ChicagoNew YorkSan FranciscoMinneapolis Emerging Trends in Post Secondary Education – The View to 2012 Michael T. Moe, CFA The St. Regis, Washington, D.C

Chicago New YorkSan Francisco Minneapolis

Emerging Trends in Post Secondary Education –

The View to 2012

Michael T. Moe, CFAThe St. Regis, Washington, D.C.

December 9, 2002

ThinkEquity Partners 2

Healthcare in 1970:

– Huge Market - 8% of GDP

– Highly Fragmented - Cottage Industry

– High Cost

– Low Technology

– Lack of Professional Management

– Negligible Market Capitalization

– Essential Human Service

– Less than 2% of U.S. Capital Markets

Healthcare in 2002:

– Huge Market - 14% of GDP

– Segmented by Category

– Consolidating

– Historically Low Costs

– Implementing Strong Management Controls and Accountability

– $2.3 Trillion, or 23%, of U.S. Capital Markets

The Healthcare and Education Analogy


Huge Market - 9.5% of GDP

Highly Fragmented - Cottage Industry

Essential Human Service

Very Inefficient

Low Technology

Lack of Professional Management

Total Market Capitalization: $27 Billion

– Small fraction (<0.3%) of the $10 Trillion U.S. Capital Markets

The Education Industry in 2002


Major Sectors in the U.S. Domestic Economy

(a) Health Care Financing Review, vol. 17, no.3.(b) Defined as pre-kindergarten, post-secondary, consumer products, training/vocational and specialty service markets.

$ Billions

Health(a) $949

Education(b) $740

Social Security $336

Defense $272

Total GDP $7,790

% of GDP

14.1%

9.5%

5.0%

4.0%

100%

Education = $2 trillion global market!


Size of Global Education & Training Market

Global education & training market: $2 trillion

– U.S. market: $750 billion

U.S. higher education market: $250 billion

– Students: 42 million (1990); 97 million (2010); 150 million (2025)

U.S. online higher education market (2001): $4.5 billion

– U.S. online higher education market (2005): $11 billion

U.S. corporate training market: $100+ billion

– Corporate spending: $65 billion

– Government spending: $40 billion

Global corporate & government learning market: $300 billion

Global corporate & government e-learning market: $18 billion

(a) Source: ThinkEquity Partners, Eduventures.


The Evolving Higher Education Marketplace

The higher education market is huge…

– Globally, 84 million students and 20,000 colleges and universities; in the U.S., 15 million students and

4,100 colleges and universities

– Higher education is a $250 billion market in the U.S.

…and growing

– Domestic undergraduate enrollments will increase by 13+% in the next decade to 21.2 million by 2010

– Baby Boom echo generation moving into their college years

– College less of a choice and more of a “must-have”

…with significant demand imbalance

– U.S. only 1 of 10 countries providing a college education to 1/3 or more of their college-age

populations

– Group of traditional host countries for foreign students (U.S., France, and England) expanding to

include Japan, Germany, Canada, and Australia

(a) Source: ThinkEquity Partners, National Science Foundation.


There’s Something Going On Here…

Indexed Performance: March 2000 – Today

(a) Postsecondary Index includes: APOL, CECO, COCO, DV, EDMC, ESI, STRA, UOPX, WIX.

+220%

-75%


Public Market Value of Learning Companies

Substantial Growth of Public Education Market

(a) Public companies included in 1991: DV, NEWH, NLCI.(b) Public companies included in 1992: FC, SCHL, TUTR, as well as all previous companies.(c) Public companies included in 1993: BTZ, SLVN, as well as all previous companies.(d) Public companies included in 1994: APOL, ESI, as well as all previous companies. (e) Public companies included in 1995: AMIE, LTRE, SMTF, as well as all previous companies. (f) Public companies included in 1996: EDMC, STRA, VCMP, as well as all previous companies. (g) Public companies included in 1997: BFAM, POSO, RLRN, RWDT, as well as all previous companies.(h) Public companies included in 1998: CECO, CLBR, CLKS, POVT, SCHS, as well as all previous companies.(i) Public companies included in 1999: COCO, ECLG, EDSN, ELLG, SCIL, as well as all previous companies. (j) Public companies included in 2000: CTRA, DCNT, DTHK, ELOQ, LSPN, RVDP, SABA, SKIL, UOPX, WEBX, as well as all previous companies.(k) Public companies included in 2001: REVU, as well as all previous companies, with the exception of BTZ, CLBR.

