Originally presented during EducationConnect 2015 on 10/15/15 in NY, Ryan Craig, Managing Director, University Ventures discusses the state of higher education today and how it is being disrupted.

1. Ryan Craig
Managing Director and Author,
University Ventures
@ryancraiguv

2. College Disrupted
The Present and Future of Higher Education
September 2015

3. Part I
State of Higher Education

4. U V C O N F I D E N T I A L // T R A D E S E C R E T
Strengths And Weaknesses Of U.S. System
Biggest strength:
Highest rate of
matriculation; diversity
of students
Biggest weakness:
Isomorphism (the four “Rs”)

5. U V C O N F I D E N T I A L // T R A D E S E C R E T
Crisis Of Data
• “My only question is if he’s that good a hitter, why doesn’t he hit better?”
- Billy Beane
• “Good hitter” in baseball = 4Rs in higher education
OBP in baseball = ??? in higher education
• Positive steps: New College Scorecard and Brookings Value-Added Ratings

6. U V C O N F I D E N T I A L // T R A D E S E C R E T
Crisis Of Affordability
• 1970s: typical student could pay tuition by working 182 hours.
• 2013: it takes 991 hours (full-time job for half the year).
• Wealth gap between young and old is at its widest point.
• Typical household headed by 65+ year-old has net worth 47x greater than
household headed by someone under 35.
• States disinvesting in higher education.
• Likely having a negative impact on economic growth.

7. U V C O N F I D E N T I A L // T R A D E S E C R E T
Crisis Of Governance
• Missions tend to be multifaceted, complex and vague.
• Sometimes there’s a double-bottom line.
• More often, so many bottom lines, there’s really no bottom line at all.
• How do fiduciaries exercise appropriate governance?
• Symptoms:
• Growth in noninstructional staff
• Athletics
• Research?

8. U V C O N F I D E N T I A L // T R A D E S E C R E T
Crisis Of Governance
• Texas Tech spent $8.4M on a waterpark with a lazy river and waterslide, paying for it with an
increase in student fees.
• Auburn has developed a $52M waterpark including a 45-student paw-print-shaped hot tub and a
20-foot wet climbing wall, paying for it by raising its student activity fee from $7.50 to $200.
• Pensacola Christian has put in a $1M wave rider.
• North Dakota State is building a waterpark with a 36-foot vortex of swirling water, a fireplace on an
island in the middle of a pool, a rain garden to mist lounging students, and a zip line atop it all.
• Clemson is developing a 38-acre Lakefront property to include “blobs” – floating mattresses placed
so students can jump “like [on] American Ninja,” says the University’s director of recreation.
• Missouri State has put in a waterpark complete with zip line and lazy river, but insists on calling the
lazy river a “current river” because Missouri State students are “not lazy.”
• Missouri has a lazy river, waterfall, indoor beach club, and a grotto modeled after the one at the
Playboy Mansion.
• Louisiana State is building a lazy river that will spell out the letters LSU in the school’s signature
Geaux font, paid for by quadrupling of student fees.

9. U V C O N F I D E N T I A L // T R A D E S E C R E T
“Bankruptcy be damned” – LSU
“We will be the benchmark for the next level”
- LSU Director of University Recreation

10. U V C O N F I D E N T I A L // T R A D E S E C R E T
We Are Seeing Impact Now
• First for-profits; enrollment down by half over last 5 years
• Small private and midsize state universities: 70% effectively failed to meet budget for both freshman
enrollment and net tuition revenue in 2014-15
• Gallup-Purdue survey: only half of 30k college alumni strongly agreed that higher education
investment was a good one.
• Only 38% of younger alumni.
• Employers also dissatisfied: Ernst & Young UK, Google.
• "Higher education has to get past the ‘take our word for it’ era. Increasingly, people aren’t.” – Mitch
Daniels, President of Purdue University

11. Part II
Impact of Technology

12. U V C O N F I D E N T I A L // T R A D E S E C R E T
Technology Starting To Impact Campus
WHAT WORKS: THE NEW CONSENSUS
• Flip classroom so “transfer of information” occurs ahead of class
• Incorporate of technology in the classroom (handheld clickers or smartphone apps) to
quickly ascertain (typically via multiple choice questions) whether students have
understood key concepts
• Integration of active learning techniques to improve understanding of key concepts
• Through technology (again), ascertain whether learning has occurred i.e., do more
students now understand key concepts?

