Sunday, August 30, 2015

Why serial entrepreneurs succeed more...

This recent post that a founder's job is to create believers - - reminded me that it is time to demistify higher success rates for serial entrepreneurs.  While it is true that they succeed more often, isnt due to any amazing product-market fit sensing abilities, that part is all hard work.  What is true though is that startups are faith based institutions similar to churches.  There is no way to prove you are right, you just need to believe.  One nice thing about startups is that you will get an answer in a much shorter time period, usually during your mortal life, generally a few years.  But during the early stages, the whole thing seems pretty dicey.  Most people you talk to will think your idea is crazy, dumb, or not do-able.  But serial entrepreneurs get to say that they have seen this before and succeeded in the same situation, and that creates faith.  Faith from employeees, investor, customers, press, etc.  That creates greater dedication, persistence, and momentum.  There really is no other magic to it.

Sunday, February 16, 2014

5 differences between consumer and institutional edtech

We have had a couple of institutional edtech exits in the last month - engrade and area9.  Institutional edtech companies are ones whose customers are the insitution - teachers, schools, districts, etc.  consumer edtech companies make the student or parent their customer.  Historically, the vast majority of edtech companies were institutionally focused, because it was more likely that students had access to devices and the internet at school than at home.  This flipped about 12 months ago.  With the advent of the smartphone, far more students have access at home than school across all demographic segements.  Companies like edmodo, class dojo, remind101 and zeal have recognized the flip and made their products free to schools in hopes of building large networks of students and parents.  Other companies like duolingo and various coding apps are going directly to consumers through app stores.  It is too early to tell if these strategies will work, or if large networks of consumers monetize well in the learning space, but it is a very different approach from institutional edtech.

When we get exits on the institutional side, it often reinforces the notion that there is a level playing field  in financial outcomes between institutional and consumer learning approaches.  Here are 5 reasons why these approaches differ and why the degree of difficulty and timeframe for creating value in institutional is dramatically higher.

1 - Capital - Consumer learning works off the same proof points as standard consumer internet products - traction, retention, growth, monetization.  The success of what you are doing will be measured against other consumer companies.  The top tier venture industry is comfortable with this despite the monetization unknowns in consumer learning.  This makes considerably more capital available to consumer edtech companies, because institutional edtech has never shown the kind of growth needed by top tier venture capitalists.

2 - Time - selling to institutions is very difficult in the education space.  They are much less clear on their technology goals than customers in a typical enterprise market, and experience significant and continuous leadership change in both their elected boards and superintendents.  You can avoid this and create a viable small business by selling directly to teachers and schools (pricepoint for least friction is $3-4/student to teachers and $1500/school, see prior posts on why).  However, these businesses have small market sizes, both capping in the range of $100-150 million historically.  Nothing wrong with this from a small business perspective, it's just that you aren't going to raise much capital or grow that quickly, so you are in it for a decade.  To create a large institutional edtech company, you are going to have to get good at selling to districts, and eventually to states.  This is slow, frictionful stuff.  

On the consumer side, by contrast, you can drive outstanding growth with a great product.  Several of the previously mentioned companies are growing 5-10% per week and have been for months or years.  That compares favorably with almost all consumer internet companies.  Many entrepreneurs are nervous that building a large network and monetizing later won't work, but historically companies who have built great products and large networks are able to monetize, so the perceived risk is probably higher than the actual risk for companies with both great products and high growth.

3 - Impact - for me personally, this is the most important, but i recognize that many are just trying to create viable companies, so you can skip this one.  The thing about education is that we have been conducting teacher-led, classroom based physical instruction for a couple of hundred years.  We are probably approaching our apex in terms of productivity.  It is possible that giving edtech tools to teachers for the classroom model could have similar effects as tech has had on companies.  Lets say optimistically that you could make the classroom 100% more productive.  The problem is that in all low income areas in the developed world and in the entire developing world, a 100% lift in effectiveness is inconsequential.  What learning needs is a 100x increase in learning per student, which is more likely to come with a paradigm shift rather than incremental efficiency gains.  Students learning directly online is such a shift.

