Online Enabler Aims for Lifelong Learning

A prominent online program management company, 2U, announced this morning that it will purchase Trilogy Education Services, a large boot camp provider that partners with continuing education divisions at dozens of universities.

The publicly traded 2U will pay $750 million in cash and shares for Trilogy, in a deal that will nearly double the number of university partners for the combined company, to 68 from 36.

“We’re believers in the power of a great university,” said Chip Paucek, 2U's CEO, who said the acquisition extends the company’s mission and its ability to offer “digital reskilling” to working adults.

Paucek said the substantial overlap between the two companies includes a shared belief in “the university’s central role in the life of the student.”

An early entrant to the OPM space at its founding 11 years ago, 2U focuses largely on graduate degrees offered by selective research universities. But the company has diversified in recent years, with an eye toward being able to be meet nascent but growing demand for short-term and alternative credentials from working adults.

For example, last year the company bought GetSmarter for $103 million. GetSmarter provides short graduate-level online courses aimed at working professionals. As with offerings from some MOOC providers, students in 2U’s courses from GetSmarter can earn a verified noncredit certificate from partner institutions like the Massachusetts Institute of Technology, other domestic universities and institutions in other countries.

Also last year, 2U paid $13 million to lease an online learning platform created by the Flatiron School, another boot camp provider. That acquisition was part of a broader partnership 2U struck with WeWork, the co-working giant that has 637 spaces in 111 cities in the U.S. and around the world. Through that arrangement, 2U gives students who are enrolled in its online degree programs the free use of WeWork offices.

The OPM is working to create physical learning spaces with WeWork as part of a broader bid to develop a “global campus” for in-person and hybrid online credential programs.

If lifelong learning becomes more than a catchy phrase, 2U could be in a good position to offer short-term online or hybrid credentials to knowledge economy workers at WeWork, a group that is among the most likely student segments to pursue alternative, career-advancing credentials in large numbers.

Likewise, Trilogy has become one of the most established boot camp providers, and the boot camp that has opted to reach students directly through relationships with traditional universities, rather than pitching its services directly to consumers. Some critics and competitors of Trilogy, however, have said the company’s partnerships could be misleading to students, who may not understand that the university-endorsed boot camp is administered through an outside company.

The company’s programs typically are priced at $10,000 for 12 weeks of full-time instruction (24 weeks for part-time programs) in web development, data visualization and analytics, UX/UI design, and cybersecurity. Trilogy offers career services to its students, including interview training and networking events.

Instruction is offered in classroom space on or near university campuses, although undergraduates who are enrolled at those institutions are not their primary students.

Trilogy’s model works by helping university partners run their own boot camps. The universities control the curriculums, and their continuing education divisions get a share of the boot camp’s tuition revenue. The programs also are not credit bearing or eligible for federal financial aid. Late last year Trilogy turned some heads by announcing a boot camp offered with Harvard University’s Extension School.

Trilogy and 2U could seek to create credit-bearing and financial aid-eligible versions of the boot camp’s programs. And the acquisition comes as the U.S. Congress is considering whether to open the federal Pell Grant program to short-term credentials, dropping the minimum eligible program length to eight weeks from the current minimum of 15 weeks.

Democrats in the House of Representatives in a report released last month voiced support for so-called short-term Pell Grants as part of their suite of recommendations for reauthorizing the Higher Education Act, the federal law that oversees federal financial aid. Support among Democrats for that proposal is somewhat flimsy, however. And the House Democrats’ report called for strong quality control checks on short-term programs.

The boot camp sector has seen plenty of consolidation in recent years. Several, including early entrants Dev Bootcamp and the Iron Yard, shut down years after being acquired, partially or fully, by large, traditional for-profit education chains.

Last April the Adecco Group, a major temporary-staffing firm based in Switzerland, bought General Assembly, one of the largest skills and coding boot camp providers in the U.S., for roughly $413 million.

Through this acquisition, the expanding 2U, which brought in $412 million in revenue last year and hired 914 people, gets new footholds in global markets. Trilogy this year expanded its international offerings through a new partnership with Australia’s prestigious Monash University, the first boot camp in that country. The company also has programs in Canada and Mexico, with more global growth in the works.

The boot camp has a presence in 50 cities and offers corporate training. While most of its programs are face-to-face, Trilogy currently offers an online boot camp with the University of California, Berkeley, and a handful of other university partners. Through the acquisition, 2U could substantially increase the online reach of Trilogy’s boot camps.

Dan Sommer, Trilogy’s founder and CEO, said the boot camps feature a centralized curriculum with digital elements that the company modifies based on local employer needs.

The acquisition by 2U, which is subject to regulatory approvals, comes on the eve of the annual ASU+GSV meeting in San Diego, a popular gathering for investors and education technology companies. Last year’s version featured a more collaborative tone about traditional higher education from company officials who, at similar events in previous years, sounded more pessimistic about colleges’ ability to cope with disruption driven by technology and the economy.

Sommer said a shared focus on working with universities helps explain the partnership between the two companies.

“We both fundamentally believe that universities are the place for lifelong learning,” said Sommer.