This Week in Edtech with Ben Kornell, 5/6/22

interesting episode. And we recently talked to Eli billionaire from Guild education, who also co founded a school called the rivet school trying to get people to get their degrees in a efficient and effective way. Both great conversation. So if you haven't listened to those jump in there, fantastic. And you know, today, we're going to try to go really fast and stay on time, because there's so much to talk about, we want to make sure we cover

everything. So we're going to give ourselves a five minute time limit on each of our big five headlines, see if we can stick to it. You ready, Ben?

giving that away for free. And that's training in UX in data analytics in it, or other hot topics like that. So my take on this is wow, that is an incredible offer. And the grow with Google courses have been this incredible success for Coursera. I happen to have been at Coursera. When this was conceived, it was not conceived by me by any stretch of the imagination. But I saw the people sort of coming up with this idea and figuring out how to do it. And it has now reached, you know, 800,000.

Plus, people all over the globe have created tons of jobs. It's been pretty amazing. And they're now expanding and expanding and offering it to everyone Ben is what is your take on grow with Google being free for every US business?

So you know, I have, I have some excitement about it from an access standpoint, and availability standpoint. But having seen what they've done to, you know, k 12, LMS market, you know, Google Classroom, being for free, has destroyed that market, you know, seeing what they've been doing with their AI work, and some of the other pieces in education, where it shows so much promise, but then they can't internally get the resources to deliver on the full potential, because that's

not really their business. It really raises questions for me. And then the last thing is, you know, when something is free, and you know, people are giving it away over an extended period of time for free, you have to ask yourself, who's the product here? What's the product? And the answer is you are the product. And so there is some way shape or form in which, you know, Google will have to or will be monetizing off of this.

And there's infinite ways they could go whether it's, you know, getting to use their tools, their cloud infrastructure, etc. But I do worry about, you know, these big behemoth tech companies coming in and crush Saying meaningful business lines and industries that have no bearing on their overall, you know, bottom line, just so that they can attract or acquire more users to their other core products.

population in the world. And I think they've seen universities sort of dropped the ball, they've tried very hard to work in collaboration with lots of universities. But you know, at the end of the day, they're sort of saying, hey, if we just go out on our own, that we can literally give this away for free. We don't have to partner with the University that wants to charge 10 grand for a certificate. So I'm still a little, I'm gonna say, thumbs up to Google for offering all this

for free. But yes, market distortion. Yes. Who's the product? Those are very fair questions to ask. I'm gonna give myself the last word here because we're the last minute and let's move to the next headline.

online certificates. An article in Hechinger Report shows that school online certificates don't actually have the return on investments that they may advertise. Case in point is a Purdue program that trains folks to be executive assistants for law firms advertising a $30,000 annual average salary and then two or three years later, those who've completed that certificate program only have an average of 18,000 in annual

income. National Student Clearinghouse CEO Rick Torres also reported this week that national enrollment in higher education is down 6%. And freshman enrollment is down 9%. So as we come to the fall semester, is going to be dark days for schools. And these online programs, which have not been positive ROI have been positive ROI for the universities themselves. So it comes back to this whole financing question. Should we be

canceling debt? Should the debt being offered for higher ed be tied to the efficacy of the programs? You know, what's your take on this, Alex?

everything. For so long, it's become an enormous burden to families of all income levels, as well as kept a lot of people from going to college in the first place. And I think it's just, you know, you think about the role of government. And I think sometimes the role of government is to rein in industries that are not operating for the greater good. And I think, you know, I think the higher ed industry is sort of starting to have that

characteristic. They're charging lots of money, and not always having real return on investment or gainful employment, as the laws tend to say the other thing I would add to this, there's this really interesting theory for any listeners who have not heard of this. It's called Bell miles cost disease. It's Bau MLL. It was a theory from the 60s from William Bowen, the ex

president of Princeton. And I think William Baumol, might have his first name wrong, that basically says that services are always going to be cost more than goods over time, because services are harder to replicate, especially sort of high skilled surfaces. And they use it to say that, you know, college tuitions will continue to go up, even though other

things should go down. And I think people have looked at this, you know, as a rationalization as a possible economic justification for why tuitions have gotten so high. But in my opinion, the existence of online learning and the complete overproduction of the professor class in the US over the last 10 to 20 years has really diminished that as as a reasonable case to be made. There's no good reason and people are trying this now that there can't be affordable colleges that don't leave people

in debt for many, many years. So I'm just on the face of it. I really, I would love there to be lots of student debt forgiveness, even if it disproportional The hits middle class folks, combined with some really strong laws about that schools have to give people gainful employment and you know, cannot keep people in debt forever when they can't pay back their debt. It's just really not. What do you think, Ben?

