bonabeau, Diane Halpern, Daniel Levitin, and James Sterling—care deeply about the quality of higher education; so deeply, in fact, that they’ve gone outside what they see as a failed system in an effort to rescue it.
“In general, the best way to achieve success is to focus on absolute criteria, but to change the conditions around you,” Nelson says. At Minerva, that means discarding almost everything about traditional college life, except the Socratic ideal of the small group where a faculty questioner forces students to grapple with new ways of thinking. “If a student wants football and Greek life and not doing any work for class, they have every single Ivy League university to choose from. If you don’t want that, you can have Caltech, which is the only university that forces you to work, because they actually issue F’s and they don’t have football. But if you don’t want to live in Pasadena, you have nowhere except Minerva.”
According to Nelson, the whole Minerva experience will be tuned to do one thing: cultivate critical thinking and communication skills in future leaders, “the people who will create or invent or run the major institutions of society” in countries around the world. Nelson acknowledges the experience won’t be right for everyone. “There are a lot of students who want the campus life and the a cappella groups and the performing arts scene. That is not what we provide. Similarly, there are faculty who want to do research and get in front of a lecture hall and regurgitate the same lecture they’ve been giving for 20 years. We have a different model.”
When Minerva started to reveal its plans back in April 2012, observers naturally posed a slew of questions. What kinds of students would Minerva try to attract? How much would they be asked to pay? Who was going to teach them? Why conduct courses online, if the students are physically co-located? What would accrediting bodies have to say about the whole idea?
Today most of those questions have answers, or the beginnings of them. To win accreditation, Minerva has partnered with the Keck Graduate Institute, a Claremont, CA-based collection of biosciences degree programs. (KGI is itself a 1997 offshoot of the Claremont Colleges consortium, which also includes Pomona College, Claremont McKenna College, and Harvey Mudd College.) To run its online seminars, Minerva has developed a new cloud-based video conferencing system that, to hear Nelson describe it, sounds a little like Google Hangouts with a collection of extra tools for discussion and evaluation. Tuition will be set at $10,000, and Minerva has created a separate non-profit organization, the Minerva Institute for Research and Scholarship, to administer loans—but the founding class will attend at no cost.
In a broad-ranging conversation, I asked Nelson to elaborate on these and other matters, including Minerva’s technology, its prospects for an eventual exit or IPO, and its pedagogical model, which founding dean Stephen Kosslyn has called a “scaffolded curriculum” where professors impart key concepts and skills in one context and methodically revisit them in others. I’ve transcribed and slightly condensed our discussion below.
Xperience: You just admitted your first class of students. Who are they? What’s the profile of a Minerva student?
Ben Nelson: They are 45 students that are, to a one, really just spectacular talents. They are, in some regards, like the students you hear about that go to Harvard or Stanford; they are the ones at the top of their high school class. They are not the kind of average student that comes into a university. Not because they are doing PhD-level work in high school—even though some of them are—and not because they have some outrageous GPA—which, of course, most of them do. But because when you look at the totality of their accomplishments, academically and outside of school, and the leadership and initiative they have shown, and then when you analyze their minds—which we do, because we have these cognitive tests and we interview them—they are just off the charts.
X: Okay, they sound pretty stellar. But how do you square that with what you’ve said in the past about making Minerva a place that welcomes students who wouldn’t be admitted to Harvard or Stanford? How can you be elite and democratic at the same time?
BN: This is exactly what we are doing: both at the same time. To give you some perspective, I went to an Ivy League university 20 years ago. I went to Wharton as an undergrad, which is just as hard to get into as Harvard is. I was a Joseph Wharton Scholar, which is the top 7 percent of the incoming class at Wharton. This was at the very top of the top for American higher education. I just spent a week in China, and the students I met in China who were admitted to Minerva, each one of them would be considered not just a Joseph Wharton Scholar but they would be in the top half of the Joseph Wharton group.
But I don’t think any of them got into the top half of the Ivy League—Harvard, Yale, Princeton, Wharton. Maybe a couple of them. There were eight students—eight!—that got admitted into Harvard from all of China three years ago. Penn just released its statistics; it has an incoming class of 2,500 and less than 1 percent came from mainland China. And if you think all those students were admitted on merit, you are wrong. You can’t select the top 27 applicants from China; that’s not a possibility for these schools. They know who’s your dad, who’s your mom, and how much money did they contribute.
The bottom line is, [students from China] are locked out of the system in many regards. Now, for the American students, there are elements of that going on. There are going to be a few students, even from China, that do get into some of these institutions. If you set your standards at that level, of course some of those will have gotten into other institutions. But the point is that you can set a bar that is substantially higher than any other university, and be inclusive of people who are completely locked out [of the elite American universities].
X: You don’t have a tenure system for your faculty. What are Minerva’s attractions for a professor who could get a tenure-track job at a traditional university?
