Welcome to Season Two of edtech insiders, where we talk to the most interesting thought leaders, founders, entrepreneurs, educators and investors driving the future of education technology. I'm your host, Alex Sarlin, an edtech veteran with over 10 years of experience at the top edtech company.
Hello, everybody, it is the weekend edtech. It is the week of March 26. We are doing amazing things in education. We are doing amazing things in tech. We put them all together in the weekend ed tech. I'm Ben Cornell, along with my co host, Alex Sarlin. Lots going on in the world. Alex, tell him what's going on with Ed Tech insiders.
So on the long form interviews, we've been doing a ton of interesting interviews. We have a few coming up really soon. One is with Jess Weems Tebow, who is a classroom educator turned ed tech recruiter works with hire edu one of the leading ad tech recruitment firms. Really interesting insights about the EdTech talent landscape. We also just talked to obey. And I'm from Cabo school and Simba who are the last two GSB Cup winners about everything they're doing with their work and what they think about the upcoming GSB competition, which is going to be really a good one. And speaking of ASU GSB tell them about some of the events we have planned Ben?
Well, first in San Francisco this Thursday, March 30. We have our ed tech Bay Area, happy hour. That's at driftwood pub in Soma area. So please come out San Francisco Bay Area, folks. And then on April 17. In San Diego, along the water near the aircraft carrier, we have from six to 8pm. It's really an edtech. Ai social, we're bringing together incredible founders from edtech AI startups, along with investors, community members, all in dialogue, community and discussion. It's the brigand tiene, it's from six to 8pm signups will be limited. So we are going to just for you, listener, put the sign up in the shownotes. Please sign up because after we get to 100 people, we are cutting it off. So come out to that event, if you happen to be at ASU GSB April 17. All right, we're gonna jump in no better place to start than the AIIB. Big News. This week, Google launching Bard, we also had Adobe, announcing a generative AI product, we had Microsoft launching a new generative AI product, the kind of quote unquote, notion killer, creative AI got a huge funding round from Andreessen. It is happening so fast, it's almost impossible to take in all of the news. Let's start with the Google bardzo, I signed up and I was on the waitlist for something like 30 minutes, and then I was right in there. Immediately, I started prompting Google barred. And immediately Google bar started promising things that Google bar could not deliver it I was like, what are the top five books on AI? Can you order these from Amazon for me? And it's like, Sure, give me your username, your credit card, all your information, which I you know, I get some fake information. And then it's like, Oops, sorry, I'm a large language model. I can't really do that. And I'm like, why it says, I was just trying to make you happy. So clearly, Google did not want to release this. Clearly, there's the caveats on this website are, you know, would make lawyers hurt. But you can see that they are in the AI wars, the race is on and has to start and they have to start somewhere. What's your take on all of this both writ large from the big tech standpoint, but also what it means for ed tech space,
it is no doubt that all of these incredibly big tech companies are arguably over their skis but you know, purposefully over their skis trying to get ahead of the curve. We saw meta announced a top level AI group just a few weeks ago, where they're sort of shifting their whole internal org around to focus on AI, we saw Google posed a red alert. As soon as Microsoft and an open AI announced chat GBT basically saying, We've got to expedite our release, which is why you have Google barred coming out. Pretty much, you know, unfinished, as you just said, then Adobe has been trying to get into this space for quite a while because they know that that the visual design space and web design and all of these things are one of the first things that that could be disruptive evil in AI. So they're trying to build it in. It's an amazing moment, I think for tech, you know, and you're seeing sort of the lack of a better word, the sort of capitalist version of AI where it's purely companies, there's no regulation to speak of this. No government, we've thought about what the heck is happening and companies are getting less and less concerned about play. Hang Out experiences that are pretty weird. I mean, we you know, anybody who's read that Kevin Roose article about basically getting Bing to fall in love with, with him as a journalist or you know what you just said, Ben about Google bar being like, oh, I want to make you happy. So I'm going to tell you I can do things I can't quite do. This is not what we usually see with big tech product launches, but they're all really going as fast as they can, because they do not want to be left behind. And I think the question that begs is, what does that mean for Ed Tech? Can we, you know, should we morally be following that lead and trying to sort of rush in? Or should we be a little more careful? What do you think about what this big tech move means for Ed Tech?
