UNext began its fully online life in 1997, founded by University of Chicago trustee and law professor Andrew Rosenfield. UNext is the 650-person corporate parent of fully accredited Cardean University, named for the Roman goddess of doorways. Cardean opened its portals with capital from Michael Milken and Oracle CEO Larry Ellison via their Knowledge Universe entity.
By 1998, Rosenfield had stamped deals with Carnegie Mellon, the University of Chicago, Columbia, the London School of Economics and Stanford. Each school got a 5 percent interest in Unext, and in return their faculty develop courses for Cardean degree programs. Knowledge Universe retains 20 percent. Cardean today has 400 students enrolled in its one MBA program with a tuition cost of $30,000.
UNext's has spent $190 million to build it technical infrastructure. Rosenfield says his company is on the verge of a major expansion that he expects will build enrollment and bring UNext closer to its vision of being a worldwide provider of top-shelf higher education for non-traditional students. He spoke freely with Greentree Gazette editor Richard Hoffmann.
Why was UNext created?
We formed UNext to bring education to people everywhere, typically to someone who's a working adult with a family. We didn't set out to create an internet business, we set out to create an education business. The internet was attractive because it is a two-way, participatory, interactive and engaging medium - exactly the opposite of television.
What's the problem with televised instruction?
Learning by voyeurism is a complete farce. Learning works when people work, read, write, talk, act and interact. If that were not so, the greatest universities in the world would have giant televised lecture classes. Look at the British Open University and others that have had access to very fine television stations. They quickly recognized that television didn't work by itself, and went to a model that added congregated synchronous breakout sessions.
What has UNext done instead?
At tremendous expense - an order of magnitude larger than anyone else has spent - we created a point-to-point architecture that facilitates learning-by-doing at a distance. Technology-assisted learning allows point-to-multipoint interaction.
Isn't that how brick-and-mortar universities work?
Not at all. Faculty provide resources, stimulation, guidance; but students educate themselves intensively in dorms, cafeterias and hallways, libraries and student centers. The structure of a great university actually is driven almost entirely by the compression and compaction of highly motivated students interacting with each other. The classroom is critical, but it's a very small part of how learning happens at a great university.
Bricks and mortar provides the best way to learn, then?
Physical campuses have immense advantages if you live in a community of others engaged in learning. However, that's available to very few people in the world and a relative few in the U.S. Something like three-quarters of people in the US today who are in college are working full-time, raising children, or are over 25 and juggling part-time work and school.
Where does Cardean fit in?
We have found a way to bring genuine learning principles and high-quality education to large groups of people for whom congregated full-time education is either uneconomical or something they missed due to their age or status. Broadly speaking, we engage students with each other. We couple learning objects of our own creation with activities to create problem-based learning situations, so that people have to do rather than watch.
How have your students responded?
Very well. But again, don't mistake what I'm saying. This is not as good as separating from work and family, and going full time to a Top 50 congregated MBA program. That's better still, and we tell people that.
So you're not in competition with traditional educational institutions.
They have completely different goals and aspirations.
Give an example please.
Princeton University is so rich that you can't figure out why it needs to raise more money or even charge students to attend. From its fantastic number of applications, it could enroll ten times as many qualified students. Princeton is the size it is because that is convenient to its central mission. It creates a community of scholarship and power. Princeton is not driven by either business opportunity or social responsibility to educate more people than they do.
And your mission?
Ours is quite the opposite. We're interested in teaching. We have a different form of organizational structure, and our ambition and goal is to teach people globally. Few, if any, research institutions have such a goal. We want to educate everyone in the world who has a passion to become educated, is willing to do the work and is capable of succeeding.
Everyone in the world?
In the next 30 years, the number of people who will learn through technology-based learning will dwarf the number of people who learn on campus. That does not mean we should in any way reduce our efforts to cause more and more people to learn on campus. If on-site learning grew globally at a tremendous rate, online learning would still be a tremendous opportunity. They're complements, not competitors; separate channels for separate groups of people.
Are you building the Cardean brand?
A brand helps people find you. It also stands for the quality of the customer experience. Starbucks has built a fantastic brand that no one ever heard of 15 years ago, because they've built a fantastic relationship with their customers that has spread almost virally throughout the world. We are interested in branding in exactly that way. That only happens over time.
So there's a bit of retailing strategy involved?
Adult learners don't arrive with a sense of relief and gratitude that they've been admitted to the club. They are already successful, employed, busy and upwardly mobile. They actually don't react badly to being graded, even flunked. They react badly to getting an answer three days after asking a question. They want to be treated as valued, paying customers, which is exactly what they are.
