This Week in Edtech with Ben Kornell, 5/13/22

positive? What do you what do you think Ben commodification I don't know if this positive, but the commodification of higher ed, what's been coming out there?

get on board. We've got a great article, and it's linked in the show notes from Ed search, by the way, EdSurge had a great week with some great articles. And it's really around, how do we value education, if we're willing to put huge discounts on signups. And also in the article, it talks about utilization of higher ed courses that are purchased, and how many Udemy courses in particular, go unused kind of sitting on the

shelf for students. And this creates real friction for anyone trying to hold the claim that higher education is a luxury good, it is not as sensitive to price discounting and so on, meanwhile, to you is in the news as well, Alex, you know, to you quite well, what's going on over there?

of flash sale marketing. Now that Coursera is in direct competition with Udemy, that to us in direct competition with Coursera and Udemy, that sort of all of these companies are starting to come together, they are in direct marketing competition with each other often for the same subjects. It's like, you know, are you learning digital marketing on

Udemy? Or Coursera? Or to you, are you learning getting a degree from to you or Coursera, they're all in direct competition, and you're seeing this sort of marketing throw down to us been in a really interesting state for the last year or so you, it seems, you know, it's acquired at x, which is one of the very, you know, biggest Ad Tech brands in the world. And it's sort of been thinking about how to put together its different offerings

into a cohesive package. But in the meanwhile, its stock value has been basically continually dropping, sometimes pretty precipitously. In all that time, and now now it's sitting at about, you know, under $10, or about 10 to $12, as of this week, so shift Pasek. And some of the other leaders that to you, I think are starting to think about, you know, to you is is sort of slowly moving from this OPM only model to this lifelong learning, we can offer learning of any of any size

model. And I think the the big question is going to be whether they can actually pull it off. They're very well positioned to they have a lot of people and a lot of expertise. But it's when you're growing by acquiring it can be a little difficult to put the pieces together. And I think that's going to be the real rubber meets the road moment.

Can they take get smarter for short courses trilogy for bootcamps, edX for MOOCs and degrees and put them together with their existing OPM, high touch business to make a learning juggernaut a model if a humongous company that's the goal, or are these pieces going it'll be less than the sum of their parts. And they're going to sort of struggle.

And I've always thought that the difference between the OEMs was like, quality and curation branded with the best universities versus these kind of wild west open marketplaces like the Udemy and Coursera has, and now you see this blending together, right. And I think part of what's driving that is content is expensive to produce. And therefore the cost is high, and therefore that limits your

total addressable market. So having something that, you know, almost as like a layer cake with lower quality, but universally price accessible, scaffolding up to higher costs. It's what we've seen universities do with extension Schools for years. Yep. But I do think from a user standpoint, it does make me worry about this, eroding the quality of online learning over time, as there's a race to the bottom with these discounting

elements. And Forbes actually had a similar article all came out this week, it's pretty amazing about, you know, the decentralization of higher ed, and how these marketplaces are enabling producers from all around the world to create short form content. Yeah, in these modular chunks, it does make you wonder, like, Where does the value capture actually shift from the large companies, to

these producers? Are they you know, are the creators, multichannel, just a very important moment in higher ed, where the ecosystem is opening up and figuring itself out?

topics in their own field. So you're literally taking you know, 200 300 400 year old brands, and putting them up against individuals who are popping in with a smartphone and a camera, and digital marketing, you know, skills and going into competition. And that's a legitimate, you know, competition right now, you people are choosing whether to follow somebody on YouTube or somebody on Udemy, or go get a decree from Harvard or from an OPM. That is a really strange

moment. And I think we're just going to continue to see these awkward, but kind of exciting changes to the higher ed landscape as that continues. Yeah, it's good. It's gonna be wild.

and device access. Right. One of the things that I think this and other K 12 trends are showing with these large school districts is that the district is now becoming a hub for far more than just learning. It's becoming a healthcare hub where mental health services are provided, and support to counselors and other health services, or their its food and nutrition provider. You know, LA Unified serves more lunches than any grocer or food vendor in the

entire LA County. And then it's also the number one employer and Cardona who's leading the Department of Education is trying to transform the teaching and learning but he also you can tell, he's realized that this is a number one, this is a top employment in Gen in our nation is education, education funding.

