Next Stop for Laura and John Arnold: Disrupting Higher Ed

Regardless of how you feel about the philanthropy of Laura and John Arnold, you can always count on this couple to keep things interesting. 

Their foundation just made a $6 million gift to Rice University to continue developing open-source textbooks using its trade name OpenStax, and to allow more of the textbooks to be offered for free. This jumbo grant fits two of the new foundation's driving principles that “philanthropy should seek transformational change, not incremental change” and that it should be “entrepreneurial, not institutional or bureaucratic.”

The gift to Rice University, which is located in the Arnolds' hometown of Houston, Texas, is a calculated bet that the future of higher education will be dominated by those that can control the digital content. It's also a bet that this area is ripe for disruption. 

Just like any venture capital firm, the Laura and John Arnold Foundation (LJAF), is mindful of the fact that the textbook cartel, which has increased the price of college textbooks 812% since 1978, is a ripe target for new competitors. And just imagine if those competitors offered textbooks for free!

Prior to this gift to Rice, LJAF primarily invested in the K-12 education market, (investing in brand names disrupters such as the Kipp Academy and Teach for America), criminal justice (researching ways to develop more reliable prosecutorial methods), and science (seeking to improve the integrity of research). 

The gift to Rice falls in the category of "same but different." It's a trademark LJAF grant, only in a new arena. 

The OpenStax gift reflects the bigger push by new philanthropists to make systemic change as much as to do good in the near-term. Like Jeff Bezos’s Amazon, which wrested control of books from publishers and bookstores by placing the consumer at the center of the transaction, the founders of OpenStax want to give college textbook publishers serious competition by providing free (as well as low-cost print editions) of introductory peer-reviewed textbooks.

With this three-year investment into Rice’s open source Connexions platform, the Arnolds are riding the disruptive technology wave, of which Massive Open Online Courses (MOOCS) is the most significant example, that threatens to seriously change higher education as we know it.  

While it's too soon to say, the Arnolds seem to want to do the same thing for higher education that they are doing for K-12: create more competition and bring more entrepreneurial ventures into the mix as the higher education market gets radically restructured.

Given the unsustainability of funding an introductory text to the tune of $500,000 dollars, which is what OpenStax spends on each textbook, questions remain about how things will play out long-term. But it is possible to imagine that some private sector entrepreneur is already scheming about how fold the costs of Openstax textbooks into their "instructional costs."