Online Education Start-Up, Backed by Research University Credit

Outlier, from founder of MasterClass, aims to create high-quality, low-priced ($400) gen-ed courses to help community college students transfer. Credits will bear University of Pittsburgh's name.

August 21, 2019
 
One of Outlier's psychology instructors

The latest start-up hoping to use online courses to try to make higher education more affordable is from an entrepreneur with a proven track record -- and has a well-regarded university willing to put its reputation behind the academic credits.

Aaron Rasmussen, co-founder of MasterClass, whose cinema-quality how-to courses from celebrity experts like Serena Williams, Dustin Hoffman and Margaret Atwood have been taken by many thousands of Americans, has turned his sights to the for-credit market with his new company, Outlier.org.

The company aims to market its courses mostly to would-be community college students and others seeking to transfer into selective universities.

The modest boast on its home page: "The World's Best Online Education."

"Why don't we have a great online university -- something we all know and love and see as both amazingly high quality and extremely affordable?" he says in an interview. "That's what we're trying to build."

We've heard such braggadocio before, as Rasmussen acknowledges. "A lot of people have tried to do what we’re doing here," he says.

What's been missing, Rasmussen says, is something that mixes the backing of a brand-name university (prestige); beautiful, high-quality courses from top-notch professors with dynamically generated problem sets (content); student interactivity, beginning with four- to five-person video chats (social interaction); and a low price -- a $400 introductory fee, which Rasmussen says he "hopes" his business model can sustain.

Certainly many, if not all, of those elements have been present in other major online education initiatives. The massive open online course movement earlier this decade brought courses from name-brand universities and started out free, though they lacked academic credit and often had little if any interaction. If you go back far enough, to the 1990s, you had Fathom, in which Ivy League and other universities sought to sell online courses to the public. But that was arguably the Stone Age of online education, in terms of technology and quality.

Those who've followed MasterClass's success probably won't doubt Outlier's ability to produce cinematically beautiful courses (trailers for the first two, in psychology and calculus, can be found at those links). Whether the courses' interactivity will be better than those of what are considered today's high-quality courses (from the universities that, say, team up with 2U to build multimillion-dollar courses) will remain to be seen, and Rasmussen acknowledges that the small video sections are just a first iteration.

Tougher Issues

The questions about prestige and price are more interesting.

While the professors aren't the sorts of celebrities that populate MasterClass's courses -- no Natalie Portman or Joyce Carol Oates -- they are from big-name institutions. The Calculus 1 class has three versions, taught by scholars from University College London and Davidson College and a doctoral candidate at Massachusetts Institute of Technology. The Introduction to Psychology course has segments taught by professors from institutions such as Cornell, New York and Yale Universities, among others.

But many of the MOOCs had high-profile professors or instructors from famous colleges. And while consumers flocked to them in large numbers, most were dilettantes, not students looking for academic credit to take them somewhere as Outlier imagines its students will be. What the consumer of that type of course or credential needs is a "brand" that will signal quality to prospective employers or, in this case, potential transfer universities -- and that's where the University of Pittsburgh comes in.

Pitt got involved through its provost and senior vice chancellor, Ann E. Cudd, who was a dean at Boston University when Rasmussen was a student there. After Rasmussen left MasterClass and was looking for a "socially impactful thing to do," Cudd was one of the first people he consulted when he contemplated doing something in the for-credit rather than noncredit education space that MasterClass occupied.

"He talked about access and affordability, diversity, which are my main reasons for being an administrator," says Cudd. "He said he was going to build this company that would provide great access to great courses with great professors, at a low cost."

"I thought it was cool," Cudd adds. "I was just giving him academic advice, about things like how you get credit. That was a part of the world he didn’t know much about."

For his part, Rasmussen says he was inspired in part by a 2012 essay in which Woodie Flowers of MIT bemoaned the 250,000 college students in the U.S. who failed calculus each year, costing $500 million in misspent tuition (then -- a figure Rasmussen estimates has ballooned to $1 billion.)

Wouldn't it make more sense to spend $10 million to build the best possible online calculus course?

As Rasmussen got farther along, he realized that having an institutional partner would best ensure that the company's courses would gain acceptance upon transfer to other institutions. He drew up a list of highly ranked institutions and ultimately approached Cudd about Pitt "being the beta partner, to award credit." Cudd says she was interested enough to talk to her colleagues at the university.

"We were intrigued by the possibility of creating essentially a national online community college," she says. "If it can be done at a low price, it could be a gateway for transfer students to Pitt or to other more elite universities … We saw this as one way we can contribute to the access and affordability situation nationally."

Pitt's Role

Under the arrangement with Outlier, which covers only the fall term, in which Outlier will offer the calculus and psychology courses to 50 students each, every successful completer with get a Pitt transcript. The transcript will not say that the course was conducted by Outlier; only a careful reader might note that the course number differs from Pitt's own four-credit introductory calculus (Outlier's is worth three) or its intro psych course.

Cudd and the administration didn't make the decision to put Pitt's stamp of approval on the courses by themselves. To assure that the courses were "high quality from the get-go," she says, university officials reviewed the syllabi, exams and "the whole class … The chairs of [the math and psychology] departments said, 'Yes, we would definitely include these in our catalog of courses if we were asked to do that,'" Cudd says. (Neither the chair of Pitt's math nor psychology departments responded to emails Tuesday requesting comment on their impressions of Outlier.)

"We would grant transfer credit for these classes if our students took them -- we would transfer those credits in," Cudd says.

Except it won't, at least right now. "Pitt students can't take the courses" during this initial semester of the experiment, Cudd says, "because there would be potential impact on their financial aid packages. We are using this semester to explore the medium, and we're not committed by our [memorandum of understanding with Outlier] beyond this term."

Cudd and Rasmussen both declined to discuss the terms of that agreement; Cudd would only say that it would create a "fairly small revenue stream" for Pitt, which could turn into a larger one if the university and the company decide to continue to work together and the courses take off.

Past Failures

Outlier will not be the first attempt to create online courses that community college students (or potential community college students) might take to transfer to four-year universities. Ivy Bridge College, an online two-year college, collapsed in 2013 under pressure from accreditors; Quad Learning and its American Honors program sought to create a replicable online two-year honors college curriculum that would help students transfer to selective universities (sound familiar?). It failed, too.

More recently, Arizona State University's Global Freshman Academy has consistently underperformed.

The closest analog to what Outlier is trying to do is probably StraighterLine, which has experimented and iterated its way into a solidly successful business, but more by forming partnerships with traditional universities to educate students who need supplemental course work (delivered at a far lower price) than with its original business model of selling those courses directly to students.

Rasmussen says he has been told by many veterans of some of those failed efforts that the "cost of acquisition" of students "will kill you," and that he believes Outlier will learn from their failures. He seems confident that the digital marketing skill that helped make MasterClass so successful (have you been to your Facebook feed lately without seeing one of its ads?) will serve Outlier well, too.

"I think there’s a lot of interest out there, just waiting to see the quality of what we produce."

Rasmussen makes an uncommon analogy for an educational product: to the spring blockbuster movie Avengers: Endgame.

The $400-odd million that producers spent to make that movie may have seemed absurd, and they couldn't have recouped their money (let alone made it back seven times over, as they did), from dozens, hundreds, even thousands of viewers paying large amounts of money. But with many millions having forked over $12 or $15 apiece, it has earned $2.8 billion, and the finances worked.

The same, he suggests, might be true for a class that costs millions to make but only $400 to take.

"Maybe, just maybe," he says, "you build this really good thing, and people come to you."

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