In honor of the recent SXSWedu, which regrettably I was not able to attend, I thought it would be fun to put down a few thoughts about edtech, which I love—because, well, who wouldn’t? It’s one of the few trillion (with a “T”) dollar markets (aside from maybe healthcare and financial services), it’s technological, it’s about education of course, and, after all, I do have a kid.
First—a “market” look at the education sector. (These numbers are wrong—as usual—but the orders of magnitude should be “sorta” right and illustrative).
A little while back I caught up with Troy Williams, the president of Macmillan New Ventures, which aims to reinvent Macmillan (one of the largest textbook and education companies in the world) from the inside. Troy was one of the pioneers of the ebook and online library space and served on the board of the Boys and Girls Club of Greater Houston. He also served as Vice Chair of the Education Foundation of Harris County—i.e., Troy knows the education space cold. If memory serves me, during our conversation I learned that in the 1990s healthcare represented approximately 10–20% of the economy, but only 1–2% or so of total market capitalization (or at least somewhere in the single digits . . . btw, sorry, Troy, if I got these numbers wrong, but again, it’s the orders of magnitude that’s most important). Since then, the market representation of healthcare (one of those trillion—with a “T”—dollar industries) is more accurately representative of its composition of GDP.
Today, education faces a similar ailment, representing around 10–20% of the economy (or some double digit percentage at least), yet probably less than 1% of market capitalization. It seems to me then, like with healthcare, the potential for education to represent a larger component of market cap is obvious—with room to grow by as much or more than an order of magnitude. Those types of opportunities are a bit harder to screw up as an investor or entrepreneur, etc.
Economics + Delivery System + Product
I recently met Don Burton, managing director of the Techstars Kaplan EdTech Accelerator. Don previously worked at Goldman Sachs and McKinsey and ran business development at Disney before founding and running several successful education companies including Parent Partners (sold to the Washington Post), Global Education Network, Aha Learning Partners, eebee’s Adventures and Learning Edge Labs . . . i.e., Don knows the education space cold. He educated me on the contrast between 3 factors (economics, delivery methods and the product itself), as they relate to healthcare and education.
With healthcare, it is clear that there is a financial imperative for change in that the current state of the healthcare system in the country is unsustainable from an economic point of view. Secondly, there is a severe problem with the delivery of healthcare services, regardless of which side of the political spectrum you lean. All that said, the actual healthcare products (e.g., medical procedures, medication, and other medical service) are actually effective. They may not be as effective as we’d like, but they do in fact “work.”
Like it was with healthcare, it’s now clear that there is an economic imperative to reform or completely replace our education system. It should also be clear that the current delivery mechanisms are not serving large portions of the population sufficiently. So then—the last question is: does the product actually work? Does the curriculum-based system for teaching children, young adults and adults most effectively prepare the country’s population? Believers in progressive education would say no. They would say the product is broken as well. Therein lies the opportunity for edtech: a broken product, a broken delivery system, but (as it was with healthcare) an economic imperative to catalyze change in both . . .
Let’s hope it works.
[Disclosure: I have a handful of relationships in the edtech space including but not limited to the following…. I am an advisor to Admittedly (through the Entrepreneurs Roundtable Accelerator), eduClipper, and Figure 1; and I am an investor in Chromatik.]
Image Credit: CC by Sean MacEntee