Redesigning Childhood Education (4 of 4): Opportunities for Entrepreneurs
In my prior posts (Parts 1, 2, 3), I’ve argued why the current K12 school model is broken and the direction it needs to (and I believe, will) go in instead. So how does that change actually happen? And where are the opportunities for education entrepreneurs to shape it?
How this unfolds
This new model of childhood education is starting to take shape in pockets around the country (especially the affluent, tech-forward hubs like the Bay Area, NYC, and Boston). Existing private and public schools in some areas are experimenting with small bits of redesign to fix the problems mentioned as well.
Historically, the original type of school was just the children in one aristocratic family and their tutor (School 1.0), then came village schoolhouses with a whole mix of formats (School 2.0), and subsequently the Prussian model and its adaptations (School 3.0) have reigned since the nineteenth century. Like those pivots, I think this shift to School 4.0 will be a story of “disruption” more than reform of existing schools.
The traditional public primary and secondary schools that account for 91% of students in America won’t adapt to make fundamental changes. Government funding for these schools means any big changes need political approval at the local and state level (plus federal level if a school redesigns curriculum that doesn’t fit Common Core and other mandates). There is little incentive for politicians to do so in the near term, however, given the firmly entrenched interests (like the NEA), the lack of young people directly affected by it having a vote, and the misalignment of these education policies with a clear Democratic/GOP dichotomy.
Public schools are particularly change adverse because most families don’t even have bargaining power through an ability to walk away. In a majority of school districts, families don’t have any school choice, which means they can’t “vote with their feet” by continually (over time) moving their children into ever more forward-thinking public schools (which would cause the worst ones to close or radically change their ways). Government funding means schools don’t need to be responsive to families until it channels through years later as political pressure with all sorts of other interests mixed in. Whenever you have a market where the customers aren’t also the payers, incentives and behavior get warped.
In classic Innovator’s Dilemma, traditional public schools — comfortable in continuing to operate as they always have — won’t consider any big underlaying changes to their educational model until they are a decade past it being too late and a wave of new private schools and charter schools have firmly established themselves as better alternatives pulling away tens of thousands of mainstream (i.e. not early adopter) families at last. (I think this mainstream tipping point is 10–15 years out.)
Especially if the difference in student learning outcomes is what I believe it will be, this will be a story like that of cars replacing horse drawn carriages. Once the new model schools hit a tipping point in enrollment and outcomes data, masses of parents looking out for their children’s interests will be eager to switch faster than traditional schools can adapt. Networks of schools built from the ground up with modernized education methods will proliferate and increase their “market share” of student enrollment aggressively — be they publicly-funded charter schools (Summit Public Schools) that have the entrepreneurial freedom or private schools in the vein of AltSchool, Khan Labs, or Elon Musk’s Ad Astra.
While slow, even political pressure will also move faster than traditional public school administrations can change their ways. Support for school choice through charter schools and/or school vouchers is only growing in both parties (the GOP has long been a school choice proponent in the form of vouchers, and moderate Democrats have embraced the charter school movement). Somewhere between 5 and 7 out of 10 Americans support school choice, with even higher rates of support among minority and Millennial voters who account for an increasing proportion of the electorate.
Education entrepreneurs running private (for-profit or non-profit) schools charging tuition will lead the way in this charge. The public sector will lag behind, but some states give enough leeway for entrepreneurs to launch publicly-funded charter options that can move the needle as well. This means the beneficiaries of this shift in the early days will generally be upper middle class and wealthy families that can afford tuition, followed by low income students gaining access through financial aid or charter schools. Education innovation tends to happen at the top, where there are plentiful resources to experiment, and at the bottom, where desperation from failing schools requires trying something new.
Why now?
The challenge with adoption of new, better school models like this has been:
- a lack of technology to support a less centralized classroom and personalized curriculum;
- a lack of rapid scalability for successful schools pioneering new models;
- a lack of data on learning outcomes at alternative schools to compare against traditional schools; and
- a lack of political will (particularly among the Democratic base) to permit/encourage basic competition in education through school choice.
We’ve passed those barriers now, however. Classrooms are “flipping”, digital learning tools are everywhere, adaptive learning and online curriculum is making personalization easier, ventures like AltSchool and Bridge International Academies are creating schools where the back-end administration scales easily and with economies of scale, “big data” is making sense of heaps of information schools collect, and more Democrats (like the President) have firmly embraced school choice.
Opportunities for Education Entrepreneurs
This pivot creates the opportunity for a whole new generation of education companies. There’s never been a better time to be in the business of “doing well by doing good”…to create big companies by finally transforming education. (It will be a gradual disruption by the standards of software startups but rapid by the standards of schools and government.)
This is hardly exclusive just to opportunities within the formal school environment. A lot more attention is going into designing, quantifying, and nurturing independent learning. The market for children’s learning solutions outside of the classroom is growing as well with a wide range of online content, games, physical products, extracurricular programs, and even consumer-facing pediatric health tools that provide relevant insight into children’s wellness.
Scalable school networks.
Attack the heart of this shift by launching an actual private school operator, or an Education Management Organization (EMO) that runs charter school networks and is paid per student by the government (not unlike how healthcare providers might get paid by Medicare instead of private insurance).
