During the years Salman Khan spent scrutinizing financials for hedge funds, he rationalized the profit-obsessed work by telling himself he would one day quit and use his market winnings to open a free school.

Instead, he started one almost by accident.

It began with long-distance tutoring in late 2004. He agreed to help his niece Nadia, then a seventh-grader struggling with unit conversion, by providing math lessons over Yahoo's interactive notepad, Doodle, and the phone.

Nephews and family friends soon followed. But scheduling conflicts and repeated lectures prompted him to post instructional videos on YouTube that his proliferating pupils could watch when they had the time.

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They did - and before long, so did thousands of others. Today, the Mountain View resident's 800-plus videos are viewed about 35,000 times a day, forming a virtual classroom that dwarfs any brick and mortar school he might have imagined. By using the reach of the Internet, he's helped bring education to the information-hungry around the world who can't afford private tutors or Kaplan prep courses.

"With so little effort on my own part, I can empower an unlimited amount of people for all time," Khan, 33, said. "I can't imagine a better use of my time."

That, along with last year's Wall Street meltdown, is why he finally gave up his hedge fund work and dedicated himself to the academy full time in the fall of 2008. The nonprofit generated thousands in advertising revenue this year through YouTube, which shares cash with popular content providers, and could become self-sustainable as a one-person operation within a year. Khan is in talks with several foundations for capital that could enable him to expand the organization's reach.

University courses

He didn't originate the concept of free online education, of course. The YouTube EDU channel features tens of thousands of so-called open courseware videos on economics, mathematics and more from Harvard, Yale and elsewhere. Apple Inc.'s iPhone App store features free Spanish tutoring, math drills and SAT vocabulary tests.

Last year, Stanford University's engineering school rolled out gratis video lectures, handouts and assignments for certain courses. Meanwhile, UC Berkeley has been posting classes online since 1995, on iTunes since 2006 and on YouTube since 2007. The university is fast approaching the 100 million download mark, said Ben Hubbard, the program's manager.

"We feel that opening this world of access to the rich intellectual resource of a public university is core to what we do," he said. "Anyone around the world, whether a taxi driver in London or budding computer engineer in Africa, can tune in."

Students who take all or part of their classes online perform better, on average, than those who complete the same courses only in a traditional classroom, according to a meta-analysis - or a study of studies - released earlier this year by SRI International.

That could reflect students using online tools on top of face-to-face learning or that these materials tend to draw an audience that, on average, is particularly motivated. But in any case, it suggests the Internet legitimately helps people learn.

Among a field crowded with exalted institutions, Khan Academy stood out enough to be named as one of three laureates in the education category of this year's Tech Awards, organized by the Tech Museum in San Jose.

'The right way'

"We were tremendously impressed by Sal Khan's simple approach to generating user-friendly tutorials in straightforward, to-the-point videos," said Michael Kevane, chair of the department of economics at Santa Clara University and head of the judging panel, in an e-mail. "We felt like he really showed people the right way to do video content - the wrong way being the 'talking head' or the 'professor at the blackboard.' "

Indeed, many universities simply post recorded lectures, while Khan stresses hands-on learning, moving step by step through multiple problems and encouraging students to work alongside him. He's also more focused on K-12 learning, with videos already posted for nearly all the math and physics encountered in those grades, and has created a math program that spits out problems that grow more difficult as students progress.

But the automated software and videos are just a glimmer of the potential that Khan sees for technology to revolutionize education. In the long term, Khan believes his academy points to an opportunity to overhaul the traditional classroom, by using software to create tests, grade assignments, highlight the challenges of certain students, and utilize those doing well to aid their struggling classmates.

Individual needs

This would minimize the time teachers spend on menial tasks, untether them from the one-size-fits-all approach to education and enable them to focus on individual students' particular needs, he said.

"That will be reality in the next five to 10 years and I think Khan Academy is in the ideal position to do it," he said.

Whether or not that ever happens, Khan's students say he's already opening doors they never could have squeezed through on their own. He says the most rewarding part of his work are the e-mails he regularly receives from people saying he helped them get into college, earn higher grades - or in the case of one woman with terminal cancer, achieve a life goal like learning calculus before it's too late.

Last week, Matthew Smith, 31, of San Pablo, applied for entrance to Berkeley City College, where he hopes to study mechanical engineering. He had only completed pre-algebra in high school, and his life was sidetracked shortly after graduation when a semi T-boned the vehicle in which he was a passenger. He suffered traumatic brain injuries and lay in a coma for more than a week.

Smith needed considerable remedial training before he could tackle any math-heavy engineering coursework. He stumbled across Khan Academy while searching online for California Standards Tests. After several months with the videos, he scored well enough on his assessment exams to start with pre-calculus in college. That's two levels above where he stood the last time he sat in a classroom.

"Without Khan Academy, I don't think I'd be in the position I'm in now," he said.