Khan Academy Competitor? Mike Feerick of Alison.com Talks About The Future of Online Education
By Paul Glader on September 2, 2011
Continuing Education, Feature, International, Open Source Education, Required, Technology
By Paul Glader
BERLIN — In the camp of free online learning, Irishman Mike Feerick believes his Alison.com has more to offer than the buzz-heavy Khan Academy. Feerick, a Harvard MBA and serial entrepreneur, has an impressive track record at several startups including his current project: Alison.com. It offers 300 free courses online that lead to training certificates and it has more than 700,000 people taking the courses globally. Mr. Feerick, an Ashoka Fellow, says the enterprise has turned the corner on profits in recent months. “I think we’re proving there is a market for free education online,” he said recently over coffee in Berlin. He points to the United Nation’s 1948 Declaration of Human Rights, Article 26, as justification for his business model: “Everyone has the right to education. Education shall be free…” He’s a key figure in the open-source learning world and a rival of sorts to Salman Khan. Wired Academic editor Paul Glader recently interviewed Mr. Feerick:
WA – How did you first decide to become a social entrepreneur in the education space?
MF – I’ve always been interested in social enterprise. Part of that came from working with Chuck Feeney – an American philanthropist [and founder of the Duty Free Shoppers Group]. I worked closely with him as an assistant 20 years ago. He’s been a huge funder of education. You can’t spend too much time with him without feeling responsibility for the world and wanting to do something about it… The wonderful thing about education is that it really underpins progress on nearly everything – from climate change, to ecology to economics. It’s all about people learning and teaching and improving. If I could make quality education free online, than I could be making my contribution to society.
WA – And how did Alison first start?
MF – In 2005, I kind of had a Eureka moment. I could see that server costs and broadband costs were going down and, at the same time, one’s ability to monetise any one page of web-content was going up. I realized then that one day, all education could therefore be available free online. I also saw what a scalable business this could be. I had a company that was turning over $1 million a year. I went home to my good wife and told her my idea to put courses on the web for free. I believed that, further down the line, we’ll be the pioneers and leaders in this area. In 2006, I had to start thinking how I would do this. What platform will I put it on, and how I would design it. In April 2007, we launched Alison with our first free customer and six courses.
WA – And how much has it grown since then?
MF – Zipping forward to today – 4 years later in April – we have just short of 300 courses online. We have more than 700,000 learners online. In the last 4 months, we have been more than breaking even, which has allowed us to invest in new, free content. I don’t have to be stressed out about how to pay expenses at the end of the month.
WA – How are you different from the Khan Academy or other players in this space?
MF — There are very few people doing what we’re doing. I’m trying to prove you can do this from the bottom up – asking for as little money as possible for what we do. If you can’t access scale, then this doesn’t work. The amount of money we make per learner is actually very small. It is increasingly difficult for 90% of incumbent players who want to charge huge margins and employ a sales force. We dispense with all of that. It’s just straight on the web. You either like it or you don’t. It’s a freemium model. There’s a couple of distinctions of how we work. If you’re an individual, nearly all the services we offer you are free. What you “need” to learn online is free, what is “nice” for you to have, you pay. When an organization gets involved, we do charge. When an organization comes to us and says, “we don’t have a budget,” we work with them. Our social mission is important to us. Learners in the developed countries are essentially paying for those in developing countries. We focus on creating learning products that can compete in the United States, Ireland or anywhere. Advertising is just one revenue element driving the site.
WA – How important is it for people to receive a degree at the end of their studies? Are you seeing that as an obstacle for free education?
MF – I see those colleges being demised longer term. Value, at the end of the day, is a very powerful force. If someone is putting on a business course and charging $12,000 for it, the real costs to them are very low. The price of online elements of education will go down very, very low. Once learning content is created, there is little incentive for someone to create it again when it is high quality. The market forces – the great invisible hand of our Scottish friend is going to be very destructive in this marketplace. What’s going to keep the pricing up is innovation. Teachers getting involved, providing one-on-one forums or giving lectures. Because the infrastructure cost of even that is so low, you are talking at the end of the day of the labor costs of the person. If you strip out the labor costs, what is left is that of the digital domain, an again, the marginal costs here are very low.
