(crossposted, with edits, from FastCompany.com. I’m going to be covering the future of education at least once a week over there; subscribe to my feed here.)
No new elite world-class universities have been founded for at least 100 years (Stanford-1891; Rice-1912), and most of them are centuries older than that. Ben Nelson, former CEO of Snapfish, has just announced that he’s starting a new one, for-profit and online. The Minerva Project has scored $25 million, the biggest seed bet in Benchmark Capital’s history, for a projected 2014 launch.

Nelson, improbably, has been a university-reform geek since his undergraduate days at Wharton, where he organized multidisciplinary courses and field trips. He sees a huge untapped market, especially internationally, for undergraduate liberal arts education at the elite level. “Harvard says that 80-85% of its applicants are fully qualified for admission, yet they have a 5.9% acceptance rate,” he tells Fast Company. “We think, conservatively, there are 250,000 English-fluent, smart, driven young people who aren’t able to get into an Ivy League university or equivalent in their home countries, and if we capture 1% of that market, we’ll be self-sustaining.”

Unlike the free, open, often self-paced online courses offered by Udacity, Coursera, Udemy, MITx, and other new ventures, Minerva will ask students to watch a pre-recorded video lecture in real time, while interacting over video chat with classmates and discussion leaders. Despite time zone, bandwidth, and equipment issues, the synchronous model has worked for 2Tor, a startup headed by Jon Katzman of the Princeton Review that built online versions of graduate programs at USC, UNC, and Georgetown. Nelson intends to charge somewhere under $20,000 in annual tuition, or less than half of what elites are asking (but a similar price point to the University of Phoenix).

He’s attracted a lot of money and packed his board with ex-university presidents, notably Larry Summers (Harvard) and Bob Kerrey (New School).”Larry was one of the first to come on board,” said Nelson. “He said, what you’re doing is critical. You’re harnessing the potential of so many elite students out there.”

But offering something equivalent to the Ivy League in the confines of a computer screen is a tall order. Minerva promises to recruit top-quality professors, develop an advanced interdisciplinary core curriculum, and maintain high standards by flunking lots of people (rather than rejecting them at the applicant end). And here’s the weirdest part: Though the classes are online, they expect students to live together in “dorm clusters” all over the world, starting locally and then rotating around to spend a semester in Mumbai, Vancouver, Shenzen, or wherever. I asked Nelson what will happen when a student in one of those dorms ODs or harasses her roommate, and he waved his hand and said they’ll outsource management. My suspicion is that administrative overhead will quickly grow beyond expectations, and that his investors’ impatience will grow, too. “We never talked IPO, we never talked exit,” Nelson insists. “Our conversations were all about the tremendous need for this.”

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