Udacity snags $15M to continue its assault on higher education

Andreessen Horowitz is leading a new investment in this change-the-world kind of company, which is run by a man who's already done world-changing things.

Paul Sloan
Paul Sloan Former Editor
Paul Sloan is editor in chief of CNET News. Before joining CNET, he had been a San Francisco-based correspondent for Fortune magazine, an editor at large for Business 2.0 magazine, and a senior producer for CNN. When his fingers aren't on a keyboard, they're usually on a guitar. Email him here.
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Udacity CEO and co-founder Sebastian Thrun

Few industries are under greater assault by technology than higher education -- and few companies are doing more to upend the way people learn the world over than Udacity, the young Palo Alto, Calif.-based startup that's brought computer science classes online and watched hundreds of thousands of students enroll. For single classes.

The startup is led by Sebastian Thrun, a former Google VP and fellow who led the development of Google's self-driving car and Google Glasses. And those are just some of his accomplishments. It was while he was a professor at Stanford University that he stumbled into his current passion: A desire to democratize education to the point where anyone with broadband access and a smart phone can take Stanford-quality classes (actually, Thrun argues, far better) for free. "We can level the playing field between the first world and third world," said Thrun.

To help work toward that giant goal, Udacity just raised $15 million in a financing round led by Andreessen Horowitz and existing investors Charles River Ventures and longtime entrepreneur Steve Blank All told, the company has raised $21.1 million. Andreessen Horowitz partner Peter Levine is joining Udacity's board

"There is a huge democratization that's going to occur at many levels," said Levine, who today published a blog post called, "Software Eats Education: An Audacious Undertaking." "Online education is going to catalyze how future generations learn. It's probably one of the biggest transformations that's going to occur."

A course for 160,000 students
You might remember Thrun's story: A year ago, Thrun put his introduction to Artificial Intelligence class online for free, to anyone who wanted to take it alongside his undergraduates. The upshot: More than 160,000 students from 190 countries enrolled. That led to a flurry of attention, and pushed the race to offer so-called "massive open online courses" (MOOC); other contenders include the not-for-profit edX and the for-profit Coursera. Unlike Udacity, however, those are aligned with various universities, which, understandably, are feeling the pressure to figure all this out.

After the staggering response to his course, Thrun gave up his tenured position and, along with two other roboticists, launched Udacity. The company now offers 14 courses -- check them out here -- and has had 800,000 people in all sign up, ranging in age from nine to 99. "Small by Facebook standards, but high by any university's," says Thrun. A course by computer scientist David Evans saw 200,000 people enroll.

Where Udacity differs from some other MOOCs is that it's doing much more than putting lectures online. Udacity's courses are designed around short videos, quizzes and tasks -- so students learn by doing, and can take quizzes over and over again. A vibrant community has emerged on the site. And Udacity is now building out a platform that makes courses far more interactive and video game like.

"Most online ed is a replication of what's in classroom," says Thrun. "We have found student engagement is highest when students can do something, and that's especially the case at home."

The classes are also open all the time and have no deadlines -- a structure that Thrun calls an "artifact from past centuries." Thrun is also committed to keeping courses free, although business models are emerging. There are fees for certified tests. Udacity just announced that six tech companies -- Google, Microsoft and Autodesk, among them -- are sponsoring courses in areas where they need more skilled workers, from HTML5 for game development to 3D graphics programming. And Udacity has become a way for companies to find tech talent; about 350 companies have signed up for access to 3,000 resumes, and they pay Udacity when they make a hire.

Udacity has 30 employees, split evenly between instructors, engineers and video producers. The company is quickly expanding, adding new sorts of classes and, Thrun said, working hard on mobile products so that it can reach as many people as possible the world over.

"The education market will be much bigger than ever before...and we have a chance to fundamentally change education," said Thrun. As for the role of traditional universities? "They will join and they will like it."

The subtext, of course, is that they have no choice.