return on investment. And this is where I'm most concerned, because I do think that a number of schools have had kind of an industrial bloat, since the 40s, and 50s, where they've just been growing, they've been growing exponentially, therefore, the cost has been growing exponentially, therefore, the debt has been growing exponentially. And if we just solve the debt problem, we're not really addressing the core

fundamentals. What makes me most concerned though, is that we, we are most likely to have a bifurcated system going forward, if we do push on that button, because we'll end up having a lead schools that can get away with charging half a million dollars a year for tuition. And that will be a small cluster of schools, and then the rest will all have to be low costs, and leveraging technology for distribution and so on. And so I do wonder whether that will create an even bigger class

divide in our systems. And, you know, really, it will come down to what's the quality level of that distributed system, but also, will the half a million dollar a year schools, you know, really lean into open access and full ride scholarships and things like that? Yeah,

They're only really reach a small subset of people. But the hope is that that becomes a different tier. And then you don't have this huge suite of middle tier colleges that are charging the same amount as your Yale's and Columbia's but not even offering meaningful outcomes. That's the fear. And I think that's where we've landed in the landscape now. And that's what makes me the most afraid that there's so many schools that, you know, people think they're going to have the same

ROI as an elite school. They don't, but the cost is quite similar. It's a really complicated issue. But yeah, we'll see where it all goes. I really hope that those who make higher ed policy and the sort of decision makers around this loan forgiveness, think it through from both a downstream effect and a political effect, you know, how is it going to be perceived? Will it be perceived as a bailout of the higher ed industry, as you say, or a

bailout of middle class? Or upper middle class people who hold much of this debt? Or will it be seen as a, you know, a real a powerful move towards redistribution and helping people, you know, put money back in their pocket to do other things,

and early childhood. And now everyone knows, it's kind of, you know, believed, as cannon in early childhood, that if you can get kids to read, by the time they're in third grade, they're going to be set up for success. And many of us point to the investment return for early childhood preschool programs, and their ability to impact life outcomes. But some publications this week one and EdWeek showed that a program called Reading Recovery, which is kind of like the gold standard for reading

intervention. It's a first graders program, where it's a 30 minute one on one tutoring, where the tutor keeps a running record of all the words that the first grader missed, and then coaches them on the strategies based on their errors. It's showed incredible gains in literacy 130 percent gains for first graders for just a semester long treatment. Well, they've followed up with some of those students that were experiencing those great gains.

And they, you know, constructed a randomized trial, which was actually quite interesting. It's not fully randomized, but they basically took cusps students that either got admitted or didn't get admitted, and then compare their performance by third and fourth grade. And what they showed is the students that were in Reading Recovery, were actually a half a grade level behind those students who hadn't had the intervention by third or

fourth grade. And it raises big questions around the long term efficacy of one on one tutoring interventions. It also makes you wonder, what are the test scores? And do they capture all of the elements we should be shooting for, to create long term literacy. And so the defenders of the reading recovering program say, hey, we never claimed to be a silver bullet. This needs lots of other

supports over the long haul. But the fact that the treatment group performed worse than the non treatment group for an intervention that cost five to $10,000 per student per year, that is pretty eye opening. And then meanwhile, we also heard on the early childhood, that on mine shift from KQED, they talk about the pandemic erasing a decade gain of public preschool access and quality. In New Zealand journal, they're talking about the staffing crisis with

preschools. So as we've been focusing about access, everyone should have preschool everyone should have early childhood, the talent shortage has been extreme in early childhood. And so the quality has been really eroded. You're now in classes of one to 20. So on one extreme, we have one on one tutoring showing mixed efficacy over the long haul, and preschool, which has just been like everyone's, you know, universal agreement, that preschool is a good thing. Now the quality is eroding because

of talent gaps. And it really makes us question like, What can we count on in terms of interventions to help all learners? As you hear this? What's your take?

