First, newspapers, then books. Silicon Valley's next target? Schools.

First Silicon Valley practically killed newspapers, then it delivered a devastating blow to book publishing. What iconic American industry does it have in its crosshairs now? Education, reports Kevin Carey, the director of education policy at the New America Foundation. Venture capital investment in educational technologies totaled almost $400 million in 2011, up from less than $100 million five years ago. “The one thing that sticks with me more than anything else,” Carey writes about a recent trip to the epicenter of the digital revolution, “is that the onslaught is shaping up to be relentless.”

The potential market is vast—education is a $1 trillion industry in the United States. Higher education is particularly ripe for disruption, as they say in the valley, because college students are graduating with expensive degrees, no jobs, and lots of debt. Silicon Valley start-ups hope to decouple learning and the college experience from brick-and-mortar universities.

The most important customers for these new technologies may be beyond U.S. borders, however, where opportunities for a solid education are hard to come by and a Western credential carries a lot of weight. When Stanford computer scientist Sebastian Thrun offered a free online class last year, the students from Lithuania alone outnumbered Stanford’s entire student body.

Venture capitalists are throwing money at any twentysomething with a MacBook Air and a decent idea, Carey reports. A start-up called Udemy provides professors and others a platform for creating online courses and takes 30 percent of any revenue generated from the class. The Minerva Project aims to digitally export elite college courses to developing countries. Meanwhile, the nation’s leading universities, including Harvard, Stanford, and the University of California, Berkeley, are busily developing online education platforms for no better reason, perhaps, than that they don’t want to be left behind.

Aside from personnel, the main expense such initiatives face—cloud storage and computing—is cheap and getting cheaper. And the potential market is global and growing rapidly. Perhaps as early as the end of this decade, foreign-born workers and others who have used online tools to learn and earn degrees—“or whatever new word is invented to mean ‘evidence of your skills and knowledge,’ ” Carey says—will be regarded highly enough to compete for jobs with workers from traditional schools.

Then the true disruption will commence. Because these workers won’t have tons of debt, they’ll be able to accept lower wages than traditionally minted grads. Old-school colleges will then struggle and probably fail to persuade potential students of the value of ponying up so much cash for their credentials. Make no mistake, Carey says: “We may not know who and we may not know when, but someone is going to write the software that eats higher education.”

THE SOURCE: “The Siege of Academe” by Kevin Carey, in The Washington Monthly, Sept.–Oct. 2012.

Photo courtesy of Gulliver Schools