Yeah, I think the three, you know, stepping back, big picture, the three big headlines are one, everyone is integrating AI super quickly. So there's a startup versus big company question, which is, will the AI revolution power new startups and new winners? Or is this actually going to be electrifying the big dawgs with a pace that we haven't really seen from traditional incumbents? You know, this case of Google moving this fast? We haven't seen this in like, 20 years from Google. So what will the EdTech big dogs do? What will the big publishers what will curriculum associates do? What will the universities do? Will they be fast to adopt AI? And will we see you know, AI, integrations, chatbots, you know, personalized assistance in the big education platforms by this fall? Because if so, that will really potentially limit the startup upside. The second question is really around big tech in edtech. So if you're using chat, GBT, or you're using Bard, what are the risks to you in education context, and specifically for kids 18. And under, there are some ways in which there's questionable liability here, around the product, putting out you know, racist, racist speech, misinformation, potentially, in chat GPT was actually shut down this week for like, six hours, because there was a data breach. And they were using some open source software where they, you know, to get it out to market fast with the beta, they're using really, really lightweight tools. And I have not seen I don't know, if you have, I've never seen a warning, if you're under 18, don't use this. Have you seen that?
I have not seen it. And, you know, one thing that caught my eye it related to that this week was there's a report about AI in education that came out from the industry association, Kosan. That's the Consortium for school network. And one of the things that they called out which, you know, I think we've discussed almost every week on the pod, but maybe not quite looked at it through this lens is, you know, AI tech is built for commercial purposes. They're not built for education environments, even when you have great, you know, partnerships, like open AI working with Khan and Duolingo. At heart, these AI technologies are not designed for compliance. They're not designed for privacy, they're not designed with COPPA and FERPA in mind, they're not necessarily designed for further, you know, the safest data practices, because what they're designed for is speed. They're designed to get out there be as smart as they can impress everybody get press get excited, and collect data, you know, collect their machine learning models, so they want to collect data from from people and train their models more and more on that as well. So, you know, in some ways, that's incredibly exciting, because it moves so fast. In another, it creates this gap, like you're saying, but it creates this gap where children are not particularly being, you know, thought about or protected as users, school environments. And some of the sort of regulations that have been put in place are just totally by the wayside right now. And I think the tech is moving so fast, nobody knows what would happen if you know, if a student in a school used chat GPT to access something really strange. And they were to, you know, get in trouble because of it or learn how to do something, you know, illegal? Who's responsible for that? Is it Google and Microsoft? Is it the school? Is that the administration? Is it the school board? Is it the parent? There's no answers to this yet. And I mean, again, I'm always trying to be positive about this. I don't want to, you know, screech the brakes at all, but it is definitely interesting how the speed of commercial tech and it sort of steamrolling any of the regulations and privacy things that school might be very interested in.
Yeah, well, and we've seen that New York City has lifted the ban on chat GBT. And so schools are feeling the pressure to open up a little bit and understand that there's a new world and maybe there's a new way of teaching. But I do think, you know, my third point is for anyone doing edtech products that leverage AI This idea of quick to the market open beta is fraught with risks. Because if you know Bard or Chechi Beatty has hallucination, you know, that's a big tech company, they've kind of caveated the heck out of it. But if you're a startup in ad tech, you have potentially, you know, legal issue in the space that is going to make everyone from university buyers to K 12. Buyers, too often parent buyers stay far, far away. And so there's almost a double standard here this way, sometimes I get frustrated that Google is largest edtech company in the world. Because when Google does things that are commercially viable people accept it and understand, you know, we're in a different use case here. But when you're an edtech company, you have one big Miss hit, and you become radioactive. I do think, like another thing I'm wrestling with is, so coming back to that first point around it being electricity for everyone. I'm interested in the b2c versus b2b models of a AI startups right now, the betta sees they're going fast to the market, you're seeing an explosion of tech, it's overwhelming for the consumer, a few of them are getting traction, I even got an SOS email just yesterday from it's text based AI. So it's all on iMessage. But they're spending so much money because the utilization of the tax, they get charged for tax, they get charged for the queries to the LLM, you know their data usage it, you know, they're experiencing catalytic growth. And yet they are not capitalized to withstand that kind of user surge, I'm seeing a real challenge. And and of course, they don't charge because everything all of this stuff is open, beta free. So I do actually see like an avenue here in edtech. In particular, that is really b2b. And that could be b2b, to other companies. So these large incumbents saying, Hey, we're going to be too slow. Let's find the product team that can help us accelerate our AI capabilities. But I could also see it being with institutional sales, where, you know, okay, our admissions process, or, you know, freshman year, lets everyone get it like a chatbot. Those kinds of sales tend to be really good with lifetime value, they tend to be challenging on the customer acquisition. But if you can get a couple of those things going, man, you're gonna have a really solid business. And you can probably do the things to reduce the risk of hallucination that a scrappy ed tech go to market fast consumer play wouldn't be able to mitigate or that alert language model, because they're just so large, haven't been able to mitigate. So very interesting folks who are listening. What's your feedback? What are you seeing? Are you seeing an explosion in b2c? Are you seeing b2b? Are you seeing? Is it going to be big companies that when will it be nascent startups a little bit of all above? I mean, and then if you're an educator, how do you weigh this decision of, you know, I've got eighth graders? Do I have them use chat GPT for their homework? Or do I not given that there might be a risk that it crosses some lines,
what it makes me all think of, you know, you've used the metaphor a few times, which I think is really powerful of you know, AI is the new electricity in this space, right? It's, it fuels all these other things, it's the underlying power. If you extend that metaphor out to this moment, it's almost like all of these big companies are creating these enormous electricity generators, they're like, here's open AI, everybody can connect to it, come on and use the API, but you get charged a little bit every time. And so what they're doing is, you know, Freemium or open beta models, letting everybody liked their houses, and then charging the company for the electricity. And that's not exactly a sustainable model. The thing that I think we need an edtech right now is, like, forgive my lack of actually understanding about electrical engineering, but I would say like, transformers, right, it's the middle layer. It's something that can take that raw electricity, and turn it into a context that's actually safe to use in environments like schools where there's a whole other set of concerns and where, as you said, an ad tech company that makes a mistake that can be racist or illegal or cause a student to self harm, can go down real fast. And we need that middle layer. Somebody needs to be thinking about how the AI can work inside schools in a safe, private, compliant way.