AltSchool is pioneering the for-profit, scalable school model with 12 early locations and over $130M in venture funding, but it’s not a winner-take-all market. There can and will be multiple large national networks of private schools offering their own particular approaches. And given the size of the market, multiple could be multi-billion-dollar companies someday.
This path is an incredibly difficult, capital-intensive, and complex one but it’s the most directly impactful education solution and can be lucrative if entrepreneurs craft models that continuously improve quality while simultaneously gaining economies of scale.
Most schools in the country will remain non-profit, but there’s an opportunity to for-profit systems to gain market share in a market that is conservatively hundreds of billions of dollars annually. Accountability will be incredibly important to weed out bad actors who create for-profit charter networks as a means to collect public education funding without providing a quality education in return (like University of Phoenix and many others did in the last decade at the higher ed level); it is in the interest of the good actors to aggressively make sure this happens.
Online learning activities
Content products — the actual learning activities students do — will keep expanding as a market and present a lot of opportunity for entrepreneurs. Platforms with interactive educational videos, gamified activities, and content creation tools that enable children to learn and make use of new knowledge in a highly engaged manner. Expect virtual reality and augmented reality to grow in coming years as a content format embraced by both educators and parents.
The challenge here from a venture capitalist perspective will be whether learning content companies can get large enough and consistency produce hit content (whether it’s MOOC courses, educational games, VR experiences, etc.). A lot of “edtech” companies in this category should really be analyzed as education-focused media companies from a business model perspective.
One compelling opportunity I see is to build the go-to platform that enables teachers who lack advanced computer skills to create their own high-quality online activities for courses through a simple drag-and-drop WYSIWYG experience. BlendSpace (acquired by TES) does this at a very very basic level. A company here could quickly build a following if priced as a subscription for individual teachers rather than selling into school systems, and would need to be able to integrate a mix of machine learning technology into activities then provide the teacher with helpful data on each student.
Comparison shopping
With more school options, there will be greater need for a way to easily review and compare all the schools nearby to determine which is the right fit. A site that provides comprehensive quantitative and qualitative data on each school’s learning environment, programming, and learning outcomes (plus perhaps reviews by parents) is going to be valuable.
The same will be true with educational programs and products outside of school as parents eagerly try to make sense of all the learning toys, games, software programs, and extracurricular options available to them.
Adaptive learning tech
The more digital learning there is, the more data points there are to collect about each student that can then be used to improve their learning experience. This data collection and experience customization is well established in e-commerce and other sectors but still just beginning to hit education.
Spearheading this, startups like Knewton and Kidaptive provide machine learning tools that can be incorporated into digital learning platforms. They provide an incredibly detailed analysis of each students strengths, weaknesses, and learning style then adjust the type and flow of activities to meet their needs in real time (like presenting more material they are weak on but in a format that is shown to “click” best for that child).
Education is a massive market with plenty of opportunity for data and AI solutions, particularly as more learning is done digitally and more offline work is quantified and recorded in online databases.
New school infrastructure
A new toolbox of technology solutions isn’t just coming to learning activities, it’s going to reshape the core infrastructure of school administration and classroom coordination.
The established Learning Management Systems (LMS) that organize and host course-related content online and Student Information Systems (SIS) that maintain students’ school-wide data, schedules, transcripts, tuition payments, etc. are both notoriously a decade behind in functionality and design. The rise of a new model of school maximizes the need and opportunity to re-envision such underpinning platforms. They need to a) be much more agile and intuitive products, b) collect, organize, and analyze far more data from far more sources, and c) better share information between students, parents, teachers, administrators, and other educational programs. They need to start from scratch as platforms designed to best coordinate the comprehensive learning experience of a child, rather than as piecemeal solutions built to tap different buckets of school budgets.
AltSchool will be one of the companies to establish a commanding lead in this category by nature of it being the first big mover among scalable, new model private school systems. By being the first, they have had to build a re-envisioned LMS/SIS anew for themselves and are now licensing that platform to other schools.
There’s an opportunity then to build high-value tools that enhance these platforms, like Clever has done in organizing data from all sorts of different edtech apps into one place and enabling its transfer into SIS. You also have companies like Panorama Education helping quantify more elements of the student experience so that improvements on those metrics can be tracked as well. You also have startups like Remind, Edmodo, and ClassDojo building a modern communication layer to teacher-student-parent interaction as well so that everyone stays on the same page and amid all these moving parts.
[A key challenge as all this student learning data comes together is going to be the need for interoperable Digital Student Records…the electronic health records (EHRs) of education. There’s critical need for each student to have one central repository of their educational history that they can bring with them to every educational program as they grow. When they start with a new school or summer camp, there needs to be a universally agreed upon way to transfer and present this dashboard on the child’s needs, interests, and knowledge. Much like EHR in healthcare, this still faces hurdles from data privacy regulations and the politics of whether established LMS/SIS providers want to make it easy for students/schools to transfer to competitor systems.]
This is a non-exhaustive list. “Childhood Learning” encompasses a very broad scope of activities — isn’t nearly everything a child does a form of learning? — and there will be a lot of exciting ways for entrepreneurs to make improvements.
←Go back and read Part 1: Intro, Part 2: A Failing System, and Part 3: What School Should Look Like
