Sitting in a fluorescently lit conference room dressed in a pressed gray work shirt, jeans and gray suede sneakers, Jeff Maggioncalda, the tightly wound 49-year-old CEO of Coursera, doesn’t touch his plate of plain spaghetti, edamame and artichoke hearts from the company cafeteria. By the end of our hour-and-a-half lunch meeting, he is still talking nonstop.
First, he goes on at length about the two years he spent traveling the world before joining the Mountain View, California-based online education company in June 2017. “I climbed Kilimanjaro with my middle daughter, I went to Cuba for a week, I went to Uganda to see the mountain gorillas,” he says. “In Indonesia we went scuba diving and saw the Komodo dragons. In Borneo we saw the orangutans.”
But in Kyoto his adventures had been cut short. Lounging at a traditional ryokan in a robe and one-toe socks, he read an email from a headhunter who described his dream job: take over a fast-growing tech startup with a social mission—to vastly expand access to higher education through massive open online courses, known as MOOCs, taught by the best professors from the world’s top universities. He was chanting the company mantra before he’d even spoken to Coursera’s board: “I said to my wife, Anne, ‘The solution to our most pressing human problems is education.’”
Maggioncalda didn’t need a job. In 2014 he had stepped down as CEO of Financial Engines, a retirement planning website he launched 18 years earlier with two high-profile Stanford professors, Nobel prize winner William F. Sharpe and former SEC commissioner Joseph Grundfest. In 2010 he took the company public, and by the time he left its market cap was close to $2 billion and his net worth was north of $50 million.
After Kyoto, he and Anne had planned to visit Israel, Machu Picchu, the Galapagos and Antarctica. Instead, he flew back from Japan and became Coursera’s third CEO. He has since boosted the company’s status as the world’s biggest, most successful MOOC provider, with 150 international university partners, 36 million registered learners, $210 million in investment capital, an $800 million valuation and expected 2018 revenue Forbes estimates at $140 million, landing Coursera on Forbes’ list of Next Billion-Dollar Startups. (Coursera’s closest MOOC competitors, nonprofit edX and for-profit Udacity, have fewer than 30 million registered users between them.) Coursera would be profitable were it not pumping so much cash into growth, Maggioncalda says. He expects to expand Coursera’s head count of 325 by more than 100 next year. Within the next two years he will likely take the company public.
When he finishes talking about his travels and the other passions he pursued during his time off, including music and sailing lessons, the 42-foot Jeanneau yacht he docks in nearby Santa Cruz and eight-hour binges playing the Wild West-themed video game Red Dead Redemption, he launches into his grand plans for Coursera: “I can see a world where Coursera is made available to every student in every college in the world.”
The three parts of Coursera’s business each drives the others, he says. It provides 3,000 courses direct to consumers, sells classes through 1,400 enterprise customers like Adobe, Goldman Sachs, L’Oréal and India’s Axis Bank, and offers 12 online degree programs for partners including the University of Pennsylvania, the University of Michigan and the University of London. “When any node grows, the other nodes benefit,” he says. “When we get another learner, our educators benefit. When we get another employer, the other two benefit.”
Coursera’s founders, Stanford computer science professor Daphne Koller, now a company co-chair and the founder of biotech startup Insitro, and co-chair Andrew Ng, who has led AI teams at Google and Chinese tech giant Baidu, couldn’t have imagined what Coursera would become when they launched it in 2012. The two had spearheaded an effort to offer three Stanford computer science courses for free online. The classes were interactive, with short video lectures, discussion forums, multiple choice quizzes, and homework assignments graded by other students using a rubric provided by professors. Though students earned no academic credit, the courses were a hit. “With no marketing, each of those courses had more than 100,000 learners,” Koller says. “It was a wake-up call about the demand for this type of education around the world.”
In short order, she and Ng persuaded Princeton, Penn and Michigan to sign on. “We wanted to leverage not only the best that Stanford had to offer but the offerings from other universities as well,” Koller says. Though Coursera had no monetization plan, investors jumped on board.
“It had the ingredients I look for in a monster venture,” says Kleiner Perkins’ John Doerr, a lead investor in Coursera and a member of the board. “Higher education costs too much, and it’s not available to enough people.” Doerr recommended Koller and Ng consult with Rick Levin, an economist who had served as president of Yale for 20 years. Levin joined as CEO in 2014 after Coursera began charging $30 to $70 to students who wanted course completion certificates. Revenue trickled in.
