Online education company 2tor partnering with Georgetown

By Steven Overly
Monday, January 17, 2011

Some prestigious universities turn away hundreds of qualified applicants every school year, limited by the number of students their bricks-and-mortar buildings can hold. For 2tor, each one represents a missed business opportunity.

The New York-based online education company partners with highly regarded universities -- most recently Georgetown -- to craft online graduate degree programs that use real-time technology to mimic a physical classroom as closely as possible.

The arrangement allows the schools to add hundreds of students to each graduating class without providing them an actual seat, an enticing proposition as tuition at many American colleges and universities continues to climb. 2tor (pronounced "tutor") collects money through revenue-sharing arrangements.

"The technology was there [and] the know-how was there on the private sector side," said Chip Paucek, the company's president and chief operating officer. "If you could bring the full power and will of a great institution to the table, that would be transformative."

Georgetown is the latest university to accept that offer. Starting this spring, the School of Nursing and Health Studies will offer a master's program for family nurse practitioners with other nursing disciplines to follow.

Julie DeLoia, the school's interim dean, said an online format is something professors have discussed for a while, but many felt that the distance would force Georgetown to compromise the personal teaching environment it has cultivated.

"Five years ago we never would have done this because the technology was too static, it was too linear, so it was a one-way conversation," DeLoia said. "In the last few years the technology is such that we can have dynamic engagement."

2tor executives described their platform as more social network than management system. A faculty member conducts class at a set time via video. A digital screen simulates the chalkboard you would find in a classroom. Students pay the same tuition as their in-class counterparts, and can even raise their hands -- with the click of a button, of course.

The technology seems to have swayed other top universities as well. The University of Southern California offers online master's programs in social work and education through 2tor. The University of North Carolina at Chapel Hill created an online version of its MBA program.

All four programs have launched since the company was founded 2 1/2 half years ago by a lineup of executives with a deep education pedigree. Chief executive John Katzman established college prep company Princeton Review and Chief Marketing Officer Jeremy Johnson built and sold a social network for college applicants after dropping out of Princeton in 2006. Paucek helmed Hooked on Phonics before joining 2tor.

The company's payroll counts 200 employees, with nearly two-thirds of them stationed in its Landover office.

Johnson admits the company's mission may draw skepticism from traditional educators, particularly as some online universities have been scrutinized by the Obama administration for low federal loan repayment rates among graduates.

"There is definitely a stigma but as you see programs like ours emerging . . . you start to see that it can be done really well, and I think you're starting to see a shift in our society where great academic experiences can be created online," Johnson said.

Philip Bronner, a general partner at Novak Biddle, agreed with that assessment. In fact, that's part of the reason the Bethesda venture capital firm was one of the first to sign on as an investor, he said. 2tor has taken in a total of $36 million in venture capital from four firms.

"We're at an inflection point when it comes to education. Historically online education was seen as something where folks get a degree, but there was an asterisk associated with the degree. Online wasn't the same as in class," Bronner said.

2tor only partners with one university in each academic discipline. For example, Georgetown will be its only nursing program. Executives said that demonstrates a commitment to each institution and the caliber of the program, but it also means fewer opportunities to expand the business.

Therefore, growth has to come in the form of students and their tuition dollars. The company's first program has enrolled more than 1,500 students to date. If that can be replicated in each program, executives don't expect growth will be an issue.

"These are large markets with a large number of students at play," Paucek said. "When a great institution like Georgetown . . . goes from a regional presence to a national presence, you can create a very large business."

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