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Jerry P. Becker

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Registered: 12/3/04
The Man Who Would Overthrow Harvard
Posted: Aug 17, 2013 2:58 PM
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From The Wall Street Journal, Friday, August 9,
2013. See
http://online.wsj.com/article/SB10001424127887324110404578627712224845012.html
******************************
THE WEEKEND INTERVIEW

Ben Nelson: The Man Who Would Overthrow Harvard

Can the Minerva Project do to Ivy League
universities what Amazon did to Borders?

By Matthew Kaminski

San Francisco

'If you think as we do," says Ben Nelson,
"Harvard's the world's most valuable brand." He
doesn't mean only in higher education. "Our goal
is to displace Harvard. We're perfectly happy for
Harvard to be the world's second most valuable
brand."

Listening to Mr. Nelson at his spare offices in
San Francisco's Mid-Market, a couple of
adjectives come to mind. Generous (to Harvard)
isn't one. Nor immodest. Here's a big talker with
bold ideas. Crazy, too, in that Silicon Valley
take-a-flier way.

Mr. Nelson founded and runs the Minerva Project.
The school touts itself as the first elite-make
that "e-lite"-American university to open in 100
years. Or it will be when the first class enters
in 2015. Mr. Nelson, who previously led the
online photo-sharing company Snapfish, wants to
topple and transcend the American academy's
economic and educational model.

And why not? Higher education's product-delivery
system-a professor droning to a limited number of
students in a room-dates back a thousand years.
The industry's physical plant (dorms, classrooms,
gyms) often a century or more. Its most expensive
employees, tenured faculty, can't be fired. The
price of its product (tuition) and operating
costs have outpaced inflation by multiples.

In similar circumstances, Wal-Mart took out
America's small retail chains. Amazon crushed
Borders. And Harvard will have to make way for .
. . Minerva? "There is no better case to do
something that I can think of in the history of
the world," says Mr. Nelson.

Some people regarded as serious folks have bought
the pitch, superlatives and all. Larry Summers,
the former Harvard president, agreed to be the
chairman of Minerva's advisory board. Former Sen.
Bob Kerrey, who led the New School in New York
from 2001-10, heads the fundraising arm. Stephen
Kosslyn, previously dean of social sciences at
Harvard, is Minerva's founding academic dean.
Benchmark, a venture-capital firm that financed
eBay and Twitter, last year made its largest-ever
seed investment, $25 million, in Minerva.

Mr. Nelson calls Minerva a "reimagined
university." Sure, there will be majors and
semesters. Admission requirements will be
"extraordinarily high," he says, as at the Ivies.
Students will live together and attend classes.
And one day, an alumni network will grease job
and social opportunities.

But Minerva will have no hallowed halls,
manicured lawns or campus. No fraternities or
sports teams. Students will spend their first
year in San Francisco, living together in a
residence hall. If they need to borrow books,
says Mr. Nelson, the city has a great public
library. Who needs a student center with all of
the coffee shops around?

Each of the next six semesters students will
move, in cohorts of about 150, from one city to
another. Residences and high-tech classrooms will
be set up in the likes of São Paulo, London or
Singapore-details to come. Professors get
flexible, short-term contracts, but no tenure.
Minerva is for-profit.

The business buzzword here is the "unbundling" of
higher education, or disaggregation. Since the
founding of Oxford in the 12th century,
universities, as the word implies, have tried to
offer everything in one package and one place. In
the world of the Web and Google, physical
barriers are disappearing.

Mr. Nelson wants to bring this technological
disruption to the top end of the educational food
chain, and at first look Minerva's sticker price
stands out. Freed of the costs of athletics, the
band and other pricey campus amenities, a degree
will cost less than half the average top-end
private education, which is now over $50,000 a
year with room and board.

His larger conceit, inspired or outlandish, is to
junk centuries of tradition and press the reset
button on the university experience. Mr. Nelson
offers a fully-formed educational philosophy with
a practiced salesman's confidence. At Minerva,
introductory courses are out. For Econ or Psych
101, buy some books or sign up for one of the
MOOCs-as in massive open online course-on the Web.

"Too much of undergrad education is the
dissemination of basic information that at that
level of student you should expect them to know,"
he says. "We just feel we don't have any moral
standing to charge you thousands of dollars for
learning what you can learn for free." Legacy
universities move students to their degrees
through packed, required lecture classes, which
Mr. Nelson calls their "profit pools." And yes,
he adds, all schools are about raking in money,
even if most don't pay taxes by claiming
"not-for-profit" status.

In the Nelson dream curriculum, all incoming
students take the same four yearlong courses. His
common core won't make students read the Great
Books. "We want to teach you how to think," Mr.
Nelson says. A course on "multimodal
communications" works on practical writing and
debating skills. A "formal systems class" goes
over "everything from logic to advanced stats,
Big Data, to formal reasoning, to behavioral
econ."

Over the next three years, Minervaites take
small, discussion-heavy seminars via video from
their various locations. Classes will be taped
and used to critique not only how students handle
the subjects, but also how they apply the
reasoning and communication skills taught
freshman year.

The idea for Minerva grew out of Mr. Nelson's
undergraduate experience. As a freshman at Penn's
Wharton School, he took a course on the history
of the university. "I realized that what the
universities are supposed to be is not what they
are," he says. "That the concept of universities
taking great raw material and teaching how it can
have positive impact in the world is gone."

Undergraduates come in, take some random classes,
settle on a major and "oh yeah, you're going to
pick up critical thinking in the process by
accident." By his senior year, Mr. Nelson was
pushing for curriculum changes as chairman of a
student committee on undergraduate education. As
a 21-year-old, he designed Penn's still popular
program of preceptorials, which are small,
short-term and noncredit seminars offered "for
the sake of learning."

