John Katzman
President
2Tor
The founder of Princeton Review has moved on since the company's $50 million initial public offering in 2001. His current venture is a model so unique it's difficult to describe. Suffice it to say that 2Tor provides real help to premium brand campuses - one at a time.
What are some visible attributes today of the pervasive change that's been underway in higher education for a decade?
Three visible changes come to mind. Tuitions have doubled. U.S. institutions have lost half their market share globally. For-profit enrollment is booming. And, of course, social networking is booming on campuses.
What are some characteristics of the change wave you and your present partners are riding?
Universities are not content to become a smaller and increasingly expensive part of the world. Further, the technology employed on campus, both academic and administrative, is improving rapidly. That improved technology could help U.S. colleges control costs and regain global market share.
How does 2Tor benefit from those two waves?
As schools become willing to make change, we get the opportunity to bring a compelling conversation to the table, and the opportunity to solve problems.
Are there similarities between your first venture, Princeton Review, and your new venture 2Tor?
Both provide high-end services. Both are aimed at students and parents who are not simply interested in checking off a box, but in high quality. And in both cases, my goal was to take something measurable, but unmeasured--and measure it.
Please explain the measuring.
Many students prepared for standardized tests, even though they knew test prep wouldn't necessarily raise scores. The Princeton Review offered uniquely effective SAT prep, which appealed to achievers. In the same way, many master's candidates in teaching are seeking that degree for a salary bump. However, those are not the grad students who would attend a rigorous program like the one offered by University of Southern California, 2Tor's first partner. Their students want a challenge and are looking to be great. I love working with USC, because they share the desire to measure the effectiveness of their graduates.
What characteristics of the two businesses are dissimilar?
I have much less control with the 2Tor model. We are the junior partner to the university we work with. This is their students, their faculty, their curriculum. At Princeton Review I was trying to create real change in college admissions, but the College Board is remarkably resistant to change. At 2Tor, our partner's success will propel change.
In this stage of 2Tor's development, are you building a business or building a brand?
USC is already a great brand. We're building a business to help expand their reach, enrich their offerings and thereby buff that brand.
While doing so, what working rule of the internet has your attention?
Scale matters; a virtuous cycle operates around size. The internet has disrupted several markets, and in almost every case has caused consolidation. Not too long ago there were tens of thousands of travel agents. Nowadays a handful of agencies like Expedia and Orbitz do most of the business. The bookstore and newspaper worlds have also consolidated. Further, quality and size seem to move together. Increased size enables investment in the product or service. That investment pays off in market share.
Where in higher education do you see similar circumstances?
This relationship between size and quality is not yet visible in higher education. Is University of Phoenix, for example, demonstrably better in quality than its smaller competitors? I suspect it will be.
What entrepreneurial opportunities will result?
At some point the U.S. Department of Education will use its Title IV leverage to push harder on outcomes. Entrepreneurs who can help raise the quality of academic offerings, mentor students, improve job placement results will likely emerge. I suspect education will be a prime mover in the improvement and widespread acceptance of teleconferencing. I also see opportunities to innovate in outcomes measurement.
What are the characteristics of an entrepreneur who will reap financial success in higher education in the next ten years?
He or she is technology savvy. Able to identify and occupy a niche, yet aware of global opportunities. Dogged, agile, energetic and yet very tired.
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