Barriers to Building for Kids 1/3: Tradeoffs
A founder I admire recently told me: “your business is an abject failure”.
I understand why he, and others, view Edify as a quixotic effort. It’s been 2.5 years since our last optimistic blog post, and our growth and revenue is still marginal. To some, our business resembles Monty Python’s Black Knight — “not dead yet¹”, but unlikely to win a fight anytime soon.
And yet, I am engulfed with conviction. I am more excited then ever about Edify’s short and long-term prospects. Why?
Why? Why am I falling ever more deeply in love with our work when it doesn’t appear to be working? Why is it so hard? And, most importantly, after ~40 years with computers and ~20 years with the internet:
Why are there no great technology businesses for kids?
It’s a striking absence. There’s lots of kid-related spending going on, after all, and tons of activity in digital entertainment for children². Hypothetically, a small team should be able to craft best-in-class software for children which can then be accessed affordably, on-demand, and with absolute consistency by adults around the world who want the best for their kids.
But, to date these products don’t exist³. Why?
I want to try to explain.
It’s partly, and deeply, personal. It’s also partly, and urgently, societal. Technology has awesome potential to help children find their path and passion in life, but kids must rely on adults to make it happen.
Two important disclaimers:
- This series is rooted in the belief that the best products⁴ for children involve learning, which, in turn, inevitably implicates education. Age agnostic tools like Google, SMS, and Maps, and games like Minecraft, Fortnite, Pokemon Go, and Angry Birds, are important, but only addressed tangentially. Services like Brainpop or YouTube Kids could use their own dedicated explorations; but I’m sticking to a 30,000 foot view for now.
- This series is short on solutions. The problems I articulate are systemic and not easily addressed. I do end on a very high note, and I hope to write more at some point about strategies for success⁵. But, for now, offering clarity about the challenges of building for kids to those interested in startups, education, and social-impact is the best contribution I can make.
Tech entrepreneurs face five primary challenges when building products that serve young children:
- “We need adults to buy”— There is always a separate buyer (adult) and user (child), so enterprise sales dynamics apply to every sale (better have that dashboard ready!).
- “And, we need kids to voluntarily use” — the nuances of enterprise sales are further complicated by consumer-level engagement requirements. Adults only force children to do so many things; and a new, unproven product will not be one of them. Plus, the primary point of building for kids in the first place is to produce a positive impact. Unless a child’s engagement is voluntary it’s hard to argue that a product is truly effective; so entrepeneurs need to have the sophistication of the best consumer companies when it comes to retention (and it’s HARD to retain children).
- “We’ll just sell to schools, they’ll force the kids to use it!” — Surprise! Your core organizational capacity is now *air horn sounds* enterprise sales, and you no longer have the right incentive structure to build a great experience for kids. Most of your energy, effort, and dollars will go to selling schools (which is very hard to do) and your remaining time will be spent on a product-roadmap dictated by district requirements (LMS integration, anyone?). In other words, you are a new member of the “just-good-enough” product consortium which, without ill intent, seriously perpetuates mediocrity in our school systems.
- “Well, what if we go bottom up with a free/viral user-experience, then up-sell to parents and schools” — Unfortunately, your users/champions are 6 and have a very weak voice in the procurement process (see more below). Also, viral growth strategies are blocked by children’s privacy laws. Also also, you’ve given away core product value and trained your overwhelmed and under-resourced buyers to expect things for free. (RIP, Edmodo)⁶
- “It’s ok, once we get to scale we can sell ads!” — there are no business model bailouts here. Thankfully, you can’t sell kids’ personal information which makes building a profitable ads business nearly impossible. Even if you “accidentally” let children sign up as adults you’re still sub-scale for an ads business. (And also evil (yes you, Musical.ly))
To recap, when building for kids you need to have a tremendous product to ensure children’s engagement is voluntary and meaningful. BUT, your user-experience efforts, while essential, have a weak and indirect impact on growth and revenue. Buyers (adults) almost never directly interact with your product and have a broad set of purchase criteria. In fact, it’s even worse then that because parents are naturally suspicious of any product children lust for (“isn’t this just another game?”).
