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Thrun on the Udacity Model

A follow up to the recent post "Some Questions About Udacity."

Felix Salmon kindly put the questions I posted last week about Udacity to its founder, Sebastian Thrun, and wrote up a lengthy post about it here. Thrun helps to explain some of the uncertainty about the relationship between his various employers (Stanford and Google) and his new start-up venture, Udacity. Read the entire piece, as they say. Two things got my attention: On Stanford and Udacity:

Looked at from a 30,000-foot view, Stanford is the institution being disrupted here, it’s not the institution doing the disrupting.

I doubt that the Stanfords and Harvards of the world are worried about their own business models. As a friend told me, it's a really exciting time to be a first rate university or a first rate teacher, but a terrible time to be a third rate university or third rate teacher. But even if Stanford can be secure in its future, it seems to me lamentable that Stanford isn't leading the way in online learning instead of simply getting out of the way (as is implied in the Salmon piece). On for-profit vs. non-profit: And in response to the question why he organized Udacity as a for-profit venture rather than following his own inspiration, Khan Academy as a non-profit, Thrun said:

"for profit is not forced to make profit. I needed to get people together really fast, and it’s much easier to do that under the ways of a Silicon Valley company."

I wonder what his Silicon Valley VC investors think of his view that for profit is not forced to make profit. Are VCs investing in social returns over financial returns these days?

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COMMENTS

  • Mark Richard-Fogg's avatar

    BY Mark Richard-Fogg

    ON October 11, 2012 01:18 PM

    As a member of Stanford’s class of 1971, I thought to try out the new wave of Udacity after watching Thrun’s video.  I’m partially through CS101 and have been delighted with the Steve Blank class “How to Build a Startup”.

    The Steve Blank class explains, I believe the model of a for profit offering not for profit.  In fact, it is the web business model.  Offer something that people want (think Facebook, craigslist, AngryBirds, etc ..) and monetize the relationship, at some future point.

    With 200,000 satisfied customers for CS101, it is not exactly the billion of Facebook, today.

    What would your “sustainable business model” do with 200,000 happy customers, who have the opportunity to think of, and be lead to their own sustainable business models.

    No doubt, Sergei Brin’s happy “well done, student” video which appears after one has completed 1/2 the CS101 class should be a strong hint of the sustainable business model.

    When the Class of 1970 met for their 25h reunion not long ago, most had already retired, and a very few raised their hand when asked, “could you get into Stanford today?” 

    Understanding how your network developed in your freshman dorm and continued throughout life is interesting and important to compare with the CS101 students and their worldwide network of 200,000.

  • Tom Doehne's avatar

    BY Tom Doehne

    ON December 10, 2012 10:19 AM

    The sustainable business model isn’t hard to figure out.  The technology to deliver information is the capital equipment.  Udacity is a capital equipment company.  Thrun is designing the capital equipment, and should be able to make good money by selling it to any organization (read university) that wants to keep up.

    As first entrant, with good funding, Udacity should be able to stay ahead of any competition for a long time, and may even be able to pull off a Google or Amazon style position.  Note that some companies have been doing this kind of thing for decades—create and sell the capital equipment to manufacturers, and keep improving the capital equipment so that the customers have to keep purchasing it in order to stay competitive.  For example, the zipper company YKK.

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