Educated Guesses About EdTech

Three notes on what earns a passing grade (and a Series A)

Founder Collective
May 29 · 5 min read

By , Managing Partner

Despite the obvious pain points in the education market — from trillions of dollars of student loan debt to unequal educational opportunities at the K-12 level — investors have historically talked about EdTech with the same trepidation they have for cleantech. Basically, It’s seen as a place of perpetual sales cycles where capital goes to waste. Many believe education is a unique industry full of intractable problems that are better solved by the government, a few socially oriented funds, or NGOs. Even an organization as forward-looking as Y Combinator nudged EdTech startups to a .

Conversely, there’s a group of utopian tech evangelists who believe we’re maybe a decade away from the four-year degree becoming a meaningless trinket, replaced in full by smart apps, on-demand tutors, and an endless library of educational video content. The zealots who hold this view tend to be maximally focused on the enabling technology, and less so the credentialing infrastructure, signaling value, and social benefits that traditional education institutions provide.

Neither camp paints a fully accurate picture. While “software for schools” has been a challenging market from a VC perspective, there have been multiple billion-dollar successes that address education more broadly. However, those successes tend to be peripheral or adjunct to traditional K-12 use cases, where few aside from Apple, Alphabet, and Blackboard have built real businesses.

Viewed through the widest aperture, education is a perfectly reasonable space in which to invest, as this small sample of companies demonstrates:

I don’t see a startup crafting a silver bullet that revolutionizes our National education policy in the near term. That said, it’s crazy to believe these companies, and the hundreds sure to follow in their wake, won’t enable alternate paths to success. As , there are as many students being homeschooled as there are enrolled in charter schools. Never have parents, teachers, and reformers had more tools at their disposal. The big question is how they’ll be employed and what impact they’ll have on the incredibly diverse education space.

While I don’t have a clear sense of how this space will unfold, here’s the closest thing I have to a cheat sheet for evaluating new opportunities at the intersection of education and tech:

The Returns On Curiosity Have Never Been Higher

Three of the five biggest tech companies operating today were founded by college dropouts. We’re increasingly seeing students opt for gap years where they start companies or otherwise try to inject themselves into the tech ecosystem. I recently met a candidate who was accepted to multiple Ivy League schools who decide to skip college altogether in favor of working in tech. This path isn’t open to everyone, or even advisable in most cases, but expect to see more ambitious students with autodidactic tendencies leveraging these tools to supercharge their educations.

On the parental front, some of my contemporaries who historically have quipped, “I like experimenting in education, but not with my child” are starting to change their tune. It might be because our children aren’t yet part of the college prep rat race, and it’ll require major cultural shifts for this notion to go mainstream, but cracks are forming around the edges and the reward for those who fill them will be great.

Consumers Will Pay If You Can Prove ROI

The ROI of 4-year college is being broadly questioned. Though the data still holds that degree-holders earn more than their degree-less counterparts, the assumption that everyone should get a degree for a degree’s sake is starting to erode. More and more, high school grads are doing the math around the value of their education relative to the debt load they’ll be carrying after graduation. This is why we invested in .

While that process plays out, I’d also expect to see a variety of alternative credentials emerge. A well-populated GitHub profile already opens more doors than a degree at many companies in tech and startups like Lambda School are building training programs around that fact. In our portfolio, Kaggle, Trusted, and Fixer are creating new kinds of social proof that promise to unlock opportunity for many in well-paid fields. When job requests start requesting links to a person’s profile on site X, you know it’s on to something.

The Bots Are Coming

The “Quantified FTE” is coming. In the future, bots will be combing through your resume, your public profile, your code, your writing and assess your fit with a given job. It will matter less that a recruiter or hiring manager likes a specific university, and it will be much more of a Moneyball approach to hiring.

Amazon warehouse workers are already subject to algorithmic overseers. Go to a sales floor and you’re likely to see leaderboards tracking each employee. McDonald’s is replacing huge numbers of workers with kiosks. I think we’re a long way from the vision of strong AI making most human workers obsolete, and hopefully the Chinese “Social Credit” model won’t find purchase here, but bots are going to take up more and more rote work — whether it’s manual labor or basic tasks that don’t require the higher levels of human thinking. This realignment will eventually have a profound impact on the way we educate students.

We’re going to need products and services that are built for training people in higher order thinking and preparing them for tasks that require human creativity, EQ and flexible problem-solving. Solutions that meet these needs will have more potential than ones that offer an incremental improvement in SAT scores or a faster path to memorizing facts from European History.

These trends won’t impact students graduating this month, but I expect they will shape many of those who are currently eating paste in classrooms around the country. Education is one of the most important industries and social responsibilities we bear. We won’t see an immediate breakdown of the “standard” form of education and testing, but there is a world of new building blocks to rethink how education might be delivered better. This has the potential to be an amazing opportunity for entrepreneurs, parents, and VCs.

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