2U (company)

2U, Inc. (formerly 2tor Inc.) is an American educational technology company that contracts with non-profit colleges and universities to offer online degree programs.[2][3][4][5] The company supplies its client institutions with a cloud-based software-as-a-service platform, coursework design, infrastructure support, and capital.

2U, Inc.
Formerly2tor, Inc.
TypePublic
NASDAQ: TWOU
Founded2008 (2008)
HeadquartersLanham, Maryland, U.S.
Area served
Global
Key people
  • Paul A. Maeder
  • (Chairman of the Board)
  • Christopher J. Paucek
  • (CEO)
ServicesEducational technology
Revenue US$ 286.75 million (2017)
US$ -30.14 million (2017)
US$ -29.42 million (2017)
Total assets US$ 482.06 million (2017)
Total equity US$ 387.83 million (2017)
Number of employees
1,922 (2017)
SubsidiariesTrilogy Education Services
Website2u.com
Footnotes / references
[1]

History

The company was founded in 2008 by John Katzman (co-founder of The Princeton Review), Chip Paucek (former CEO of Hooked on Phonics), and Jeremy Johnson as 2tor but later changed its name; In 2013, John Katzman left to start Noodle Partners, a similar company. As of 2019, Paucek continued to serve as CEO.[6] Paucek holds an MBA from the University of North Carolina at Chapel Hill that he earned online through that school's partnership with 2U.[7] 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.[8]

The founders of 2U self-funded until they reached their first deal to offer an online teaching degree with the University of Southern California (USC) 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.[8]

After the USC deal but before its initial public offering, the company was backed by venture capitalists and raised $96 million.[9] The company went public on March 28, 2014, and raised $119 million by offering 9.2 million shares at $13 per share.[10]

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.[8]

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. [lower-alpha 1] The company announced in April 2014 that Semester Online would end in the summer of 2014.[12]

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.[13] 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.[14]

In late 2017, former Obama administration official Valerie Jarrett joined 2U's board. As of 2020, she remained in that position.[15][16]

In 2018, 2U launched the Harvard Business Analytics Program (HBAP) 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.[8]

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.[17]

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.[17][18]

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.[19] The net worth of the company fell from $4.7 billion in September 2018[20] to $1.35 billion in November 2019.[21]

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.”[6]

In August 2019, 2U announced that Catherine Graham, its chief financial officer (CFO), 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 (CMO). Ogden-Reese was CMO of SeatGeek and has over 12 years of experience in senior marketing roles.[22]

On August 6, 2019, 2U announced its first undergraduate program. The program offers a degree in data science and business analytics, as well as six other degrees, from the University of London (UoL) with its member institution London School of Economics (LSE).[23] UoL, 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.[24]

In 2020, Senators Elizabeth Warren and Sherrod Brown called for 2U and four other online program managers (OPMs) 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.[25]

In June 2020, 2U announced that it would offer $3 million in scholarships in increments of $2,500 to under-represented demographics. Recipients must demonstrate both need and merit. The scholarships can be applied to about 100 different programs with a strong emphasis on technical training.[26]

In late 2020, 2U announced a partnership with Netflix and Norfolk State University. They aim to create an online tech bootcamp with video lectures. The program will last 16 weeks. The first students will start classes in January 2021. Instructors will mostly be from Norfolk State but will also include guest lecturers from private industry. Staff from 2U's data science, engineering, and design groups will mentor students. The program will have three tracks: Java Engineering, UX/UI Design, and Data Science. Netflix is paying the costs for all students. Students will earn college credits.[27]

2U strongly benefited from the shift to online learning that was facilitated by the response to COVID-19. 2U saw large growth in gross revenue in 2020. The company also significantly reduced its debt. 2U was servicing more than 275,000 students as of late 2020.[28] 2U said that the pandemic also greatly increased interest in its revenue-sharing pricing model from both new and existing clients.[29]

In 2020, the London School of Economics agreed to expand its scope of business with 2U to include undergraduate degrees in mathematics and finance. 2U's CEO believes that this particular collaboration will help remove the negative stigma associated with online education.[28]