Tech as well. And I think what is scary to hear when you hear about this stuff is that it's sort of coming from multiple angles, that, you know, not only are there not enough, not enough qualified teachers to, to teach in these classes, and their teacher student ratio is getting too high. But also, they're not actually even sure which techniques are going to be most

effective. It's sort of like, it's scary to put all of these things on top of each other and makes you sort of question the foundations of what we know and don't know about early childhood. I don't even know how to go much deeper than that other than, you know, I would hope this is, again, maybe naive, but I would hope that this kind of longitudinal study that you're mentioning, then were to say, oh, yeah, you get much better in first grade. But what does it mean, in third or

fourth grade? I'm hoping that, you know, technology could at least support studies like that, because you're going to have students in the same program year after year giving data to the same corpus. So you know, if there's a childhood reading platform that can actually track student's reading level over multiple years, maybe this type of finding could be done on a more systematic basis, rather than coming as this huge surprise later.

what niche are we serving? And how do we do that really well, but don't just focus myopically on one score, think about, okay, around the corner, how am I setting this up for that learning group, whether they're, you know, 85 year olds, or five year olds? You know, how can we scaffold the learning developmentally to support them? All right, yeah. Number four. So we've talked about, you know, career higher ed, and K 12. Now we're going even off edtech and back into the offline world.

Tell us about it out.

offline. And there couple of different reasons for this, there's a sort of perceived lack of engagement in online learning, there's a perceived lack of quality in online learning, there's the perceived increase in cheating when you have, you know, students

distributed. And they're also actually some tutoring, I said, some staff crises where, you know, some of the tutoring companies that have grown really large or different kinds of companies that have grown, don't have enough people on staff to be able to support as many

schools as they'd like. So for example, you know, one of these is we saw a tech unicorn, Indian unicorn madonn, to start to slash its course, costs by up to 70%, which is, you know, as people sort of go back to regular schools, and part of their thinking there is they're slashing course costs, but also trying, it seems like to start integrating more artificial intelligence and sort of offer something that's more scalable

is, I think, the plan there. And so you can sort of see this feeling of, okay, if we kept our cost very high, by having all human tutoring, and all human supports, then people might start canceling contracts and moving away as they have to go back and pay in person teachers. So we're going to try to offer our supplemental service, that's less money, but still stay really involved. It's an

interesting strategy. And I think you're gonna see other companies sort of pursue similar things, especially in the tutoring space. You're also saw a headline about in Washington, DC area schools in Virginia and Maryland and DC, they're starting to really move away from online learning in a very systematic way. They're saying it will not be an option for next year, it'll be very low

numbers. And this is based on some research from McKinsey and others saying that the online environment has actually pushed students behind up to, you know, four months in math and reading. So there's this feeling of during this pandemic, when everybody was sent home, there was sort of no plans, and everybody had to go to online learning, there was a real learning loss, a very measurable serious learning loss. So people are starting to blame online learning as a medium for it.

That's not great for the space. And personally, I don't think it's true, I think that was emergency online learning. But you can see the sort of political and policy stance starting to move back. And the last one was, we saw proctor you one of the main integrity, you know, cheating detection solutions, and Ed Tech, put out a report saying that they're cheating online has hit a record high, with one out of 14 students cheating according to their estimates, which is higher

than we've ever seen. So there's also going to be a little bit of you know, if there isn't already feeling of integrity issues, when you don't have the classic, you know, Proctor in a room, watching the students making sure they don't, you know, look at their notes, or all of these old fashioned kind of things. So I think this spells a little bit of something a little bit scary for the tech world. You know, I think we've all had a real opportunity during the pandemic

to shine and step up. But I think that, you know, the emergency nature, the fact that students are experiencing huge mental health crises, the parents were out of work, or having to go to work and leave their children created this huge, perfect storm of problems. And now online learning is getting some of the blame for those problems. They're saying, Oh, it's the online learning environment that's causing this. What do you think about these headlines? Ben,