And so whether it's at the district level, or if it's at the national level, we're actually seeing trends affecting k 12 that have nothing to do with teaching and learning and, you know, myself as a school board member, I worry about that, because where's the focus on teaching and learning, but to it's also for the South, it's asking so much of them and asking them to step up. Meanwhile, the teachers unions are kind of raising their hand saying we've already got enough

on our plate. Now you're adding all this. So there were some other K 12 headlines that connected with this. What were you watching?

and social work. But now when you're doing it at the scale of LA or New York, that is a that's a tall order. I mean, one interesting set of headlines that came out this week, somewhat about education, some actually outside of education were about this, this really large scale pushback against sort of big social media. Within

the education world. We saw Randi Weingarten and you know, start to push against meta Facebook, and think about, you know, sort of get on what you might call a bandwagon to say, what are the social media providers who are sometimes in education starting to do to schools, what are they what are they doing in terms of privacy?

What are they doing in terms of, you know, addicting kids to social media, or cyber bullying, and there's sort of a long list of proven things, frankly, that social media can do that's

negative for students. And then meanwhile, you're also seeing that there's push backs against companies like tick tock, there was, I thought, a great op ed in the New York Times this week by Ezra Klein, one of my absolute favorite journalists about how tick tock because it's really owned by China, which is, and basically by the Chinese government, as this enormous social media platform that has not only all the data, but algorithms to decide what everybody sees it, basically

decide what every teenager in America and Europe sees on a daily basis, the idea of that being decided partially by the Chinese government is something that we should all be a little bit scared of. So I think there's there's some interesting ideas. Yeah, there was also something about Twitter, then what was the Twitter headline?

power. And the article that that you're referring to in that search is really talking about well, actually, if you go down the list of ad tech companies that have incredible reach, and are in every classroom in America, there's essentially no oversight or regulation on who owns that. So connects with that thought of, you know, tick tock might be dangerous, because it's run by the Chinese government. What about the one? What about the apps that are already in schools? Who's owning them? What

are their agendas? How do they pry prioritize things? And I do think we're in a political moment to where, you know, folks on the right are asking questions about where does the content come from, and who gets to make those decisions. And the move on the left right now is that is up to the teacher that is their discretion. But a new group on the left is saying, wait a second, many of these decisions are being made by unaccountable big tech

companies. And so you could end up having, you know, it's very easy to see battles around what platforms what content and what media, schools buy, and use coming from both right and left

political spectrum. So it does, you know, for our listeners, it just means that the more you as an entrepreneur in edtech, or as a senior leader in tech, the more you can be transparent around what is driving your decisions around content, how you approach privacy, and winning some of that PR battle ahead of time, the more you can do that, the more you will be able to weather the storm of you know, teachers union push back as recline coming after you or some of the challenges that

school districts have as they get into the internet business, as le USD is, yeah. Let's talk a little bit about workforce. And today it's a little bit about that intersection with lifelong learning in higher ed, Alex, what do you have for us?

boot. Just in the government, right, the UN actually said that Facebook had facilitated a genocide in Myanmar and what happened to them nothing.

should be paid. And we should really move to a world where you don't have this sort of strange arrangement where people can do unpaid internships to, to get into the workforce and get free labor. And then Edzard had an

interesting article. Again, we've been citing them a lot this week, they had I think they had a really terrific week, lots of interesting articles about going even further and saying, let's not even even beyond unpaid internships, why shouldn't colleges actually offer courses sort of based on work, or really designed specifically to get people through that college to career transition? And I think it's a very, it's a very fair question.

And it's something that I think more and more colleges are thinking about as the numbers of incoming students who say that they're there to get, you know, to get great jobs and to have lucrative, you know, and meaningful careers keeps rising. I think colleges have gotten that memo. And now they're just starting to think about, you know, what, what could they possibly do? Is it partnering

with a tech companies? Is it creating apprenticeship programs or Co Op programs like, like, Northeastern, I think they're trying to figure out how to bridge that gap. And it was an interesting article to think about how to do that. What do you think then? Do you think colleges should offer more work based courses?

