Why Starbucks Just Committed $250 Million to Online Education

April 15, 2015 By Chris Johnson

Starbucks announced just this last week that it is doubling its free tuition plan to include four years instead of the previous two. It’s a partnership with Arizona State University, widely considered a leader in the online ed space at the university level.

Full and part-time employees are eligible, and Starbucks is suggesting it will invest $250 million or more with a goal of getting 25,000 employees to graduation by 2025.

The significance of this is two-fold.

One, online education has finally arrived as a viable alternative to traditional ed. MOOCs arrived on the scene in earnest (and with great fanfare) in 2011. By 2013, the concept had massive headwinds. But in the two years since, the tech and theory have evolved to a point where online ed is truly threatening market share from offline instruction.

Secondly, brands are realizing the sheer marketing power of education. Hopefully Starbucks management truly wanted to help educate its workforce. And you could argue that increased labor competition over the last twelve months is squeezing more pay and additional benefits from companies (witness the pay raise Wal-mart just issued to half a million workers). But undoubtedly, Starbucks believes the quarter billion bucks is a bargain compared to the attention and loyalty earned by becoming known as an educator.

The first wave of content marketing – the one where brands realized they had to have news rooms – hasn’t even crested. And if fact, it’s debatably the hottest story in marketing in the last five years.

We believe the second wave is where brands recognize they need a school room. Become known as an educator – either by funding education or teaching people yourself – and you’ll be rewarded with an unmatched connection to consumers.

Our new online video platform is our bet on this second wave. All courses are taught by high-growth companies. For our community members, it means learning skills directly from companies – completely eliminating the gap between academic instruction and practical application. You learn the practical application. (From the smart folks already applying it.)

For brands, Uncubed offers a massive marketing opportunity. We don’t yet know what the value is having consumers look at your brand for six to 25 minutes, but it’s significant. And for hiring, getting an audience to watch an engaging course taught in the very office where they might work, is a powerful concept. (You can see who’s already on the platform here.)

It’s an uncertain time for education, and we expect lots more brands – big and small – to make outsized investments in their potential to step in here and lead. And win over an audience.

So kudos to Starbucks for their announcement.


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