13. U V C O N F I D E N T I A L // T R A D E S E C R E T
The Promise Of Technology For Higher Ed.
Stage 1:
Accessibility
Stage 2:
Affordability
Stage 3:
Efficacy
We are here

14. U V C O N F I D E N T I A L // T R A D E S E C R E T
The Promise Of Technology For Higher Ed.
Global media phenomena Actually More of the Same
But Represented
Something Important

15. U V C O N F I D E N T I A L // T R A D E S E C R E T
Technology Goal #1: Simplify
• Steve Jobs hated complicated manuals, saying products needed to be so simple that a
stoned freshman could figure them out.
• If there’s one product or service that should be designed so that a stoned freshman can
figure it out, it’s higher education.
• Complex rules are hard to follow. Complexity is the enemy of
completion.

16. U V C O N F I D E N T I A L // T R A D E S E C R E T
The Promise Of Technology For Higher Ed.

17. U V C O N F I D E N T I A L // T R A D E S E C R E T
Goal #2: Approximate Controlled Focus
• Controlled focus vs. focus by choice
• Theory of flow:
• Highly challenging work
• Student has sense that skills are above average and more than
adequate to succeed with the work
• Goals are clear and feedback is consistent
• Likely solved by gamification and adaptive learning

18. U V C O N F I D E N T I A L // T R A D E S E C R E T
Power Of Gamification
• 70% of gambling revenue
• Only game materially improved by technology (gamification):
• Illusion of control
• Appearing to operate on variable payout
• Near misses 30% of the time
• Increased arousal (bells and whistles)
• Immediate gratification

19. U V C O N F I D E N T I A L // T R A D E S E C R E T
Promise Of Adaptive Learning
SIZE MATTERS
Larger student community interacting with learning objects
= more effective the learning system
= better student outcomes

20. U V C O N F I D E N T I A L // T R A D E S E C R E T
The Smartphone Challenge
What Doesn’t Work: The “Holy Trinity” of Online Learning –
content/lecture, discussion, assessment – doesn’t translate to
smartphones
• Navigating curriculum challenging on smartphones
• Discussion boards can work well on smartphones
• But smartphone posts likely to be much shorter and informal
• Assessments
• Formative assessments work well
• Summative assessments do not
• Solution: purpose-built apps
• Very different from allowing mobile access to courses with traditional
online architecture

21. Part III
Market Direction

22. U V C O N F I D E N T I A L // T R A D E S E C R E T
Market View
• Elite universities will be fine
• For the rest, starting to see “Great Hollowing Out”
• Retail: Sears, JC Penney, Gap, J. Crew
• Restaurants: Olive Garden, Red Lobster, TGIF
• Likely connected to decline of middle class
• Question: “Discounter or Premium Provider”
• With market trend, can you afford to be anything else, or to not choose?

23. U V C O N F I D E N T I A L // T R A D E S E C R E T
Areas in Need of New Investment: Both Ends of Market
Discount providers
• Medicine
• High-end IT (coding)
• Integration of value-added brands and content
• International pathways
Discount providers
• Institutions providing low-cost programs
• Entirely online
• Competency-based
• Technologies/service providers empowering low-cost
programs
Technology-based products
• Increase efficiency
• Reduce cost of delivery
• Support premium programs with
innovative technologies
Connection to employment
• Technologies matching students
to jobs
• Technologies matching institutions
to employers (“double-click degrees”)
• Self-serve, low-touch
• Institutions and service providers providing
direct connection to employment, improving
likelihood of employment outcome
• High-touch

