2tor (or tutor it’s supposed to be pronounced in the US) is a very exciting higher education startup and I was fortunate to have a long chat with Jeremy Johnson, 2tor’s Co-founder and Chief Marketing Officer. So why are 2tor so hot? Well partly because one of the founders is John Katzman (founder of Princeton Review), but equally it’s about the level of investor interest they have generated - to date they have raised US$68m (£43.3m).
2tor is more than an immersive digital technology program, they also provide the initial investment to develop the online courses as well as supplying both the technical infrastructure and support service for students. Johnson said, ‘a really simple way to describe 2tor is that it’s better version of Blackboard meets Facebook’. Actually, what they really do is partner with ‘the next generation of great universities’ to put a selection of their courses online, at a quality, service and price point level that’s never been seen before in the education sector. In simple terms the courses at their partners’ institutions aim to become elite brands, occupying similar positions to that Marc Jacobs and Berluti hold within LVMH Moët Hennessy’s portfolio of luxury goods.
So far 2tor have only developed courses with:
- University of North Carolina Kenan-Flagler Business School
- University of Southern California (USC) Rossier School of Education
- University of Southern California (USC) School of Social Work
- Georgetown University School of Nursing & Health Studies
Of these it’s the USC Rossier Masters of Arts in Teaching that’s caused academics and investors alike to take notice of 2tor’s business model. The USC’s MA used to have 70 students enrolled, but after working with 2tor enrolments jumped to 2,200 (inc. 500 graduates), including students from 30 countries! Students studying these courses pay the same online as those studying on campus. Such a premium-pricing model for online Masters courses has never been tried before with the USA, even amongst Ivy League institutions. 2tor’s model seems counter intuitive to those of companies like Udacity (offering free online courses), Udemy (low-cost modular study) or even M.I.T. whose free online courses will soon allow students to obtain limited accreditation.
After recently enrolling in courses at CodeAcademy, Udemy and Udacity, I can see there is a clear niche for premium courses/brands within both the formal and informal academic markets but my favourite, and possibly the best value I have seen, is the amazing £600 one day programming course offered by Decoded where the student instructor ration is just five to one.
But is 2tor’s model sustainable? Possibly, but they will face significant challenges from within and outside the US. For example, European media giant Bertelsmann has recently invested US$50m (£31.5m) in University Ventures, whose UK subsidiary, Higher Education Online are looking to replicate 2tor’s model with European universities. 2tor on the other hand are totally US-centric and as Johnson pointed out, ‘the majority of top university brands are American’. In the US, 2tor’s main competitor is Embanet Compass (purchaed in 2012 for $650m by Pearson) who claim to be ‘the leading provider of online learning services for the world’s premier schools, colleges and universities’ (inc. USC) but actually compete in a price-sensitive sector og the HE market. 2tor’s domestic focus may be pragmatic, but I think unless they partner with the likes a Bertelsmann, Pearson, EduComp, News Corp. etc, and quickly, they will struggle to hold their position within the US market, let alone outside it.
I think 2tor may have started a virtual HE ‘arms race’ that will inevitably bring competitors, who will challenge them on three fronts:
- Financial – there will be a battle which will test 2tors backers and their ability to access the large amounts of capital needed to develop a large portfolio of courses
- Capacity – 2tor may end up competing with large media companies like News Corp. and Bertelsmann, who have deep pockets, a wealth of talent (technical and creative) and who have strong distribution channels around the world
- Positioning – inevitably someone will try to create elite online education brands with Ivy League partners. If and when this happens this may significantly discount the premium 2tor and their partners can charge for their courses.
I love 2tor and want them to succeed, but hope they realise what a hornets’ nest they have stirred up!
PS – 2tor have now changed their name to 2U