some future earnings. But let's also remember that people are spending time, whatever their time is that they're using on an online course, they could be using it in an in person course, or doing something else that's like money making. And what we learned in K 12, at least is that schools social benefit was first childcare, second, connecting with peers. And third was the learning. And I actually think that the folks in higher ed and workforce kind of said, well, that may be true for them,

but not for us. Well, the reality is when paired head to head against an in person learning experience and an online learning experience, when time is equal, and cost is marginally different. People are going to choose the in person, because human learning in groups in person is powerful. So we really need to push our online learning platforms to go the next level in creating that connection. I do wonder about the strategy of dramatically

dropping price. Would that actually make someone say, Well, I'm willing to have a inferior learning experience, but it's so much dramatically cheaper? I would do that. For technical skills. I could totally see that happening. But I do wonder about that time value prop it very interesting space and also the point you made ain't about cheating and trust online. I think the industry bears a lot of culpability for that and needs to find good ways to safeguard and authenticate

student learning and work. Well, that was the main four headlines, we always close with a roundup of funding and m&a highlights. Alex, whenever I take funding and you take the m&a on the funding side, it's a little bit of a journey around the world. In Asia, the James Murdoch firm Bodhi Tree invested $600 million in India's Allen Career Institute. We've been watching India a lot on this show 600 million in these in person coaching and test prep organizations or institutions.

They are a direct competitor with Akash, which was purchased by by Jews. And it does go to show that this blend of in person and online is really working in India. Very exciting to see what goes on there as that market progresses. And as access explodes. Also, the outschool of Korea just scored a $10 million series A investment. It's called flooring. And it values the firm at $40 million. And it has just incredible

adoption rate. Asia Pacific is just growing exponentially with online learning adoption. rounding it out in Europe, stone speak invested a billion euros in inspired Education Group. I'm quite familiar with Ieg. They have a bunch of elite schools 70 Premium schools in 20 countries. And those schools tend to send 90% of their students to an elite university. This is basically a privatization of the school sector that has largely been government dominated in continental Europe. So

definitely bears watching. And then Glenna, which is based out of Brazil, is essentially creating an up work skill based marketplace for young people to get jobs. And as I've talked to entrepreneurs in South America, one of the biggest challenges is the unemployment rate of young people between 18 and 24. And they're eager to gain the skills to get jobs both at home, but also, you know, remotely. And there's not enough capacity or capability in the higher education system to fuel that.

So Galena, one of a number of companies that I think will be filling that need coming up on the m&a front, what do you have for us, Alex? So we

training and augmentation. So basically, this is a merger of two companies, that's going to create an even more of a powerhouse for elearning brothers in terms of being a sort of go to place for instructional designers with over two and a half 1000 contract instructional designers on call. We saw Pearson, acquire mondly, which is a language learning platform that has 40 languages, and you know, all these different language pairs

in its app. So that is a move in Pearson to supplement their existing language offerings. With some online self study, I would be surprised if that wasn't at least partially in response to companies like Busuu and Babel and Duolingo. And you know, others in the space that have gotten incredibly huge audiences through their self study apps. I think Pearson is saying this could be something we offer in conjunction with our

other offerings. We saw snap mobile, which is an administrative support platform for high school coaches and group leaders acquired two companies one is called eight to 18, which is for athletic directors. So that matches the high school coach. demographic is sort of adjacent demographic and a company called school see annex T, there might be school see next, which is a multi language translation and

messaging tool. So those seem like natural acquisitions to expand the capacity for a business that is all about creating the smooth administrative solutions, you can get translation in there and expand to athletic directors

from coaches. And then lastly, in India, we saw Indian Ed Tech unicorn upgrade, acquire Data Science Institute in Santa Fe, I may be getting that completely wrong in Sophie, which is in a $33 million deal, an equity stake and basically that's going to be a content acquisition deal I believe where they're basically trying to build out a you know, high quality data science arm of content, and rather than having to build it themselves, they acquire a proven one I'm from this company

Data Science Institute in Santa Fe. So I don't think any of these are super surprising. I'm a little surprised about the Pearson mondly. One, it seems I would love to hear the sort of thinking behind that, but I would guess it's about competing with existing b2c apps. But it's very interesting to see companies continue to merge and

expand their offerings. And, you know, we have a conversation coming up with cambium education, which is a great portfolio company that does exactly this has put together a whole set of companies to do a really wide variety of offerings. That's it for m&a.