BN: The compensation is the flexibility they get. The tenure track is a double-edged sword. Faculty are generally happy to have tenure themselves, but they are generally very angry that their colleagues have it. So, one of the biggest elements is that they don’t have to have colleagues with tenure. They have academic freedom and flexibility; they have the opportunity to be Minerva professors.
Having said that, we don’t expect our professors to necessarily be here forever. If a professor gets a plum, full-time position at Princeton, where they get to teach one course a year and hang out, great. We wish them well. This is an important thing to understand. One of the reasons we don’t have the same faculty model is that we don’t want our undergraduates to pay for prestige. We want them to pay for value. Undergraduates at Minerva do not subsidize research; grants subsidize research. We also don’t take overhead. More of your [grant] money goes to you. We don’t lay claim to your IP. At other universities, if you do novel work, the university owns the patent. At Minerva, you own the patent. Other universities will tell you you have to be on campus nine months out of the year. For us, you only have to be in class, for a one hour and ten minutes session, and you can do that from anywhere in the world. So the level of control you have over your life, your IP, where you live, who your colleagues are: that is a level of control no other faculty has.
X: Let’s talk about the technology. There are plenty of learning management systems out there, but at Minerva you’ve built your own software from scratch. Why? What are its main features?
BN: The last company where I was CEO was Snapfish, and in the online photo space, there were three or four companies whose entire reason for existence was to build photo sites for other companies, like retailers. They powered every photo experience you have heard of; it’s called white labeling. At Snapfish, we built our own platform, because the others weren’t very good. In 2004, 2005, a few of those retailers came to us and said, ‘We are sick and tired of these platforms that were built for us, because they were built for the CIO and not for the customer. Can we please have yours?’ and we said, ‘Okay.’ And we wound up powering Costco, Walmart, Walgreens, Flickr. It turns out that the way to create great scalable systems is to build it with the end user in mind.
In edtech, you basically have the same issue. Most of the platforms are not built for the student. They are built for the procurement office of the university. So, like most enterprise IT, it’s awful for that reason. It turns out that even the most fundamental building blocks, we have to build ourselves. The reason for that is because our pedagogy is so unique. The platform is being built specifically for the curriculum we have in mind and the subjects we are teaching.
The general edtech world has a dual focus, neither of which is ours. One is the focus on the individual student: adaptive learning, competency-based learning, for single consumption. The other is mass broadcast: MOOCs and the Khan Academies of the world, the lectures. We aren’t interested in those either. We are glad they exist, and our students will take advantage of them to cover material we don’t teach them. But what we are focused on is taking the 19-person seminar, and making it run better than it can be run offline. No one else has that special requirement. Because there is no market for it, there is no focus on building it, which is why we built it ourselves.
X: So what’s the pedagogical style you have in mind, and how will you embody it in a 19-person, online seminar?
BN: We are showing it soon, but let me describe it. There are few important design principles around what we are building. The first is that every single Minerva class is a seminar. There are no lectures. Professors are banned from talking very long—and we are tracking it, so we will know. It’s about engaging students and getting them into active learning. That means one camera to one student at all times. There are 19 students and one professor, live in the room. Then there are all sorts of tools incorporated into the site that enable everything from very basic participation to extraordinarily deep interactions.
To give you an example, the very first time we trialed the platform was a year ago at the University of Washington Medical School. The professor had two sections of the class: one offline around a table and one on our platform. He told us that the online class blew the offline class out of the water. The reason was really basic, even though we didn’t think of it as a design feature at first. When he would ask a question in his offline class, four kids would raise their hand and he would pick. The worst case scenario is that the student knows the answer, and then the conversation is over. The point is engaging them in analysis, so you want to avoid the right answer. In Minerva, they type their answers. You can pick the most interesting wrong answer first and then engage the students who had the right answer to walk the student with the wrong answer through it. That is not something that people who don’t care about active learning think about, but it’s something you can do much more easily online than offline.
Another example is, we do breakout sessions where the students break into groups. They have a shared whiteboard, shared files, shared documents. The professor can “walk” into and out of the breakouts. At the end of the breakout, everyone goes back into the main classroom. Try to do that offline, and there is overhead, with chairs shuffling and people checking Facebook; if you do three or four breakouts you’ve used 20 minutes on overhead. With Minerva it’s instantaneous.
X: Still, there will only be 19 students in your first class, and they will all be right here in San Francisco. Wouldn’t it be easier to get them all together in a single classroom?
BN: Much easier, but we do nothing that is easy. We only do what is right. This gets to another point about our curriculum. When you allow classes to happen offline, you effectively predetermine that the class is the ultimate unit of measurement. You are left with no choice but to make your degree a collection of 30 unrelated units. We simply don’t believe in that mode. We think curricula should be thoughtful. They should have purpose and be highly structured, while leaving room for effectively infinite choice.