Then analogy, we could probably have another podcast just analogizing on the electricity. I think, you know, what's the right voltage for the different use cases? And then what is what is truly needed? I mean, I think one of the things we're seeing with generative AI is it can do so much what are the have targeted use cases where it can actually do something narrow and focus and really add value in edtech. There are so many great use cases like that. And I think this tuning or training, what you'd like him to as the, you know, transformer at the electrical plant, that tuning and training may be the highest value add portion of the staff. Coming back to the analogy though to I think there's also a question of equity. And this like, you know, the work of Progress Administration electrified all the rural areas, who's making sure that the AI is serving all kids, and not just the people who can pay 30 bucks a month for the AI assistant? I think that question is coming soon. Because like you said, the current, everybody gets free bite at the apple that's not going to be sustainable long term. And so we need to have our ecosystem thinking about, you know, what are the sustainable paid model so that every child or every adult, regardless of their ability to pay or their income can get the benefits of AI electrification. While we covered a lot. I feel like, we need to take a breath here, but we can't, there's still so much going on. One of the reasons I love the our team work here is you are such an expert in OEMs, higher ed OEMs product, everything. But a massive move that I feel like is just way under the radar for most people is Pearson selling their OPM. It's the sea of regulation amidst you know, rising and falling of opium stocks. Tell us more about what happened and what your take.
Yeah, well, I'm flattered by my contention that I am an opium expert. I think I'm a dilettante at best, but I have been close to it. One person who is 100% opium expert is Phil Hill, the EdTech. You know, reporter has been covering this for years. And he broke this news, I think this week. But it's been in a number of different outlets at this point, which is that Pearson which was one of the very first real breakthrough online program management providers, especially with their partnership with Arizona State, which was you know, over 10 years ago, now, they were once a big leader in the in the space. And now I would imagine it's partially because of the regulation. It's also because of a huge amount of increased competition is now selling its OPM business to a private equity firm. And I did a little double take when I was reading about this private equity firm because that most of their brands are fashion brands, they run dry bar and intermix and Playtex. And SAS soon I did not immediately see the connection there between education but they have a few different types of businesses. Basically, this is a deal with Pearson saying we don't really see much went much upside with this side of the business at this point. See if you can do anything with it. See if you can turn it around and resell it or make it work. We'll get some of the proceeds, if it does, but I think the real story here is that the opium market has shifted enormously. The biggest player in it at this point, I believe is edX you know, to you having purchased edX to you had bought trilogy, which is a big Oh pm and then to you about edX, which has a lot of OPM, that's a $960 million revenue company combined, of all the different online program management's there, that's pretty good. Coursera now is doing over 500 million in revenue from their OPM while he is over 200 million. I think in that in that space, Pearson is saying, we don't really want to compete with these companies for a few different reasons. It's a really interesting moment, because the regulation that we've been talking about on the pod is it was slightly paused. But it's still pretty likely to come down and fall on the opium market, there was a great Hechinger Report, article this week, really interesting one, basically, you know, it's called when universities slap their names on for profit coding boot camps. And it's, that's obviously a sort of actively derogatory way to look at it. But, you know, it's a very common practice now, for universities to basically use white labeled boot camps. That's what they mean by slap their names, to expand their offerings. And basically, you can have the northwestern cybersecurity boot camp, but really, the cybersecurity boot camp is provided by an OPM, and almost all the services or for the RPM, so we're in this wacky world where OPM is took off. And only now are people starting to say, Okay, well, this is a big business, but it also is a little bit of a wild west business where these universities that are publicly funded in many ways are now doing things with for profit companies. And Pearson I think is just