A few core tenets of my EdTech worldview:
- How I think about the largest education companies in the world:
- Duolingo: a gaming app. On average, doesn’t improve learning outcomes, but has great engagement, monetization, and brand.
- 2U Inc: a weak business model. Their sales tactic was built around them taking on all the risk and sharing upside with universities. Their success was the arbitrage between a university’s brand and its physical capacity, but the long term cost was the dilution of university brands online. Their model hinges on tenuous legal footing regarding Title IX funding, that was never put into law and could, at any point, be revoked. Inevitably, weak credentials will burn their business.
- Udemy/Coursera: a solid marketplace with suboptimal engagement. The drivers of their business will be creators/influencers with strong followings, who decide to add online courses to their followings. It will inevitably be dominated by a Pareto distribution, but real value in the form of professional advancement content will always drive revenue. However, value will always be maximized at the time of purchase, because courses alone will always suffer from weak completion rates.
- Kaboot!: fun tooling for engagement. Similar to a gaming company, although they focus on tools (picks and shovels) and let teachers and schools handle the content.
- Ivy League: the real winners. Age old brand, a system that allows the world’s best pricing system (find the absolute most that a family can pay), and a tax shielded hedge fund. Favored by the elite, they set the bar for societal expectation in the US and stand for the ideal of meritocracy. Because of their continued limited enrollment (the antithesis of every educational ideal about accessibility), they provide credentials at a social and professional level that are almost unrivaled at ages 18-22.
- Other universities: piggybacking off the success of the Ivies, but offering far less value. They feed off the arbitrage between demand of parents for university spots, and the limited capacity of the top tier schools. The lowest tier will continue to die, and the number of universities will dwindle very slowly.
- Khan Academy: incredibly valuable, but mostly to children that are already motivated. Khan Academy fills the gap of good explanations, but does not create the desire for them. Students who benefit the most from these explanations are brighter than average, with below average teaching resources.
- The buzzwords of an EdTech company: accessible, bite-sized content, personalized learning.
- The biggest driver of the educational market is the parental desire to ensure their child is taken care of. What exactly that looks like is defined socially, usually by those surrounding the parents and popular media.
- The lifecycle of an EdTech company:
- Create a cool product
- Sell the product to motivated parents and children
- Get better results than average
- Promote the fact that they have better results than average
- Market to the mass public
- Exit
- Get average results
- The failing of the EdTech world: idealism
- Consider the ideals held by most people in the education world: everyone deserves a chance, anyone can succeed with the right resources, and famously, “no child left behind.” Now, consider the fact that a lot of the world’s educational system is broken. Let us then imagine a world where those ideals are not true, and see what we can come up with. Effectively, the antithesis here would be that some people are naturally poised for success, and others aren’t. Basically, that education itself does not work on every child.
- What if we acknowledged that the dream of a parent is not for their kid to get into a good school, but just to get into a better school than their neighbor’s kid? Status approach.
- The biggest EdTech companies aren’t in EdTech: Zoom, PowerPoint, etc.
- Need founders who know their markets, but educators don’t come from backgrounds where they are practicing the muscle of business-building (as opposed to a PM or dev, etc.)