$0.3 $1.1 $1.9 $2.2

$4.5

$7.6

$10.9

$13.7

$11.4

$25.3

$27.7

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

CAGR: 49.4%


$1 Invested at IPO…

STRA Performance: 7/25/96 to 9/30/02

CAGR: 42.6%$1 @ IPO = $9.02 Today

Strayer



UOPX Performance: 9/27/00 to 9/30/02

CAGR: 111.6%$1 @ IPO = $4.51 Today

University of Phoenix Online



EDMC Performance: 10/31/96 to 9/30/02

CAGR: 35.2%$1 @ IPO = $5.98 Today

$0

$10

$20

$30

$40

$50

Jan-96 Jan-98 Jan-00 Jan-02

Education Management



CECO Performance: 1/29/98 to 9/30/02

CAGR: 71.3%$1 @ IPO = $12.39 Today

$0

$10

$20

$30

$40

$50

$60

Jan-98 Jan-99 Jan-00 Jan-01 Jan-02

Career Education



DV Performance: 6/21/91 to 9/30/02

CAGR: 28.0%$1 @ IPO = $16.21 Today

$0

$10

$20

$30

$40

$50

Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01

DeVry



APOL Performance: 12/6/94 to 9/30/02

CAGR: 68.6%$1 @ IPO = $59.57 Today

$0

$10

$20

$30

$40

$50

Jan-94 Jan-96 Jan-98 Jan-00 Jan-02

Apollo


Our Society is Changing…

1800 1880 1900 2000

90% 49% 38% 2%

(a) Source: Department of Labor.

Farmers as a % of the Labor Force

Just 13% of working American adults had a high school education in 1900

Only 3% had college degrees


U.S. Economy Shifting to Service Jobs

13.7%

35.4%

38.9%

17.7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2000199019701960 19801950

Services Manufacturing

(a) Source: Department of Labor.


A Changing ParadigmHuman Capital is Replacing Physical Capital as Primary Productive Asset

0

2

4

6

8

10

12

14

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999

1.2x

12.1x

Price/Book Ratios


Education Counts

(a) Median earnings in 2000 dollars for all wage and salary workers ages 25-34. Source: National Center for Education Statistics.

Educational Attainment Outcomes

Salary Gap between Male High School and College Graduates


Education Counts

(a) Source: Michael Milken. Data in 1995 dollars.

Educational Attainment Outcomes

Earning Power of a 30-Year Old Man With a High School Diploma

$35,350

$26,110

$21,620

$0

$10,000

$20,000

$30,000

$40,000

1973 1982 1995


Fastest Growing Occupations (2000-2010)

Employment

(thousands of jobs)

Occupation 2000 2010 Change

Computer software engineers, apps 380 760 100%

Computer support specialists 506 996 97%

Computer software engineers, systems 317 601 90%

Computer systems administrators 229 416 82%

Data communications analysts 119 211 77%

Desktop publishers 38 63 67%

Database administrators 106 176 66%

Personal and home care aides 414 672 62%

Computer systems analysts 431 689 60%

Medical assistants 329 516 57%

Education Required

Bachelor’s degree

Bachelor’s degree

Bachelor’s degree

Bachelor’s degree

Bachelor’s degree

Long-term OTJ training

Bachelor’s degree

Short-term OTJ training

Bachelor’s degree

Moderate-term OTJ training

(a) Source: Bureau of Labor Statistics.


The Need for Skilled Workers

% of Jobs Requiring Skilled Workers

28%

45%

65%

85%

0%

20%

40%

60%

80%

100%

1950 1991 2000 2005E

(a) Source: ThinkEquity Partners.