If it's like, healthcare data analytics course, that Norma padrone talked to us about in one of our first episodes, now, you know, at Tech is in healthcare or at Tech is in life sciences or climate change. So there's a there's a convergence here that higher ed would be loath to, to miss out on. Yeah, I will say one thing that we have to remind ourselves is actually in the 1950s. And 60s, there was quite close collaboration between large research institutions, and huge

industrial companies. Many of the like chemical industry innovations actually came through partnerships with universities, we've gone through a period of these large industrial Titans shifting over into either smaller organizations or big tech, and that connection with the university has been lost. But I actually think there's a great tradition of work based learning.

benefits. Companies like you know, GM, and that that really started to go away in the 70s, as as companies started to really optimize for the shareholder and stock prices coming out of the sort of Chicago School of Economics. And in that moment, I think what even though that movement came out of a university, I think universities started to rightfully become very skeptical of companies as a sort of

positive social actor. And as a result, I think universities started to look at companies as sort of a little bit askance as people who as institutions that are really out for themselves and not don't care about sort of a common social good, whereas universities, you know, shut. I think it's so interesting that there's even a potential of companies and universities starting to come back into

alignment. You've seen that we talked last week about the grow the Google programs that are being offered, or all of these collaborations between big companies in schools and universities. You know, I wonder if that I just wonder if we're entering a new era of colleges not being as afraid of being a little more vocational or having more partnerships, public private partnerships with with universities, it would be amazing to see I frankly, would

love to see more of that. I think that it's been a mistake to have the These two giant sets of institutions really not working together for so long. Sorry to wax poetic a little bit there. I can't say enough about this transaction man book gave me so it's so much insight into how companies work, then. So one other headline about the SAP this week that I thought it was worth mentioning, what happened with with the LSAT and standardized testing,

mainstream traction. In Inside Higher Ed an article around this statement of this, it comes from a huge critic of the LSAT and its lack of predictive like success for student admissions. And yet she argues MIT is making the right call because of the intensity of their analytical program and the kind of base level that the LSAT provides. And so there's this question of, you know, LSAT went from this universal kind of rite of passage experience for everyone.

Now, there's this lack of SATs, it's a little bit of a wild west for both admissions officers and college applicants, are we going to see selective reengagement with the LSAT, either for schools that are primarily focused on analytical rigor, and therefore need some sort of benchmark or baseline, or even programs within a university that you have to apply to where the LSAT becomes a component? I

think that's interesting. It also begs the question of what is the LSAT good for, it's definitely not about the ceiling. It's more about the floor, the days of like perfect SATs, as you're like calling card to get in somewhere, think that those days are gone. But the idea that we want to have minimum competency, and, you know, algebraic understanding, that is coming back. Yeah, you've seen this firsthand, and from a lot of different company perspectives, you know, assessment drives innovation in

our space. What do you think about our old friend SCT rearing its head again?

And it makes a lot of sense. Um, sometimes you see these sort of political style pendulum swinging within the education world, and you know, SATs and AC T, and those sorts of college admission standardized testing, have had the pendulum swinging against them for for a few years now, they've been claims of it being biased the test or being, you know, non predictive, as you said, I think what you just described, and this, this op ed is a much more nuanced view, if you have students going to a

school like MIT, it's a technology school, it's an Institute of Technology, they focus on STEM, math, technology, engineering, it makes perfect sense to have a baseline quantitative exam to help vet their applicants, just as if you're going to RISD, it makes perfect sense to have a portfolio designed to vet your applicants before you, you know,

go to a design school. So hopefully, what this might lead to is a little bit more of a sensible discussion about what admissions is really about, rather than every, you know, rather than the just classic, you know, common app, essay, essay T, everybody uses the same few benchmarks, maybe there'll be a little bit more thought put in from each of these schools about you know, what type of student body they truly want, and how to make assessments that actually select for it, rather

than just sort of inheriting the status quo. And using the same standardized tests. You're also seeing, of course, edtech companies jump into this space in some really interesting ways. And some of them try to create new versions of college admissions or new takes on how to evaluate various types of skills, including durable skills. So I hope we get to a world where, you know, some assessments hopefully not too onerous that college is used to

evaluate their candidates. It seems like a positive move to me.