Which brings us to a final challenge to rule them all: the ‘New Food Conundrum’. When it comes to kids, adults are extraordinarily conservative buyers. They are also thoroughly (and rightfully) jaded thanks to all the oversold just-good-enough products they’ve been buying. Finally, in this market a user’s (kid’s) enthusiasm for an unknown product (new food) is not an inherent commercial positive. This compilation of factors creates such significant, twisted, and grueling obstacles to new businesses that Part 2 — Conservatism is devoted to fully articulating it’s ramifications (which ultimately come down to yet more tradeoffs for entrepreneurs).
Together, these factors are torturous. Startups that scale do so by sidestepping them. Either a company:
A) takes children/learning out of the equation entirely and simply sells software to adults (Clever, Remind, Kiddom, Teamsnap etc).
B) serves college or post-college learners; AKA adults who make their own decisions (Lynda, U2, Moocs, Craftsy, Guild Education, Lambda School, DuoLingo etc.).⁷
If a company does choose to stay focused on building for young children the difficulty of balancing consumer and enterprise dynamics with no clear strategies for growth is immense. To get initial traction entrepreneurs are virtually forced to orient to either adults (the just-good-enough product route) or kids (by building a game). But, choosing to prioritize adults over kids, or vice-a-versa, always undermines the ultimate goal of maximizing both impact and growth/revenue.
(A third strategy is to build high priced toys/STEM activities which cross into the educational realm (Lego, Sphero, Osmo, robots, etc.). However, these physical products are too pricey to make a widespread impact, and arguably exacerbate inequality in education by providing uniquely potent play experiences which are only accessible for rich kids.)
To my knowledge, no company except Minecraft (which took a particularly lucky and noteworthy path⁸) has succeeded in thrilling both adults and kids while semi-equitably impacting learning at scale. Every other company gets stuck on one side of the child/adult divide. And in the end, our society is the ultimate loser; as yet another generation of children grows up unsupported, thinking learning isn’t fun.
Perhaps there is another path. Maybe a company can build a product which thrills both children and adults without biasing to either. Conceivably a dedicated, privileged team could stand in the midst of all these competing priorities and make the hardest tradeoff of all: sacrificing growth, revenue, and certainty in the short term for everyone’s (especially children’s (and shareholders)) long-term gain.
That is what Edify is attempting to do, and has been attempting to do, and will keep attempting to do. It’s intensely difficult. It’s taking some patience. And being at peace with why — why our journey is so dang odd, unorthodox, and thrilling — helps us (and hopefully, you) stay the course.
What if it’s all just a delusion?
Well, being Quixote for kids doesn’t seem that bad, all things considered. At least it’s better then being in ad-tech, that’s for sure⁹.
- Yes, I know its from a different skit :).
- Owning the customer relationship has never been more important in business, and no customers have longer life-times, or higher loyalty, then children.
- Great is an inherently subjective term, so let me add a little clarity:
A. I’m not dismissing companies like Toca Boca or Club Penguin.
B. I’m questioning the absence of startups with the sophistication and success of Dropbox and AirBnB (much less Apple or Google).
C. No, selling hardware to schools does not qualify as ‘building for kids’.
D. Games, toys, and entertainment in general are not enduring businesses. Enduring is at the core of what I mean by great — the type of company that’s ‘built to last’ and will be around in 50 years. That said, I’d love to explore these kid-related fields outside education more thoroughly at some point.
- The only kind that lead to exceptional, highly profitable businesses.
- Part of my hesitancy is that I don’t really know what it takes to succeed yet. We have some ideas, and Edify hasn’t failed yet, but positive alternatives are always harder then diagnosing/criticism.
- At least Edmodo sold (albeit for an extremely poor multiple). For other examples see, re: Remind, ClassDojo, etc.
- I’d further argue that these companies are primarily facilitating ‘old learning’ with new business models. While admirable, this still falls short of the ultimate challenge to use new technology to enable genuinely new, and widely accessible, learning experiences.
- Minecraft built incredible loyalty amongst children first (without really intending to), then expanded it’s educational credibility with schools and parents after being purchased by Microsoft for $2.5 billion in 2014.
- Unless you’re Todd Saunders and Dan Pratt in which case you rock and everyone please go check out AdHawk which saves small businesses money and time on digital advertising.