Udacity's high-profile chief executive, Sebastian Thrun, is at it again. Having just raised $35 million in new venture capital, he is bristling with plans to keep expanding in online instruction, focusing mostly on ways to sharpen up technical training for big companies and their workers in fast-changing fields.
In its 2 1/2 years of existence, Udacity has experimented with a variety of strategies. Initially, the Mountain View, Calif., company had big plans to disrupt traditional, university-style instruction. One of its earliest offerings was a wildly popular online course on artificial intelligence, modeled on a version of the class that Thrun taught as a professor in Stanford's computer science department. Thrun in 2012 talked about building out a full complement of massive open online courses (or MOOCs) that could provide students anywhere in the world with low-cost academic degrees.
But building up a full suite of academic courses and achieving high student completion rates proved tricky. Besides, two other startups with closer ties to academia, Coursera and EdX, emerged as the dominant new players in that sector. So Udacity more recently has gone the vocational route. It is drawing more of its instructors from industry -- while creating a course catalog that's heavy on specific technical skills such as writing Android applications or programming in Hadoop. The idea: to help people who are already working in the field win promotions or qualify for better jobs.
Udacity's employees. CEO Sebastian Thrun (jeans and brown jersey) is kneeling in the foreground.... [+]
In an interview, Thrun said he's excited about using Udacity as a way of addressing the "skills gap" in fields ranging from computer science to finance. He noted that companies all over the world are scrambling to hire data scientists, and can't find enough. Udacity now offers eight short courses in various aspects of data science and -- with its new funding -- could triple that number in a year or two, he said.
Udacity's business model provides free versions of all its courses -- but invites students or their sponsoring companies to pay fees for what Thrun dubs "nanodegrees." He hopes that these official certificates of completion will rise in stature to the point that job candidates list them on resumes and employers ask for them in job ads. He notes that companies such as AT&T, Verizon, Wal-Mart and General Electric have been using Udacity courses for their workforces, at least on a pilot basis, and he sees big room to expand ties to industry.
The lead investor in Udacity's new financing round is Drive Capital of Columbus, Ohio. It was founded by Mark Kvamme, a former partner in Sequoia Capital, one of Silicon Valley's most renowned venture firms. Kvamme says he founded Drive on the belief that heartland America was rich with opportunities -- and needs -- for a stronger start-up sector. In an interview, Kvamme said he believed Udacity's skills-centered approach could be useful not just for computer-related topics, but also for industries such as retailing, where seasoned managers may benefit from quick, systematic exposure to new ideas in merchandising and other areas.
Kvamme said he's been trying to invest in Thrun's projects since 2007, when Thrun and a team of his Stanford students were developing a neighborhood visual-mapping service that ultimately became Google's Street View. "I was well down the path toward funding them, when Google stepped in and bought the business," Kvamme recalled. Kvamme added that Thrun is "a force of nature. He's a very thoughtful guy, with high energy and high integrity."
Other new participants in Udacity's new funding include German media company Bertelsmann, Brazilian investment firm Valor Capital, Japanese hiring specialists Recruit and U.S. conglomerate Cox Enterprises. Udacity also is getting additional capital from two earlier venture investors: Andreessen Horowitz and Charles River Ventures.
How long will Thrun stay in charge of Udacity? In an interview, he waved aside comparisons to Coursera, which was founded by two other Stanford computer science professors in 2012, who have since ceded the CEO title to a more traditional leader, Richard Levin, the former president of Yale.
"I'm in this for the long run," Thrun said. He said he hopes that as Udacity's courses grow, it can help knowledge and opportunities spread globally in ways that contribute to a more harmonious world. Besides, he noted, Udacity last year hired a chief operating officer, Vish Makhijani, who rounds out the management team in ways that lessen the pressures on Thrun to try to do everything.