A Wharton bachelor's degree in economics took him
to consulting at Dean & Company in Washington,
D.C. "My first six months, what did the
consulting firm teach me? They didn't teach me
the basics of how they do business. They taught
me how to think. I didn't know how to check my
work. I didn't think about order of magnitude. I
didn't have habits of mind that a liberal arts
education was supposed to have given me. And not
only did I not have it, none of my other
colleagues had it-people who had graduated from
Princeton and Harvard and Yale."

After joining Snapfish in 1999 and leaving as CEO
a little over a decade later, Mr. Nelson, who is
38 and married with a daughter, wrote and shopped
around his business plan for Minerva. He says he
considered partnering with existing institutions,
but decided to build a 21st-century school from
scratch to offer the "ideal education."

Ideas like his are not in short supply. The
catch? No one has found a way to make a steady
profit on an ed-tech startup.

Going back to the Internet bubble of the late
1990s, many have tried. With $120 million from
Michael Milken and Larry Ellison and a board of
big names, UNext launched in 1997 as a Web-based
graduate university. It failed. Fathom, a
for-profit online-learning venture founded by
Columbia University in 2000, closed three years
and several million in losses later.

In the current surge of investment in new
educational companies, Minerva has no direct
competitor but plenty of company. Udacity and
Coursera, two prominent startups, are looking to
monetize the proliferation of MOOCs.
UniversityNow offers cheap, practical courses
online and at brick-and-mortar locations in the
Bay Area. And so on.

Education accounts for 8.7% of the U.S. economy,
but less than 1% of all venture capital
transactions in 1995-2011 and only 0.3% of total
public market capitalization, as of 2011,
according to Global Silicon Valley Advisors. The
group predicts the market for postsecondary
"eLearning" and for-profit universities will grow
by double digits annually over the next five
years.

Mr. Nelson's vision will be beside the point if
Minerva fails to attract paying students. He
makes a straightforward business case. Harvard
and other top schools take only a small share of
qualified applicants, and for 30 years have
refused to meet growing demand. A new global
middle class-some 1.5 billion people-desperately
wants an elite American education. "The existing
model doesn't work," he says. "The market was
begging for a solution."

Audacious ideas are easy to pick apart, and Mr.
Nelson's are no exception. He repeats "elite" to
describe a startup without a single student.
Reputations are usually earned over time. Many
prospective students dream of Harvard for the
brand. Even at around $20,000 a year-no bargain
for middle-class Chinese 18-year-olds-Minerva
won't soon have the Harvard cachet.

Any education startup must also brave a
regulatory swamp. By opting out of
government-backed student-loan programs, Minerva
won't have to abide by many of the federal rules
for so-called Title IV (of the relevant 1965 law)
schools. Americans won't have an edge in
admissions and Minerva expects most students will
come from abroad.

But Mr. Nelson wants to be part of the club whose
price of entry is accreditation. A cartel
sanctioned by Congress places a high barrier to
entry for newcomers, stifling educational
innovation. Startups face a long slog to get
accredited. So last month Minerva chose to
partner with the Keck Graduate Institute, or KGI,
a small school founded in 1997 that is part of
the Claremont consortium of colleges near Los
Angeles. Minerva degrees will now have, pending
the regulatory OK, an accreditor's seal of
approval.

With this move, Mr. Nelson eased one headache and
raised some questions. KGI offers only graduate
degrees in life sciences, an unusual fit for an
undergraduate startup. KGI isn't a recognizable
international name for Minerva to market. Yet Mr.
Nelson says the schools are "completely
complementary" and the deal represents "zero
change in our mission."

Among the other marketing challenges: Won't
Minerva undergrads miss out on lifelong bonding
built in classrooms, dorms and next to the keg?
Traveling across the world, Mr. Nelson says, will
bring people even closer together. Campus
activities? Imagine a college newspaper with 25
foreign bureaus, he shoots back, or the cultural
attractions of the world's great cities. "If you
want to be an intercollegiate fencer, do not come
to Minerva. Bad idea," he says. "There are a lot
of traditional experiences that a traditional
university will provide you that we will not."

Effusive on every other topic, Mr. Nelson turns
vague when I bring up Minerva's finances.
Skeptical investors have seen this movie before.
Mr. Nelson doesn't even hint at projected profit
or a growth timetable. He says the school has to
become roughly the size of an Ivy League
university, enrolling around 10,000 students, to
break even. "Making your profit, your substantial
revenue, based on 18-year-olds is not the mover,"
he says. "It's what you do with them. It's how
you build the brand."

If the bulk of revenues won't come from
undergrads, then where? "We'll see," he says.
Perhaps executive education, or licensing
classroom content or technology, or putting on
conferences. "Our enterprise value will not be
derived nearly as much from our 'E' as much as
P/E," he says, as in the price/earnings ratio.
"It isn't about maximizing profits. It's all
about how the brand unlocks the future potential
earnings." Harvard, a multibillion-dollar
operation, is a business more than an academic
model.

Whether or not Mr. Nelson and Minerva shake up
American higher education, someone will.
--------------------------------
SIDEBAR ILLUSTRATION: Ken Fallin
--------------------------------
Mr. Kaminski is a member of the Journal's editorial board.
--------------------------------
A version of this article appeared August 10,
2013, on page A11 in the U.S. edition of The Wall
Street Journal, with the headline: The Man Who
Would Overthrow Harvard.
********************************************
--
Jerry P. Becker
Dept. of Curriculum & Instruction
Southern Illinois University
625 Wham Drive
Mail Code 4610
Carbondale, IL 62901-4610
Phone: (618) 453-4241 [O]
(618) 457-8903 [H]
Fax: (618) 453-4244
E-mail: jbecker@siu.edu



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