Who else has taken online education to the level you have?
Nobody. Some other firms do independent correspondence, with e-mail instead of stamps. Others are more imaginative.
Is anyone trying to imitate you?
Not to our knowledge. In today's market, a start-up with our objectives would not easily find the necessary financing. That might not be true in three years. There are established firms who will be able to launch with the change in their left pocket.
Are there other barriers besides cost?
Online education is valuable when people learn, not just attend. Many non-educators had the idea that merely putting content online was education. However, people want to learn, not just get done. They want a program that offers genuine enhancement of knowledge and ability, one that will enable them to succeed rapidly.
Is the demand for that growing in the US?
The number of people in the U.S. who want to obtain a degree-based education while working and raising children is truly immense. Current estimates have 350,000 people completing undergraduate degrees or getting a masters online. These are pure degree-seekers, not people taking a course here and there to deepen a skill. That number is likely to increase to 3.5 million by the end of mid-2006.
What about internationally?
The demand for education is growing faster than anything I can think of. The landscape is as big as markets get. Health care and education are the two giant markets, about equal in size globally at about $5 trillion each. There is no firm in the higher education market that has as much as one percent of market share. It's utterly un-concentrated, and the areas of biggest population growth like India, China, Singapore, Japan, Korea and Mexico have few incumbent suppliers.
What are the obstacles in those countries?
First, they don't have the facilities. Second, they don't have the teachers, a bigger problem. Looming even larger is economics. American education's largest subsidy is not federal money. It's the fact that the U.S. economy is rich enough to allow lots of people to be unemployed between the ages of 18 and 22. In many parts of the world it's unthinkable that productive young people are not at work.
Sounds almost like a catch-22.
The solution is to educate people while they are working. The only way to scale up to educate many working people is through technology-assisted education. So we think the international dimensions are much larger than in the U.S, gigantic in fact. If there will be 3.5 million people in the US learning online in three years, there will be many times more than that in four or five years worldwide.
How well are you doing in the U.S. market?
We entered the U.S. market as an accredited degree-granter, and we began with an MBA degree. We thought the quickest way to build a business was to sell directly to other businesses. And quickly we got General Motors as our first major customer. Right now we have about 400 MBA students.
Actually your growth hasn't been very quick.
During our startup, the internet's valuation crashed. All internet businesses were afflicted with mistrust, even ours. Most of our effort in the first few years went to building infrastructure. We were in the middle of building when the financing crisis hit.
How did you survive?
We were treated the same way by the financial markets as on-line groceries and the like. Fortunately we had very strong partners and people who believed in us. Now we're very optimistic. Our capacity will serve tens of thousands of students, and we intend to do so this year and next.
What's a major difference between Cardean and a bricks 'n mortar institution?
Like us, they have a huge fixed cost, but they can serve only a fixed number of people. Bricks and mortar are not easily scalable.
How do you market your programs?
We continue to market to business. Thomson has joined us in our sales efforts to large corporations. We have another partner called Affinity2 that covers small businesses. We have a fee-sharing arrangement and both partners have equity stakes, which aligns our interests perfectly. In addition to dealing with employers, we now have individual students coming to us directly. They found us in a variety of ways.
Would you team with traditional institutions to market online learning?
Not at the MBA level. Perhaps at the undergraduate level. We'll have more to say about that in the future. We've partnered with schools to create curriculum, but they are not teaching these courses and the student is by no means enrolled in those schools. We benefit from their wisdom and exceptional courses, but we are an independent University.
Cornell, NYUonline and, most recently, Columbia's Fathom closed down their online operations. What was the problem?
In the '60s, even GE was building computers. They soon figured out they would be better off as a customer of IBM than as owners of a computer company. That's the problem that traditional universities have in entering this new phase of education. Unless they are willing and capable at having a business with different goals, staff, organization and structure, they're not particularly advantaged. In fact, they may be disadvantaged.
So, who is your competition?
We don't take students from other online providers like Apollo or Walden. Our competition truly is ignorance. We are trying to serve people who, if they don't consume our service, largely do without. We're in a positive-sum business. If I get 50,000 students, I probably won't take them away from anyone else. I just expand the number of people who go to college.
Do people think Cardean represents the future of higher education?
I certainly hope not! We're not rooting for online to displace on-campus learning. The best hope for the world is that more and more people get the opportunity to go full-time to a physical campus. That said, we're also hopeful that more and more of those who can't will have the opportunity to learn online, because it's distinctly valuable, although second best.