entrepreneurs. So you know, I really do know firsthand how critical the work that we do is to student success. And I'll be honest, I would have been a better teacher, if I had access to some of the solutions that cambium provides a phobia called by I can absolutely say that same. And a big part of the motivation, when I made the jump from the classroom to business was that I was impatient to figure out how to have an impact

at scale. And, you know, I really thought that media and technology in a business setting was the best way to do that. And this was when people still rented VHS tapes in video rental

store fronts. So let's keep that in mind in terms of the technology we were talking about at the time, you know, since then, really, the speed of innovation has increased so exponentially, that you know, we've moved those of us in the space who are thinking about how to serve students and how to serve educators, you know, have moved from shipping DVDs and CD

ROMs. And you know, that kind of stuff to leveraging AI and machine learning at scale to provide personalized learning experiences for students and real time reporting for

educators. And in addition to all of that, I think some of the things that the response to the pandemic has ultimately forced accelerated, is things that we think about a lot in the space and many of your listeners do like the proliferation of devices in the classroom, necessary investments from an equity perspective, broadband, you know, the other thing that we don't talk about as much in the space as education providers, but I think is critically important is when all

of you know sort of the response to the pandemic lockdowns, remote learning, etc, happened, companies also went through real transformations to remote work. And that I think also has created greater empathy by technology providers, for customers, for administrators, for educators, for students, adopting and using technology either for the first time or for the first time at the scale and with the consistency, then some of what we've been doing for the

last few years as required. So, you know, before the pandemic, yes, we had lots of partially distributed and hybrid teams who moved immediately to fully remote and figuring out how to collaborate and engage, innovate effectively at scale, support customers effectively at scale fully remotely. That creates a lot of new understanding and empathy for what educators, administrators and students are having to go through and I think has led to a lot of increased innovation and a lot of

increased appreciation. I think it's also forced us to think very, very, very critically about the role of effective implementations and per Professional Learning and Development as part of success. When leveraging technology and education, you can have the greatest solution in the world.

But if you can't implement with fidelity and you can't support your users through that process, and they have a terrible experience with that, you have nothing, you're not solving any problem, you're not filling any need or closing a gap. And so I think the human side of implementation and efficacy has become also front and center, not only at cambium, but an issue throughout the industry that we hear leaders in education talking about either in good ways or in negative

ways. And we want to be sure that we keep that always as a Northstar and a top priority.

proposition, of course. But we think about that in terms of, are we doing the best job that can possibly be done at the job that we've been hired to do by our customer, the gap that we've been asked to fill or the need, we've been asked to address the problem that we've been asked to solve. And those specific needs, opportunities and challenges in

K 12 education, are unique. So while we think about what we have as a portfolio of offerings, and we think about being very intentional about where the greatest areas of need and where the biggest pain points are in education, when we think about our portfolio, each one of our solutions, is designed to be the best that it can be to do the best job that it's hired to do by our customers, which means we zero in on that focus, and we build all of our go to market, all of

our customer teams, customer facing teams and our product development teams around being the best at that need. So those products really are and those solutions are differentiated, and laser focused on being the best that they can be at that challenge. So we don't think about how do we balance the need, or the demands around this product? Or this solution? Or this product? Or this solution? We think about each what are we doing here? And are we doing the very best job at this thing that

we can be? Are we that trusted partner? Are we the subject matter expert at this, and that's how we think about that for each of our solutions. So we're not in a trade off position, we're gonna focus on this, we're gonna focus on that, we're always focusing on the problem that we're trying to solve for our customers.