saying, Okay, this has not been good for us for a while, we're just gonna, we're just gonna step away, we're out of this out of this world. And then the question is, is this you know, they were still one of the relatively big players in the space. Now the question is, you know, what is the future of OPM is this sort of backlash moment can actually stick are the regulations can actually really bite into their ability to spread and profit or is this just a little bit of a bump in the road where people are just noticing finally that this thing is happening. And it's a little bit of just a culling of the herd, I think time will tell, I would guess, frankly, this might be a problematic moment for OEMs, I think that they are going to have to be really careful. So places like edX trilogy, places like thrive, dx full stack Academy, Flatiron School, which had been going after university partnerships, I think they're going to, I'm sure they're keeping their ear very much to the ground here about whether this regulation is going to really cause a problem. So few different things going on there. But I'm curious what you what you think about this world. And I know that opioids are not your 100%, bread and butter, but I'm curious what you think of this deal. This 27% of adjusted EBITA for the next six years. And then if they sell it, Pearson gets a profit, like, what is this deal look like to you? Great. So
wearing my finance hat, let's look at the deal itself. And then let's step back to look at the opium market. So the deal itself is structured in kind of a classic urn out fashion where you sell for, you know, $1, but you get potential upside. And the idea is to take a cost center or something that is really dragging down your earnings or profits, spin it out. And basically, you limit your downside, because it could just be worth zero. But you still have some potential for upside. I'm just shocked because Pearson really had the lead. And all the things you just said about that marketplace just a few years ago, now you're seeing fire sales. And the fact that it's this particular private equity firm and not a classic education and private equity firm also speaks volumes, because you know, those education private equity firms, they're well capitalized so they could have, they could have bought it for $1 and then put money into it. They are not biting at this apple. And it suggests that this is a little bit of a Hail Mary here. I would also say that earnouts are interesting, because there's a lot you can do to manipulate the payouts, right? So when it's talking about adjusted EBIT, da, what goes into adjustments? Like do you are all expenses, all capital expenditures rolled into there, where you bring down the earnings, and what is depreciation and amortization versus what is actually an operating costs. So there's a lot of risk in the deal. I'm sure they had plenty of lawyers on that. I bought a company one time for $1, we did have like a rev share agreement. And it ended up being a win win because the distraction from the parent company was low. And the revenue we were bringing in, we immediately got a great customer base. But it definitely was, you know, that deal was more like a, let's just squeeze the like earnings out of this thing and replace it over time with our products. This is not something you do if you think you're you've got an ascendant market leader. Now on the OPM space itself, what's really interesting is, you know, Pearson still has a market cap over 7 billion, they are still one of the most valuable companies in education today and in history, and the keep selling off these pieces, they sold off their curriculum business several years ago. So their Indian arm we just covered in the last episode was just sold off. So in a way, they have not shown an ability to keep a lead and remain innovative. But they have shown an ability to cut off different parts of the body to kind of keep the profitability engine going for the company. I think that that's a that's a tough place to be in if you're in education and edtech. But it does show that they are more resilient. If you look at Coursera. their market cap is like 1.5 billion 1.2 billion. And you mentioned they've got real revenues, but they're getting a pretty low multiple on those revenues. Two years ago, they were trading at 50 bucks a share. Now they're I think around 10 bucks, if not a little bit lower. So overall, the market is down on OPM, and I think the headline here could be like, what's up with Pearson? I think but the truth is, it's this OPM market is really getting the squeeze. I will also just say for those who are thinking about, you know, where are the winners, the boot camps that are specializing in, you know, take this course with job guarantee, I think that that sub sector is still doing well. It's the university partnerships, OPM, that's really, you know, the struggling part of that segment.
