Harvard and MIT just sold edX and decided to cross the river…to get water

The rhetoric of those involved does not hold up. Still, recently it became public; Harvard and MIT are selling off edX, to firm 2U. Why? Instead of listening to what they themselves try to claim, here is how to understand it. Is it perhaps about actively trying to avoid to make an important strategic choice?

The owners’ own main argument for selling off edX to 2U is that, edX in this way gains more muscle – at the same time as 2U gaining a bigger marketing place. The owners claim, rightly, that it seems to take a lot of resources to become a global, strong, player in the growing market for E-learning.

The buyer, 2U, spend just as much money into marketing than the whole cost of Coursera, a sign on how crowded it already has become in the digital space to ´acquire students´ – that´s how many actors, that wants to stress growth much faster than what natural growth give, play this game. Therefore, some also believe it´s about creating a bit lower sales-cost (as if sales-cost IRL was low).

But 2U does actually not have as much muscles as one might assume. They are loosing money themselves, have even borrowed money in order to be able to afford edX. And Harvard and MIT themselves have much stronger muscles than 2U.

What were the owners of edX really thinking there?

If you just concider an investment as a pure short term financial affair, not as strategically important for your long term business, then why not cash in when the prize is good?

Both Harvard and MIT can afford to invest, big… if they perceive it as important. Their own resource banks are seriously big, among the strongest in the entire United States. And just by investing around 60 US Million into building edX they now have ended up with 800 US million. A pretty decent kick-back.

Instead of selling off; they could have decided to grow that investment much more. But they didn´t.

Does Harvard really think it’s more interesting to invest in other companies’ digital future than in their own digital future? Because, that’s exactly what they really seem to do, check here. They invest heavily in companies like Microsoft, Apple, Facebook, and Google. Adding to that; these particular companies, in their turn, invest in edTech.

What happened, really?

It´s a bit ironic that Harvard on one hand invests in companies that in turn invest heavily in the very industry in which Harvard itself is established and on the other hand sell off edX.

Feels a bit like crossing the river for water.

Did the owners sell off just because other players in the last year have been tempted to cash in? Coursera, for example, went on the stock exchange at sky-high valuations as early as this spring. edX has a different legal form, a foundation, which may make that particular solution a bit difficult – but now they are losing the non-profit advantage.

A short term financial affair is something different than a strategic decision.

Did the owners just take the opportunity now that COVID has given the whole area increased interest?

Were the owners dissatisfied that edX have not managed to get bigger than they have become and therefore decided to leave it? edX’s growth in the years before COVID has not been on par with how the talk about them, and the actual growth, was only a few years ago. But if so; why not change the management team, even the strategy of edX, if they thought e-learning was seriously important? Their main competitor, particularly in US, Coursera, have grown much more during the same time period.

Do they want to go out digitally all alone, without edX as an intermediary? After all, some of the funds they receive from the sale will be used for the further development of digital learning. There are already online-courses to take directly from Harvard as well as from MIT. Is edX, nowadays, in the way of them reaching out directly to the market?

MIT is pushing for their own version, MITx Online, which actually already have million users enrolled, while they ´just´ get 9 million via edX.

Assuming themselves being strong enough as independent from edX?

Well, maybe.

But if Harvard and MIT seriously thought it costs a lot of money to become an important and successful player on the e-learning market, and they also were interested in to becoming one…why just put the money they get by selling of edX into their future digital learning-fund? They could easily have put far more money in such kind of development, if they wanted to.

One ought to remember that originally; edX actually just got 60 million – peanuts to actors like Harvard and MIT.

Branding comes from the old times when hot iron was used in order to ´brand cattle´. Today it has become a term for “what´s in the head of the customer”.

What one do not invest in tell as much about a corporate strategy as what one do invest in.

If Harvard and MIT were seriously interested, they could have invested much more than they have done so far in e-learning.

Is it perhaps so simple that the owners are starting to get a little worried about their own brands?

Harvard and MIT have now, through all the courses they have given at edX during the last 10 years, given away their own brand at least 10 times more than they themselves have managed to do in the last 100 years.

It is literarly already possible to see the consequences of this – check out peoples profiles on LinkedIn. Who hasn´t ´studied´at Harvard or MIT today? Who hasn´t a certificate from both of them?