The Need for Skilled Workers

Adults with Bachelor’sor Higher Degree

Adults without Bachelor’sor Higher Degree

Less Than 25% of U.S. Adults 25 and Older have a Bachelor’s or Higher Degree


The Demand for Knowledge Workers is Fundamental

E-Human Capital Solutions

Global Corporations

Demand for Knowledge Workers

Internet-Based Employee Solutions

Transformation of Knowledge

Higher Ed Solutions

Improved K-12 Solutions

Testing and Assessment

E-Corporate Learning

70% of Fortune 500 CEOs say finding knowledge workers is a major issue of growth


“I skate to where the puck is going to be,not where it has been.”

- Wayne Gretzky


Four-year degree

Isolated

Just-in-case

Tailored programsOne-size fits all

Global network

Cost

Industrial Economy Knowledge Economy

The New Knowledge Economy

Just-in-time

Virtual learning communities

Forty-year degree

ROI

Local


ROI

Custom multimedia learning saves 20% in the first year of implementation and 50%

in subsequent years

E-learning produces a 60% faster learning curve than traditional instruction

Examples:

– Motorola: $1 spent on training yielded $30 in productivity gains over 5 years

– IBM’s Basic Blue management training e-learning initiative: 2284% ROI

– Omega Corporation:

100% improvement in hit ratio on sales calls

Improvement of customer commitments from 33% to 93%

Achievement of 50% of yearly sales goal in quarter after training

– Union Pacific Railroad:

Increase in bottom-line performance of 35%+

Implementation of new processes 12 months earlier than with traditional training

Bottom-Line Effects of E-Learning

(a) Source: THINQ.


Higher Education Landscape

66+ million adults and more than 50% of all employed persons participate in some

form of continuing education

56% of the workforce, or 66 million people, is without an advanced degree

Number of corporate universities skyrocketed from 400 in 1988 to over 2,000 today,

including 40% of Fortune 500 companies

More than 60% of corporate universities have alliances with institutions of higher

education, increasing to 85% by 2003

Executive education particularly salient in light of recent corporate scandals, with

newfound interest in studying “good” corporate governance



The Corporate Market Opportunity

Number of Corporations Offering Distributed Learning Courses to Employees

U.S. corporate business skills training market projected to reach $18.3 billion by 2006

(CAGR of 13.3%)

Worldwide IT education & training market projected to reach $28.6 billion by 2006

(CAGR of 7.1%)(a) Source: ThinkEquity Partners.


The Corporate Market OpportunityCorporate Universities Up Tenfold

Over 40% of Fortune 500 companies have implemented a corporate university

As a point of reference, there are 3,700 postsecondary institutions in the U.S.



Six Megatrends Shaping Higher Education

Demographics

Co

nso

lidat

ion

Outsourcing

Intern

et

GlobalizationBra

nding

Higher EducationMarket


Eve-o-lution: Woman Power

Women have outnumbered men on college campuses since 1979

60% of distance or online learning are females over the age of 25

Women: Changing the Face of Higher Education

(a) Source: Business Women’s Network, Diversity Best Practices.

1.4

3.5

6.2

7.5

8.6

0.0

2.0

4.0

6.0

8.0

10.0

1960 1970 1980 1990 2000

(in m

illio

ns)

Female Enrollment in Higher Education

41%

56%


Working for the Weekend

28%

43%

0%

20%

40%

60%

80%

1970 2000

Percentage of College Students Over the Age of 25

Our Students Aren’t Getting Younger


Working for the Weekend

Level of Education CertificatePrograms

Associate Degree

Programs

Enrollment more than one year after high school 54% 14% 50%

Part-time student 41% 18% 13%

Also worked 1-20 hours per week 75% 42% 51%

Also worked more than 20 hours per week 47% 28% 40%

Bachelor’s Degree

Programs

Completion Rates for Postsecondary Education

As more adults work and attend school, the need for expanding traditional university limits has never been greater