In September 2020, 2U and Columbia University's engineering school announced an expansion of their work together. 2U is helping launch the Columbia Artificial Intelligence Program. It is an online program targeted at working executives. The program takes nine months on a full-time basis and 18 months for part-time students. Admission will require programming and mathematical skills relevant to machine learning. The first cohort of students will start in 2021.[30]

Before the start of the 2020-2021 academic year, Simmons University announced that it would be delivering hundreds of courses online in order to cope with the COVID-19 crisis. 2U helped Simmons deploy all these courses. Simmons expanded its scope of work with 2U that already included six graduate programs with a total enrollment of 3,000 students. The expanded agreement with Simmons also provides for the creation of additional degree programs aimed at non-traditional students with lower tuition than in-person programs. Simmons receives services from 2U on a revenue-share basis.[29]

Amherst College used 2U's services to move some of its undergraduate courses online in the first semester of the 2020-2021 academic year.[29]

Business model

2U operates as an online program manager. It does not confer degrees.[31] 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.[32] Students meet in a live video chat room with the professor and the other students.[33][13] This approach has led to a student retention rate of 84 percent.[34]

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.[35]

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.[36]

Trilogy Education Services

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.[37] In-person courses are held on the affiliate university campus.[37] 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.[37][38]

Trilogy Education Services was founded in 2015.[38] 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.[39]

Recognition in the media

In May 2012, Forbes named 2U as one of the ten "Start-Ups Changing the World".[40]

In 2014, Inc. Magazine named 2U one of ten "Tech Companies Helping Humanity".[13]

In 2016, 2U was listed as a "Most Innovative Company" by Fast Company.[41]