At edX, there are currently 383 Harvard/MIT courses. Say that its average gets 200,000 students, a not at all impossible figure – some a million, others a bit under 100,000.

Rumor has it that Harvard and MIT will have at least 10,000 new students in less than a week as soon as they sign up for a new course at edx. Can it even happen in less than a day?

A ship that goes down is difficult to bring up again. It takes time to build it, but goes much faster to sink it.

Then suppose that 5% pays for a certificate, the approximate figure that the MOOCs have – probably much higher for Harvard and MIT. It would give 383 x 200,000 x 0.05 = at least 4 million distributed certificates.

Traditionally; Harvard brings in 2000 students a year, MIT; 1500 – when they were formed, of course, they were significantly smaller than today (Harvard, year 1636, MIT, 1861). A total of 3500 students. Assume this size for about 100 years, then I’ll take it very high. Would give 3500 x 100 = 350,000 degrees issued. That compares with 4 million certificates issued in just 10 years, through edX.

Have Harvard and MIT now become concerned that their brands are sinking ships?

Was it so simple that the faculty at Harvard and MIT, most universities run by a kind of partner structure, the faculty decides, thought that edX has now taken a little too much space from the owners themselves? Well, if you know something about partner structures, would such kind of argument surprise you?

Imagine you after decades of hard work finally had got a tenure at Harvard, or MIT, and then ´suddenly´ your own employer decided to put your ´business card´ online and push it out all over the globe, partly even for free, at the same time as mixing it with other, less prestigous, ´business cards´. What would you then say, if you got the chance to raise your voice internally?

What would Harvard and MIT be in the long run, if they were available for everyone? Something very different than what they are today is the answer.

A luxury brand can’t be for just about everyone.

All of this is genuinely hard to find out the answer to by just doing an analyis from the outside. So, of course, I am just speculating here. But still; the most plausible interpretation remains this…

Neither Harvard nor MIT sees it as their main strategy to take part of the ongoing race to become the biggest, and most important, player in the E-learning space. Instead, their strategy is to continue to do research and classical teaching, preferably irl – with a small, but due to COVID now perhaps a bit bigger, twist of e-learning on top. In other words: it’s about staying in their old business.

Ain´t that how a ´non-strategic choice´ on how to cope with a situation of a digitalized, even disrupted, business landscape for education could look like?

One might wonder: will that strategy hold for them in the long run? Well, maybe, perhaps, possible, peradventure, for them, since they in particular, at least so far, have somewhat unique brands on this market. But even on that, I am not totally convinced.

Digital powers are so strong that they have a tendency of finally even forcing really strong, old, brands to rethink their strategy. It has already happened in a lot of other industries, why not also education? Kodak, EMI, Blockbuster, Wallmart, IKEA, Disney…the list becomes longer and longer.

After all, universities hardly signed up to be a subcontractor to an e-learning platform, even pay for it, that is no much different from everyone else that already exists.

How many other established university partners of edX will now also start to drop out – even if Harvard and MIT claim that they will keep their online-courses at edX? And what will that lead to?

2U is an interesting platform, but actually not that unique among plattforms – a bit higher prices, more complete programs and much more aggressive sales organization than some of the others, but what else?

The unique thing about edX, also Coursera for that matter, was precisely the ownership connection to universities with globally strong brands. That´s how they could grow much faster than others. That’s why a lot of patterns ones joined. That´s also why an unusually big amount of people enrolled with them – they could actually have gone somewhere else, why didn´t they?

On top of that; Coursera seems to give a bit better royalty to their partners than edX.

I would be very surprised if a decent proportion of all the universities around the globe that have been part of the edX partnership structure do not now gradually leave (how big marketing place did then 2U actually aquire?)

But then, after a while, a new way of digital platforms will emerge, though perhaps not called MOOCs. Unless; each single university on the globe try to go to the market by themselves of course (not very likely).

The battle among digital platforms and students is far from over.

Have, still, several of the universities on the globe not really decided on how to cope with a digitalized, and a future disrupted, business landscape for education?

Is it possible to continue with an old strategy when a business landscape fundamentally change character?

Making a decision on how really to cope with a digitalized business landscape for education still seem to be a strategic choice left to be made by a lot of the incumbents.

But $ 800 million in return on investment of $ 60 million can perhaps help at least some important players avoid doing so for some time to come.

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