staff. Netflix is, you know, crashing and burning around some of their new initiatives and publications, including the closing of Tulum. And then thrash CO has been having layoffs after they just raised 100 million, Cameo re laid off something like 25% of their workforce. So we're seeing it in

the tech space. But we're also seeing it in, in ed tech on the ad tech side, on deck, which Alex and I are both member of cut 25% of their staff, mainly driven by, as they say, by a change in the funding marketplace, where they were planning to do a kind of venture studio or incubator at a tech startup lighter learning laid off nearly 200 employees in February, white hat, which is owned by by Jews, is laying off 1800 employees, which I mean is

huge. And then on top of that 800 White Hat employees resigned as well, due to request to return back to the office. So we're just seeing big players, small players, medium players, everyone affected. In India owner Academy, we've reported on this before laid off 600 employees and Vidin to laid off over 200 employees. And just to be clear, this doesn't mean that these companies are going down

in flames necessarily. It really is a sign of the market saying and the board saying you need to tighten your belts, you need to focus on your core business. And you get need to get more efficient with your cash burn. But it does mean that some of the the high flying funding rounds that we've seen, or some of the tech ventures that were highborn are going to be facing

harder times ahead. Alex, you and I both have been through this on both sides, you know whether laying others off or being laid off ourselves, how do you navigate these kind of trying times? And when you've seen a market swing like this? You know, what's your advice to people? Yeah, that's

But I think my advice would be, you know, we're at a really, you know, how bullish we are about about edtech, specifically on this podcast, there for every white hat that's laying off 1800 people, there are hundreds, literally hundreds of Indian ed tech startups with really exciting ideas, starting lots of entrepreneurs getting off the ground, lots of funding going around, the funding is starting to, to suffer a little bit in terms of the amount, but still a lot of funding coming around.

And I think, you know, I hope that people don't find themselves feeling pushed out completely of that tech or technology in the case of places like Robinhood, and Netflix, and instead feeling like they're there, maybe, you know, a change from being part of a very big company that has a sort of a big name, and maybe taking a little bit of a chance on a smaller company or a new initiative, or starting you're starting their own thing, because there's so much energy, and there's so much

opportunity for new entries into tech and especially at Tech. So I would hope that people don't feel too demoralized and upset about, you know, losing, they're losing their employment, and instead sort of use it as a learning opportunity and a chance to evaluate the space and perhaps join a more agile, smaller player. That's my best advice. And man, I you know, I it's gonna be cold comfort for some.

And so I always encourage founders, you know, if you've got time, and you've got the cash, be really, really thoughtful around how you navigate the next 12 to 24 months, because you have an obligation to the users to not you know, set them up for failure. And then on the employee side, if you're very strategic in how you're setting

that up. You know, it's always better for a tech founders to make one Cut and just really narrow the focus once rather than death by 1000 layoffs, and I've just seen organizations lose focus, lose their culture lose their momentum through, you know, round after round of layoffs and people start wondering, you know, what's next? Is it going to be me? And so just really focusing on your business. And then when you do that, like treat the people,

right? Because we might hear all these articles about it being a hot job market, but it still takes three to six months at best for folks to find that right next place in ed tech. So just, you know, a lot of scars, you know, that I've had through these processes. And if everyone can kind of put the learners first, then really think about how you treat everyone with dignity and respect, then there's an opportunity to come out of these tougher times even

stronger. And you know, most of the history shows that the best startups are actually in bear market, you know, founded or grown in bear markets, because you're forced to focus on product market fit your foes forced to narrow in on what success looks like. So speaking of that funding market, we have our typical funding and m&a highlights. on the funding side edgy capital, announced the target to raise $160 million fund focused on edtech and the

