BWP Ep. 4: Noodle (+ 2U, PrincetonReview) w/ John Katzman

If you don’t know who John Katzman is, you’ve probably been a beneficiary of one of his startups without even knowing.

• Have you studied for the ACT, SAT, GMAT, MCAT, or LSAT through the Princeton Review? Founded by John Katzman.
• Have you attended an online course or program through your University? 2U (NASDAQ: TWOU) likely enabled that. Founded by John Katzman.
• Have you searched for an online school or graduate program? Noodle. How about tutoring? Noodle Pros. Attended an online program/university? Noodle Partners. I sense a theme here… all founded by John Katzman!

Needless to say, John knows a ton about EdTech and starting successful companies. He also has great wisdom on leadership, and in building in NYC. Just last week, a student entrepreneur emailed me to chat about building impactful startups, and he mentioned that John gave him & his cofounder an opportunity to intern at Noodle after hearing their story/pitch — it’s stories like this that make John’s impact on the world feel even more tangible.

John has spent a great deal of his career making the cost of online education more affordable for everyone, especially since founding Noodle Partners, and I’m excited to share our conversation with you.

A Conversation with John Katzman: CEO/Founder of Noodle

First start with telling me about your mission, and how Noodle was built with purpose from the start. And maybe talk about how you view the traditional learner (and how that might differ from most people’s views) & serving that demographic.

I started the Noodle Companies because traditional education marketplaces tend to be opaque and inefficient — change in higher ed is typically very slow, marketing/sales of these solutions is hard, etc.

And the root of the problem is that education is very hard to measure. The things you can measure in the short term don’t matter — like attendance, grades, and test scores. We look at them because we think they predict things that do matter — longitudinal long-term outcomes — like is your life happy, will you get a good job, etc. We continue to measure these things hoping that they might be predictive, but with very little data to suggest that’s true in many cases. And the more we focus on the short term, the less predictive those things are because everybody’s gaming them.

For Noodle, the creation of marketplace creation metrics was the overall thesis, to create transparency and efficiency in education marketplaces. Noodle Partners is doing just that — doing good for the world by lowering the cost of of high-quality higher education by 25%

Everything we’re doing is basically about building more capacity at schools without building any buildings. Noodle does the marketing and recruiting such that schools can fill that online capacity without diluting the quality of the student body’s learning experience.

Why did you choose to start Noodle, The Princeton Review, and 2U in NYC?

It’s all about access to great people. Whether you need tech, finance, marketing expertise — New York has all of that and then some! It made sense for all three of my companies to start here in NYC.

Noodle sits at the intersection of so many aspects of education: college search, the OPM market, tutoring, and more. When you were first building Noodle & were thinking about GTM, where did you start and why? Was it building connections with Universities, focusing on product, or building community among students?

The first thing was just to develop a v1 of a business model that was different from what I did last time with 2U. At a high level, the problem I was trying to solve was “can we prove that online education can be as good as classroom education in higher ed.” Online education just had such a terrible reputation, and we wanted to change that with Noodle by helping great universities bring their courses online and seriously invest in the growth of those programs. And our goal is not only to make the experience good, but also less expensive for the students (other OPMs have perversely made hybrid more expensive).

So we started with getting the model right, and then it was about finding schools and executing on our growth plan. It’s been a three to four year journey of continuing to evolve the model while we expanded the number of schools. And just, just get market fit but then, but then drive something that is sustainable economically and.

Over the past two years, we’ve signed up as many degree programs from good schools in the US as all of our competitors combined — so we’ve definitely figured out the market-fit side. And we’ve also accomplished a lot in terms of creating transparency for our investors, for the Universities that we partner with, and in everything that we do. Even with our internal hiring goals, we’re holding ourselves accountable to eliminate pay gaps, hire more POC, and be sure we’re elevating conversations on racial and gender equality.

Both 2U and Noodle sell into Universities / B2B — my alma mater Boston College is a customer! What are the top 4 things Universities care about when they’re choosing a provider?

1. First and foremost, they care that you will do things that are accretive to their reputation — that you’re not going to harm the reputation they spent, in some cases, several hundred years building. They really have to trust you as a partner.
2. The second is that they’re looking for low cost providers that can reduce the cost of their services. With Noodle, we save them between $15,000-$25,000 per student compared to the old model at 2U.
3. The third is flexibility. Older OPMs operate as silos, which made sense a decade ago when online education was viewed as just a “nice to have”. But now education is almost 100% online. And even pre-COVID, 35% of graduate school students were solely online. Online is the fastest-growing segment in higher education, and the percentage of online grad school/adult learner enrollment will likely never drop below 50%.
4. And then finally, they want transparency — ie: this is what we’re doing, this is what it costs, this is why we’re doing it, etc. That ongoing conversation is really important. The root problem of traditional OPMs stems from the opacity of the model, and it encourages bad behaviors.

In today’s world, you can’t have separate marketing/recruiting initiatives, a different tech stack, and different instructional design for your online classroom than you do for your in-person courses — you want to be agile and have one partner, one process.

How do you mitigate the sales cycle of selling into Universities which many view as a tough end market?

You don’t mitigate it — you just deal with it. Within higher ed, there’s shared governance in any university relationship where there might be between 20-40 people who at least have to be indifferent to your solution, but really have to be supportive. And if you rush things, it’ll catch up to you in the implementation in really bad ways.

So the answer is, you get proper funding so that you’re okay with things taking as long as they actually take.

You’re the founder of 3 successful education companies, when it comes to building culture, what was consistent among the 3 and maybe what have you done differently with building Noodle?

In each of the three companies, I talked to my people about (a) having a soul and (b) having a clue. There are lots of people in education that have a soul, but they aren’t thoughtful about their systems, their profitability, and how they run as a company. And then there are some companies who have a clue, like the for-profits in higher ed did, but they have no soul — they don’t care about students. All three of the companies I’ve started have had a soul and a clue.

The second thing is bringing together really good people and letting them do their job. And that sounds so obvious and trite, but it’s true!

Advice for an entrepreneur building something transformative in education? What would you like to see built?

I have a million thoughts — this could be a two hour conversation!

My first idea is a really good testing company that blows out the SAT/ACT and redefines how assessment should work, both in terms of how states measure their schools and how universities measure their incoming students. There’s a billion dollar company waiting to be founded — and I want to invest in it.

Another concept is bridging the connection between K-12 and Higher Ed. The reality is that every school is teaching something different, every teacher is teaching something different, and every student is learning something different and then forgetting half of that. And then every university program has different requirements. There’s an opportunity to create more of an onramp between high school graduates and higher education, and eliminate the line that exists between high standards and accessibility. There needs to be an onramp where anyone can participate and (a) you might be totally ready for college today and you don’t need the onramp and then you’re just in/admitted, and (b) somebody else might need six months or a year or two years, but everybody can get there. This onramp would allow for flexibility where a student is today, so that they can be ready for the college program of their choice whether it’s tomorrow or in a year from now — creating opportunities that are accessible and high-quality.

A huge thank you to John for sharing his perspective on scaling 3 successful EdTech companies — we’ll have to come back for that 2 hour conversation around what else he’d like to see built :)

To learn more about Noodle, follow them on Twitter. And John too!

If you’re an entrepreneur building in NYC, in education, or more specifically within testing or creating an onramp between high school and college as John mentioned above, please shoot me a note at meagan@lererhippeau.com. I’d love to help.

Keep an eye out for future editions of Building with Purpose, and in the meantime, let’s keep in touch on Twitter :) https://twitter.com/meaganloyst