4 - acquirers - there are three repeat acquirers in institutional edtech - Pearson, HMH and McGraw Hill.  It is possible News Corp will become an acquirer, but not much action yet.  At least one of these companies is usually going through bankruptcy and the others are quite price sensitive, because they are not growth companies, so any acquisition is measured by its ability to contribute to the bottom line in the short term.  Thus, many acquisitions south of $50m.  Consumer on the other hand is stacked with high growth acquirers looking for strategic fits.  Education is a $4 trillion space, so everyone on the consumer side is going to keep an eye on the market to gauge whether attention is shifting from learning in an institution to learning individually.    If your consumer learning company can sustain very high growth, you are making a case that you are drawing that attention.

5 - quality of life - again, if you are just trying to make a buck, skip this section.  Making the student your customer aligns your goals with theirs.  Things like "faster learning", "higher engagement", and "deeper understanding" are much more likely to drive revenue from students.  In the institutional space, these are important, but may well be trumped by how easy it is to add and delete students from your program or other things that make institutional life easier.  Personally, alignment with the student makes me far happier in the long run, because transformational approaches need alignment, they have enough friction because of the change they are creating.

Saturday, February 1, 2014

The Big Shift

When Rocketship started almost a decade ago, we were outliers.  We believed that students learned best when they were taught developmentally for academic skills and through projects for developing their hearts and minds.  This bifurcation between the methods for teaching was not generally accepted.  Most of the highest performing teachers and schools were not trying to teach each child.  They were developing amazing school cultures and work ethics that would help students to overcome their deficits.  

Fast forward to 2014.  Because of the popularization of blended learning, flipped classroom and a massive increase in classroom and at-home technology, most teachers and schools think a lot more about teaching each child today than they did a decade ago.  While a decade ago, it was considered insane to remediate the hundreds of skills that a student might be lacking from previous years, now it is on people's minds.  That is the good news.  

The bad news is that teaching each child using current tools is an intensive manual effort.  I sat with an amazing teacher for the first half of last year watching her assess and create learning paths for each child in her class.  It took her 10 to 15 hours each week to do this well.  The spreadsheets she used to track the skills and gaps of each child and plan their activities was amazing.   It worked fantastically!  Students were learning a ton in her class.  But seriously, how many teachers are going to do this?

We created zeal to solve this problem.  Our hope is that by reducing those 10 to 15 hours to a few minutes of a teacher's time each week, we will accelerate the shift to treating each child as unique.  Our goal is to make it so simple to teach each child that it is less work than whole-class instruction.  This will buy back time for teachers to teach the whole child, all of the skills that help children succeed in life - persistence, teamwork, empathy, how to solve hard problems...

Zeal's work has been intense this past year.  We have been working with a dozen classroom teachers through many iterations of our program.  We are so thankful to our early "zealots" for helping shape our system.  We are about three months away from opening up our closed beta program for teachers ready to teach each child.  If you are interested, follow @gotzeal and come to the website and sign up for our beta.   We are excited to accelerate the big shift to honoring each child's unique gifts and letting off some of the pressure teachers face.

Tuesday, December 24, 2013

The new vocationalism

In the past 30 years, “vocationalism” became a dirty word in education, especially among those of us serving low income students. VocEd meant a two-tiered system in high school with a few kids getting ready for college and the rest stuck in shop class, getting ready for something “less.”

But the ROI of a four-year college has changed, and our perception of the relationship between education and work has to change with it.  The reality is that most people don't go to college to stay in academia.  They also don’t go to college to “self-actualize” (although that’s a terrific outcome when it happens - whenever in life it happens).  They go to college to get ready for, and then get, jobs.  Don't get me wrong, for many of us, college was one of the most transformative experiences in our lives.  We built the beginning of our professional networks and gained a little bit of perspective on life.  These non-academic benefits are undeniable.  Yet the cost of college only works financially if you can get a good job afterward. That may or may not mean a traditionally “professional” job, but it should mean one that enables you to keep moving forward for the rest of your life on all your goals, personal and career.

