2U (company)


2U, Inc. is an American educational technology company that contracts with non-profit colleges and universities to offer online degree programs. The company supplies its client institutions with a cloud-based software-as-a-service platform, coursework design, infrastructure support, and capital.

History

The company was founded in 2008 by John Katzman, Chip Paucek, and Jeremy Johnson; In 2013, John Katzman left to start Noodle Partners, a similar company. As of 2019, Paucek continued to serve as CEO. Paucek holds an MBA from the University of North Carolina at Chapel Hill that he earned online through that school's partnership with 2U. 2U was started, in part, because its founders saw an opportunity due to the fact that few highly-ranked universities offered online instruction. 2U explicitly rejected the low-cost, low-quality business model of online education. 2U is the third company where Paucek was a founder.
The founders of 2U self-funded until they reached their first deal to offer an online teaching degree with the University of Southern California in 2009. 2U's first enrollment form, for 120 students, was received from USC via fax in 2009. 2U partnered again with USC to offer an online degree in social work in 2010.
After the USC deal but before its initial public offering, the company was backed by venture capitalists and raised $96 million. The company went public on March 28, 2014, and raised $119 million by offering 9.2 million shares at $13 per share.
In 2011, Georgetown University's School of Nursing and Health partnered with 2U to offer a degree program. The Kenan-Flagler Business School at the University of North Carolina started offering an online MBA through 2U the same year.
A previous program. 2U's "Semester Online" for undergraduate universities was marketed as a platform for top-tier universities to offer online courses to paying students at participating universities. The company announced in April of 2014 that Semester Online would end in the summer of 2014.
Other schools such as the Syracuse University, Northwestern University, and the University of California, Berkeley have signed on with 2U to create online graduate degree programs. In March 2015, Yale University and 2U announced that they were partnering in order to offer a full-time, online master of medical science degree. Such degrees are required in order to become a physician's associate. Yale's program has the same admissions requirements, curriculum, and tuition as the on-campus program. Degree programs managed by 2U offer exactly the same degree as their offline counterparts. As of 2015, about 12,300 students were enrolled in 2U partner programs.
In 2018, 2U launched the Harvard Business Analytics Program in conjunction with Harvard University. HBAP lasts nine months, is taught by faculty from Harvard's Business School, School of Engineering and Applied Sciences, and the Graduate School of Arts and Sciences. Graduates receive a professional certificate. Students in this program have an average of 17.5 years of work experience, are an average of 42 years old, and pay $50,000 in tuition.
In February 2019, 2U announced that it had acquired a minority interest in Keypath Education. Keypath's services are similar to those of 2U. It was founded in 2014 and has 23 partner institutions in the United States, Canada, Australia, and the United Kingdom. 2U said its relationship with Keypath would allow it to offer its services to smaller and cheaper programs than it has in the past.
In early 2019, 2U announced that it had entered a partnership with EGADE Business School at Tecnológico de Monterrey in Mexico to offer an online MBA program. The program started classes in the Fall 2019 and is taught in English. 2U also partners with Tecnológico de Monterrey and the Washington University School of Law to offer an online master of laws program.
During a conference call with investors on July 30, 2019, Chip Paucek said the business wasn’t growing as he had hoped, and attracting large numbers of students was more challenging and more expensive than before. As a result, the company’s stock fell from $36.50 to $12.80 in 24 hours. Paucek said 2U would work to increase the efficiency of its marketing spending by reducing the number of programs it launches. He also said 2U would be more flexible with its pricing and offer hybrid pricing structures and fee for service in addition to its current revenue share model.. The net worth of the company fell from $4.7 billion in September 2018 to $1.35 billion in November 2019.
In August 2019, the company announced that increasing competition was leading to a strategy based on non-degree programs having shorter courses, and development of technology “boot camps.”
In August 2019, 2U announced that Catherine Graham, its chief financial officer, would retire from the company in October. Graham was replaced by Paul S. Lalljie as CFO. Lalljie worked at Neustar for nine years as CFO. In November 2019, Jennifer Ogden-Reese became 2U's chief marketing officer. Ogden-Reese was CMO of SeatGeek and has over 12 years of experience in senior marketing roles.
On August 6, 2019, 2U announced its first undergraduate program. The program offers a degree in data science and business analytics from the London School of Economics. LSE and 2U aim to keep the cost of the three-year degree at $20,000, far lower than most of 2U's other programs. 2U usually focuses on high-tuition programs at selective universities. Starting in 2017, 2U diverged from this strategy. It acquired GetSmarter and later Trilogy Education. These firms offer short-term non-credit training programs.
In 2020, Senators Elizabeth Warren and Sherrod Brown called for 2U and four other online program managers to disclose the terms of their contracts with colleges and universities in order to determine whether they were violating laws meant to safeguard consumers from predatory enrollment practices.

Business model

2U operates as an online program manager. It does not confer degrees. Rather, it provides its clients with technology and other resources to create online classes and degree programs taught by the client institution's instructors with live video and recorded classes with multimedia presentations. The programs set-up by 2U and its clients generally have small class sizes and career services. Students meet in a live video chat room with the professor and the other students. This approach has led to a student retention rate of 84 percent.
2U signs long-term contracts, typically 10-to-15 years in length, with its client institutions. Students pay standard tuition. 2U gets paid through revenue sharing.

Subsidiaries

GetSmarter

In early 2017, 2U acquired GetSmarter. GetSmarter was founded in 2008 in South Africa by Robert Paddock. It offers short-term online courses in partnership with major universities. 2U paid $103 million in cash up-front for GetSmarter with a $20 million earn-out. In 2016, GetSmarter had $17 million in revenue and roughly 400 employees. GetSmarter was 2U's first acquisition. At the time of its acquisition, GetSmarter continued to operate as an independent firm.

Trilogy Education Services

is a New York City-based 2U subsidiary that offers non-credit professional training programs, colloquially known as coding bootcamps, through affiliate universities. In-person courses are held on the affiliate university campus. Revenue from the tuition is shared with the affiliate university. Graduates receive a professional certificate from the partner school and career counseling. The partner schools do not regard program graduates as university alumni.
Trilogy Education Services was founded in 2015. In June 2017, the company received $30 million in a Series A funding round, followed by $50 million in Series B funding round in May 2018. It was bought by 2U in April 2019 for $750 million in cash and stock.

Recognition in the media

In May 2012, Forbes named 2U as one of the ten "Start-Ups Changing the World".
In 2014, Inc. Magazine named 2U one of ten "Tech Companies Helping Humanity".
In 2016, 2U was listed as a "Most Innovative Company" by Fast Company.