Conversations about coding bootcamps, at least in Silicon Valley, seem to take one of two forms: breathless odes to a bright new dawn for education, or dire warnings of their likely collapse. Either way, novelty drives the narrative, not market size. But the recent announcement that online program manager (OPM) 2U, Inc. is acquiring Trilogy Education Services for three-quarters of a billion dollars changes that. Bootcamps are now officially big business.
This acquisition dwarfs the last high-profile transaction in the space—Adecco’s $412.5 million acquisition of General Assembly a year ago—and signals a rapid scaling of the bootcamp model in general. The increasing flow of capital into the space points to how rapidly the bootcamp model has scaled and strengthens the case for their potentially disruptive future in the larger higher education landscape.
Arguably, Trilogy is worth its price tag. Trilogy offers 2U a differentiated approach to the bootcamp space, by partnering with traditional universities to offer white label coding programs. They handle every stage of implementation, including developing the curriculum, sourcing instructors, recruiting learners, teaching those learners, and providing career support. Revenue is shared with the traditional institution that lends its brand name and classroom space.
In less than four years, Trilogy has extended its reach—and its value—at breakneck speed, now partnering with over 40 institutions in five countries. While Trilogy is well-known to industry players, the company has kept itself out of the limelight from the student’s perspective, ingeniously leveraging the host institution’s brand to dramatically lower the cost of learner acquisition. Universities, for their part, use Trilogy to establish a toehold in the bootcamp space while focusing on their traditional, degree-based offerings—dabbling in disruption without having to do it themselves.
That innovation-as-a-service offering makes Trilogy a natural acquisition target for 2U. 2U partners with brick-and-mortar colleges and universities to launch online graduate degree programs. Schools enter into long-term revenue sharing arrangements with 2U, whereby 2U is responsible for providing the upfront capital to build online programs, as well as the marketing, recruiting, and instructional design expertise needed to make those new programs successful.
Acquiring Trilogy, a potentially disruptive player that is also pulling revenue from the corporate training market, helps insure 2U against risks to its core product. In the short term, the blurring of the line between non-profit institutions and for-profit providers is raising eyebrows, which could leave 2U’s graduate degree business vulnerable to regulatory pressures if the political climate changes. In the long term, alternative educational providers (like bootcamps) could disrupt traditional graduate degrees.
2U had already been diversifying its portfolio by acquiring short course provider GetSmarter, and by establishing a partnership with WeWork. Acquiring Trilogy further diversifies 2U’s revenue base, expands 2U’s university partnership network from 36 institutions to 68, and extends the company’s reach into the labor market, providing a buffer against external pressures both disruptive and otherwise.
Traditional higher education is outsourcing innovation
2U and Trilogy have spent the last several years positioning themselves to tackle the very innovation challenges that universities are ill-equipped to address given their business models. Institutions have eagerly partnered with 2U and/or Trilogy in hopes of not only capturing much-needed revenue, but also of catching the disruptive wave instead of getting caught underneath it.
However, the mechanics of the acquisition underscore a sobering truth for traditional higher education: universities engaging in this partnership model are not adapting to, or benefiting from, a potentially disruptive force as much as they may think they are. The $750 million that 2U spent on the acquisition? That value accrued to Trilogy, not Trilogy’s university partners.
Unless traditional institutions make a concerted effort to learn from their partnerships with 2U and Trilogy, building their own capacity and letting workforce-aligned, skills-based elements really sink into their institutional DNA, they may find themselves playing a dramatically reduced role in the new higher education landscape. For example, UNC Chapel Hill announced that it will embed for-credit programming courses based on Trilogy offerings into its 2U-powered online MBA program. This could help the university unlock innovation if they “insource” important bootcamp-related capabilities in the process. Universities that have built disruptive, radically affordable models, like WGU and Southern New Hampshire University, have developed their own capabilities around online education—and are scaling rapidly.
The bootcamp market is consolidating, but also growing
2U’s acquisition of Trilogy outlines the next stage of how this market is likely to evolve. As Ryan Craig has argued, bootcamps are ‘last mile training providers’, helping students cross what is unfortunately often a yawning chasm between school and the workforce. The bootcamps that are scaling most rapidly are those that are planting themselves on one of the two sides of that chasm, either through university partnerships or by partnering with employers.
These affiliations make sense for bootcamps because they lower costs in a crowded market where cost of learner acquisition is high. Trilogy’s use of university brands has helped it attract thousands of students cheaply. General Assembly, on the other hand, now gets half of its revenues from employers, skipping over the frenzied consumer market altogether. Unaffiliated bootcamp players, who have to spend heavily in order to attract students, but also have to scramble to help students find jobs, could struggle as the market bifurcates.
But while the players may consolidate, the bootcamp market is likely to grow significantly across a few dimensions, one of which is lifelong learning. Rather than exclusively focusing on helping career changers find entry level jobs, many bootcamps are increasingly focusing on helping employers continuously upskill their workforce. Another dimension involves bootcamps widening their offerings beyond coding and tech, where they started. Moving into design, healthcare, and finance gives these short-course training providers the opportunity to help a broad set of career changers reskill and shift industries.
Bootcamps aren’t a flash in the pan: they are providing adult learners with a path into the tech sector where there wasn’t a reasonable option before, and are helping employers source hard-to-find talent to take on an increasingly digital future. These programs are short, affordable, and effective at helping students upskill and move into new industries. Traditional higher education has been slow to adapt to the needs of a rapidly changing, high-skill labor market. But as the Trilogy acquisition highlights, there is a tremendous value to be gained in adapting on their behalf.
