Page 42 - Forbes Magazine-September 30, 2018

EDUCATION
institution, 2U has positioned itself as a white-label
soft ware-and-services fi rm with a blue-chip client FOLLOW-
base. Its graduate off erings are in fi elds with strong THROUGH
job prospects. Besides UNC, 2U has off erings with
schools including Yale, NYU, UC Berkeley, Tuft s,
Northwestern and Vanderbilt. SLICE OF HELL
Timing is everything in business, and 2U’s cri-
sis-era launch was fortunate. With fi nances strained John Schnatter, founder
of Papa John’s, joined
and digital technologies disrupting nearly every in-
the Forbes billionaire
dustry, top universities fi nally accepted online de- ranks in January 2017
gree programs as equal to on-campus alternatives. after his pizza chain’s
stock hit an all-time
2U has 64 degree programs with 26 universities and
high. “As long as our
is adding more than 14 new programs each year. quality and company
Paucek, 47, 2U’s mastermind, has been involved continue to get better,
in educational ventures since the early 1990s. In the by nature we will get
bigger,” he told us.
2000s, Paucek ran Hooked on Phonics for Sylvan
Turns out the converse
Learning. Aft er its parent company was sold, Paucek might be true as well:
partnered with John Katzman, the founder of Princ- Papa John’s shares are
eton Review, to start 2U in 2008. down 41% in the last 12
months. One reason:
2U’s success has sparked a deluge of competi- Schnatter himself. Last
tors, including a new outfi t from Katzman, who left November he critiqued
in 2012. Th ere are others: Coursera, which operates the NFL’s handling
of national-anthem
massive open online courses (MOOC), manages a
protests as a “debacle,”
$22,000 a year M.B.A. at the University of Illinois which cost him his
and will soon start programs at Michigan and Penn. CEO title. (Papa John’s
Edx, a MOOC founded by Harvard and MIT, off ers was a major sponsor
of the league.) Then,
a master of science in analytics from Georgia Tech
this summer, Forbes
for less than $10,000 and will launch 13 other pro- reported that he used
Gulf of Mexico. “Th e professors were just brilliant,” grams. Overall, the number of OPMs is 30 and ris- a racial slur during a
media-training exercise
says Broussard, who, like all 2U students, attended pe- ing, according to Eduventures Research.
in May. Schnatter,
riodic immersion sessions on campus. If that weren’t enough, schools like Harvard and 56, stepped down as
OPMs have a dismal reputation in education cir- Cornell are building their own systems. Short-sellers chairman the night our
cles because they have long been associated with are thus eyeing 2U, as margin pressure is inevitable. report posted, but he’s
now suing Papa John’s,
for-profi t boiler-room-type operations. Th ey came Paucek is undeterred. Last May he acquired
arguing his ouster
under the scrutiny of the Department of Education, short-course provider GetSmarter, which off ers constituted a “coup.”
in part because they encouraged students to pile on certifi cate programs in data science, artifi cial intel- The company also faces
government-backed loans to fi nance dubious de- ligence and blockchain. Recently, 2U became the allegations of internal
sexual harassment and
fi rst OPM to off er a juris doctor. Paucek also plans of spying on workers.
ABOVE AND BELOW: JAMEL TOPPIN FOR FORBES grees. By avoiding any notion of being an academic
to off er medical, dental and vet- Schnatter denies the
erinarian degrees. allegations against him;
HOW TO PLAY IT BY JON D. MARKMAN Papa John’s has hired a
Don’t underestimate 2U’s
third party to conduct a
Robust data networks underpin innovative business models fi rst-mover advantage. In ac- cultural audit.
like 2U. One way to play this trend is T-Mobile, the wireless ademia, where risk-taking is
communications company serving 72.6 million customers. anathema, reputation and word
Through second-quarter 2018, it logged 21 straight quarters of mouth oft en trump hard eco-
with more than 1 million net new accounts. Churn, the
percentage of customers who have stopped subscribing, is nomic analysis. “It’s a pretty sim-
0.95%, a record low. T-Mobile announced plans to deliver 5G to 30 cities in ple business,” Paucek says, whose
2018. These blisteringly fast, stable networks will allow T-Mobile to compete 2U stake is worth $100 million. FOLLOW-THROUGH BY NOAH KIRSCH
with cable companies and allow customers like 2U to dream up new hori- “If the student wins, the univer-
zons for online education. Shares trade at 12x trailing earnings. sity wins. If the university wins,
Jon D. Markman is president of Markman Capital Insight. we win. We believe that. It’s not
some PR talk.”
FINAL THOUGHT
“Here as elsewhere on this touching planet, imitation is the
watchword and prestige the highest ambition.” —J.D. SALINGER