What Makes a Top-Tier Online Education? A Lot of Money, and a Dose of Hollywood Magic

Courtesy of 2tor

Chip Paucek, chief executive of 2tor, emphasizes how expensive it can be to set up a high-quality online program.
April 02, 2012

Meet the Ed-Tech Start-Ups

It's a golden age for educational-technology start-ups. The past three years have seen a spike in venture-capital investment in upstart companies, many founded by entrepreneurs just out of college. Last month The Chronicle outlined the trend ("A Boom Time for Education Start-Ups"), but we wanted to dig deeper.

Below are short features on three such companies, focusing on the problems they hope to solve and the challenges they face in selling their unusual ideas. To get a sense of the emerging field, we've included a list of a dozen other start-ups competing for a piece of the action.

Highly selective colleges have been slow to experiment with online learning, in part because of an unresolved question: How do you create a blue-ribbon experience that would rise above that of lower-cost competitors?

An upstart company named 2tor believes it has the answer: Inject a dose of Hollywood into cybercourses.

Since its founding, in 2008, 2tor has built online graduate programs for Georgetown University, the University of North Carolina at Chapel Hill, and two for the University of Southern California. They are the kind of high-profile universities that would rather have no online program than one that did not reflect well on their institution's brand, says Chip Paucek, 2tor's chief executive.

The legwork required to build best-of-breed online programs is often costly. Mr. Paucek, 41, repeats the word "expensive" frequently. His company says it invests more than $10-million up front in each of its programs, leading the firm to be picky in choosing its partners.

Last week its leaders announced a fifth partnership, to create an online master-of-public-administration program at Chapel Hill.

2tor's big investments pay for Web platforms that allow students to attend online classes with their professors in real time. Another portion of the money bankrolls the company's course videos, which feature production values closer to documentary films than lo-fi YouTube clips.

While shooting videos for USC's online social-work program, for example, 2tor hired professional actors and enlisted professors to help re-enact meetings between social workers and their clients. With faculty members shaping the script, the clips brought to life the clinical scenarios that students typically only read about.

The slick videos aren't Mr. Paucek's first attempts to blend education and entertainment. Shortly after earning a bachelor's degree in political communication from George Washington University, he founded the Cerebellum Corporation, which produced an educational PBS show called Standard Deviants. Young actors and comedians spiced up the learning material. 2tor's graduate-course videos are created for a more advanced audience, but they reflect Mr. Paucek's television background.

Among ed-tech start-ups, the company says it is one of the richest in the United States. This week it plans to announce an additional $26-million infusion of cash. That would bring its total investments to $96-million.

2tor's platform has allowed one of its partners to scale its degree program to thousands of students. Before teaming up with 2tor, USC's on-campus master-of-arts-in-teaching program enrolled 81 students. The 2tor-built online program has enrolled more than 2,500 online students so far, and those courses are taught by two dozen full-time instructors and a large group of adjuncts. Each class section includes live meetings—even the ones where instructors and students live in distant time zones.

Like some of its competitors, 2tor spends a chunk of its project budget trying to influence search-engine rankings to recruit potential students. One of the first Google results for "How to become a teacher" is a 2tor-built portal called, which funnels visitors to USC's online master-of-arts-in-teaching program. 2tor also built a site at, hoping to catch visitors at a high-profile domain.

Once the company finds potential students, the universities control who gets admitted, Mr. Paucek says. Though he declines to specify how many leads are admitted to each program, he says the company's partner universities are equally selective in admitting their online and face-to-face classes.

2tor's big-budget style means hat the students who enroll in its partner programs pay just as much to attend online as they would to take classes on campus. But Richard Garrett, a vice president and principal analyst with the consulting firm Eduventures, says the high prices don't just keep 2tor's revenue-sharing business model afloat; they send signals to students who may associate cost with quality.

"The typical online student experience isn't very compelling," he says. 2tor "needed an offering that was distinct and highbrow given the kinds of institutions they were targeting." So the company has to spend money producing top-quality material in ways that many universities can't afford to spend on their own, he says.

Mr. Paucek admits that his biggest challenge is trying to change preconceived notions about what online education looks like. But he sees those barriers shrinking as students look for high-quality online degrees. Some online programs operating today won't be acceptable to students 10 years from now, he predicts. Or even five years from now.