It's certainly under scrutiny. I mean, when I read what Pearson is doing here, it seems smart to me. I mean, I would say that when you say you know, cutting off parts of the body to preserve the profitability, you know, Pearson has been a behemoth. It's been a big company with lots of different divisions for a long time. And I don't know I mean, it feels like the decisions these sort of bow on decisions that are being made internally to get rid of some Hall segments, which may be getting outdated and focus on others, I'm pretty excited about it for them. I mean, we mentioned last night at the beginning of the year that Pearson was one of the only edtech companies over this last year, that stock actually went up that actually had, you know, positive results in this crazy pandemic, you know, post pandemic bust. I don't think it's a coincidence that they're now saying, okay, you know, we're going to, we're going to streamline and focus on certain elements of the business, I know, their assessment, business is a big part of things, and that are really safe idea, you know, for lack of a better word from some of the chaos of the ad tech world, but we'll see how it all pans out. So speaking of post pandemic, Ben, there's some interesting news coming out this week about post pandemic, k 12. Landscape, what's going on there,
you know, we are now in a new era in K 12. Around, you know, what, sticking from the COVID era and what's not sticking. And I think there's a really great article in K 12 Dive where they're talking about the elements that are going to stay with us, and then the elements that are kind of winding down. I do also want to caution that there's a narrative here, which is around what products or tools solve needs are in COVID, that are now becoming a part of the future. Another is the kind of attendance patterns that we saw during COVID. And what's continuing, and the third is the funding, and you know the answer. And so there is a little bit of a conflation of those things, it may be that your attendance down in funding is gone. So this particular technology is going away, even though the kind of use case is really strong. In K 12 Dive just to give the high level summary, you know, they're looking at software for digital oversight, collaboration solutions for virtual environments, strengthen security and safety, device management solutions, and online instructional resources. What strikes me about that list is these aren't mainly infrastructure type tools, they are all about enabling the instruction, even like the virtual learning ones, they're tools that have to do with classroom management, you know, affecting the kind of engagement or ability to roll out curriculum in a virtual environment. But it is not about the pedagogy. And so really, I think we've seen that pedagogy has snapped back largely to pre pandemic pedagogy, which for those of us who believe in, you know, future forward learning competency based project experiential, it's concerning, right. But in terms of the tooling, I think this idea that we can deliver things more efficiently, we can deliver things anytime, anywhere, that's really what's sticking. The other big element of this story is the tutoring space, tutoring kind of had its wave and moment. And now the kind of calling is happening. Esser was this wave of funding. And, you know, imagine like how waves go, you get your, you get a set of waves. So the first set comes in, it's like s or funding washes over, and then it goes back out to sea. And then Wave Two is like, okay, implementation of all these tutoring tools and programs. And the third wave that's coming in, is the far more destructive wave. It's the one that's basically coming in and just cleaning out the shoreline of everything else. And so I think it's causing a lot of companies to pivot rethink, expand, diversify. Paper is probably our headline use case here, you know, articles about New Mexico canceling the contract, there's a number of schools where the utilization never reached the threshold. So there's almost like a rebalancing of the contract size. And we see them in the m&a space kind of expanding their repertoire to basically being a full service student support system, rather than just tutoring. But, you know, whenever the wave comes in, and it washes away, it washes away some necessary things that needed to go away, and it washes away some good things. And we're seeing high dosage tutoring organizations that have had impeccable results, also getting caught up in the churn. So we're not really out of the pandemic yet actually doing this podcast and three of my family members have COVID. But we are in the kind of post pandemic reality. And I think the takeaway is that it wasn't as transformational a moment as we had hoped. And maybe, I mean, this is often isn't me, maybe the AI moment that we're in is actually the transformational game changer, rather than the kind of pure COVID You know, disruption. As you hear all of that, how do you make sense of it?
Yeah. Yeah, no, I think that was a fantastic sort of around the world and the landscape right now in K 12. One of the things that really stood out to me this week was an article in the 74 million by Stanford GSC. Professor Thomas D. Basically, he's looking into where did the students, the 1.2 million students who left public schools during the pandemic, where did they go, and what it's showing is that a significant number of them went to homeschooling. But he basically found that for every additional student enrolled in private school over the last two years, you know, almost two of them entered the homeschooling environment, rather than private school. So I think that, you know, when you look at the fallout, as you just did, then of what it's going to be, in this post pandemic era for edtech, sadly, I do think there's been a little bit of a snapback pedagogically, at least at a high level, from the district level, I bet a lot of teachers are continuing to use tech in a way that they never have, before the pandemic, I'm pretty confident in that. But I think in terms of the school buying, they threw money in every direction, right, they threw the rest of funding, they did tutoring, they, you know, contracts with all sorts of new tech companies, they did all these free contracts with their tech companies during the pandemic, and then, you know, had to decide which to keep, and there's all sorts of dynamics there. But I think that we might look back and the legacy of the pandemic, you know, might actually be that, you know, people really started to question the standard school system and what it's doing, and a lot of students were pulled out of schools, it might, you know, this whole homeschooling, you know, two or 3.0 is getting the momentum, and the infrastructure, you know, we shouldn't totally dismiss the value of the infrastructure here, because the infrastructure does allow additional, you know, the safety, compliance security infrastructure that schools are keeping in place post pandemic potentially allows them to continue to use other technologies in a safe, compliant way. So I don't know, it's a little bit of a, you know, give with one hand takeaway with the other. But I'm so you know, optimistic that we will look back at this moment as something of an inflection point, it's just a little bit of a question as to it doesn't seem like it was the inflection point where school became project based, or school became experiential, or school became, you know, collaborative or school became social, emotional, or any of those things. I don't think this it quite adds up to that. But I think it might be a moment where schools got with the program, and realize they have to be very smart and be able to deliver learning in an online environment at the drop of a hat. And that might still be a meaningful thing. Yeah, I agree.