We are moving into an era where people will, thankfully, have much more clarity about what jobs are out there.  They will also know what skills they really need (not mere guesswork) to succeed at them.  In order to match people to the jobs available, and help people fill the gaps in their skills that will keep them from jobs they want, we have to figure out how to evaluate and get people those skills as efficiently as possible. This is a new, middle-class “vocationalism.”  

The best examples of the new vocationalism are the developer academies springing up daily in San Francisco - dev bootcamp, app academy, hack reactor and the like.  They take untrained folks and in a couple of months give them the technical skills they need to start their first job as an engineer.  In many ways, the developer academies were a reaction to a perfect storm: a glut of college grads with debt but no jobs, and a tech sector with a ravenous need for engineers.  Crucially, tech companies can measure the real skills of a candidate in an interview and tryout process, not by guessing from paper credentials by looking at developers code on github and giving them tasks to do.

These dev academies live in the physical world.  They provide intense bonding experiences over a couple of months for the people going through them.  They are also the first signs of the new vocationalism.  Many people that went to these schools skipped college and are now thriving in high paying jobs.  Companies don't have to care that the students skipped college because they have relevant, valuable, measurable skills, and demonstrated they had the resilience to survive this intense process.  I have hired a couple of people for my engineering team with these backgrounds on an otherwise very senior team. They are smart young engineers with humility, energy and passion along with their skills - exactly what startups crave.

Will this new vocationalism in coding move to other sectors?  If employers become clear about the skills they need (not as easy as it sounds, since 70% or more of what experts decide and do is unconscious, or tacit, expertise), and the jobs are plentiful while truly skilled supply is limited, we will see one sector after another get over their fondness for college credentials and focus on what mastery looks like for a particular job. Even now, employers struggle to make newly minted BAs ready for work - in health care, for example, new nurses often require tens of thousands of dollars worth of retraining time before they can be effective.

Will this new vocationalism move online?  Again, it seems at least some of it is very likely to do so. (But not all: the first time a professional draws your blood should probably not be with you, the patient: “Sorry - this worked so well for me on-line!”)   The way Zeal's engine (and I think most other online learning engines) works is that if you can quantify outcomes for which on-line training helps, we can pick a path for you to attain that outcome through a set of learning experiences tailored to your specific existing skills and gaps.  We use data from everyone that has come before you to optimize these paths.  We can pay attention to specific learning characteristics you have by clustering you with others who seem to benefit from similar lessons.  That constant mapping and remapping of the best next experience tailored to you makes technology-enhanced learning's potential incredibly valuable.  

The current set of MOOCs, with their mass-produced, pre-recorded lectures have missed this  point entirely.  But don’t worry, when the goal is learning, and the market spends $4 trillion on it annually, entrepreneurs will bang on the problem passionately until you learn what it takes to make you successful at work.   

Since vocational training is where the jobs are, it will get a lot of focus, and innovation will flourish.  Bror Saxberg and I have been chatting about how Kaplan, the large education company, is working on this challenge- he’s their chief learning officer. Kaplan is beginning to work both internally and with companies on mapping expertise (both conscious and non-conscious) in a variety of fields in a systematic way (using evidence-based techniques like cognitive task analysis), and then backwards mapping those outcomes into courses and training (also evidence-based, to maximize learner success) that Kaplan can offer. This point seems obvious, yet Kaplan is one of the only higher ed organizations to approach learning in such a systematic way.  Udacity's refocus away from college and into this area will look smart in hindsight.  My guess is that their experience with San Jose State helped them to realize that the other 99% aren't the same kinds of students, nor have the same kinds of goals, as the current 1% of the world's kids who go to traditional universities.  It takes much more to help them succeed, to gain a meaningful career (along with other benefits) from their studies.  But it can be done, and it can be done at scale online, building the skills that students need to join the middle class.

