By Michael Noer of Forbes
The headquarters of what has rapidly become the largest school in the world, at 10 million students strong, is stuffed into a few large communal rooms in a decaying 1960s office building hard by the commuter rail tracks in Mountain View, Calif. Despite the cramped, dowdy circumstances, youthful optimism at the Khan Academy abounds. At the weekly organization-wide meeting, discussion about translating their offerings into dozens of languages is sandwiched between a video of staffers doing weird dances with their hands and plans for upcoming camping and ski trips.
Pivoting, Salman Khan, the 36-year-old founder, cracks a sports joke appropriate for someone who holds multiple degrees from MIT and Harvard.
It involves LeBron James (a Khan Academy fan), three-point shots and sophisticated algorithms called Monte Carlo simulations. The company’s 37 employees, mostly software developers with stints at places like Google and Facebook, are the types who know when to laugh. And they do.
It’s a prototypical Silicon Valley ethos, with one exception: The Khan Academy, which features 3,400 short instructional videos along with interactive quizzes and tools for teachers to chart student progress, is a nonprofit, boasting a mission of “a free world-class education for anyone anywhere.” There is no employee equity; there will be no IPO; funding comes from philanthropists, not venture capitalists.
“I could have started a for-profit, venture-backed business that has a good spirit, and I think there are many of them–Google for instance,” says Khan, his eyes dancing below his self-described unibrow. “Maybe I could reach a billion people. That is high impact, but what happens in 50 years?”.
It’s a fair question, with an increasingly sure answer: The next half-century of education innovation is being shaped right now. After decades of yammering about “reform,” with more and more money spent on declining results, technology is finally poised to disrupt how people learn. And that creates immense opportunities for both for-profit entrepreneurs and nonprofit agitators like Khan.
How immense? According to a report from the President’s Council of Economic Advisers, global spending on education is $3.9 trillion, or 5.6% of planetary GDP. America spends the most–about $1.3 trillion a year–yet the U.S. ranks 25th out of the 34 OECD countries in mathematics, 17th in science and 14th in reading. And, as in so many other areas of American life, those averages obscure a deeper divide: The U.S. is the only developed country to have high proportions of both top and bottom performers. About a fifth of American 15-year-olds do not have basic competence in science; 23% can’t use math in daily life.
It’s those latter statistics that motivate Khan. The site covers a staggering array of topics–from basic arithmetic and algebra to the electoral college and the French Revolution. The videos are quirky affairs where you never see the instructor (usually SalmanKhan himself, who personally has created nearly 3,000 of them). Instead, students are confronted with a blank digital blackboard, which, over the course of a ten-minute lesson narrated in Khan’s soothing baritone, is gradually filled up with neon-colored scrawls illustrating key concepts. The intended effect is working through homework at the kitchen table with your favorite uncle looking over your shoulder.
Or make that the planet’s favorite uncle. Over the past two years Khan Academy videos have been viewed more than 200 million times. The site is used by 6 million unique students each month (about 45 million total over the last 12 months), who have collectively solved more than 750 million problems (about 2 million a day), and the material, which is provided at no cost, is (formally or informally) part of the curriculum in 20,000 classrooms around the world. Volunteers have translated Khan’s videos into 24 different languages, including Urdu, Swahili and Chinese.
“Sal is the world’s first superstar teacher,” says Yuri Milner, the Russian physicist turned venture capitalist who was an early investor in Facebook, Twitter and Groupon.
Beyond admirers like Milner, Khan’s meteoric success has attracted the financial support of a bevy of high-profile, socially minded backers, including Ann Doerr, the wife of billionaire venture capitalist John Doerr; Bill Gates; Netflix CEO Reed Hastings; NewSchools Venture Fund, whose CEO is the former president of the California State Board of Education; and Google, whose chairman, Eric Schmidt, serves on the academy’s board. In total Khan has raised $16.5 million, with assurances of more to come.