University Tuition$ Per Year for Residents

Actual In Current $ Today

University of Wisconsin - 1935 $55 $654 $3,408

UC Berkeley - 1964 $203 $1,067 $4,176

Wharton - 1975 $3,430 $9,826 $24,570

A Quality Education Is Becoming Increasingly Expensive



Largest U.S. Universities by Degree EnrollmentsFall 1995 Fall 2001

University Enrollment

1 Community College of the Air Force 69,611

2 University of Minnesota – Twin Cities 51,445

3 Ohio State University – Main Campus 48,676

4 The University of Texas at Austin 47,905

5 Miami-Dade Community College 47,060

6 Arizona State University – Main Campus 42,040

7 Texas A&M University – Main Campus 41,790

8 Michigan State University 40,647

9 Pennsylvania State University – Main Campus 39,646

10 Houston Community College System 39,541

11 University of Florida 39,412

12 University of Wisconsin – Madison 39,005

13 University of Illinois – Urbana-Champaign 38,420

14 Northern Virginia Community College 37,144

15 University of Michigan – Ann Arbor 36,687

16 Purdue University – Main Campus 36,427

17 University of South Florida 36,142

18 New York University 35,835

19 Indiana University – Bloomington 35,063

20 University of Arizona 34,777

University Enrollment

11 Apollo GroupApollo Group 139,300139,300

2 Community College of the Air Force 69,611

33 DeVry UniversityDeVry University 55,735 55,735

4 University of Minnesota – Twin Cities 51,388

5 Miami-Dade Community College 49,836

6 Ohio State University – Main Campus 48,352

7 The University of Texas at Austin 48,008

8 Arizona State University – Main Campus 42,463

9 Texas A&M University – Main Campus 41,892

10 Michigan State University 41,545

1111 Career EducationCareer Education 40,800 40,800

12 University of Florida 39,863

13 Pennsylvania State University – Main Campus 39,855

14 University of Wisconsin – Madison 39,289

15 University of Illinois – Urbana-Champaign 38,841

16 Houston Community College System 38,493

1717 Education Management Education Management 37,658 37,658

1818 University of Phoenix OnlineUniversity of Phoenix Online 37,600 37,600

19 Purdue University – Main Campus 36,893

20 University of Michigan – Ann Arbor 36,525

(a) Source: Chronicle of Higher Education.


World’s Ten Most Valuable Brands

8

10

Marlboro

Intel

McDonald’s 26.4

7 Disney 29.3

3 IBM 51.2

Mercedes 21.0

9 24.2

Rank Brand2002 Brand Value

($ in billions)

2 Microsoft 64.1

5 30.9

1 Coca-Cola 69.6

4 General Electric 41.3

6 Nokia 30.0

(a) Source: Interbrand Corp., JP Morgan Chase & Co.

WHERE ARE THE EDUCATION COMPANIES?


World’s Most Valuable Higher Education Brands

Sorbonne

MIT Cambridge, MA

Cambridge Cambridge, England

Brand Location

Oxford Oxford, England

Paris, France

Harvard Cambridge, MA

Stanford Stanford, CA

LSE London, England

Juilliard New York, NY

Liberal Arts

Technology

Liberal Arts

Claim to Fame

Liberal Arts

Professional Schools

Professional Schools

Economics

Performing Arts

INSEAD Fontainebleu, France Business

Cordon Bleu Culinary ArtsParis, France

Bolshoi Ballet School DanceMoscow, Russia

University of Tokyo Research, ScienceTokyo, Japan


Global Higher Education Landscape

United States

265,000 people15 million students

2,600 faculty India

945,000 people4.5 million students

303 faculty

Japan

126,000 people271 faculty

China

1,215,000 people2.2 million students

397 faculty

Former USSR


404 faculty

Germany


198 faculty



Global Higher Education Landscape

500,000+ foreign students, or 3.5% of total postsecondary enrollees, study in the U.S.

and spend $13 billion

America educates one-third of all foreign students

For every foreign student studying in the U.S., there are three to five students who would

consume U.S. education online, if they had the access or the resources

– Potential of 1.6 million international distance learning candidates

Global demand for higher education forecast to reach 160 million students in 2025

– Conservatively, 45 million users of online higher education

– Assuming average annual tuition of $4,800, global market for online higher education will top $215

billion

Students Abroad Hungry for Top-Quality (U.S.-Based) Education

(a) Source: ThinkEquity Partners, Chronicle for Higher Education.


