2U said yesterday that it had formed a partnership with shared workspace company WeWork. Any of the 13,000 students enrolled in the graduate degree programs that 2U hosts will be able to use the WeWork offices for free.
It’s the second deal cut by 2U chief executive, Chip Paucek, within the last 18 months, and it’s one he hopes will give a boost to both 2U students--and to his company.
“Strategic partnerships don’t always work because it’s not always a win-win. This is definitely a win-win,” Paucek says about the partnership between his company, based in Lanham, Md., and the New York City-based WeWork. “We’ve become a new channel for them; they’ve become a new channel for us.”
The partnership with WeWork has three parts: first, WeWork will open up its 286 offices to students engaged in 2U-supported graduate programs. Next, 2U is going to use a software platform developed by a coding bootcamp, Flatiron School, (recently acquired by WeWork) as its new front-end.
“We are taking the parts of our current LMS that offer really, really strong backend and building those into this much more modern front-end,” Paucek says. “So, it’ll feel to students like going from Outlook to Slack.”
Finally, WeWork will effectively become a “channel” for 2U to offer minicourses, namely those developed by its South African division, GetSmarter. (2U acquired GetSmarter last May.)
Richard Garrett, the Chief Research Officer at research and advisory firm Eduventures, thinks the partnership between 2U and WeWork may signal a new approach to blending learning, “recognizing the limitations of fully online delivery and potentially opening up a broader market.”
Space for Students
Paucek explains that 2U sees students already congregating—on Facebook, on their own or through the partner program. He feels comfortable that students will use the WeWork spaces, claiming that half of 2U students are in a WeWork city. “It’s appealing for students to have a quiet place to take exams” or meet colleagues, he said.
2U is keen to offer an architecture program with its partners— but that’s a subject that needs a studio. “Now we have a place where we could build a small studio,” says Paucek.
The deal also includes the ability for 2U to hold immersions or residencies at WeWork locations. All of the online programs at 2U are blended in some form, he says. For instance, nursing students must do clinical placements.
“Many of them happen on campus, but over time, all of the partner programs have started to move them all over the world,” says Paucek, adding that this part of the deal gives 2U a better way to support schools on those physical components.
Scholarships and ‘Future of Learning and Work’ Space
2U will also be offering $5 million in scholarships to WeWork community members and employees, that they can spend on 2U’s graduate programs, as well as on short online courses from GetSmarter. Paucek says the scholarships will become available “very quickly.”
And WeWork and 2U will also work together to make a “Future of Learning and Work” space, slated to open in 2019. A location has not yet been selected, though Paucek says they’ve got a couple ideas about where it will be.
Market Responds
2U made its public debut in March 2014. Since then the stock has risen more than four fold. (It closed on Monday at $73.95 a share.) Investors seemed cheered by news of the deal, bumping up the stock price by $1.57 (or 2.17 percent). In November, the company reported quarterly revenue of $70.3 million, which included the results of GetSmarter.
Although 2U has yet to turn a profit, it continues to grow: it is planning to launch 14 graduate programs in the US during 2018. (By contrast, 2U launched four degree programs in 2014). And late last year, former Obama administration official, Valerie Jarrett, joined 2U’s board.
The company remains one of the few edtech companies to reach the public market. “Edtech needs that validation,” Paucek says. “I’m hopeful we’ll see [more edtech companies] make their public debut this year.”
“Don’t underestimate the power of people,” Paucek says. “2U is not just about the code. If you look at the business decisions we got right, the first one was offering live (online) classes. People matter.”
One perspective that Paucek says has changed is 2U’s confidence in building programs. “In the early years, we expected universities to deliver their expertise and content,” and 2U’s challenge was to build a program that was “as good as” a campus experience. “Now we’re trying to help them build something better,” Paucek says.
He remains firmly convinced in the value of a degree from a world-class university. But 2U is now shouldering more activities, including data analytics that predict which students need more support, software that helps locate relevant tutors for students and now providing many of their online students with spot to study or even meet face-to-face.
Howard Lurie, the Principal Analyst of Online and Continuing Education at Eduventures, thinks the partnership is a smart move for WeWork, pointing out that WeWork has a population of young, early stage professionals looking to sharpen their skills.
“My understanding is that 2U is interested in having the WeWork partnership built around GetSmarter,” Lurie says. “So I think it’s a good testing field for GetSmarter content. I don’t think 2U has a lot to lose by this, in the sense that there’s almost, to some degree, a natural, built-in constituency in the WeWork world which is growing very, very fast.”
