The Siege of Academe, Updated

Over the past few years, every new day has seemed to bring news of another higher education technology startup company promising to change the world. According to the National Venture Capital Association, investment in education technology jumped from $100 million in 2007 to nearly $400 million last year. Clearly, something is going on. So, on Easter weekend earlier this year, I flew to Silicon Valley to find out what, and why. The result was a long article in Washington Monthly, called “The Siege of Academe.” It was published earlier this week and you can read it here.

Some of the reasons I knew, or had guessed, beforehand. The world has changed since the first wave of ed tech startups went belly-up after the late-‘90s / early 00’s dot-com boom and bust. Educational tools have become more sophisticated and computing power cheaper as broadband access and mobile technology have spread. What I didn’t really understand until I got there was how the economics of technology startups have changed, too.

This came into focus late on my second night town, at the offices of Founders Fund, the venture capital fund run by billionaire Peter Thiel, as I talked to an investor named Scott Nolan who had previously worked as a rocket engineer for Thiel’s fellow PayPal co-founder / celebrated rich guy, Elon Musk: 

I ask Scott which job is harder: rocket scientist or venture capitalist? He smiles and says it depends. What exactly did he do for SpaceX [Musk’s, space venture, which was about to become the first privately-held company to send a payload to the International Space Station], I ask? So he walks over to the whiteboard that makes up the entire wall of the conference room and deftly sketches out the inner workings of a rocket engine, showing what happens when thousands of gallons of rocket fuel are sprayed into a chamber of fire, thus igniting and creating fantastic amount of force, the eddies and whorls of which need to be predicted and calculated in minute, down-to-the-millisecond detail, so that the force can be directed down through the closed chamber in which the initial combustion occurs and out the bottom of the rocket in the form of enough thrust to take something the size and weight of, say, a telecommunications satellite, up and away from the gravitational bonds of our planet. Any flaws in design or misunderstanding of the precise nature of the whorls and eddies result in what Scott calls a RUD—a “rapid unscheduled disassembly,” meaning the rocket blows up.

This is, in and of itself, a design challenge daunting enough to keep an engineering geek in bliss. And there’s more. The whole point of SpaceX is to make space flight both reliable and cheap. You can get to cheap with cheaper materials—but cheaper might mean weaker and less reliable and thus more likely to cause a RUD. So the real holy grail is a more efficient use of fuel to create thrust. The amount of thrust needed to liberate X amount of weight from the Earth’s gravity well is a brute math problem. It’s inescapable. And, crucially, as Scott explains it, when the rocket is sitting on the launching pad, most of the weight is fuel.

Most of the weight is fuel.

That stays with me, even after we finally leave Founders Fund, dodging the sprinklers again, and I catch a taxi a few blocks from the gates of the Presidio and head back to SoMa and my hotel. Because when most of the weight is fuel, Scott explains, a reduction in the amount of fuel you need to create thrust increases the payload weight you can move from Earth into orbit along a logarithmic scale. It’s not a linear, one-to-one thing. The less fuel you need, the less fuel you need. It’s exponential.

This, I realize, is pretty much what’s happening to the basic math undergirding the Silicon Valley economy and, with it, the likelihood of higher education encountering some kind of dramatic disruption at the hands of a Musk-like figure. As access to the Internet grows and the cost of everything technological moves toward zero, the amount of money needed to start a company that can grow to scale and just possibly change the world—that can go from 0 to 1—drops along the same kind of exponential scale. When does that cost become functionally indistinguishable from nothing? In the admittedly much less complicated business of photo sharing, it got there nine hours before I arrived at Founders Fund. That’s Instagram, the billion-dollar company that consisted of nothing more than a handful of ramen eaters (on the day it was purchased, Instagram had fewer than twenty employees) armed with ergonomic black chairs, wi-fi, and MacBook Airs.

During a meeting on Sand Hill Road, the fabled home of Silicon Valley venture capitalism, one investor told me that the basic model of firms like his making huge startup bets was ripe for disruption. A new breed of venture firms has taken to investing small amounts in start-ups, in the range of $25,000 to $50,000. These firms recognize that the cost of starting a new company is far less than it used to be, which means that investors can spread their money around to more entrepreneurs and ideas. And the entrepreneurs themselves can “fail faster,” a crucial idea in an ecosystem driven by experimentation and groping around for the new new thing.