The Global Brain Drain: Outward Bound

% of Foreign Students Who Planned to Stay in the U.S. After Completing Studies

(a) Source: OECD. 1997 data.

But the Demand for a U.S. Education and Job Remains High


Global Higher Education LandscapeAccess to Higher Education (18-22 Year Old Students)

Current % % of Students # of Students (mm)

China 3% 20% 240.0

Malaysia 14% 40% 8.3

India 4% 8% 11.0

Hong Kong 15% 20% 0.1

US 42% 45% 16.1

Projected by 2020 _______

(a) Source: US Census Bureau, World Bank, Government of Hong Kong.

In Malaysia, for example, an additional 5.4 million higher education slots are needed to get to 40%

Online courses will capture at least half of this growth - $200+ billion opportunity by 2020


Less than 1/3 of adults outside the U.S. have completed high school, let alone earned a postsecondary degree

The Global Education Gap

Average Years of Schooling

0

2

4

6

8

10

12

14

United States East Asia & Pacific Latin America &Caribbean

Middle East &North Africa

South Asia

0%

20%

40%

60%

80%

By Region, Excluding High Income Countries

Percentage of Adults Enrolled in Postsecondary Education

(a) Source: World Bank. Data as of 1999.


Global Higher Education LandscapeAsia Is Changing

(a) Source: Asian Demographics Ltd. Includes India, China, Japan, South Korea, Taiwan, Hong Kong, Thailand, Philippines, Malaysia, Singapore, Indonesia.

Current Projected by 2020

Over age 40 31% 40%

Postsecondary graduates 93 million 141 million

Skilled white collar jobs 81 million 103 million

Skilled white collar segment growing in excess of 2% per year in most Asian countries

In the next 20 years there will be 36 million additional skilled white collar workers

Global Demographic Changes Mirror the U.S.’: Aging Populations, Increased Postsecondary Attendance, and Need for Skilled Labor




% of Workforce with Secondary Education or Better: 2000 vs. 2020

Untapped Potential: Growing Pool of Postsecondary Students…




% Average Annual Growth Rate 2000 to 2020

Untapped Potential: …Needed to Fill a Labor Force Demanding Skills


The Blowing Up of a BubbleGrowth & Composition of Venture Capital Investments in Nominal Dollars (1991-2000)

(a) Source: 1991-1994 Venture Economics; 1995-2000 PricewaterhouseCoopers / VentureOne Moneytree Survey.

$2.5 $5.1 $4.9 $5.3 $6.7 $9.8 $12.6$17.4

$46.3

$87.7

$ in

bill

ion

s

32%

83%


The Blowup of the Bubble

(a) ThinkEquity Partners.


High Hopes for e-LearningCapital Invested

Company Capital Invested Company Status

Blackboard $103 million Private

Caliber $74 million Bankrupt / Acquired by Sylvan

Campus Pipeline $91 million Acquired by SCT Group

Cognitive Arts $33 million Private

CollegeClub $64 million Bankrupt / Acquired by Student Advantage

DigitalThink* $45 million Public: $90 million equity value

Docent* $80 million Public: $45 million equity value

KnowledgePlanet $67 million Private

Mascot Network $22 million Out of Business

Pensare $38+ million Bankrupt / Acquired by Duke University

Saba Software* $50 million Public: $80 million equity value

WebCT $120 million Private

ZUniversity $15 million Out of Business

$802 million* Money invested through pre-IPO mezzanine level.


Colleges, Students, and “Average Joes” Have Embraced the WebYears to Attain 25% Market Share



Colleges, Students, and “Average Joes” Have Embraced the Web

133 million U.S. adults – 66% of the adult population – have Internet access

IT spending on web initiatives by U.S. companies will exceed $282 billion – at 27%, more

than 2x in 1999

84% of four-year colleges will offer distance learning courses in 2002, up from 62% in

1998

Over 90% of college students access the Internet, with 50% accessing the Web daily

By 2004, 2.2 million degree-seeking students will be enrolled in distributed courses –

CAGR of 33%



Embracing the Web: A Global Perspective

Huge global opportunity

– By 2003, 65% of Web users will be international

– Non-U.S. countries will account for over half of worldwide Internet commerce by 2003

– Percentage of American users will drop from one half in 1998 to one third in 2003

Jump in Internet spending outside the U.S.