And, you know, I think it does segue well, to higher ed, and lifelong learning workforce learning. We're seeing a boom right now in the idea of skills development, skill based learning. And I wish it was more pedagogically innovative in K 12. But we are seeing that the upskilling space is leaning in hard on this. Can you talk to us a little bit about what we're seeing in the news this week with a credible, as well as the Burning Glass report?
Yeah, a bunch of interesting things happening at the same time in the sort of skills base for workplace and skills hiring space. One was a credible, which is one of the leaders in certification for ad tech basically allows people to create credentials for all sorts of different learning activities, just announced a skills development pathway plan that's basically trying to help people both gain and showcase their skill sets in new ways, which is, you know, they're following a big trend here, Burning Glass, which has been for a long time, one of the big leaders in being able to sort of break down the skill sets in work, you know, They've analyzed hundreds of millions of job postings and pull together all of these different skills aligned to different jobs, put out a really interesting report, we will link to in the show notes, basically saying, you know, there are a few different skill sets that are really fast growing and really high demand. The four they call are particularly our AI and ML, cloud computing, social media and product management. And they basically say, if you start breaking these down into their composite skills, and then looking at what they're doing for the workplace, there's a huge demand, and that demand is getting filled by all sorts of things. So for example, they give a great example of data analysis skills. In 2011. There were about 300,000 job posts seeking data analysis skills in 17 different occupations, and that sounds decent 10 years later, four times as many jobs in five times as many occupations. So the same skills are now used in way more occupations that makes them in way more jobs. And if you follow the skill as the unit, it creates a very different landscape of what you know the workforce looks like, which is exciting. Last headline there is there was a really interesting, global survey from UNICEF, and NET app of students and basically said that they asked students about their skills and students about it If they feel like school is preparing them for this skills, basically they said that about half of the students said that the purpose of school should be gaining practical skills for the real world. Half of the students see these 37,000 students see that skills are what school is even about. And they think it's education is not doing enough of that. They say that skills like programming and coding 61% think they're not learning enough. 60% feel like they're not getting financial literacy skills. 55% say they're not getting data analysis skills. So there's a this call from both the workforce side and the students side to get really practical and teach the skills of the future. And I just think this is a way of that is has not yet crusted, because it hasn't made its way into the actual school systems into universities. But it's coming from every angle, especially from the workforce. And there's this feeling of the unit of hiring has to be skills, it should not be degrees, or credentials or experience. It should be practical skills, which opens up all of these alternative pathways. It's a really exciting moment. And I think it's gaining a lot of momentum right now. What do you think that?
Yeah, I mean, on top of that, I'm just cross referencing with what we're seeing in Europe around, can AI be used to assess job skills? Can it not like where's that bias, this ability to assess skills has been a huge barrier. And people have been using, you know, grade cards and your university, almost as an inference of you being a skilled employee. But now AI can actually create low cost abilities to measure your skills. Just last week, a company called Code Wars, which is a game based Skill Assessment company, where you're basically playing these games that test your coding and help you level up that's connected with the job hiring platform that says basically, you're ready for this level of coding. They were just acquired. So I think there's a lot going on in this space. But there's also fear, who gets to assess the skills, how will they assess the skills, and, you know, the cynical view often is that, of course, people in power will use this skill based way of assessment to like, further capture more market power. I'm especially interested in the overlap with labor unions, one because labor unions typically have resisted new assessments of quality. But this could actually be the moment for labor unions to lean in and say, we could be a force for upskilling, our employees, our labor union members, and essentially capture more and more market share. Because as a labor union, you probably are best positioned to be an honest arbiter of skill levels. So just think of like, you know, electrician unions or machinists unions, where they do actually have assessments to be formally apart and to like, reach certain status within the union. So as we think about basically everything that you said, I'm interested in the kind of institutions that may or may not lean in to this. And it comes back to this idea that we really are in this inflection point moment. And many of the things that just from a technical or cost standpoint were not possible before are suddenly possible. So now, how do we deal with that as social institutions? Let's do our last topic. And we'll keep it brief because this could be a PhD dissertation, one of our other social constructs is really the idea of meritocracy and, you know, achievement and climbing the economic