Where will the jobs be in the 21st century, and how can the next generation of people prepare to perform them? Several Entrepreneur Journeys interviews with executives of online or blended universities have offered their perspective on how to help people, on a large scale, learn what they need to know to work in today’s world. Now Deal Radar tackles the question with Rasmussen, Inc., an online post-secondary educational services organization that offers degrees in fields of high demand through its network of 18 Rasmussen College campuses across the Midwest and the Southeast and partnerships with 14 other universities through its online education services provider, Deltak.
Rasmussen, Inc. delivers regionally accredited degrees from the associate’s through the doctoral level that are focused on preparing students for careers with the greatest occupation opportunities. These are fields such as organizational leadership, Internet marketing, business intelligence, and applied psychology, that require certain skill sets and that the company believes are highly marketable to today’s student. To gain an understanding of the current and future labor market and design its programs, Rasmussen analyzes statistics from the Department of Labor, monitors industry trends, and works with local business leaders to design curricula that truly fit market demands.
CEO J. Michael Locke was a Harvard-trained lawyer who had practiced law for a few years and then worked in finance, where in the 1990s he realized how technology was changing many sectors of the economy and saw a number of requests from private education companies that were trying to raise capital. Locke saw an opportunity to change and advance education with the use of technology. He met Robert E. King, chairman of Rasmussen, who had a company focused on the administrative computing needs of higher education and was starting a company focused on the online education market. King brought in Dr. Bill Graves, and online education pioneer and expert from the University of North Carolina. The trio launched what is now Rasmussen, Inc. in 1999.
King is a true pioneer in education, specifically in using technology to enhance education. In the early 1970s, he helped to create an early version of online education in the form of multimedia video tapes to train people studying information technology, because he understood the value of offering a platform that fits into people’s lives. Together, with Locke’s vision for sculpting a new landscape for education, King and Locke worked to take online education to a new level, one that was focused on quality and outcomes, as much as it was on convenience and flexibility. Rasmussen College is one of only 3% of private, career-focused colleges that are regionally accredited. All of the universities that partner with it through Deltak are regionally accredited. For more on the importance of regional accreditation, see my interview with Michael Clifford, an investor in the University of Phoenix.
There are 19 million students attending U.S. post-secondary institutions today. According to Eduventures, roughly 10% of those students are currently taking their program online. That part of the market is growing over 25% annually; the overall market is growing at roughly 1.5% annually. Rasmussen College is one of a number of institutions where more than 50% of students take their program completely online. So, assuming over time that this will be the relative modality breakdown, 50% of those 19 million students will eventually go online versus 2 million today.
When determining market segments, the company considers first credentials and then the programs. Online education has been fairly common among graduate students over the past decade, and it is now becoming more common at the bachelor’s and associate’s levels. These two credential levels are centered on a services economy and are Rasmussen’s top target segments. After focusing on credential level, the company then turns its attention to specific programs. As mentioned above, Rasmussen tends to focus on top-tier programs in high demand that are also focused on a services economy. Further, while Rasmussen is not actively targeting the international student market, it knows that offering an American education to students abroad through online learning is an opportunity in higher education.
Rasmussen says that at the core of its value proposition is not online education; rather, it is the educational experience as a whole empowered by the application of technology. The priority is to provide an education of the highest quality. Rasmussen aims to do this by adhering to high standards of academic rigor, offering a highly scrutinized program portfolio, and employing industry experts to teach. The online instruction offered by Rasmussen College and Deltak is led by structural designers who take a program that would traditionally be offered at a campus and create an interactive, engaging, online learning environment.
Rasmussen, Inc. is growing over 20% per year and has annual revenues over $200 million and solid profit margins. Over the past few years, the organization has added several university partners through Deltak and several new campuses to Rasmussen College. Two new campuses—one in Blaine, Minnesota, and one in Tinley Park, Illinois—are under construction, and Rasmussen just signed a lease for a new campus in Tampa.
On gaining traction, King says, “I don’t think this is a market where you do a beta test, like you would in technology; this market has been tested since 1900. It’s not about the software and not about the technology, it’s about education and the return on investment students receive. This venture was about applying technology to those core principles to make education more accessible to more people […] We want our graduates to be successful and productive contributors to our global society.”
As of February 2010, 97% of Rasmussen College graduates from the previous year were employed, a statistic the company says is proof of its commitment to developing the greatest learning tool, not the greatest widget.
There is no exit plan. The organization is an S Corporation, and the intent is to hold on to it for the long term.
This segment is a part in the series : Deal Radar 2010