“The numbers get really crazy when you look at the impact per dollar,” says Khan. “We have a $7 million operating budget, and we are reaching, over the course of a year, about 10 million students in a meaningful way. If you put any reasonable value on it, say $10 a year–and keep in mind we serve most students better than tutoring–and you are looking at, what, a 1,000% return?”
Even in Internet terms that’s impressive for an organization that 24 months ago consisted of one man working alone in a walk-in closet and 12 months prior to that was the oddball hobby of an intellectually hyper-active hedge fund analyst. But Salman Khan’s ambitions go much further. “Now that there are these tools, where students can learn at their own pace and master the concepts before moving on, can we rethink this educational model that has been standard practice for hundreds of years?”
Internet-based technology long ago figured out how to revolutionize and democratize everything from retail to auctions to maps. So what took so long to disrupt perhaps the largest, most dysfunctional field of all? With education several things were needed that until this decade hadn’t materialized: widespread broadband, low content costs (both creation and distribution) and rapidly proliferating mobile devices. And just as critically, a shift in social norms that accepts the efficacy of online learning coupled with a generation of digital natives willing to wholeheartedly embrace it.
And this perfect storm is finally attracting investment. According to GSV Capital, a publicly traded venture fund based in Woodside, Calif., a measly $3.4 billion worth of venture money was plowed into education over the past decade–but the deal pace accelerated sharply. Of the 428 deals financed during those ten years, 207 of them closed in 2010 or 2011, accounting for 45% of the funding.
“Importantly, it’s not just a lot of capital that is coming in or a growing amount of capital,” says GSV CEO Michael Moe. “It’s the people who are always early and usually right. It’s Kleiner Perkins. It’s Sequoia. It’s Benchmark. It’s NEA. It’s Greylock. It’s Bessemer. The very best venture firms are not just making casual investments in education–they are making it a big part of what they are doing.”
Online education isn’t entirely new. In a limited fashion Harvard began offering course material online way back in 1997, Rice University followed suit in 1999 and MIT in 2002. What is new and startling is the scale of these enterprises. A single (and rather difficult) electrical engineering course from MIT attracted 155,000 students this past spring, and Coursera, a Mountain View, Calif.-based startup that hosts classes from 33 different universities (and received $16 million in venture funding earlier this year), claims 1.7 million people have signed up for at least one of its courses.
Perhaps most dramatically, Stanford’s Sebastian Thrun recently resigned his tenured professorship to start Udacity, a for-profit venture that offers courses in science, engineering and entrepreneurship. Thrun, a computer scientist and roboticist who spearheaded the development of Google’s driverless car, took the leap after 160,000 students signed up for his Introduction to Artificial Intelligence class when he first offered it for free online in 2011. Almost 15% of the online students completed the course at Stanford-level, and 170 out of his 200 traditional students preferred the virtual Thrun to the live one.
“They found the online medium so much more satisfying that they chose not to come to class anymore,” Thrun says. “And in my midterm and final exams their outcome was a full letter-grade higher. I’ve been giving these exams for a long time, and the questions were of comparable difficulty.”
The biggest opportunities of all may be in the developing world. Although broadband connectivity is more limited there than in richer countries, it is far from nonexistent, and ultracheap tablets like the $40 Aakash are starting to come to market. That makes alternative delivery systems possible. Dozens of Khan Academy videos, for instance, could fit on a single thumb drive.
“This decade is the first opportunity we have ever had to extend quality secondary education to every kid on the planet,” says Tom Vander Ark, a venture capitalist who headed the Bill & Melinda Gates Foundation’s educational programs through 2006. “When you combine mobile devices, free content and an inexpensive, blended learning model, you can serve kids in the slums of Nairobi for $4 a month and you can start to imagine a $100-a-year high school that is quite high quality.”
Much of our current education system derives from the so-called Prussian model, and it dates to the late 1700s when the King of Prussia introduced free, compulsory elementary schooling. Those schools were dedicated to teaching citizens the three Rs (reading, writing and arithmetic), with the secondary, more cynical, objective of creating a docile working class accustomed to submitting to authority. A great deal of our educational scaffolding, including separating students by age and separating subjects by ringing bells, dates from Prussian times.
