Friday, March 12, 2021

Coursera IPO Reveals Bleak Future For Global Labor

Coursera (COUR) is an online educational provider, most notably known for its Stanford grad founders, its free Massive Open Online Courses and its relationship with elite schools like University of Pennsylvania, University of Michigan, and University of Illinois who have provided content.

After about a decade of existence, amid the Covid pandemic, the company has decided to go public, with the help of Goldman Sachs, Morgan Stanley, Citigroup and others acting as underwriters. Coursera has never made a profit even though it has enormous margins, taking the lion's share of the revenues from its joint operations with notable schools.  

Like the Laureate Education IPO in 2017,  Coursera's intentions are global in scope.  Laureate's IPO sold the idea that there was a growing global middle class that needed education and was willing to pay for it. But Laureate's slogan "Here For Good" became a bad joke as the global economy worsened and the company downsized.  

Coursera has already served tens of millions of people, most of whom gained access for free or next to nothing--other than having an internet connection.  

Like Laureate, Coursera has also received funding from the World Bank, but in 2021 the picture is framed differently. Coursera's idea is that the world's labor force is facing a more challenging and perhaps bleak future, a "double disruption" of a global pandemic and increased automation, and the notion that COUR can profit from this disruption.  

The company's Prospectus states: 

According to our estimates based on data from the International Labour Organization, the global workforce will grow by 230 million people by 2030. This is expected to happen at a time when up to half of today’s jobs, around 2 billion, are at high risk of disappearing due to automation and other factors driving obsolescence by 2030, according to The International Commission on Financing Global Education Opportunity.

So how will Coursera make a profit?  According to Gary Roth, author of The Educated Underclass, "Many of these unprofitable, investment-capital initiatives only succeed if they can cannibalize other parts of the economy (e.g. Home Depot or Lowe's versus traditional hardware stores). The education sector is already unprofitable and requires massive amounts of public funding. We'll see if initiates like this can survive."

Roth added that Coursera is mostly "confined to pre-professional and professional areas like non-technical business disciplines that don’t require huge inputs of expertise or equipment. The humanities are out, as are the sciences. They also represent a low tier of degrees, without much respect from much of the ‘employing class’, most of whom graduated from decent-quality liberal arts or state-funded schools."

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