So, if challenging domain-specific skills of all kinds move online, what purpose does our current brick-and-mortar school system serve?  Many people feel a lot of angst about this.  Here's the secret that every employer knows: domain-specific, knowledge-intensive skills are not the only skills needed for expert performance.  What are often called “soft skills” within a domain, involving social emotional intelligence and character skills, play an enormous role for success in jobs (and in life).  

When we try a new engineer out for a couple of weeks, we are actually assessing 80% their character and interaction skills at work and 20% their ability to code.  In any human activity, the need for strong personal and interpersonal skills, not just technical skills, will always be critical.   People who can't work with others, organize tasks, control their frustration, communicate, convince, persist, etc. will not do well even when they have the specific job skills.  Beyond the world of pre-kindergarten, we have massively under-rated teaching these kinds of skills in our education system.  
My hope is that schools at all levels - K-12, vocational, and college; online and physical - start to quantify and measure these skills much more precisely so that they weave job-relevant character building and communication into every interaction with students.  KIPP has started to do this and my bet is that it will pay off enormously in their college persistence rates.  This is where the in-person experience shines, when people can work together over long periods of time to model, coach, and change each other’s behavior to fit the character and communication skills that make you happiest and most successful with others.  Reid Hoffman of LinkedIn wrote a great book called "The Startup of You" on a particular form of soft skills (long-term planning and networking) and their importance in navigating modern life.  I think we can all look at our successes in life and realize that they are a lot of non-academic skills that matter.

This jump to the new vocationalism, both from a technical and human standpoint, is not unfolding evenly across all sectors. The perfect storm is moving to our entire country - we have millions out of work, millions of jobs unfilled, and a national need to regain our place as the most innovative and productive country in the world.  The new vocationalism can help to make the transition from old economy to new at the speed we need to make it.

Wednesday, November 20, 2013

5 things to remember about teachers when you are building your edtech product

1 - teachers are among the busiest people on the planet.  The best thing you can do for a teacher is to save them time so that they can focus more on their students.

One of the biggest uses for zeal is personalizing homework.  It is incredible how valuable saving a couple hours a week of assembly and grading of homework are to most teachers.

2 - a teacher lives and dies by how their school day goes.  Tools that make it go more smoothly (better instruction, better planning, better assessment, better management etc) are what teachers need.

A great example here is class dojo.  Teachers manage their school day with this tool and the adoption has been incredible.

3 - teachers are very social people by nature and care about human relationships.  The more your system unlocks that sociability, the more engagement you will get.

Edmodo figured this out better than anyone else.

4 - don't make the mistake of thinking a teacher's students are your customers.  If you are trying to improve the lives/performance of kids, you should, but remember that if the person choosing your software is a teacher, your value proposition has to be to them.

We spend a lot of time improving learning velocity of students on zeal, but make no mistake that an incisive report or graph that a teacher can use to better understand a student is worth its weight in gold.

5 - if you have not taught, it is a disadvantage, and the only way to overcome that is to spend a lot of time in the classroom user testing your product.

We have more than one teacher on our founding team, but we still spend at least 8 hours per week user testing with teachers and students.

Sunday, November 3, 2013

Why Beyond Schools?

A bunch of folks have asked me about the title of my blog.  Since I worked and led schools for a decade, I clearly have a lot of affinity for them.  So why "beyond"?  I think we have reached the limit of what we can load on teachers and schools and expect them to do.  It is a bit like moore's law, every few years the linear improvements that yield to chips doubling in density every 18 months is threatened, and a new solution needs to be developed to get back on the curve.

I think parents in many Western nations went too far in giving up responsibility for our children's life outcomes to schools.  The only way I see our kids making the kind of gains we want is a partnership between teachers and parents.