budget. But I'm kind of connecting the dots from some of the things that you had said, one is like, you're coming from a customer centric rather than product centric standpoint of, okay, what are the diversity of needs of this customer? And then how do we pull the tools off the shelf to meet those needs? And that can from business standpoint, also drive up lifetime value? I'm also, you know, thinking about your earlier comment around services

and implementation. And it's not just the product itself, the kind of technical innovation but what's also the adaptive change, or how do we support them to grow through that and one of our last podcast guests said the dirty little secret of education is that many of these businesses require services business to

implement. So when you are thinking about product I can totally hear there's a laser focus on how are we the best and it sounds like from a sales standpoint, it's up portfolio are your sales go to market team really thinks about solution selling to the customer and pulling those off on customer success? Do you have like a holistic approach to when you

implement with a district? Do they kind of have one success team that then integrates all of the products into a unified rollout and implementation strategy? Or is it case by case? Like how do you manage that?

and scientists? Are we what's the value proposition that we're bringing, and each of those value propositions has a dedicated go to market team, because that's the whole thing about being a subject matter expert, that's the whole thing about being a trusted partner, is that you really need to know what you're talking about, you have to be a subject matter expert, and you have to be a trusted partner. And we know that the challenges around these things yet there are overlapping

challenges. But the needs and requirements are different and differentiated. Sometimes even the decision makers around these things are differentiated. So it's really important to us that we have dedicated go to market teams that are focused on solving a specific set of problems addressing a specific set of needs. And those teams are a combination of sales teams, Customer Success teams, implementation teams,

professional learning teams. And so that group, that differentiated group can ensure that our customers are completely successful implementing the solutions that are solving a problem or filling in our particular need. And to us, that is really the difference. That is how you create really great experiences and improving academic outcomes for students, is by being laser focused on that. And that's important. That's critical. And that's where scale does come in. Because, yep, that's

challenging. That's challenging to do if you don't have the scale to do it with fidelity and to do it. Well.

how do I grow? You're doing like a level of calculus here, where it's not just like, how does this product fit in with this customer? But how does it create a comprehensive support for the solution set or needs of the customer? So very, very interesting. Alex, why don't you wrap us up with our last question.

very widely distributed? Tools? Like cambium?

scale and maturity. And, you know, some pieces of advice that I think are consistent across scale maturity, having worked at all levels of maturity, everything from startups and jayvees to mature businesses at scale, I would say boiled down to a few simple things. The first is tenacity. You know, this space K 12 education in the US and around the world, but in the US in particular, is

fragmented. Right? We know that there's federal funding and federal legislation, but to the greater extent, most funding and most legislation that impacts education happens at the state level. And so that means we have to be excellent at solving a problem filling a need, creating a solution for educators and students where they are. And so that takes real tenacity, right? It takes real tenacity to learn all of those things, learn where the challenges and opportunities

are. And so if it's really meaningful to someone and this is something that they really want to do, boy You gotta have some grit. So that's true across whatever scale you're operating at. And then the second thing I would say that relates to that is, you also have to have tremendous empathy, tremendous empathy for your customers, and for your teams. You know, I think it's really critical to stop and think about the experience from your customers

perspective. And I mean, all stakeholders in your customer journey, so not only the decision maker, and the folks who get to decide how funding is spent, but also all of the stakeholders who are going to be tasked with implementing with

making something successful. So you really have to be thinking about UX and user experience all the way through the process, from the very first moment, that you're even having a conversation about the solution, through implementing and maintaining it as a successful solution that meets the objectives that it's set out to accomplish for your customer. And that in itself takes grit. Because there are so many different perspectives you need to take on board. And it matters

so tremendously. So at the same time, you also have to have empathy for your team's thinking about the challenges they're going through so that they have the emotional bandwidth and energy to be empathetic to

customers. And that brings me to the last point that I think is a piece of advice that travels across scale, which is Ally ship, you know, we really each need strong supportive allies of all kinds, even sometimes just to hear us out, when we're grappling with something and to think through something through us or to sponsor us or support us as we're going through this

journey. And I think one of the points that people miss, most often about ally ship and building great allies is that the best way to build great allies is to be one, which means you really have to invest in taking an interest in the challenges and opportunities that other people are experiencing, and figuring out how to support them what you can do, whether that's your customer, whether it's your internal teams, whether it's your colleagues, somebody else in the space, those things

matter. And those kinds of meaningful relationships, truly meaningful relationships, not just sort of a transactional kind of networking sort of scenario. But truly meaningful relationships are where some of the best work in the space gets done. And I can't emphasize that enough for people who are looking to make an impact in the space.