WA – What’s your view of the for-profit schools in the U.S., which are facing a lot of criticism and government regulation?
MF – There may be disruption going on in this market place. My view of the for profits – I think people give the University of Phoenix a hard time. Why are there 400,000 people signed up to the University of Phoenix? Yes, the market may be oversold. But some people are getting some good value out of it for what is currently available. Otherwise their subscriptions wouldn’t be so good. They have a lot of sunk costs in the business. But costs will still trend toward zero because of the costs. Their product is going to get better but, in my view, their revenues are almost certain to decline.
WA – Does that mean we are moving to a post-degree world?
MF – I think the United States is an entity to itself. Education has been so washed and diluted there. Clearly you have some of the best colleges in the world. Once you go beneath the Ivy Leagues and state colleges, you have absolute troughs. What’s going on at community colleges, where it takes 6 years to graduate from a 2-year program? It’s criminal what’s going on there! I think the Obama administration knows that and are trying to do something about it. It’s a global phenomenon too. Today, there is huge Inflation… 25% of people in a given college will have top honors. Anymore, when someone comes in [to work for me], I’m interested in how intellectually curious they are about a topic… So many people do degrees and it’s so meaningless.
WA – So where does this all lead?
MF – There’s clearly a shift… to value. People are asking, “Where is the value? Where does it lie?” When I hear people talking about a college education, it’s almost meaningless. What does that mean? A 2-year associates degree? That’s like a high school diploma in Ireland or Australia! There are a couple things about online education that make it a good business. Education is a $3 trillion figure (UNESCO stats) worldwide. It’s highly political, however. In every country, it’s highly political. It’s very nationalistic. Education systems all around the world tend to not go over the borders. But the web bullies its way. Education, generally, is very fragmented. There is no player in the world that controls more than 1/3 of 1% of the world’s education. There’s no one that’s really big. That’s why there is a massive opportunity here. There’s a lot of international, commoditize-able curriculum that could be made available very easily.
WA – Where are we migrating to with 4-year schools?
MF – In the universities today, you see that very few people turn up at lectures. Their view is they don’t want to listen to a professor reading out of a marketing book. They can do that at home. A teacher doesn’t have to deliver factual learning. What has to be delivered is the understanding of that knowledge. It’s like taking a piece of jig saw and organizing them in your head. The basic jigsaw pieces can be acquired on your own… Fact-based learning will become very strong and dominant online in my view. You won’t have the (in-person) lecture very much. It will be recorded online if anyone wants it. What will become much more important, then, is talking to people one on one or in groups.
WA – What will this look like technologically?
MF – Skype is a tremendous tool – the fact is that you will be able to pump up people in video and have them in a classroom easily on Skype in a year or so. You’re going to be able to have your study group assemble with immediacy online. You’re going to be able to talk to people, interact with people from a distance. This interactivity will enable you to learn really quickly. You can challenge or query anything being said with immediacy. That’s missing from the early stage of e-development. Tools on the web are developing so rapidly and are being led by companies like Skype.
WA – How do entrepreneurs and schools make up the lack of social interaction, of being in a classroom and seeing people’s faces?
MF – Where people have the greatest hesitancy of e-learning is that it truly is not all about learning facts or experiments. It’s also about interacting socially. A dichotomy in education going forward is that all the fact-based stuff will be done independently online. Then, at a college campus, you can go to your small-group tutorial and hang out with your mates afterward – it’s about doing the fact based learning and then going on a leadership retreat with people afterward. These campuses will be turned on their heads. Simply meeting and sharing the moment in education will become a premium endeavor – just like at today’s rock concerts where the ticket prices continue to rise.
WA – What will happen to the campuses themselves?