The Prussian model, which was imported into the U.S. by Horace Mann in the mid-19th century, had a number of advantages. It guaranteed all Americans a free, relatively good education and guaranteed employers a time-disciplined workforce with a set of common skills. It played no small part in lifting millions into the middle classes. And given the state of technology at the time, it was arguably the most cost-effective way of doing so. But it also had significant drawbacks, most notably its factorylike pacing.
“We have a one-size-fits-all, one-speed-fits-all, one-path-fits-all model,” says Thrun. “And that is the result of one simple assumption that we are questioning. The assumption is that education takes place from teacher to student by spoken word–by synchronous, not recorded, spoken word. That means that all the students have to be at the same place at the same time. If everyone really learned at the same speed on the same path then you could fill a stadium and still have useful learning. But you can’t.”
Thrun, Khan and many of their fellow educational disruptors want to upend that. Broadly termed “flipping the classroom,” the idea is that students watch lectures and work through problem sets on their own time, at their own pace. Once they prove mastery of a concept, adaptive software will suggest new ones, much like Amazon recommends new books. Teachers are kept abreast of students’ progress through back-end dashboards. Class time once reserved for lectures would be devoted to mentoring and one-on-one tutoring.
Knewton, a New York City-based startup that has raised $54 million in funding from a gaggle of A-list firms, including the Founder’s Fund, Accel Partners and Bessemer, is taking this concept to new levels. The company has created a software platform that can be used by any content creator from a megapublisher like Pearson down to an individual teacher or prep school. Knewton’s software data-mines each student’s performance and deeply customizes his or her learning experience. Ultimately they expect to be able to track you and your learning habits from grammar school through grad school.
“Once you have device-based learning, you are producing so much data we know everything about what you know and how you learn best,” says Knewton CEO Jose Ferreira. “You learn math best in the morning, between 9:30 and 11 a.m. We know that. That 40 minute burst you do at lunch every day? You aren’t retaining any of that–go hang out with your friends. You learn science best with videoclips or games instead of text or in addition to text? You learn history best in 22-minute bite sizes, and at the 24-minute mark your click-rate always declines? We know everything about how you learn.”
But where does this brave new world leave teachers?
“What gets exciting is that you can imagine a lot of differentiation of teacher roles in the future,” says Michael Horn, coauthor with Clayton Christensen and Curtis Johnson of Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns . “Some people might be content experts, some who are mentors and some who are handling nonacademic problems. That is significant change.”
Emerging communication technologies have long been touted as a panacea for our educational woes. In the 1920s, as radio boomed, more than 200 educational stations were formed with the hope “that through the connectivity of radio, a single dazzling teacher could inspire thousands of bored students,” as William Bianchi writes in his history of the movement. By 1937 only 38 had survived. The dawn of television spawned similar utopian dreams. Sunrise Semester , a production of CBS and New York University, ran for nearly 25 years starting in 1957 and offered watch-at-home courses for credit. In the 1980s personal computers became common in schools; in the last decade broadband Internet did. None of it helped very much.
“This happens over and over,” says Steven Gilbert, president of the TLT Group, a nonprofit educational technology consultancy. “As a kid I watched a physics course on TV–in the 1950s. And if you were self-motivated enough and had various other things helping you, you could learn physics in an okay way. The same thing is happening with the Khan Academy videos, and for the most part they are very good videos. What is missing is the recognition that a whole lot of humans don’t like to learn that way or can’t. And we have enormous historical evidence that that is the case.”
But like the good revolutionaries they are, the entrepreneurs on the front lines either dismiss that history as irrelevant or read something entirely different into it.
“Recent history teaches us that the Internet ultimately revolutionizes any industry that has an information or media-based product,” says Knewton’s Ferreira. “If you can put a chunk of that product–not all of it, but a lot of it–through a pipe and get it to people directly, it’s inevitable. The last two that haven’t changed yet are video and education, and I think both needed more broadband and better devices.”