References
  1. "US SEC: Form 10-K 2U, Inc". U.S. Securities and Exchange Commission. Retrieved March 10, 2018.
  2. "2tor gets $10M credit line - Washington Business Journal". Bizjournals.com. 2012-04-18. Retrieved 2012-05-03.
  3. Alyson Shontell, provided by (2012-04-18). "There Are A Million Education Startups And No One To Acquire Them". Sfgate.com. Retrieved 2012-05-03.
  4. Heather R. Huhman (2012-04-11). "The Future Of Education: How 2tor Is Helping America's Great Universities Go Online - Business Insider". Articles.businessinsider.com. Archived from the original on 2013-03-17. Retrieved 2012-05-03.
  5. Bolshaw, Liz (2012-04-16). "Out of sight but not out of mind in the virtual world". FT.com. Retrieved 2012-05-03.
  6. Johnson, Stevan (August 1, 2019). "As Competition Mounts, 2U Signals Big Changes for Online Education". Chronicle of Higher Education. Retrieved August 2, 2019. It’s becoming obvious that all schools are going online. We believe this represents a new reality in the marketplace, and requires us and others to adjust to it.”– Chip Paucek, CEO
  7. "Christopher "Chip" Paucek". 2U.com. 2U.com. Retrieved 5 December 2019.
  8. GRUSHKA-COCKAYNE, YAEL; LAKHANI, KARIM R (21 January 2019). "2U: Higher Education Rewired". Harvard Business Review. Harvard Business School.
  9. "Online Higher Education Gets a Raise as 2tor Secures $26 M. in Series D Funding Round". Betabeat. 2012.
  10. Flook, Bill. "2U goes public, rings opening bell on NASDAQ". Baltimore Business Journal.
  11. "Universities". 2U, Inc. Retrieved 24 September 2013.
  12. Straumsheim, Carl (3 April 2014). "2U Ends Semester Online". Inside Higher Ed.
  13. Kerpen, Dave (2014-07-24). "10 Tech Companies Helping Humanity". Inc.com.
  14. Monir, Malak (12 March 2015). "Yale to offer full-time master's program online". USA Today. Gannett Co. Retrieved 5 December 2019.
  15. "Valerie Jarrett to Join 2U Board of Directors". 2U. CISION PR Newswire. 7 December 2017. Retrieved 2 November 2020.
  16. Chen, I-Chun (30 October 2020). "Walgreens Boots names Valerie Jarrett to its board". Chicago Business Journal. Retrieved 2 November 2020.
  17. Staff (11 February 2019). "2U's Busy 2019 So Far Includes Partnerships, Global Expansion and a Minority Acquisition". EdSurge. EdSurge, Inc. Retrieved 5 December 2019.
  18. "2U, Inc. and the EGADE Business School at Tecnológico de Monterrey Partner to Deliver a New Online MBA". CISION PR NEWSWIRE. Retrieved 5 December 2019.
  19. "A Reckoning for 2U, and OPMs?". Inside Higher Ed. 1 August 2019. Retrieved 17 November 2019.
  20. Gara, Antoine. "Ivory Tower In The Cloud: Inside 2U, The $4.7 Billion Startup That Brings Top Schools To Your Laptop". Forbes. Retrieved 2018-10-02.
  21. "2U Net Worth 2012-2019 | TWOU". Macro Trends. 17 November 2019. Retrieved 17 November 2019.
  22. Graham, Michael (5 November 2019). "Power Moves: New C-suite hires for CUCollaborate, 2U, Inky Technology". Technical.ly DC. TECHNICALLYMEDIA. Retrieved 7 November 2019.
  23. Schwartz, Natalie. "2U plans 6 more bachelor's degrees with London School of Economics". Education Dive. Education Dive. Retrieved 8 October 2020.
  24. Lederman, Doug (6 August 2019). "2U Goes Undergrad". Inside Higher Ed. Retrieved 5 December 2019.
  25. Schwartz, Natalie. "Democratic congressional inquiry targets OPMs". educationdive.com.
  26. Kidwai, Aman (23 June 2020). "2U commits $3M for underrepresented students to pursue technical training". HR Dive. Retrieved 2 November 2020.
  27. Shieber, Shieber. "Netflix launches a virtual HBCU boot camp with Norfolk State to increase exposure to the tech industry". Tech Crunch. Retrieved 2 November 2020.
  28. Guzman, Zack (29 October 2020). "'We're removing the stigma of online education long term': 2U CEO". Yahoo! Finance. Retrieved 2 November 2020.
  29. Schwartz, Natalie (20 October 2020). "Colleges look to OPMs as pandemic intensifies shift online". Education Dive. Retrieved 2 November 2020.
  30. Kelly, Rhea (1 September 2020). "Columbia Partners with 2U on Artificial Intelligence Program". Campus Technology. Retrieved 2 November 2020.
  31. "What's Ahead for 2U?". fool.com. Motley Fool. April 2014. Retrieved 2014-11-19.
  32. Greenberg, Molly. "2U Releases Mobile Apps, Making it Easier For Students to Access Online Course Content". Inthecapital.com. Retrieved 19 November 2014.
  33. Burke, Adrienne. "$97,500 for an Online Degree? 2U Is Worth It, Say Students". Forbes.com. Retrieved 19 November 2014.
  34. Lapowsky, Issie. "The Future of Online Education Is on Campus". Inc.com. Retrieved 19 November 2014.
  35. "IPO Preview: 2U". Seeking Alpha. Retrieved 19 November 2014.
  36. Howard, Caroline (2 May 2017). "EdTech Giant 2U Acquires GetSmarter For $103 Million". Forbes. Retrieved 5 December 2019.
  37. "Trilogy Education's Unique Approach To Coding Boot Camps Helps It Raise $50 Million". forbes.com. 2018-05-31. Retrieved 2018-09-12.
  38. "Trilogy Education Services Raises $30 million to provide skill-based training". venturebeat.com. 2017-06-06. Retrieved 2018-09-12.
  39. "Online Enabler Aims for Lifelong Learning". www.insidehighered.com. 2019-04-09. Retrieved 2019-05-31.
  40. Pozin, Ilya. "10 Startups Changing the World And What We Can Learn From Them". Forbes.com.
  41. "2U: Most Innovative Company". Fast Company. Retrieved 2 October 2019.

Notes
  1. The universities included: Boston College, Brandeis University, Emory University, Northwestern, The University of Melbourne, Trinity College of Dublin, University of North Carolina at Chapel Hill, University of Notre Dame, Wake Forest University, and Washington University in St. Louis.[11]
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