The way you do that is through this concept of the scaffolded curriculum. You create a base in the freshman year which is a set of several dozen habit-of-mind concepts that are subject-matter independent. You use the subject matter to illustrate the point, but the point is to teach you these tools around critical thinking and effective communication. Then, in the sophomore year onward, but even during the freshman year, you apply one concept to another, and scaffold up and make the students apply concepts from one class to subject matter from another. It’s a psychological concept called ‘far transfer.’ If you want to learn it, you have to learn it in one context and apply it in another.
There is no way we could conceive of engaging that class in an offline environment, because every student needs to be evaluated on every single one of those concepts. That’s why there are no lectures: time is too valuable. The classroom is too critical for us to allow it to go into randomness, or for what happened in the class to vaporize into the ether. You have to constantly evaluate the students. Because it’s one camera to one student, we record all the proceedings. The professor goes back through the class, repeats it at 2x or 3x speed, and grades everyone on habits of mind and concepts, using a set of rubrics. If a professor notices you are struggling with a particular concept in your morning biology class, that afternoon your philosophy professor can see that you are having a problem and reintroduce that concept in a completely different field to apply it. And if you make a breakthrough, your political science professor can see that you have made that breakthrough and apply it in yet another exercise. You can’t do that offline.
X: But it sounds like you’re completely doing away with the actual content—the factual information students need to know about the real world. Isn’t there some role for the old “sage on the stage” model of education? Looking back on my own college experience at Harvard, some of the most memorable experiences for me were watching great teachers like Stephen Jay Gould, whose classes were always packed because he was a master lecturer.
BN: We expect our students to watch MOOCs, read books—what a crazy idea!—and engage with adaptive learning platforms. Our critique of that is that traditional universities charge their students for information that should be free, and that they themselves are giving away in other contexts. Think about the absurdity of it. Stanford goes and says, ‘We are giving away our AI course free to everyone on the planet—except if you were admitted to Stanford, in which case it will be $5,000, please!’
X: You’re going to move each cohort at Minerva to a new city each year. What’s the pedagogical theory behind that? Again, it seems like you’re creating a logistical headache for yourselves.
BN: You’re right, it would be much easier to have them stay in San Francisco. Even easier, not to find them housing in San Francisco but say we can do this in Chico. But you have to look at what we are trying to do. We are trying to educate leaders in a variety of fields, in a global context. That is what the curriculum is designed for. In fact, if you look at what every top-tier university purports to be doing, they are supposed to be educating the people who will create or invent or run the major institutions of society. And so, the question is, who do you want running your institutions? Those people who have been sequestered away from society and sheltered from it, and have gotten this kind of approximation of the real world, and then go off? Or those that in this critical age where they still have brain plasticity and are still getting to understand how things work, are not sheltered from society but thrown right into it?
Much like we think knowledge dissemination should be free and ubiquitous, and it is not the purview of the university to charge for it but to curate it, we also believe that experiential education has to be experienced. It’s one thing to take a class on cultural differences. It’s a hell of a lot better to go to India and try to hail a taxi and be respectful of the person who was there before you, or stand in line for the train from Guangzhou to Hong Kong. That is how you learn culture. That is how you learn the way the world works.
X: Other attempts to create online universities, notably Altius Education, have crashed and burned recently after failing to win the support of the traditional accreditation bodies in higher education. But Minerva, through KGI, has already received accreditation from the Western Association of Schools and Colleges (WASC) for several of its degree offerings. How did you avoid the wrath of the accreditation system?
BN: Here’s how we look at the accreditation system. We have long publicly argued that there should be a new pathway for innovative companies and institutions to get accreditation. We have also always said that we don’t need that new pathway. We are extraordinarily well funded. We have an academic roster that would make any university on the planet blush. Probably most importantly, there is zero financial exchange with our academic partners for incubation. We are not paying them a dime. It’s the same way KGI was created: It was incubated within Claremont Graduate Universities and then spun out.
So the way we didn’t incur the wrath of the accreditation folks was by not giving any reason to incur wrath. I don’t know if there was any reason given for the Altius decision, but I do know there was a transaction there—a revenue split [between Altius and the host institution for its online college, Tiffin University of Ohio]. Whether or not there was fire, one could imagine there was smoke. You could question, well, why are they really doing it? Who is in control? Is it above-board, or they just paying them for their accreditation? Most profit-non-profit relationships are like that. And we refused to do that.
WASC has been great. They had some initial confusion about the contract [between Minerva and KGI]. It took their legal counsel a while to get it, because it is complex. But we have now done three reviews with them and passed all three, and are doing a fourth next week.
X: So if I understand you, you’re saying that the accreditation system truly is anti-innovation, but at Minerva you have had the resources to work around that?
