• December 22, 2014

'Social Entrepreneurs' Bring New Ideas, New Conflicts to Colleges

'Social Entrepreneurs' Bring Hope and Contradictions to the College Market 1

Joey Pulone for The Chronicle

Brian Sowards founded Useed, which helps colleges run small fund-raising campaigns. It's important to "challenge your customer," he says.

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close 'Social Entrepreneurs' Bring Hope and Contradictions to the College Market 1

Joey Pulone for The Chronicle

Brian Sowards founded Useed, which helps colleges run small fund-raising campaigns. It's important to "challenge your customer," he says.

Many of the boldest experiments in higher education these days are led by a relatively new kind of business leader: the social entrepreneur.

The founders of Coursera proudly claim the label, stressing their lack of concern about a business plan as they set up free online courses from top colleges. So does the head of Udacity, another provider of MOOCs, or massive open online courses. In fact, it's hard to find any chief executives of education start-ups these days who don't drop "social entrepreneur" into their bios, as they stress that they are not your typical money-grubbing suits.

But other than a promise to do good, being a social entrepreneur in higher education appears to have no strict meaning, at least to the lawyer or the tax man. It is a state of mind: an optimistic belief that if you change the world, money will follow.

It is also a commentary on what the new entrepreneurs see as the slow pace of change at nonprofits—that traditional colleges and foundations move too slowly to make big innovations happen without a push.

Daphne Koller, the 44-year-old co-founder of Coursera, embodies this new ethos. Most of her career has was spent on scholarship, as a Stanford University professor of computer science and winner of a MacArthur "genius" grant. She says that she took a pay cut to start the company, and that its mission is to solve the problem of unequal access to high-quality education. To show she's not about the money, she boasts that Coursera skipped the usual market research done by old-fashioned companies.

In every decision the company makes, she says, the first question is, "Is this in the best interest of our students?"

For instance, Coursera has rejected the idea of selling advertising on its Web site, Ms. Koller says. Ads might bring a lucrative income stream, but they would be a "distraction" to students.

Yet there's nothing on paper that guarantees these student-centric operating procedures. Despite the ".org" in its Web address, Coursera is a standard C Corporation, whose charter is to return profits to the investors, who have given more than $22-million to start the venture.

Ms. Koller and the company's other founder, Andrew Ng, could have made their venture a nonprofit. And they considered that route, Mr. Ng told me in an interview last year. But when they were starting out a couple of years ago, he said, they found it "really tough" to raise money from foundations. "It turns out that we're able to find resources much more easily as a company than as a nonprofit," he said.

They even looked into setting up as a "benefit corporation"—a structure that makes clear to investors that the company will focus on social good as well as profits. But the state of Delaware, where Coursera and just about every other Silicon Valley start-up are incorporated, doesn't offer that option.

As I continued to ask for proof that Coursera would be less profit-focused than any other company, Ms. Koller pushed back and turned the question around, asking why people assume that nonprofits are somehow purer than a well-meaning company. "I just read the Time magazine article about nonprofit hospitals charging egregious amounts for Band-Aids," she said. "Does that mean that they're doing the right thing by their patients? I would argue against that claim."

"It comes down to who's running it and what their intent is," she concluded. "Andrew and I are running this, and we're running this with the best of intentions."

More Contradictions

Social entrepreneurs in higher education also present another contradiction: Companies like Coursera need old-fashioned universities to be their partners but are also pushing disruptive changes that could threaten, as a side effect, traditional revenue streams of those same partners.

In other cases, the companies seek to change the way colleges do business rather than to simply sell to what colleges already do.

"If you want to create real change, you have to be willing to challenge your customer and question their beliefs," explains another self-described social entrepreneur, Brian Sowards, the 32-year-old founder of a start-up called Useed. His company helps colleges run fund-raising campaigns for individual projects proposed by students. It's similar in spirit to Kickstarter, the popular "crowdfunding" site, through which strangers are asked to make small contributions to support projects. It's a different approach than asking alumni to donate to a main college fund that the institution can spend on whatever it wants.