24. U V C O N F I D E N T I A L // T R A D E S E C R E T
The Full-Stack Higher Education Company
• Q. What is at top of higher education “stack”?
• A. Jobs
Full-stack companies need to:
• Develop and deliver specific high-quality educational experiences that produce graduates with
capabilities that specific employers desperately want
• Work with students to solve for the financing of the educational experiences
• Connect students with employers during and following the educational experience and make sure
they get the job
They may not look like traditional universities

25. U V C O N F I D E N T I A L // T R A D E S E C R E T
“Full-Stack”: “Just-In-Time” Education
“Top-Up” Programs Alternative Models

26. U V C O N F I D E N T I A L // T R A D E S E C R E T

27. U V C O N F I D E N T I A L // T R A D E S E C R E T
Just-In-Time Model for…
Healthcare
Biotech Financial services
Energy

28. U V C O N F I D E N T I A L // T R A D E S E C R E T
Just-In-Time Can Be Integrated With Degrees
SEO MARKETING CODING SALES DATA SCIENCE FINTECH

29. Part IV
The Great Unbundling

30. U V C O N F I D E N T I A L // T R A D E S E C R E T
Degrees: Default Currency of Labor Market

31. U V C O N F I D E N T I A L // T R A D E S E C R E T
Unbundling 101
• Music
• Album/CD bundle to iTunes
• Television
• Cable bundle to Netflix and HBO Now
• Now Verizon and other cable providers starting to offer choice
• Unbundling shifts producer surplus to the consumer
• Bachelor’s program is also a bundle
• Does every element provide adequate benefit to every student?
• Gen. ed. courses
• Courses in major
• Distribution requirements
• Library
• Extracurriculars
• Athletics, lazy rivers, research?
• What might prompt “The Great Unbundling”?

32. U V C O N F I D E N T I A L // T R A D E S E C R E T
Finer Currency Increases Market Efficiency

33. U V C O N F I D E N T I A L // T R A D E S E C R E T
A Better Term for “Competencies”

34. U V C O N F I D E N T I A L // T R A D E S E C R E T
Competency Marketplaces

35. U V C O N F I D E N T I A L // T R A D E S E C R E T
Double-Click Degrees

36. U V C O N F I D E N T I A L // T R A D E S E C R E T
What SaaS Has Done to Enterprise Software…
SaaS MODEL:
ADOBE CREATIVE SUITE BECOMES ADOBE CREATIVE CLOUD
• Build product from Day 1 with focus on customer experience and value
• Unbundle into component parts
• Decide on your business model
• There may be many
• “Customer for life” mindset
• Major opportunity

37. U V C O N F I D E N T I A L // T R A D E S E C R E T
New Business Models
More revenue from
employers/ placement
and less reliance on
Title IV
Medical
assistant
Nurse
Radiologic
technologist
Paid Free
NoYes
Sonographer
Cost to job-seeker
Guaranteedoutcome

38. U V C O N F I D E N T I A L // T R A D E S E C R E T
New Competition
~100 RPOs with over $100M in revenue (vs. ~ 20 for-profit universities)

39. U V C O N F I D E N T I A L // T R A D E S E C R E T
We May Find…
More value in owning competency profile than in delivering postsecondary education
Major question: If competency marketplace attributes competency to you, who owns that
competency?

40. U V C O N F I D E N T I A L // T R A D E S E C R E T
Will Degrees Go Way Of Debutantes?
• Unclear ROI
• Too exclusive

41. U V C O N F I D E N T I A L // T R A D E S E C R E T
Wait! International Students Have A Say
Challenges in emerging markets:
• Irrelevant Curricula
• Spoon feeding
• Underfunding
• Cheating
• Shortage of prestigious, world-ranked institutions

42. U V C O N F I D E N T I A L // T R A D E S E C R E T
Import/Export Opportunities
Challenges in emerging markets:
• Irrelevant Curricula
• Spoon feeding
• Underfunding
• Cheating
• Shortage of prestigious, world-ranked institutions
Today:
Importing Students
Tomorrow:
Exporting Programs

43. U V C O N F I D E N T I A L // T R A D E S E C R E T
University Ventures
1745 Broadway, 20th floor
NY, NY 10019
(212) 202-3100
www.universityventures.com