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Randy Best can’t read. “I’m acutely dyslexic,” says Best from his office in a glitzy Dallas skyscraper where he is plotting his assault on the ivory tower. “My mother read to me all through college. She was a schoolteacher, so she was just humiliated–and made it clear to me that she was devastated. Back then there were two reasons you didn’t learn to read: You were lazy or you weren’t very intelligent.”
Even today, as his latest venture,
Academic Partnerships, is using the Web to turn struggling midlevel U.S. universities into global education brands, he still needs someone to read to him. On his desk sits a manila folder marked “Read,” where he stashes articles and e-mails for his right-hand woman, Justyna Dymerska, a Cambridge-educated Ph.D., to recite. In fact, Best, 71, can’t even use a computer. His Web activity is confined to an iPad. When he needs to send e-mails, he dictates while someone else types.
It’s a startling confession for anyone, let alone the founder and CEO of an estimated $100 million (sales) education technology company. But Best’s functional illiteracy masks an even rarer ability: making money–and lots of it. There are the jewelry businesses he founded as an undergrad in the 1960s, the art galleries and cattle yards in the 1970s, and outpatient care, oil exploration and defense contracting in the 1980s. By 1995 Best had made several fortunes and turned, momentarily, to philanthropy.
He founded Voyager Expanded Learning as a free afterschool program for Dallas latchkey kids. Originally a nonprofit, this startup would turn out to be his biggest moneymaker yet. Best eventually pulled in so much government money from the No Child Left Behind Act that Voyager–by then very much for-profit–was criticized by education watchdogs as the “Halliburton of Education.” Best sold Voyager for $360 million in 2005 to library database ProQuest. His 37% stake in the company was worth close to $130 million.
Academic Partnerships, founded as Higher Ed Holdings in 2007, is on track to make that payday look like a freshman introductory course. It’s a simple business model: Academic Partnerships helps colleges move some of their degree programs–usually those with a professional or vocational slant–online. The company spends an average of $2 million per school (it currently has 40 U.S. campuses and 17 international ones) to acquire online students, digitize lessons, set up back-end administrative and technical support, and tutor professors in the ABCs of the virtual classroom.
In return it takes a 50% cut of the tuition, which at some schools can be as costly as a traditional degree. The company says it has so far recruited 82,000 students, with an 85% retention rate. When they graduate, those students are granted transcripts and diplomas that are indistinguishable from ones earned the old-fashioned way.
There are now in excess of 2,000 online degree programs in the U.S. About half of the schools rely on a third-party facilitator like Academic Partners or its competitors to put warm, tuition-paying bodies behind their new virtual desks. Other leaders in the industry include
Deltak (owned by Wiley),
Embanet(owned by Pearson),
Bisk Education and
2U. According to Robert Lytle, cohead of education practice at the
Parthenon Group, those facilitators currently bring in an estimated $1 billion a year in tuition revenue. That market is expected to double in four years, says Michael Moe, cofounder of
GSV Asset Management.
“They are good at that, and we are not,” says Donald R. Bobbitt, president of the University of Arkansas System, which began working with Best in 2012. Best finds students partly through partnering with some 2,000 big institutions worldwide–hospitals, corporations and municipalities–that want better educated (or credentialed) employees. But it’s also a lot of telemarketing. Of the more than 400 workers employed by Academic Partnerships, 50% work the phones–and the e-mails–in a sprawling call center situated right across the street from Best’s office: The three Rs here being recruitment, retention and revenue.
Philosophy, political science and art history majors need not apply, nor gifted high school seniors shooting for top-tier schools. “The Stanfords, the Harvards, oh my gosh, those schools are remarkable,” says Best. “But they’re irrelevant to the market.” The degrees Academic Partnerships are selling are aimed squarely at the bulging middle mass of the college market–the millions of adult students seeking degrees as a vehicle to better jobs and bigger salaries. Let the 20-somethings pack the coffeehouses, stadiums and frat parties. Best’s clients are all business. They are cops, nurses, teachers and construction workers grinding for the promotion and pay bump that comes with a B.S. in criminal justice or nursing or a master’s in education or construction management but can’t take days or nights off–much less four or five years–from the job and kids to earn a diploma.
“We’d all like to be 19 again, sitting in a dorm, but that’s not the way it is,” says Jeb Bush, the former Florida governor and a current Academic Partnerships investor and senior advisor. “We have a whole lot of people who aspire to a better life, are married, have a job, can’t pause and undo what they’ve done in their adult life but want a college career that will help them live a life of purpose and meaning. And without expanding the reach of our public universities, that promise will be unfulfilled.”
It’s great for the colleges, too. Online learning enables them to expand without building new classrooms or laboratories, landscaping playing fields or providing heat, so growing a digital student body has an outsize effect on the bottom line. It costs the average public college $13,000 a year (in 2010 dollars) to educate an undergraduate on campus, according to the
American Institutes for Research, a nonpartisan research group. According to Academic Partnerships, it can do the same job online for about $1,500 a year–making digital degrees a profit machine even after accounting for the significantly higher costs of acquiring virtual students (there is much more competition in cyberspace).
In some ways the money couldn’t come soon enough. At elite public universities like UVa or UC Berkeley bright and often wealthy students battle for admission, but there are hundreds of middling state schools on the brink. These schools are being squeezed by decreasing government aid (taxpayers typically foot
about 13% of the bill, according to the U.S. Department of Education), falling enrollment and anemic alumni giving.
“Higher education is an industry in danger,” says
Clayton Christensen, the Harvard Business School guru and a senior advisor (unpaid) at Academic Partnerships. “It’s very plausible to say that 15 years from now half of the universities that exist will be bankrupt and in some fundamental way facing extinction and the need to totally change themselves.” Best wants to be that change agent. If his plan works, the same man who can’t find his way through a textbook or use a computer might end up saving the battered U.S. public university system–and mint another fortune in the process.
Best was born and raised in Beaumont, Tex., a fading oil boomtown near the Louisiana border. His father was a hardware store owner (and also dyslexic) and his mother a schoolteacher and principal. He set out to major in prelaw at the local college, Lamar University, but soon realized he’d have to read and write briefs. Best switched to political science and began a lifelong obsession with history, ancient civilizations and the arts.
