Where do MOOCs get off?

In my December issue I covered the very likely possibility of a Udacity IPO, Udacity are cutting costs, doubling down on their high growth business areas and raising prices. This all seems likely to lead to an IPO. Coursera have long been considered next in line for an IPO as they took on Maggioncalda, who probably picked in part because of his own experience in successfully taking companies through to IPO.

But IPOs are not the most common exit for companies, acquisitions are and the news in December of the launch of Facebook’s learning platform suggests suggests the major social networks are now ready to enter Edtech and may want to acquire to gain access.

Facebook’s Learn.fb is starting small, with just 13 courses but it follows on the footsteps of Facebook jobs and Facebook mentoring. For Facebook it’s a way to diversify revenue, especially given recent stagnation in their growth. If a social network creating a job market and then adding education sounds awfully familiar that’s because it is, LinkedIn are doing exactly the same — and they acquired Lynda to get them traction at scale. Like LinkedIn, Facebook will be well placed to solve three aspects that have bee dogging MOOC platforms’ B2C model: jobs, credentials and scale.

I’ve previously (here and here) suggested that the core driver for the MOOC market is about job seeking and that platforms or companies that can better deliver on the outcome will have a strategic advantage. Udacity had multiple attempts at this, bootcamps achieve this and last mile programmes are entirely geared towards this integration. The larger, online only platforms have also tended to fail at this. Udacity aborted Job guarantee and stuck to soft, scalable offers, Coursera had a similar experience. There are various reasons but the short answer is that it is hard and the efforts don’t scale. Bootcamps while small on any individual level, they are able to guarantee (within reason) a consistent and known output in terms of their graduates which in turn increases the employability outcomes.

That brings us to the second issue — credentials. The core problem of any credential is that it is unknown and thus employers can’t assign a value to it, creating a chicken and egg problem because if employers don’t value them, why should learners pay for them (at least at volume and at price)? The three main approaches to solving this (and they are not mutually exclusive) are (1) branding to try and get traction e.g. Nanodegrees and Specializations (2) Credit bearing e.g. MicroDegrees from edX and likely something from FutureLearn and (3) B2B integration — by selling the courses to businesses directly as B2B training, they get (a) the revenue from business and (b) businesses build awareness of the courses — Pluralsight are the masters of this but Coursera for Business’ recent success suggests a similar strategy.

But MOOCs are still a bit unknown and while they’ve all made varying degrees of substantial progress none have had a breakthrough moment — a true challenge to the University degree, at scale. It is this, that makes the advent of the social networks into Education a potential game changer, Facebook and LinkedIn are uniquely placed to bring all three things to bear to make MOOCs a success, they are just missing one thing — the MOOCs.

But what is this ineffable MOOCy quality? In Jeff Maggioncalda’s recent interview with Julia Stiglitz (formerly of Coursera) . His doubling down on online degrees was a recognition that their big brand universities were one of their only USPs vs Pluralsight and Skillsoft etc and notably for LinkedIn and Facebook that’s largely the only thing they are missing.

That may not mean an acquisition, LinkedIn allowed third party providers in, including edX so they could just open up a marketplace or buy Udemy. But if the business models look good — like Udacity and Coursera’s do — it makes a lot of sense for Facebook or LinkedIn to make an acquisition and deliver vertical integration on this. Not only could they drive forward growth by making themselves the market places for education and jobs — but an education offering with top universities would have a halo effect on non MOOC offerings on the platform.

Facebook seem the more likely to acquire as they are playing catch up to LinkedIn and acquiring say, Udacity or Coursera would give them a huge leg up in users, courses and brands. That said, LinkedIn are more acquisition hungry. In terms of who will be acquired, it’s difficult, Udacity is much easier since it’s closer to IPO and more tech focused (i.e. services the core market). Coursera are bigger in users, courses and overall brand but would be a trickier prospect, Universities would be deeply reluctant to be integrated into either but especially Facebook given its role in the downfall of democracy current ethical quandaries.

That might seem scary for MOOC platforms but arguably not being acquired is just as scary. If the platforms continue to double down on Education their three advantages coupled to some of the deepest pockets of any corporate make them a truly formidable player that could crush the margins of the MOOC businesses.

I’ll leave you with this image, which as well as capturing my argument signifies my personal flourishing as an artist :-p.