ladder, through education and education as a vehicle to the middle class. I think an article that we had this week and correct me if I'm wrong. This is called the myth of education as equalizer how human capital, Trump's social democracy by John Shelton, a professor at the University of Wisconsin Green Bay, it's Cornell University Press. You can have your favorite AI tool, right a synthesis of it, but ultimately, the gist is coming out of World War Two, this idea of the GI Bill and the path of education to a middle class was really touted by especially by Democrats who really thought that education could be this social climb, you know, ladder, pre World War Two labor unions were really the primary publicly viewed vehicle for paths to the middle class. And you know, that's basically why we had all of this socialist uprising and the Red Scare and all that kind of stuff. You In the 20s, and 30s, so this new narrative really conformed well to, you know, everybody got some sort of skills and training in the military. They're all coming back. It just happened to coincide with, you know, the industrial boom, that we experienced post war. But ultimately, the data does not support the conclusion that education is this great equalizer. And you know, first, I think that the history here is just fascinating. The conclusion is really around where we are today is the myth still exists, but public investment in higher education has gone down, whereas private tuition costs have gone up. And so the ROI, whether you believe in the myth, or whether you don't believe in the myth, we've lost the return on investment on an individual level for education as a means to the middle class. And I think that that conclusion is actually something that's been echoed on countless stories that we've been covering this year. And so you know, what's great about this? Is it contextualize it in the arc. I am concerned about like, the kind of implications on what do labor unions have to do with this, because having been part of the labor union myself, and having done negotiations with labor unions as management, I have not necessarily seen those groups as nimble and progressive, as advocates for their employees and the growth of their employees as one would have hoped. But it does basically push us to a blank slate view, where actually, every single education experience needs to be held to account for its return on investment for the individual. So clearly, something we could talk about forever. We have been talking about it since we started the podcast, but this new kind of entry into the space, what does it mean? And how is it resonating with you, Alan?
Yeah, that's a great synopsis. So there's an Inside Higher Ed article this week, that's a book review of this John Shelton book about the education myth. And I think, you know, this really is an interesting argument that is being made. And it basically is looking at Lyndon Johnson, who was a school teacher, and really, really invested in education as a transformational move in the 60s in the US. And then looking at people like Obama and Bill Clinton, who are both, you know, children of single parents who got incredibly good education. Bill Clinton was a Rhodes Scholar, Barack Obama was at, you know, law school, and basically got this springboard into the, you know, Global Elite. And there's this sort of Democratic Party claim that education is the answer, retraining, education, all of these things are the way to take displaced workers and keep them in the mix in the economy. And according to this author, it actually is a little bit of a sleight of hand, because it allows both parties to pursue trade deals or, you know, basically to ignore unions or to take labor overseas and to sort of not do other sociological and economic innovations to help workers because they can always just say, education is the answer retraining is the answer, we're going to invest in retraining programs, and as you say, then that it just gets more and more expensive. And it's just it's a really, as you say, this is a PhD thesis, this could be the source of many, many books, but I think it's relevant to all of us in edtech, for a couple of, you know, important reasons, which is that we are in this really, I think, pretty unusual moment in terms of the history of education, where the claim that the sort of accepted wisdom that what governments can do to make their workforce have basically survive, you know, to have enough jobs and have enough money to work. It's been the accepted wisdom has been, you send as many people as you can to college, do retraining programs have alternative credential programs. It's all through the education lens. And I think this is saying, maybe saying that education is the answer, even though it seems like a very, you know, anodized and safe and exciting and, you know, obvious self evident political stance, maybe it's actually a little bit of a canard, it's a little bit of a red herring and that education, as the answer to all problems, hides a lot of other things that might be being done. And to your point, but I don't know if you know, going back directly to labor unions is the answer. But I think all of us in edtech could really benefit from sort of zooming out and looking at the history of of higher education, looking at the history of workforce training, and starting to say where do we want to put our chips in terms of the philosophy about what education can and can do instead of just taking as a given that more education is better college is better than no college? It's all about just you know, getting people on that pathway like the Obamas from you know, through Columbia through a Yale Law School, like, there's been this idea that that's what everybody's shooting for. And I think that's under fire in a way it hasn't been in a long time. I think everybody knows about it.