Meanwhile Coursera and other MOOC purveyors had gone through a boom and bust in the public imagination. The New York Times declared 2012 “the year of the MOOC,” and columnist Thomas Friedman breathlessly wrote, “Nothing has more potential to unlock a billion more brains to solve the world’s biggest problems.”
Shortly thereafter, Koller says, “the narrative was the death of the MOOC,” after data from two University of Pennsylvania studies showed that 80% of the people who registered for MOOCs already had degrees and only half of them bothered to look at a single lecture. A minuscule 4% completed their courses.
The Coursera team ignored the chatter. “I thought the hype and the death talk were equally funny,” Koller says. “Higher education involves a very slow-moving set of institutions. And when you’re very successful, you don’t want to shift on a dime.”
Levin, now 71, had said at the outset that he would stay only three years. When he turned the company over to Maggioncalda, it was on an upswing. Its enterprise business was taking off, tripling revenue in the year since Maggioncalda took over. Customers include Adobe, which paid Coursera an estimated $150,000 this year to provide a suite of five machine-learning courses, one taught by Ng and the rest by two University of Washington professors, to 1,500 of Adobe’s top developers and engineers. (Coursera splits its fee for the University of Washington courses with the school.) A plus for Adobe is the detailed reports Coursera provides on employees’ performance in the courses. “It allows us to know exactly who has what technical expertise in what technological domain,” says Justin Mass, Adobe’s global head of technical talent development.
Coursera also makes money serving as a platform for companies like IBM and Google that offer classes such as IBM Blockchain Foundation for Developers, taught by IBM staffers. In an effort to increase adoption of its products, IBM is pushing to train developers, administrators and customer service workers in IBM technology. Coursera charges $39 to $49 a month for these courses, which take three to six weeks to complete. Graduates get certificates and IBM digital badges that can help them land jobs at IBM or at IBM client companies like Wells Fargo and Exxon Mobil. Corporate courses can be especially lucrative for Coursera, which in some cases keeps 100% of tuition revenue.
Maggioncalda is also betting on a major expansion in Coursera’s full-degree programs, launched under Levin. It now offers a bachelor’s in computer science from the University of London and 11 master’s degrees, including an “iMBA” from the highly ranked Gies College of Business at the University of Illinois for $20,000, compared with $82,000 an out-of-state student pays on campus. Its university partners say the online degrees aren’t siphoning away brick-and-mortar students but rather attracting nontraditional students who otherwise wouldn’t enroll. “We’ve tapped into a whole different market,” says Gies dean Jeffrey Brown. While Gies’ on-campus program can enroll only 100 MBA students at a time, since the online division launched two years ago it has registered nearly 1,800 students, most of them in their 30s and well into their careers.
In offering full degrees, Coursera is challenging an established competitor, 2U, a publicly traded company based in Lanham, Maryland. 2U has built a market cap of $3.7 billion on revenue of $350 million developing 64 online degrees, mostly master’s programs, for 34 universities. It keeps 60% or more of tuition revenue, which supports a marketing team of 250 people. By contrast, Coursera, which charges schools less than half of tuition revenue, relies on its vast user base for marketing.
Maggioncalda sees Coursera’s user base as its greatest advantage, and he has launched a series of experiments to expand it. In a pilot program called Coursera for Partners, the company is offering Duke students, staff and faculty, free of charge, all the Coursera courses taught by Duke faculty and by the Google Cloud team.
Why give up all that tuition revenue? “It’s a loss leader,” Maggioncalda says. A Duke staffer who takes the Duke introduction to probability and data course may decide to pay $300 for a popular data science course series offered by Johns Hopkins, or could change direction and pay for a $20,000 M.B.A.
In another experiment, called La Tríada, Coursera is offering more than 100 courses from three Latin American university partners, Tec de Monterrey in Mexico, Universidad de los Andes in Colombia and Pontificia Universidad Católica de Chile, free to all on-campus students at the three schools. “When those students graduate, they’re going to want to take more Coursera courses,” Maggioncalda says.
Maggioncalda doesn’t foresee the demise of the old-fashioned classroom, but he is staking Coursera’s future on his belief that technology will continue to change the way people learn. High-quality affordable online classes will prove the most effective way for working people to gain new skills like data analytics and programming languages like Python, he believes.
“I think almost every degree will move online,” he says. “It is so efficient, so compelling; it will be highly personalized and powered by data. We’re going to have virtual and simulated learning experiences that will transport students into totally different learning environments that will give them access to things they can only get in the virtual world.”
It’s a bold prediction from someone who spent more than two years chasing real, rather than virtual experiences. Has he scrapped plans to go to Antarctica? Definitely not. “I’m going to go,” he says. “I just don’t know when.”