“It is the naysayers that say nothing new,” sighs Udacity’s Thrun. “Almost any recent success you see in society was quote-unquote ‘nothing new.’ There were lots of people who said the Internet was nothing new. After all, we have books already and can send them by mail. If there was nothing new, Salman Khan wouldn’t have hundreds of millions of views.”
Much like the story of Bill Hewlett and David Packard founding Hewlett-Packard in a Palo Alto garage during the depths of the Great Depression, a fine dust of hagiography is already settling around Salman Khan’s life story and the origins of the Khan Academy.
Khan’s Road to Damascus moment came in 2009. By that point he had been creating YouTube videos for three years (they grew out of tutoring sessions with his cousin Nadia when he was living in Boston and she was in New Orleans), and they were garnering tens of thousands of views every day. But despite the time he was putting into the project, Khan viewed it as largely a hobby.
Then Khan received an e-mail from a young man who had, despite some pretty long odds, managed to get accepted into college. But he was still far behind his classmates, particularly in math. Then he discovered Khan’s videos. “Spent the entire summer on your YouTube page … and I just wanted to thank you for everything you are doing,” he wrote. “Last week I tested for a math placement exam and am now in Honors Math 200. … I can say without any doubt that you have changed my life and the lives of everyone in my family.”
The words struck Khan deeply, especially since he had grown up poor, raised by a single mom in Metairie, La. at a time when that town’s claim to fame was electing a white supremacist, former Klan leader David Duke, to the state legislature. It was only his intellectual gifts–he had competed in regional and national math competitions in high school–that allowed him to escape to Cambridge, Mass. and MIT. Once there Khan distinguished himself both by his rebellious look–he had played in a death-metal band in high school and still sported muscle Ts, wild hair, pierced ears–and the quality of his mind.
“What I did by virtue of skipping a lot of classes was get two undergraduate degrees and a master’s in four years,” Khan recalls. “It wasn’t slacking. There were much more productive ways of learning everything than sitting in lectures.”
But by 2009 Sal’s rebel days were long behind him. He had a lucrative job as a hedge fund analyst, an infant son and a wife who was still training for her medical career. And despite the finance job, and an M.B.A. from Harvard Business School, the two had far less than $1 million in savings. Making YouTube videos full-time seemed unthinkable. But that e-mail pushed Khan over the edge. He quit his job, installed himself in a walk-in closet off the bedroom and started cranking out videos. His wife said he could do it for a year. Ten months later Khan still had no financing and was almost on the verge of giving up. Then Ann Doerr wrote him his first check.
“I decided I wanted to send a little contribution,” Doerr recalls. “What was honestly stunning to me was that Sal had been on a number of news shows–CNN and the like–and I just assumed that he was well set financially. Then I found out I was his biggest contributor. The other thing I found out that he was about ready to call it a day and get a ‘real’ job, which was to me equally frightening.”
Khan has recently published a book, The One World Schoolhouse (Twelve, 2012), that recounts the story of Khan Academy and outlines a radical vision of the future of education. Khan would like to re-create the once common mixed-age classrooms that he believes encourage older kids to take responsibility for younger ones. He wants multiteacher classrooms to provide students with different perspectives. He would abolish summer vacation–”a monumental waste of time and money.” And he would eliminate letter grades altogether, preferring a more qualitative approach to assessment, what he terms a “running multiyear narrative.”
It is heady, dreamy stuff and about as likely to happen as, well, a single teacher inspiring millions of students around the world using nothing more than crudely drawn YouTube videos.
“Sal Khan is arguably the most impactful educator in the world, and he has done it in 24 months,” says GSV’s Moe. “That’s really cool and exciting and motivating. He is leading the revolution. My only disappointment is I think he could have done just as well as a for-profit–although it’s hard to argue he made the wrong strategic decision.”
Khan is nonplussed. “Being a billionaire is sort of passee,” he shrugs. “It’s ironic. When I used to try and describe what the Khan Academy was, I would tell people that if it were a for-profit I would be on the cover of FORBES.”
This story appears in the November 19, 2012 issue of Forbes