– Up to $913 billion, two-thirds of the projected $1.64 trillion worldwide 2003 e-commerce total

– Western Europe and Japan: 29% in 1999 47% in 2003, or $764 billion

– Chinese universities project a 5% increase in IT budgets in 2003 (vs. a 5% decline in the U.S.):

800,000 Chinese students online next year

In three years, 1/3 of all Internet users will prefer using a language other than English

– Fastest Internet user growth in the Asia-Pacific region

– Triple to 75.6 million from 19.7 between 1999 and 2003

(a) Source: International Data Corp., World Bank, ThinkEquity Partners.


The Growing Demand for Online Higher Education(a)

The Higher Education Landscape

(a) Source: IDC, U.S. Department of Education, ThinkEquity Partners.

14.6

14.8

15.0

15.2

15.4

15.6

15.8

16.0

16.2

2000 2001 2002 2003 2004

mill

ions

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Total enrollment in degree-granting institutions

Online enrollment as a percent of degree enrollment

CAGR: 33%


Railroads

– 23 miles of track in 1830 166,703 miles in 1890

– Overexpansion led to bankruptcy: investors lost nearly $2 billion in 1893 alone

– 1,500+ railroads in 1917 / 254,000 miles of track 562 for-hire railroads in 2000 / 173,000 miles

– Today, rail transportation is a $50+ billion industry

Automotives

– Between 1904 and 1908, 240+ firms manufacturing cars were established in the U.S.

– By 1923, there were 108 firms – just 10 accounted for 90% of annual production

– By 1926, there were 43 – no new U.S. manufacturers entered the industry afterwards

– Today, there are 3 – total U.S. market over $630 billion

Commercial Banking

– Between 1860-1921, number of banks in the U.S. increases by over 19x, peaking at 30,000

– Number of insured banks declined annually from 14,413 in 1984 to 8,007 in 2001

– Number of banks dropped by 33% from 1990 to 2000; number of branches grew by 27%

Same Movie, Different Actors

(a) Source: Multiple sources, including AACA.


South Korea Korea National Open University 206,000

Thailand Sukhothai Thammathirat Open University 210,000

Turkey Anadolu University 630,000

United Kingdom The Open University 200,000

Spain Universidad Nacional de Educacion a Distancia 200,000

South Africa University of South Africa 127,000

Mega Universities: A Global Phenomenon

Country UniversityNo. of

students

China China TV University System 690,000

France Centre National d'Enseignement a Distance 350,000

India Indira Gandhi National Open University 875,000

Indonesia Universitas Terbuka 400,000

Iran Payame Noor University 183,000

Pakistan Allama Iqbal Open University Islamabad 325,000

(a) Source: Best Educational E-Practices, The Open University, UK.

Bangladesh Bangladesh Open University NA

Universities with 100,000+ Students


Successful Online Initiatives

(a) UMassOnline.net.

FL Comm. Coll. D.L. Consortium: 85,278

Univ. of Maryland Univ. College: 68,250

Florida Virtual Campus: 56,198

Illinois Virtual Campus: 46,678

Georgia Globe: 40,000

Maryland Online: 27,060

Arizona Regents University: 12,353

eArmyU (23 campuses): 12,000

Connecticut D. L. Consortium: 9,683

UMassOnline: 7,824


Ivy League

Ric

hn

ess

Reach

Higher Education: Combining Richness & Reach on the Internet

StateUniversity

CorrespondenceEducation


Reconceptualizing Effective Learning

(a) Source: Andersen Consulting.

