. >> reporter: math teacher salman khan started providing free online classes in 2010 out of his house, arguing that new approaches to teaching were needed. he inspired stanford professor sebastian thrun and colleague peter novick to put a course on artificial intelligence online just last year. >> and to our surprise 160,000 students signed up. we managed to graduate 23,000 students at stanford graduate- level quality in a specialized subject area called artificial intelligence, which means peter and i taught more students than all thprofessors in the world ombined inhe se subject area. >> reporter: were you amazed by this, or did you expect it? >> i was blown away, and it changed my life. >> reporter: after that success, thrun founded udacity, a fast- growing startup in palo alto, financed with venture capital money, offering classes in science, technology, engineering, and math. universities came on board, hoping to reach more students than they previously could, and to improve instruction both on and off campus using online technology. thrun says early results are promising. >> we