Mr. Sowards says that his mission is to help students become more entrepreneurial as they raise money for their projects.

He said the company has already turned down gigs that didn't advance that mission. "We were invited to help study-abroad trip companies to create crowdfunding pages for people to go on their trips," he said. As a revenue-generator, it seemed a sure bet. "What it wouldn't do is transform education," he said. So they said no.

At least one longtime college-technology leader, Martin Ringle of Reed College, looks at some of the new pitches from social entrepreneurs with "fascination," especially those promoting free courses.

"They're saying, Hey, you guys have to get on board with this whole new wave of things," he says. Yet the new wave of things is "trying to undermine and disrupt and ultimately do away with" the people they are selling to. "Many of these entrepreneurs are essentially playing both sides of the street."

Some young leaders of start-up companies in higher education, though, argue that they are simply behaving in the disruptive spirit they were taught by the universities they are selling to.

"This generation of entrepreneurs were actually raised very idealist," says Michael Staton, a 32-year-old who founded a company called Inigral several years ago. "I always felt that I was getting sold this idea that I could change the world—as far as back as I could remember."

Mr. Staton says his alma mater, Clark University, which uses the slogan "challenge convention, change our world," has declined to try Inigral, which helps colleges improve enrollment through a Facebook application. "I would probably give it to them," he says.

Indiana Jones vs. Han Solo

While the term "social entrepreneur" has been around for decades, it seems to have emerged within higher education only in the past few years.

An organization called Ashoka, for instance, has been promoting the idea since the 1980s, but it only set up a program focused on higher education in 2008. The group has primarily applied the term "social entrepreneurship" to people starting nonprofits who want to borrow practices from the business world to make their efforts more innovative and sustainable.

Ashoka does sometimes support founders of for-profit efforts, but only if "the social mission is their main driver," and the for-profit structure is just "the best way to realize its intended social impact," says Michèle Leaman, a director at the organization. "Selling water and donating 5 percent of profits, that's not really social entrepreneurship for us."

In Hollywood terms, Indiana Jones might call himself a social entrepreneur. But not Han Solo, who claimed he saved Princess Leia only for the reward.

But Ms. Leaman admits that some companies misuse the label. "The term is really muddled," she notes.

Many professors watching their colleges work with Coursera or try other products made by social entrepreneurs say they are skeptical of companies, fearing that the talk of social good is a way to try to distract from the profit the companies stand to make.

"It's a kind of whitewashing of what they're doing, which is to make money off education," says George Williams, an associate professor of English at the University of South Carolina Upstate and an editor of the ProfHacker blog hosted by The Chronicle.

Yet Mr. Ringle, of Reed College, admits that he would rather work with companies who talk about doing good rather than ones who don't bother making that pitch.

"I like hearing this rhetoric and would love to see these folks essentially carry through on it and be successful," he says. He praised Google, which was founded with the informal corporate motto of "don't be evil," for its Apps for Education program, which offers free e-mail services to colleges, arguing that it has changed the behavior of Microsoft and other competitors.

There are other technology companies that have passed up profits to fulfill a broader social mission. One example cited frequently by social entrepreneurs is Craigslist, an example that Mr. Ng said is an inspiration to Coursera.

I got the chance to talk with Craigslist's founder, Craig Newmark, during the recent South By Southwest Interactive Festival in Austin, and I asked him what advice he had for the many social entrepreneurs in education.

He said that he went through a time when bankers and venture-capital firms were offering him "a big huge pile of money" for a stake. He passed, to keep almost everything on Craigslist free (the site does charge small amounts for some job postings).

"If you do something successful, bankers and VCs will be all too happy to give you a huge amount of money to do things the usual way," he concluded. "But if you know when enough is enough, you can do something unique."

College 2.0 covers how new technologies are changing colleges. Please send ideas to jeff.young@chronicle.com or @jryoung on Twitter.

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