Student debt is a $1.6T looming crisis. The high cost of higher education drives many to reconsider if the investment is worth the return. However, as we move toward more automation and advanced technologies, those without an advanced degree are less likely to earn a living wage. Tackling this myriad of issues is complex and Outlier.org offers high-quality, affordable, and flexible online higher education learning options that are transferable at a fraction of the cost of a conventional college course. The company focuses on intro-level courses, providing flexibility and ultimately making the choice of determining a major more affordable. Each course only costs $400.
AlleyWatch caught up with CEO and Founder Aaron Rasmussen (cofounder MasterClass) to learn more about making higher education more accessible, the impact of the pandemic on how we approach academics, the company’s latest funding round, which brings the total funding raised to $46M, and much, much more.
Who were your investors and how much did you raise?
Outlier.org just closed a $30 million Series B funding led by GV. This funding round also includes participation from Unusual Ventures, existing investors GSV and Harrison Metal, as well as Gaingels, an investment syndicate in service of the LGBTQ+ community, and a group of underrepresented angel investors.
Tell us about the product or service that Outlier.org offers.
For $400, around one-sixth the cost of a traditional college course, Outlier.org students have access to a world-class learning experience that earns them transferable college credits from the top-60 ranked University of Pittsburgh. Our courses use cutting-edge learning techniques, including adopting innovations from educational psychology research and game design. The cinema-quality lectures are taught by some of the brightest figures in academia, including instructors from Yale, Harvard, MIT, and Columbia, providing quality education no matter the student’s location.
What inspired the start of Outlier.org?
Outlier.org was founded with the goal to provide a high-quality, affordable and flexible option that aids in making education accessible for everyone. At Outlier.org, we’ve aligned our incentives with the student’s incentives, and our mission is to increase access to high-quality college education and reduce student debt, whether that’s direct to students or working with universities to increase persistence and retention.
How is Outlier.org different?
When we first got started at Outlier.org, we looked at research that has been around for years on how students learn, the ways they fail and succeed, and how we could emulate some of these models. While we’ve used some phenomenal existing research, we also landed on the idea that we had to build our own learning management system. We knew this would be the only way to create the best possible learning experience, and this is one of the main differentiators of our product. Another key differentiator is that through our partnership with the University of Pittsburgh and Pitt-Johnstown, our students who complete an Outlier.org course will earn real, transferable college credits.
What market does Outlier.org target and how big is it?
Outlier.org’s mission is large and so is the market. This includes both students, as consumers, and higher education institutions as potential partners. In terms of its size, global higher education is a trillion-dollar industry–our goal is to change the way we view this market, creating space for more accessible and affordable solutions.
What’s your business model?
Our business model is a combination of direct-to-consumer, as well as partnerships with higher education institutions. What’s important to note about Outlier.org is that what’s best for students is also what’s best for us. This is the foundation that we build upon for existing and future partnerships.
How has COVID-19 impacted the business?
When the pandemic began, we were in the process of filming two of our new courses, Astronomy and Statistics, which are now available. Because of COVID-19, we had to adapt with remote filming techniques. Our production team and instructors worked together to set up at-home filming stations. COVID-19 forced us to get more creative, but Outlier.org was started well ahead of the pandemic in order to give students access to education, regardless of their location. It was created in response to the existing barriers in the higher ed system, from the extremely high cost to geographic and timing limitations. These barriers, unfortunately, will remain after the pandemic as well. The primary thing that has happened with the pandemic is that the conversation around online education has shifted, we now know that it can work.
What was the funding process like?
Funding at this stage of my career is much more pleasant, albeit still stressful and tiring as you might expect. It’s still a full-time job on top of your regular CEO job, but almost all of my conversations were with VCs I already knew and liked. Most had been tracking the company since the series A funding round, and I’d gotten to hear their perspective and they were familiar with mine.
What are the biggest challenges that you faced while raising capital?
The biggest challenges were around the fact that we’re still growing our course catalog, and our rolling cohorts (starting every two weeks) didn’t start until the fall of 2020. Champagne problem: but there are more VCs I like now than ever before, and I really dislike having to tell them they didn’t get the deal. My recommendation is to be open if you’re excited about a company and move fast.
What factors about your business led your investors to write the check?
Each of our investors share a common passion for increasing access to high-quality higher education and reducing the huge burden that is student debt. Outlier.org is one of the few attempts to tackle the problem head-on, and we’ve proven our courses work, which is a first for scalable online courses. Combine that with the market size, and it makes for a good investment.
What are the milestones you plan to achieve in the next six months?
Student success continues to be a number one priority for us. We’re seeing higher volumes of students, and we’ll need to make sure our success rates stay high as volumes increase. We’re deep into making new courses and continuing to hire as we grow. With this new funding, we will release 14 more courses by the end of 2022, enabling students to complete their first 2 years of college for a fraction of the traditional cost, and giving partners like universities and employers more ways to support students on their path to a degree.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Go remote, if you can. There are considerable savings to be had if your business can support it. Otherwise, make strong judgment calls as to whether the market is responding to you. If it is weak because of the overall economy, you’ll need to cut burn and save. If it isn’t a macro effect and you’re being cautious, double down on marketing spend rather than cutting it. Get your unit economics tight.
Go remote, if you can. There are considerable savings to be had if your business can support it. Otherwise, make strong judgment calls as to whether the market is responding to you. If it is weak because of the overall economy, you’ll need to cut burn and save. If it isn’t a macro effect and you’re being cautious, double down on marketing spend rather than cutting it. Get your unit economics tight.
Where do you see the company going now over the near term?
Most immediately, we’d like to focus on course creation. We are still testing a variety of approaches both to support our students with new courses and different ways of paying to reduce the cost barrier. We’ve also just introduced a new payment option for Outlier.org students to make our courses even more affordable with a zero-interest payment option through Klarna. Our goal with Klarna is to break down the financial barrier to a college degree and give students more flexibility when paying for their education. This will make a full semester of four courses on Outlier.org just $89 a month for 18 months at 0% interest. More accurately, we pay the interest for the student.
In the same vein, continuing to establish new partnerships with traditional higher education institutions is extremely important to us. Like I said earlier, our goal is not to replace the college curriculum, but to provide a high-quality, affordable and flexible option that aids in making education accessible for everyone, and we’re now one step closer to doing that having completed this funding round.
What’s your favorite outdoor dining restaurant in NYC?
I am still way too cautious to even eat outdoors. But, I got my first dose of the vaccine! And when I’m fully vaccinated, it’s straight to Juliette in Williamsburg for the duck confit.
