The Online Education Bubble

I felt I ought to write this piece, after reading today that investment in e-learning is due to grow to 107 billion in 2015 & this Andreessen Horrowitz podcast on the ‘software eats the world’ theme – referencing education. Yes, I know I said it’s a zombie conversation, but with headlines as big as these, I just can’t resist taking another stab at it.

Why is there a problem with online education?

Because we’re throwing money at something that is broken. It’s broken for two main reasons: we don’t really understand learning – i.e. we don’t actually have a solid theoretical framework on which to answer simple questions like ‘what is good learning?’ ‘How do people learn?’ and secondly it’s broken because in the absence of a foundation, all manner of dysfunctional conventions which arose in the Victorian era are now being carried into the digital approach.

But will they buy it? There’s your investment question. If what I am saying is true, why is online education booming and where will it go?

Start with the customer. There are basically two use-cases for online education: if it’s helpful and if it gets you a ticket. 

1. Helpful stuff: learning online is now probably the main way adults learn. Only they don’t realise that – probably you didn’t. That’s because it’s not ‘education’ (or formal learning) in the way we would recognize it: rather, we hit a problem we go look something up. From medical conditions to gardening tips - sometimes we just browse skateboarding stunts. The difficulty with this class of online learning is that almost all the best stuff is user-generated and free. The exceptions are of course interesting: corporations have weird and wonderful procedures that you can’t Google. There are still some specialisms that are poorly represented on the web.  
2. The ticket trade: So why is there any interest at all in online education? It’s because education isn’t about learning – it’s about the certificate trade: you pay for certificates, and you can trade these for better-paid jobs. Simple. Only this market is breaking down: the first way it is breaking down is that there are now better ways to prove your worth. We all knew that most people’s qualifications said nothing about their capability (not least because they were in Ancient History or such like) – but we hired them anyway because the certificate said ‘brainy & socialized’ and we had no other choice. But now we can see their capability – in the same way we can judge restaurants – by looking at the ratings, comments and timeline - and we're becoming a bit more suspicious about hiring people 'just like us'. Thankfully I can now bin the CVs and turn to LinkedIN. The second reason is this: what happens to the worth of a certificate once you can get it for $5 online? Will I trade it for a job, then? Sure, I still want some record of your learning – but I’ll judge that from your portfolio, your ratings, your contributions etc. – not from some weird cash-for-certificates scheme.

So the problem with education is not its value, it is its worth. As I have remarked before, a MOOC is a bit like persuading people to believe in God by putting church online. The problem is not really that people are struggling to get to church, the problem is that just don’t believe anymore. 

The learning that actually takes place in the educational system happens outside the classrooms. We forget almost all of the stuff we needed to pass the test, but we get the certificate. The certificate was a ticket to a job. But all this stuff is disrupted. We learn online, we socialize online.

So what survives? 

The first class of learning will boom. If you are an expert with a great portfolio you can micro-monetise knowledge sharing – for example with advertising – but your resources will generally be free at point of use (because you have your competitors). And the problem is that the people who know useful stuff (as opposed to the stuff needed to pass exams) are generally not in education. And the overlap really isn’t that great. There will be opportunity for apps, videos, blogs from people who know how to do useful stuff and can market themselves well. Maybe a subscription-based ‘expertise-exchange’.

Short-sighted Universities will invest heavily in attempts to monetise reputation until the bubble bursts. They can see the writing on the wall. Beyond that, the smarter ones will develop partnerships with big businesses and develop innovative, project-based curricula. These will contain very little in the way of content (you can get that online after all), and more about providing a structured set of challenges that approximate real—world competence and lead seamlessly into real projects. They won’t need the certificate trade as the portfolio will speak for itself. The challenge for Universities today is that they have expertise where they don’t need it (in content) and none where they do (in creating a digital, challenge-based curriculum – the kind of thing Roger Schank has been busy doing).

For this reason, corporations will extend and new institutions will be born to provide something a bit like online apprenticeships, utilising approaches that are more structured and depend heavily on gamified, challenge-based and simulated experiences that merge into actual work (in the way that DuoLingo does, for example). At the beginning of your ‘course’ you are paying, by the end you are getting paid. It will be hard to say whether groups of teenagers hanging out in Starbucks are learning or working, or who they are working for without a close inspection of their transactions.

In summary, If you think that the future of online education is kids in Africa using mobile phones to join virtual classrooms at Oxford University, then hold onto your money.