MF — I still see people living in dorms and on campus. But they might not be enrolling in classes and might not be there for whole terms. They might be participating in music together, climbing mountains, making adventures. Many of the things that get in the way of that type of activity on campus can be taken out. You can do it so much more efficiently. That’s the challenge for universities today. It’s about using the space you have in a more innovative way.
WA — What’s the geographic profile of your roughly 700,000 students?
MF – We have 200,000 in the United Kingdom, 100,000 in the United States and a growing number in Africa, the Middle East and Asia. We have 100,000 people in the Middle East. India is our fastest growing market because we have strong suites [programs] in digital IT and English language. We partner with the British government. Most people search around for courses. Referrals are huge…. We’ve gotten to where we are with no marketing budget. We have nearly 10,000 testimonials on our web site. Lots of them on each course… If praise to Allah is worth something, then I’m in heaven. There are thousands of thank you notes from the Middle East where they don’t have the infrastructure that we in the Western World take for granted. They don’t have universities or good community colleges. They are not existent in a lot of countries worldwide. When people can get on the web, they get excited.
WA – Where are the most important innovations happening? And how does your courses relate to those innovations?
MF – Our competitors are also interested in that. There’s a lot of casual learning out there where people pop up YouTube and find out how to do something in 2 minutes. We cater for someone different. We cater to someone who is interested in psychology and want to take a whole course in psychology. It’s for the person who says, it would be great if I don’t have to pay for it. But where do I go to do that? We have 2 products – certificates and diplomas. If you start doing the Psychology course and don’t like the subject or have time to complete it, you can stop the program. If you were using a for-profit college and were using the University of Phoenix… a $10k charge on your credit card could show up.
WA – So what is the future for most universities in the U.S. and elsewhere?
MF – The economics of what’s going on are nuts. I’ve spoken at colleges and universities recently. They don’t see this coming. It’s saddles and motor cars. It was very hard for people in the business of saddle making or horses to move to getting into cars in terms of transport. It’s a lot of the same with people in the education world. They don’t understand the fact that people can learn in a different way. When you test the impact of how much people retain knowledge, especially taught online through interactive multimedia, and compare the cost of traditional methods, the costs are hugely different. You are talking about factors of X10 at a minimum. Governments all around the world are wasting billions of dollars today.
WA – What do you make of the Khan Academy, which is getting a lot of attention and a lot of funding these days?
MF – It’s great to see people innovating… He’s got a lot of publicity because Bill Gates is promoting him and saying he’s his kid’s favorite tutor. But go on Alison and look at Math Planet out of Sweden. It’s much more in-depth. He (Khan) is a pioneer. But there’s the old cliché of pioneers getting arrows in their back! I tremendously admire what he’s done. But is it sustainable? Some of his courses are terrific. And he, personally, has a great knack at creating those courses. But a lot of people can do what he is doing. Is it a stable business plan? One thing it is doing is it’s showing the power of video. Video is so easily and quickly created. It all goes down to quality… Harvard is Harvard because it constantly puts together good students and good courses.
WA – How much more involved will big companies – like Apple, Google and Microsoft – get with online learning?
MF – I think there will be a Facebook or Google in learning. I’d like it to be us. I think you can underestimate the complexity of education however…. You can’t just come into education and scoop it up. There are whole reputational issues. There are a lot of things that make it complicated that are not up front. It’s more complex than it appears.
WA – Can a computer teach James Joyce and ask students probing questions about Ulysses or The Dead?
MF – That’s where innovations can happen. If you want to do a course on James Joyce [at a high level], you are going to do it at Notre Dame or the University of Dublin. Free micro-courses online will take place where you bring people up to speed quickly on any topic. So you can get people doing a course on James Joyce or other lesser known subjects. You charge the 5-6 people, who wish to study at a higher, intense level, higher prices to make it worth the personal intense engagement of a teacher. That’s one area where the market is going to get way more sophisticated. If you are a standard English teacher and offer no other value to compete with an automatic system to compete online, you need another job.
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