Instead of shooting for the moon by building a beautiful, expensive product and hoping like hell that the whole world comes to your door, the idea now is to build the “minimal viable product,” get it to the market quickly, watch what happens, and iterate like crazy. Because the Cloud is so cheap, it doesn’t take much in the way of money to do this. Because the scale of the entire world is so large, the potential to get big is vast. If that doesn’t work, everyone can move on to the next thing with relatively little time and money wasted.

In the future, anyone with an idea will be able to build a rocket, aim it at the gigantic trillion-dollar market of education, and light the fuse.

The “fail faster” dynamic has certainly borne itself out. A couple of days ago Twitter informed me that OneSchool, the founders of which make a cameo appearance early in the piece, has already “imploded.” Parker Holcumb, by contrast, who I described unsuccessfully pitching his mobile app to a venture capitalist, has forged ahead and is now selling his electronic highlighter on iTunes. Doubtless, various new companies that didn’t even exist in April have already been dreamed up, funded, and passed their prime, while others have already garnered legions of followers and are well on their way to making people rich.

What I don’t think will change are the underlying economic and cultural forces driving the larger trend. It’s not just that the tools, money, and opportunity are there for the taking. It also has to do with the particular mindset of the people who live in Silicon Valley. Their sense that the education industry is ripe for disruption is nothing new.

Late in the trip, my guide Michael Staton and I met two men in their 60s at a well-appointed Greek restaurant in the Financial District. It was the first time we had ventured north of Market Street, into the world of tall buildings and suits. The two men were Stewart Alsop and Tom Kalinske. Alsop was a technology journalist for a number of years before turning to investing. (The Washington, DC columnist Joseph Alsop was his uncle.) Kalinske ran Sega back when Sega Genesis was the coolest video game console you could buy. Then he went into business with Michael Milken and helped found Knowledge Universe and the popular children’s education toy manufacturer, Leapfrog. In some ways they are of the old, pre-Netscape Valley, back when starting a new company meant building a large corporation that manufactured physical things, but they’re still smart and connected enough to understand the new.

Kalinske told me a story about a long time ago, in the 1990s, when Michael Milken was having pretty much exactly the same idea that Silicon Valley people are having now, which is that there are great college professors out there and why can’t we just videotape their lectures, sell them to people, cut the middleman colleges out of the deal and be the middleman ourselves? So they identified Nobel Prize winning college professors, because they are, of course, the best. The sent video teams to the professors and because this kind of thing used to cost a lot more money to produce what with film cameras and so forth, they’d sunk $20 million into the project before realizing that most Nobel Prize winners are by and large really terrible lecturers and nobody is going to want to pay money to watch them drone on for hours at time. Luckily, they got Thompson publishing to buy the business for $20 million so nobody took a bath—at least on their end. It was a close call. 

Then Alsop told his story about education and the Valley. Back in the ’80s, he says, he tried to set up a foundation to help education with technology. So he went to meetings where they set curriculum and talked to people who made decisions about education, and came away from it disappointed and cynical. The system struck him as calcified and absurd. Nothing has happened in the years since to change his mind about that.

And that’s pretty much the way people in Silicon Valley see it, which in and of itself doesn’t distinguish them from lots of people everywhere; there is a long tradition in this country of dissatisfaction with our public K-12 education system, along with a much shorter but growing movement, led by the likes of Peter Thiel, of dissatisfaction with higher education. The difference is that in Silicon Valley, more than perhaps any other place in the entire world, people have been trained and acculturated to believe that if a huge system doesn’t make sense, it should be swept away and replaced by something better—and that they, themselves, could make that happen, and reap untold riches in the doing, by combining virtually unlimited access to capital with the greatest software engineers in the world, people who are increasingly able to reach out to the entire planet through the Web of telecommunication to give them what they want, when they want, in an instant, for free. How and when those people reach higher education will be one of the fascinating dramas of our time.