future of work in Europe. Edgy capital is touted as the first in ad tech fund. Alongside Brightside, we follow a lot of their stuff. And in four years, they've invested in 20 Different companies. And two, they've had two exits. So this idea of raising a bigger fund, you know, it's still small relative to the US Space funds, but it's a ambitious hill to climb, they've already secured 105 million and now with the markets the way they are that last 55 is going to be a huge boulder up the

hill. We also saw an investment in Africa, an area that we've been really excited about as a hotspot for education technology, not just for growth of the business, but unlocking opportunity for all people Monera got 3 million to grow the tech talent pool. We also saw schematics raising 16 million, and I nurture raising 15 million schematics is in Mumbai. And they do educational games and learning for children through

play. And I nurture also an online media company that does post grad programs in management, computer science, finance, and it these rounds of 16 and 15 million just for our viewers or listeners to know many of these rounds were actually close three or six months ago and are just coming out in the press. But you can already see some of that, you know that headline valuation coming down from you know, 20 and $30 million rounds to, you know, three to $15 million

rounds. So definitely seeing that trend and will be interesting to watch going forward. I know you had a couple Alex, what would you like to share with the listeners?

to Ed Tech. And I imagine you're going to see some of those future of work, or parenting and tech startups looking for looking for some funding from them from magnify ventures out

of LA. And lastly, we had a small round in another Indian startup just to put a fine point on you know, for people who are getting laid off from us academy or Vidanta right now, for every door closing their windows opening foreign admits or foreign admits is the name of the company raised 420,000 US dollars from unicorn India

ventures. It's a peer to peer mentoring platform and trying to help people sort of secure all the different services they need for international graduates and alumni a little bit sort of associated with companies like a ply board. There were some mergers and acquisitions as well. Ben, do you want to kick that off?

This acquisition valued around $100 million is a executive program based out of Singapore that offers programs from global universities like Harvard Medical School, UC Berkeley, Yale School of Management, so kind of like a hybrid OPM, but with in person classes, we also saw that Pendo raised 6.9 million to give employees control over their career paths.

So the idea is really just in time career progression platform, they basically work with over two 2000 enterprises, helping people develop kind of personalized career paths. And that HR tech market is just booming. Yeah, with, you know, about 5 trillion spent on tech applications. So as HR tech, blends with learning tech, it's going to unlock some tremendous possibility. And really, just comment about

hybrid programs. So by Jews has been basically trying to fill all the spaces on their punchcard to be able to sort of compete with everybody in every anybody in the Asian and tech market, regardless, you know, from K 12, all the way up to career. It's an interesting acquisition.

of a marketplace. What is the percentage likelihood that a ed tech pure ed tech fund will raise a billion dollar announced a billion dollar fund like owl did a year ago? This is in the next 12 months? Oh, what he's?

quite as big. I don't know if I think I think we might see that that our venture is billion dollar fund was the high watermark for the next few years. Hopefully, it'll swing back, but I would give it a big yet 20% chance that anybody would get another billion dollars, I may be wrong. And maybe it would come out of I don't know if it would be in the US even at this point. Maybe Maybe Maybe there'd be something out of out of Asia or Europe that tries to go that big, but I

don't even think so. So, yeah, 2020, maybe even less, I don't think it's very likely. Wow. And

think it was in the plans. The question is, will they actually go through with the plans if there's changes in the in the marketplace? Which I think inevitably there will be but I don't know. I mean, I think they might do it. I would give it a more than I give it a two thirds chance. What do you think that? Let's take a quick break. Have you ever wondered how Netflix

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It's looking more like a two or three year down time. So I think the odds are likely because I think that they will realize six months ago would have been a better time to do today, because six months from now might be looking even worse. I agree. Yeah. All right. Now on to the product side, what ASU announced a partnership with dreamscape learn a virtual reality platform that allows users to have total immersive experiences studying things like biology, archaeology, and marine biology.