How People Learn


University of Phoenix Online: Case Study

Began operations in 1989

Current market cap = $3.7 billion

FY 2002 revenue = $327 million

50,000 degree-seeking students

2,600 faculty members

11 accredited degree programs in business, education, IT and nursing

Recent outperformance:

– $1 invested at IPO is $4.50 today

– CAGR of 112%



University of Phoenix Online: Case Study


UOP Online Ending Degree Enrollments

Annual CAGR: 60.5%

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Nov-97 May-98 Nov-98 May-99 Nov-99 May-00 Nov-00 May-01 Nov-01 May-02 Nov-02 May-03 Nov-03


Apollo International: Case Study


Formed by Apollo Group executives in 1998

Taking educational products & services worldwide – especially to emerging markets

– Leveraging Apollo Group model

1,200+ students in the Netherlands, Brazil, and India

– K-12 feeder system in Brazil – over 250 affiliated schools and 110,000 students

Offers workplace-oriented undergraduate and graduate degrees

– Business, nursing, information technology

Investors include Kaplan and principals in Apollo Group

Led by Chairman and CEO Jorge Klor de Alva


Capella University: Case Study

Founded in 1993 by former Chairman and CEO of Tonka Corporation

$50 million in revenue in 2002

5,000 enrolled students

Projected annual enrollment growth of 80+%

Seed capital of $2.8 million invested

$35 million Series E financing in 2000 – Forstmann Little and SmartForce

$16.7 million round in 2002 – Forstmann Little and Putnam Investments

Initial strategy: focus on Ph.D.-level online education and Master of Science in business

education and human services



Capella University: Case Study


PH.D. MASTER’S BACHELOR’S CONTINUING EDUCATION

PROFESSIONAL DEVELOPMENT

EDUCATION

BUSINESS

HUMAN SERVICES

PSYCHOLOGY

TECHNOLOGY

Programs Offered by School

The Capella Way of Learning

Outcomes and assessment-based curriculum

Relevant, applicable content

Individualized learning approaches

Strong sense of community

Broad program offering

Modular approach to learning delivery

Meaningful student interaction

Exceptional customer service


Open University: Case Study


Britain’s largest university – 200,000+ students

22% of all part-time higher education students

Established by Royal Charter in 1969

Two-thirds of students are between 25 and 45

75% of students are in paid employment; 150,000 are online

Offers 360+ undergraduate and postgraduate courses in arts, languages, social

sciences, science, math and computing, technology, business, education, and law

Average time taken for a degree is 6 years, at an average cost of 4,100 (pounds sterling)


Sylvan International / Walden University: Case Study


Founded in 1970, a pioneer in distance and online learning for adults

Accredited by the North Central Association of Colleges and Schools

Offers Ph.D. and other graduate-level, regionally accredited degree programs in

management, education, and social and behavioral sciences

Walden Institute established in 1998 to provide online certificate and degree programs in

technology and business

Sylvan Ventures acquired 41% stake with a $32.8 million investment in February 2001

– Sylvan acquired an additional 10% interest in FY 2001 for $8 million


Branding: relationships and content

Accreditation

Impact on traditional universities

Intellectual property

Teaching with technology

Regulation

Sources of funds

Student aid

Student life

Land of Opportunity

(a) Chronicle of Higher Education, ThinkEquity Partners.

Trends and Opportunities

Certification vs. degree

programs

Older students

“Skilled” sectors

Corporate universities /

alliances with corporations

Alliances between universities

Issues


Convenient

Condensed Instruction

Cost-Effective Education

Career-Oriented Curriculum

Customer Service

Education Solutions in the Knowledge Economy The Four Ps Plus The Five Cs

People

Product

Potential

Predictability

Mega-Winners


The Future Mega-Winners

Access + Cost + Quality = ROI

Seamless solutions & invisible technology

Lifelong learning and career focus

Problem-solving: learn by doing

Distributed, yet integrated, interactive and intimate

Flexible bargaining power of actors

Choice within a consistent framework

Assessment = currency of the Knowledge Economy

Branding is key

Documents

ChicagoNew YorkSan FranciscoMinneapolis Emerging Trends in Post Secondary Education – The View to 2012 Michael T. Moe, CFA The St. Regis, Washington, D.C