The end of the yellow brick road

In his novel, The Marvelous Land of Oz, Frank Baum famously said “everything has to come to an end, sometime” and so it does. Today we are announcing that, in conjunction with the conclusion of cohort #5, our co.lab program will come to an end.

When we started operating co.lab in Sept 2013, it was conceived as a non-for-profit partnership between NewSchools Venture Fund and Zynga.org to support startups at the intersection of games and learning. This growing and promising sub-market of the edtech ecosystem has a number of specific challenges and opportunities that we believed deserved a dedicated program with hands-on support. Our goal in starting co.lab was to help the ecosystem grow and prosper. We are believers in the power of games and their ability to provide engaging and enriching educational experiences for children. Our intention was to create a stronger ecosystem of learning games by selecting some of the most innovative startups in the field and providing them with best practices from both the ed-tech and the commercial games industries.

After 2.5 years, 5 cohorts, more than 200 applicants and 29 companies who have gone through the program, it is clear that co.lab served a need in the market and has proven valuable to participating startups. Our companies have proven to make a difference in student outcomes: with an NPS score of 8.9 and over $57 million in follow-on capital raised, they are reaching more than 50M students. More than half of co.lab companies have conducted successful efficacy studies, have received critical acclaim and recognitions such as Common Sense Media, Parent’s Choice and Editor’s Choice awards, and/or have been funded by US government grants for further development based on their educational promise.

One of the special things about co.lab has been its hands-on approach. We selected small cohorts of between five and seven companies so that we could focus on each company’s unique needs and work with their founders one-on-one around product, go to market, and strategic priorities. We strived for diversity accepting companies that were well developed and looking for a pivotal step to hockey-stick their growth, such as Kidaptive, as well as those that were merely an ambitious idea led by amazing entrepreneurs, such as Piper. With Nearpod and WriteLab we mixed in some “non-gaming” companies so we could learn about how consumer software and games could be applied to ed-tech platforms. Our talented entrepreneurs have grown their companies significantly since participating in co.lab and being part of those journeys has been a true privilege for everyone here.

As a result of our front row seat in the market we have learned a lot, and we would like to share a brief summary of those learnings in this last co.lab post. So here they are, the main “lessons learned” during our 2.5 years at co.lab

Lesson one: Consumer-driven design
One assumption we started with was that large consumer software companies could contribute value to edtech startups; that’s why we partnered with Zynga. The education software industry is experiencing a revolution led by companies that disrupt the market from the “bottom up.” Teachers and parents are adopting products independently of any mandate by a school or district, therefore the user experience must resemble that of consumer software, with apps or services that delight and engage users. This contrasts with the old edtech industry where products were largely designed for compliance. They satisfied the needs of the district’s tech requirements and regulations, not necessarily those of the teachers, students and parents. We believe this revolution, in which co.lab companies such as Nearpod, WriteLab and Lab4U are well represented, will finally deliver on the promise of technology as a tool to empower teachers and parents and supercharge education. We found that entrepreneurs received a lot of value from their interactions with the Zynga employees, given the consumer-driven approach of today’s edtech companies. Zynga’s employees’ “lessons learned” in the commercial games industry were invaluable for edtech entrepreneurs, particularly in the areas of product design, development and growth. We would love to see other mature technology companies undertake similar initiatives where they can apply their best asset, their talent, to mentor social-impact entrepreneurs.

Lesson two: Parents value free over quality
Parents, by and large, are still not paying for their children’s out-of-school digital educational content. We have found that the conversation on digital media usage by kids is still largely dominated by discussion around “screen time” rather than “screen quality”. Many parents still view “screen time” as a treat or a digital babysitter, rather than a tool that serves as an enriching experience in their child’s educational growth, explaining parents’ unwillingness to pay a premium. Not surprisingly, many of the highest grossing kid mobile apps are kids’ video services. However, we believe that a cultural shift will happen sooner rather than later. Just like we once started recycling (and now composting) our garbage and eating organic foods, we believe parents will soon happily supply their children with quality educational apps and pay for them. In addition, the emergence of well organized, vetted distribution platforms, where parents can easily find apps that deliver on their educational promise and are loved by kids, will serve the best quality developers and benefit the whole ecosystem. We’ll be watching!

Lesson three: High barriers to meet K12 needs
Schools are a challenging market for learning games. Even though 74% of K-8 teachers claim to use some kind of games in their classrooms, it is very difficult for cash-strapped startups to get any of that action. Teachers, understandably, look for apps that solve multiple pain-points at once. In terms of content, this translates into platforms with a wide breadth of coverage ideally across subject areas and age ranges. Educators prefer one platform that serves all their needs over jumping from one app to another. Unfortunately, given the high production costs of content in general and of games in particular, companies seemingly need to heavily invest in content development before getting any serious traction. I call this the “lean startup dilemma” of learning games: startups have to find a way to develop a wide breadth of content before being able to get traction. The lack of distribution platforms does not help, exacerbating the discovery problem for teachers and complicating the integration of different apps into the already hectic school day. Again, just like in the previous points, we expect this problem to change with the emergence of school content platforms that, for example, could combine content from different developers. We’ll be waiting!

Lesson four: Business model innovation and perseverance
Lastly, a piece of advice for entrepreneurs in this field — I have two words for you: innovate (particularly around business models) and persevere! Waiting for Apple or Google to feature you in hopes of making your business successful is a strategy that we know doesn’t work. While of course this does help, it doesn’t move the needle most of the time, particularly when it comes to revenue sustainability. I encourage you to think about other ways to get in front of users and use them as a catalyst for growth. We have seen companies like GoNoodle use an alternative sponsor-based business model with great success, while others like ABC Mouse leverage the power of TV advertising for commercial scale. Other successful business strategies we’ve seen are integration with after-school programs and summer camps such as Tynker or aggressively going global as Enuma does. Of course there is no silver bullet for success but we for sure know that just publishing a well produced app certainly is not enough to generate significant traction.

The second piece of advice is about perseverance. As I highlighted above, there are some tectonic shifts in the making that will positively impact the learning games market, namely society’s perception of kids’ digital media and novel distribution platforms. My advice is simple: be there when these shifts take place! We already know schools are a tough cookie to crack for any new technology company, but patience eventually pays off. Content companies like BrainPop have persisted for more than 16 years and built a very successful business as a result. The counterpoint of schools being hard to penetrate is that once you are in, you will probably be there for many years to come.

So this is it. We hope all ed-gaming entrepreneurs find these lessons valuable and thought provoking. We could not be happier for having supported so many companies in the space and worked with some of the best talent in the industry. We have had the privilege to work alongside amazing entrepreneurs and their teams who all have tremendous dedication and the continued belief that they will make children’s lives better little by little. Needless to say this has been the most rewarding part of running co.lab. As Bobby George, founder and CEO of Montessorium said “co.lab has proved instrumental to how we think about growing Montessorium. The insights we learned there, are ones that will carry over everywhere”. We hope that their 4-month long co.lab experience represents a major milestone in all of co.lab companies’ histories.

I am personally thankful to Zynga.org, NewSchools Venture Fund, and more recently the team at Reach Capital for their amazing support of the program. I am also grateful for the dozens of industry experts that have come to mentor our cohort companies alongside some of the best Zynga employees. Thanks to all of you for your time and dedication.

From now on I look forward to continuing to support companies in this space as a Partner at Reach Capital and hope to see all the 29 alumni and everyone else who we’ve been in touch with, grow and prosper!

On behalf of Deena, myself and the entire co.lab team thanks and good luck!

Esteban Sosnik

May 26, 2016