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2U’s longtime CEO, Chip Paucek, has stepped down from the position as the company looks to focus on becoming profitable and improving its operations, according to a Friday announcement.
Paul Lalljie, previously the company’s chief financial officer, has assumed the CEO role effective immediately. Paucek will remain a 2U employee until Dec. 15, when he will transition to a new role as special advisor to the company.
The news comes during a tumultuous time for 2U. Most recently, the company announced that it was parting ways with the University of Southern California — one of its oldest and largest clients — on most of the online degree programs they worked on together.
Paucek co-founded 2U, a company that helps colleges build and run online programs, and has been CEO since 2012. 2U has become a massive force in higher education over the last decade, growing revenue from $55.9 million in 2012 to $963.1 million in 2022.
“This company has been a source of continuous inspiration and growth,” Paucek said in a statement. “I am deeply grateful for the opportunity to contribute to its impressive legacy and am proud of what we have achieved together.”
2U built its brand on helping top-ranked colleges create online graduate programs. Its clients include Georgetown and Northwestern universities.
Over the past several years, 2U has branched out to offer alternative credentials, such as short courses and boot camps in fields like cybersecurity and coding. The company leaned into this strategy in 2021, when it acquired edX, a high-profile MOOC platform.
However, 2U has never posted a profitable year since it went public in 2014, and it has nearly $1.3 billion in liabilities. During its most recent quarter, its revenue fell 1% year over year to $229.7 million due to lower student demand for the company’s coding boot camps and high-priced degree programs.
The company lost $47.4 million during the quarter.
2U also announced layoffs during the third quarter. This followed similar cuts about a year prior.
Since 2U announced its third-quarter performance last week — along with the news about curtailing its work with USC — its stock price has hovered around $1. That’s a far cry from its height in 2018, when it was above $90.
The company has also faced legal troubles.
A group of former USC students sued 2U and the university last year, alleging the partners enticed applicants for USC’s online graduate education programs by advertising artificially inflated rankings.
USC was also sued this year over its online master’s in social work. A group of graduates said USC presented the online program as equal to the campus-based version, even though the university outsourced “substantial aspects” of it to 2U, according to the lawsuit.
2U was not named as a defendant in that complaint.
“The Board and Chip have mutually determined that this is the right time for a leadership change,” 2U Board Chair Paul Maeder said in a statement Friday. “The Board is confident that Paul is the right person to lead the company during this next phase, continuing to pursue our ongoing strategic initiatives and spearheading new ones.”
In a statement, Lalljie said he plans for the company to focus on job-specific reskilling, capitalizing on advancements in artificial intelligence and delivering profitable revenue, arguing that high-quality learning “is more important than ever.”
“The company led the way in bringing great universities into the digital age, and the need for our technology and services continues to grow,” Lalljie said.
Before Lalljie joined 2U in 2019, he worked at information services company Neustar for 18 years.