I mean, I will say there's like an obvious contrast here on preschool education, which all of the research shows, he's incredibly good. Invest, right. And so what also is interesting is, as we think about different segments of the education journey, which ones are like, clearly high ROI, and which ones are, you know, underwater in terms of the ROI, I would also say, you know, work in so many different fronts, we're coming to grips with the fact that we are an individualistic society and other societies are collective, or collectivistic. So when you see the kind of protests in France around changing the retirement age, or you look at the policies of China around AI, immediately, you can see that there is a culture and ethos around, everyone does better when everyone looks out for everyone else. And this kind of collective good, whereas the US we love the exceptional story, like exceptionalism is kind of baked into the DNA of how we think about these things. And so if education can open a path for Bill Clinton, or Barack Obama, it may not open a path for everyone or the average person, but that that path could be there for you. Or, you know, we love our billionaires, like in other countries, we would tax the heck out of anyone making these kinds of ungodly profits. But in the US, it's really like, that could be you, like Jeff Bezos could be you one day. And so there is this, you know, reckoning culturally that we have to do and with edtech tools, like, are we helping each individual reach their individual full potential? Or are we lifting the collective potential with our tools and products and our strategies and approaches its attention. And I would just say, you know, as an educator, myself, you want all of your students to succeed, and you want each one to reach their full height, you know, so it's lifting the floor. And, you know, lifting the ceiling,
one tiny last point that I think is so relevant, you're mentioning Amazon and Jeff Bezos. And I think that's such an interesting example. Right? At this moment, Amazon is investing huge amounts of money in its Career Choice Program in worker education. It's also fighting labor unions, you know, tooth and nail, and you can just see it in real time. That idea that you can use education as a way to sort of distract from other reforms, even though we all believe in education. So I just had to call that out because it's just right there for the taping.
Yeah, totally. All right. Well, we've reached the point of the show where we're going to do our rundown of deals and financing. We didn't have a guest today. There are so many great guests out there. By the way, if you've got someone who you think should be on the show, please let us know. Alex, why don't you kick us off? Yeah,
lots of funding. Some of these are actually from last week because we didn't go through the funding last week, but lots of amazing things. So we see bonus Lee, a boulder based company that's about employees, being able to award each other things for engagement and satisfaction. It's basically a workforce play that combines education and peer to peer recognition raised $19 million. This week, collider AI that's based in the Bay Area in Cupertino just got $10 million. That's it's about listen to this one, helping increase the number of companies to drop the college degree from their hiring requirements and hire for skill instead. Speaking of skills based hiring $10 million for glider AI, all mentor does video based courses for students in the Middle East. That's a Dubai based company that's always really interesting to see stuff happening in the Middle East. And we also saw some other movement in that space. We saw music company trolla Raise $8 million for online music schools. Again, interesting related to the homeschooling market, Dutch startup ag five raise 6 million euros for skills management, head race. It's an Austin based company that's all about placement opportunities for employers and basically creating independent recruiting businesses that it's a job play combined with education $6 million up duo in SF doing peer to peer feedback on the enterprise market raising $4 million and one that stood out to me a lot. MCSA that's ma Q S A D, got $2.8 million seed funding round after breaking through a million users. That's one of the biggest rounds in Pakistan that we've ever seen an entire I think it might be the biggest round in Pakistani edtech in history. So you just hear that there's stuff happening in the US but there's also Dubai, the Netherlands and Pakistan. But you know, it's cool to see that how many of these are back in North America, frankly, because there's some bigger rounds starting to happen in the US. And I'm excited that it feels like maybe there's some momentum. Ben, do you want to talk us through a couple of mergers? Or are there any of these that stand out for you?
Yeah, lots happening on the funding side. And also good to see that our ad tech winter is warming up just a little bit. On the merger side, we saw quickly, I believe I'm pronouncing that right, it could be quietly joining parchment. And the play here is around student mobility with courses and programs across different universities. So the idea that you could dual enroll, or you could enroll in one school and then transfer those credits to another. That's the play here and this is out of Scottsdale, Arizona. So you know, there's ASU people there, University of Phoenix people there, it's all part of that Arizona higher ed ecosystem. We also saw a vital source, which is a huge provider of publishing digital publishing bookshelf is their main product that's used by over 18 million learners per year, they have acquired academia most academia is basically a cost effective course materials delivery solution. So the idea is really around how to deliver course materials in a far far lower cost way they manage supply chain. This can be used for both digital books, but also really the target here is around campus store. So the ability to deliver printed materials or other course materials, as well as campus goods to stores really interesting, this digital physical play. And the last is Carnegie learning. They announced the acquisition of Claris Corporation. It's a community college marketing platform. Carnegie is really now becoming vertically integrated across K 12. and higher ed and this community college set is a really valuable space. And the community college marketing has become, you know, a key skill that they're looking to double down on to reduce customer acquisition cost. Lots going on in the world, both on the funding and m&a. Lots going on. We covered AI, we covered post COVID Ad Tech, we cover skills development and education as a path to the middle class and the OPMs. So we've been really around the world. Alex, thanks so much for the show today. Thank you listener for tuning in. Because if it happens in ed tech, you'll hear about it on the weekend Ed Tech. Thanks for joining.
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