BN: What we are saying is that the traditional way is great, if you are starting Minerva. If you are starting the world’s greatest university and you’re not paying off anyone to do it, what is the accreditor going to say? No?
The process was actually really good for us. They made us go through a huge amount of documentation and made us answer a bunch of questions that we never had to answer before. You may say, ‘Oh, we’ll figure it out when the students show up,’ but WASC doesn’t let you do that. Students are coming: you need to know what orientation looks like. You need to do emergency planning.
I am not in favor of bureaucracy, but it was good for us. But if I am Codecademy or Udacity or what have you, I am not going to want to go through all of this stuff. I think it’s bad for the system. So we need to introduce new models without the same barriers. The system is set up to keep new players out.
I have been on the stump about this. When you force innovation to go outside a company, the company will die, and that’s no big deal. It is irrelevant if University X goes out of business and University Y takes its business. That happens all the time. But if you force innovation outside of an entire industry, that industry will die, and we can’t afford for that to happen in higher education. That is what the accreditation system is forcing.
At the high end, Minerva can come in. But there are no new Minervas. We announced our founding two years ago and we don’t have a single follower. Meanwhile, there are at least two Airbnb’s for dogs. Seriously. What else in the Valley doesn’t get copied?
X: What makes Minerva a venture-backable business?
BN: It’s an excellent question. Minerva, I would argue, is a classical venture-backed institution—which means that it’s almost entirely unable to be venture-backed today. It is addressing a deep societal need in a revolutionary way, at a much higher quality and lower cost than incumbents. Most importantly, it derives value less from profits streams and much more from the value of the assets it creates: the brand. That is about as classic, textbook, 1980s-era venture capitalist as you can get. But that’s not what VC is today, except for a few practitioners at the very highest level.
X: When you say the asset is the brand, do you mean that the exit scenario here for the investors is to raise Minerva’s visibility until you’re able to go public, rather than selling to some other company or educational institution?
BN: Public markets are probably the only logical exit. But the secondary markets are becoming more and more robust. There are all these vehicles now that aggregate [private] investors. Are we going to go public or stay private? I don’t know, but the liquidity event is going to be the trading of our shares. We will not sell to another university—they will not be able to afford us.
X: How do you take what you’ve got—five faculty members and 19 students—and scale it up to something that produces significant revenue?
BN: The good news is that the scale we need to achieve is not foreign to higher education. My alma mater had 10,000 undergraduates. Iowa State has 50,000. Because we are trying to do something which is that size, yes, we add the complexity of various locations, but frankly a lot of those universities also run study-abroad programs.
Think of the complexity we avoid. No sports, no classrooms, no facilities except residence halls. No administrative buildings, no faculty offices. And our faculty-to-student ratio is going to be very good. A lot of universities are at eight-to-one or five-to-one; we are not going to get to that level. We are going to be in the teens-to-one. So the faculty will be a rational-sized faculty from a university perspective, the student body will be a rationally sized student body, and even if we wind up getting to an Ohio State level, it’s an order of magnitude that is realistic.
X: Are you designing the technology platform so that it can scale up to handle tens of thousands of students taking hundreds of classes?
BN: As much as we need to, at this point. Every platform has its architectural iterations on the way up. The technology hurdle isn’t the number of classes you have, it’s what happens inside the classes. That is the hard part. Getting 20 live video streams to work effectively across borders: that is the challenge. If you have one class or 20 classes, it’s just more Amazon instances.
X: Tuition at Minerva will be relatively low—just $10,000 per year. That’s so low that, on the one hand, I wonder why you’re bothering to collect it at all, when you have only a couple dozen students. On the other hand, is it high enough to really fund the operation and become self-sustaining as you grow?
BN: That’s where having 7,000 to 20,000 students comes in. If we don’t collect tuition, we are not self-sustaining. The founding class is 19 students. But when you have a few hundred, or a couple of thousand students a year—we think $10,000 is a great deal compared to $40,000.
But it’s still $10,000. It’s a lot of money. We have a huge respect for that. At my last company [Snapfish] I sold my product 9 cents at a time. At a $10,000 ticket price, I have to deliver the most spectacular experience in the world.
X: How will financial aid work at Minerva, and how will it differ from the practices at other universities?
BN: It will be different in a couple of very important ways. Number one, it doesn’t distinguish based on who you are or who your parents are. It’s not about credit scores. That is really important. Second, at least for a while, we imagine that a lot of it is going to be about low-interest student loans. The reason for that is you can have a much broader impact with a much smaller amount of money than if you do scholarships. Loans are a market, and you can create mechanisms to make the market work at a much lower cost per student than scholarships. Scholarships are not a market: they come from generous individuals. You can try to scale that, but you have to fight for every dollar. We are more focused on creating scalable mechanisms that don’t discriminate.
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