April 3, 1999

New Company at Columbia Aims to Profit From Internet

By KAREN W. ARENSON

oining the race to the Internet and its riches, Columbia University has formed a company and hopes to make a profit by providing courses, research and other university material on line.

Columbia officials said Friday that while they did not yet have a specific blueprint, they hoped to devise a program that differs from more traditional on-line education programs that offer courses or degrees. They said they had incorporated the new subsidiary, Morningside Ventures Inc., about 10 days ago, and named Ann Kirschner, a former National Football League executive with a background in new technology, to run it.

Although Columbia has not lined up specific programs to offer through Morningside Ventures, , Michael Crow, the university's executive vice provost, offered as an example the kind of multifaceted product he has in mind for people interested in the weather:

"We could have available the latest lectures on the subject, real-time analysis of the latest research being done, maybe a three-day course on interannual and seasonal forecasting, or the chance to sit in on Prof. Mark Cane's great lecture on the historical evolution of long-range forecasting."

Many colleges and universities are putting courses on the Web, and some have even begun to offer degrees that can be earned without setting foot on campus.

But only recently have they begun to think of creating profit-making subsidiaries that can tap capital markets to help pay for the high cost of ambitious Internet programs.

New York University formed such a company last fall to handle Internet offerings that it expects to sell to companies and other users, and many other universities are weighing commercial ventures.

In a sign of investor interest in on-line learning, Columbia's own business school has agreed to provide courses and other material to Unext.com, an Internet start-up company, in return for royalties that can be exchanged for a share of the company. The business school's agreement is separate from Morningside Ventures. )

When a report about the business school's partnership with Unext.com appeared yesterday in The Wall Street Journal, more than a dozen venture capitalists called Columbia to inquire about it, Dr. Crow said.

He said Columbia was not sure yet how big its new company might grow, but that it wanted the option of tapping capital markets or developing alliances with other businesses. He said Columbia also felt the need for a company to compete with the wealthy companies that are now flocking to higher education.

"University education is undergoing a fundamental transformation," Dr. Crow said. "We needed an organizational entity that would allow us to interact rapidly."

He added that Columbia was eager to let the business world know of its intentions quickly, because business developments related to the Internet occur so fast.

"Yahoo has announced that it's still searching for more partners, but Yahoo doesn't even know that we exist," he said.

Columbia is taking the new venture seriously. It has already spent several million dollars to develop ideas, Dr. Crow said, and expects to spend several million more.

"But if it took $50 or $100 million to build the kind of interactive learning space we're talking about, it is not probable that we would take that kind of money away from our existing operations," he added. "We would look for risk capital to do that."

Columbia has already brought in two executives to develop the new company: Ms. Kirschner, who was vice president of interactive programming and development for the N. F. L. and had been associated with two other digital start-ups before that, and Vikram Nagrani, a former principal at Morgan Stanley who is now Morningside Venture's chief operating officer.

Although the new company had not been disclosed on campus in advance of yesterday's public announcement, some faculty members who participated in discussions about Columbia's digital future expressed excitement.

Nicholas Turro, a chemistry professor who has lectured to industry figures, said he has talked with Ms. Kirschner about how he might be able to put that course on line.

"What excites me," he said, is that people at the new company will "do the work of putting it on line," while he can concentrate on his own work.

Ms. Kirschner said the aim was to do for learning what Amazon.com has done for books. "Amazon.com creates a community of readers and a thirst for books, and then, by George, a way to buy those books," she said. "We want to create a community of learners."