Burck Smith: StraighterLine a ‘year and a half ahead’ of other online college-course providers [Q&A]

Burck Smith — Baltimore Friends High School graduate, resident of Charm City’s Homeland neighborhood, repeat entrepreneur — is a thought leader in the online college education conversation.
His company, StraighterLine, allows students to take about 60, for-credit courses, completely online, for $49 per course (plus a $99 per month subscription fee). The startup, originally a division of Smith’s tutoring services company, SmartThinking, which was bought by Pearson in 2010, has equivalency agreements with 35 colleges and universities, allowing courses taken through StraighterLine to transfer directly into a student’s degree program. According to StraighterLine’s student-customers, an additional 400 colleges have also awarded full credit for StraighterLine courses.

When StraighterLine launched officially in 2009, “we were very controversial,” said Smith. “We created a pathway to credit, we built courses that a college might, we used McGraw-Hill content. … Most colleges want students to take its high-revenue course, [and] doesn’t want a student taking a cheaper course somewhere else.”
The environment in 2012 is just a bit different, now that prestigious universities like Stanford and Johns Hopkins are offering courses for free through online groups like Coursera.
“I think all this [interest] in things like Coursera has basically proved the model that we started in 2008,” Smith said. “So we think we’re a year and a half ahead, and we’re going to try to stay there.”
Not only has StraighterLine bagged more than $10 million in equity financing in the last year and moved out of the Emerging Technology Center‘s Johns Hopkins Eastern Campus to a new office in Federal Hill, but it’s also rolling out two new features in the next month: professors will be allowed to pitch their own courses and the site will begin administering the Creative Learning Assessment, a test colleges use to measure critical thinking skills.
Technically Baltimore spoke with Smith about why online college education has been a prickly matter, and whether a day is coming when students never step foot on a college campus again.
TB: StraighterLine started in 2008, and it sort of ushered in this shift we’re seeing now with more universities embracing these massive open online courses.
BS: The two principles we started are the same two principles behind this explosion of free courses: one, online courses should be much cheaper than face-to-face courses. There’s no overhead. And two, anyone can operate an online course. You don’t have to have an ivory tower just to deliver a college course online. At the time, we were very controversial.
TB: You mean in 2008, when colleges thought you were—what? Encroaching on their turf?

BS: We were pretty controversial from about 2008 to really about 2011. … The accreditation model makes it very difficult to create course-level price competition because [colleges have] priced online courses as if they were face-to-face courses—because they don’t want their students migrating from high-revenue courses to low-revenue courses.
TB: Low-revenue courses being ones offered online through StraighterLine…
BS: So when someone comes along, like StraighterLine, and basically points out that online courses are dramatically more expensive than they should be, and then price it that undermines some colleges’ business models, that creates controversy. That’s what we pointed out in 2008, and still do.
TB: But now that’s not really controversial anymore? Pricing online courses at a lower rate?
BS: And then the Ivy League schools embraced these free courses and it became very clear that online courses should be much cheaper. And now we’re not controversial. It’s more prescient.
TB: Do you consider something like Coursera, which offers those massive open online courses (MOOCs) for free, to be your competition? 
BS: All of these companies are moving into the same space but from different directions. We have the business model and now we’re trying to build out a really big market. I think what the end game is going to be is one or two platforms where a lot of online education happens, and it won’t be like what we see today where you have 4,000 different colleges offering the same online courses. If we start to aggregate, the prices will plummet—[that is] great for students, great for taxpayers.
TB: So even taxpayers should be rooting for people like StraighterLine, like Coursera, to pool resources and offer online courses on a limited number of platforms? 
BS: One-third of all students have taken at least one online course, and that’s at a price point that’s probably 10 to 30 times higher than it should be. And these courses and prices are being subsidized by taxpayers anywhere from 10 to 50 percent, depending on the kind of college. If the price plummets, then higher education is much cheaper to provide, and then the subsidies [for higher education] diminish as well. And students will be paying less out of pocket.
TB: But what if I want to live in a dorm, throw a Frisbee on the Quad, perfect my keg-stand? Will people really want to attend college just from behind a computer screen?
BS: That happens. It happens a lot now. There’s plenty of colleges that have fully online programs. What’s more likely is you have just a much wider range of options than you have now. … So, for us, you take your freshman year online and your rest somewhere else. Or some combination of the above, or perhaps college takes place at other places—you don’t  have to go to a campus. Maybe it’s internships, travel abroad, or whatever. I think that you’ll see a much wider variety of structures that emerge.