I taught in very low income schools in Nashville, TN for three years.  I tried to work hard to get families involved in what we were doing in class.  My co-founder at Rocketship, Preston Smith, was much better at this and his ability to bring the community into the school is a huge part of what makes rocketship succeed.  It also made clear how far the norm had shifted at the average American school towards parents passing responsibility to teachers for their kids academic success.  I don't think that is good.  Parents have to pay attention to their kids, because everything doesn't go well socially, emotionally or academically and any of these areas can really take your children off-track.

In very low-income communities, people are often working multiple jobs and have a lot of things requiring their attention just to keep the lights on and family fed.  If education takes too much time or capacity at home, it won't happen.  Often there are language barriers to understand their children's academic needs or parents themselves don't have the academic background to help on their own.

That is a very difficult set of challenges to overcome in order to help your children.  But it has to happen.  Parents have to be clear on what their children need and have to have the tools to help them. The closer we get to every child walking into class academically prepared, the more we shift the norm back to a partnership between parents and teachers.

That is what we are working on at Zeal.  If we can help parents play a bigger role in learning, we think our superhero teachers will have a fighting chance of helping them to grow up to their full potential.

Sunday, September 8, 2013

Are schools better than parents?

I am in the nice position as a third time founder that I no longer have to look at the world as a zero sum game.  My success and those of other entrepreneurs in learning technology are correlated in my opinion, not inversely correlated as I remember feeling in my first company.  So one of the things I try to do is spend time with other entrepreneurs, especially first-time entrepreneurs with good ideas.  It was startling to me at netgravity how many truly awful decisions I made as I was learning to run a company, and how much pain and anguish they caused.  A good example of this is that I had brought on two venture capitalists who were both from the client-server world when netg was a client-server company (ie people installed our software on their site instead of paying for it as a service and letting us manage it).  When I saw the first saas companies, double click and ad force, it was obvious to me that the business model would work better and the customer experience would be better if we managed the infrastructure.  I then went through almost 2 years arguing with my board over this and putting together several ill-fated strategies for becoming a saas company.  Because of course my vcs preferred the place they had always made money, client server, and they didnt want netg to be a saas company.  Ultimately I created a skunkworks to build our service which became a much bigger and higher growth revenue stream for us than the client server business and of course my board loved it then.  But those two years sucked because my inability to get us into saas quickly dragged my team into all kinds of time wasters and probably cost us several billion in market cap.

So fast forward to today in learning technology.  Its a traditionally horrible market that is about to become ridiculously good, but only if you respect the drivers that made it suck and the ones that make it beautiful.  The thing that has made learning tech suck for 30 years is that schools are exceptionally bad at buying things.  You can read other of my blog posts for the details, but anyone who has run these companies or served on boards can tell you the ways it sucks for as long as you would like to listen.  The thing that has changed is that students now have access to learning through their phones and other devices.  So you don't need to sell things to schools.  We even have examples of companies like edmodo and class dojo in our space who figured this out and are crushing it.

So why is it that almost every entrepreneur I speak with wants to sell to schools?  They all have their key insights on why their sales strategy will work 10x better than anyone's before.  And of course one things startups do well is to explore a huge number of approaches to a well understood problem.  So these companies fail, usually slowly and painfully as investors learn that in fact the buyer hasn't changed, their incentives haven't changed, and the startups outcomes dont change.

My only conclusion is that entrepreneurs, especially first time ones, are problem seeking and solving machines and the structural concern about whether the customer has any money is secondary.  Not only that, but because most entrepreneurs in this space have absorbed its culture, the idea that your buyer is the parent and not the school is very close to heresy.  I can't tell you the number of very smart people I speak with who cannot accept that schools are not the one and only vehicle to improving academic outcomes.  So the idea of engaging parents seems like it misses the point.  I think both of these biases far outweigh the actual reason most entrepreneurs give for selling to schools, which is that they don't know what parents will pay for.  This last one really doesn't take much imagination or creativity to figure out, so my conclusion is that people have actually never spent any time thinking about it, because of the blinders created by one and two.  I hope for the sake of the kids that we see more entrepreneurs break out of this mental prison.