What is the percentage likelihood that we will have in the next 12 months? Someone who comes up with a fully VR degree?

perennial tech promises. It's been around for 20 plus years now as an idea, I think the the invention of the Oculus, and it's purchased by meta, you know, Facebook, meta was a sea change in the development of VR, Magic Leap, which was trying to be the next big thing has sort of begun to fizzle or maybe completely fizzled to this point, the Microsoft HoloLens, which was also supposed to be the big sort of augmented reality, next thing has not

particularly taken off. I think that VR is going to have its moment. I think it's coming. But I don't think it's going to come that fast. I don't think that we're going to see that kind of full scale embrace of VR, especially for something that's sort of a high cost product, like a degree within the next you say within the next year. Yeah. All this is within the next year. Yeah, I don't think

it's gonna happen. Maybe I'm fooling myself, there may be some really wide eyed excited entrepreneurs out there who are making it happen. But I think that VR always is right around the corner. And I hope that this time, it's authentically around the corner, and that in the real educational experiences and immersive experiences will

happen. I just don't think they're going to scale to the size of a degree that quickly, I think we're going to, maybe we'll see our first sort of really breakout VR class, something that people actually, you know, talk about outside of, you know, VR, VR Reddit forums, but I don't think we're gonna get to do agree. Am I wrong? Ben, do you think we will? Do you have some insider info on this?

and so on. And so this idea of fully VR is like the idea of fully personalized learning that there's actually good use for in person interaction, there's good use for, you know, whole class instruction. And I actually think that the way you know, as I learned more about the dreamscape folks, they're actually allowing the, you know, many of the the experiences translate to data in Google Sheets that then people can analyze in groups and they have

small discussion groups. So this idea of the experience is really a touchstone for the class rather than the entire thing. Okay, last one, what are the odds that we will have a pure edtech web three company raise at $100 million valuation or more? So when three ed tech company raising I was thinking unicorn, but that's we're still

too far away. But in the next 12 months, do you think that there will be a Web three and I include in web three anything from blockchain and decentralized, you know tokens or currency. I include NF T's I include Dows. Basically anything that's leveraging blockchain to decentralize, you know, either production or engagement and learning.

80% chance. The reason I think this will happen is that there's so few great ideas out there yet. But there's, it's basically this open playing field of possible ways to use web three in education. And I, Danny Pico, and I wrote a couple of articles about this for the tech insiders newsletter, there's so many opportunities, but I don't think anybody's quite hit even a

triple, let alone a home run. So I think if anybody if a company comes out with a really good business plan, a really good founding team, maybe a Metaverse strategy. So speaking back to your last thing about VR, if there's some, a lot of the big the big projects right now in web 3d are sort of involved both Metaverse and some for some kind of crypto currency or shared

ownership. If somebody comes in with a really good play, I think a lot of the VCs will jump on it, because they basically aren't seeing very many other good players, they're seeing a lot of small ideas that are potentially interesting, but seemed like long shots, somebody comes in with something that seems promising, I think they'll

throw a lot of money at it. And if and I think that the web three communities will embrace it, too, because they'll want a champion, it reminds me a little bit of Pokemon Go, being the sort of go to AR VR, you know, Product A few years ago, and it sort of put that entire field on the map in a way that it was

never on. I think if somebody can create a web three education, play that puts web three education on the map makes it a real thing that people can consider rather than a sort of set of disparate ideas, which is definitely where it's at now. I think they'll they'll get everybody's funding, and then you're starting to see some big valuation. So I'm gonna give it 80% chance I may eat those words in in a year when maybe web three is considered a passing

fad. But I from from all the work I've been doing and looking at it, I think there's still a lot of growth there. So I hope I hope it does happen.

valuation. When I think about the other technologies like or the other applications like Dows, or when I think about NF Ts and education or so on. I'm much more bearish on that stuff. So I do think, you know, this idea of high school or supplemental education or workforce for higher ed, having components that live in the metaverse me, I think that

that's just inevitable. The question is, like, which platforms are going to win first, and then we can all compete for that real estate to virtual real estate to grow it? I think the platform war has to be fought first before we really know who's going to be the winner there. Yeah. Well, thank you all to our listeners. As I mentioned before, if it happens in ed tech, you're gonna hear about it here at ed tech

insiders weekend Ed Tech. Thank you, everyone for joining this week, and we will see you next week. Thanks for listening to this