Education Trends 2020 Part 1/4

This is the first of a four part series in an effort to disclose all of the insights I’ve learned from talking to hundreds of companies and diving deeply with a couple of dozen portfolio companies (lambda, outschool, prenda, getsetup, contra) in edtech and the future of work. My hope is that this is helpful to founders in developing ideas for new companies, and to funders for evaluating which companies are taking advantage of the changes we are seeing.

1. Education can be delivered online without loss of fidelity. Through live and asynchronous collaboration between teachers, TAs and peers, the social and motivational aspects of online education can be as good or better than physical settings.

This sounds kind of obvious, but I’m struck over and over by how few founders actually believe it. As adults, we all harken back to our in-person learning experiences as the highest and best form of learning. That has changed. For good. Get over it. For me, seeing students at Lambda work on projects in teams, or seeing Outschool students laugh and get frustrated and interested and connected with teachers, all online, made this obvious. Your education company should be live online.

2. Large class live instruction combined with peer group collaboration can lower the price of delivery by an order of magnitude, but is much more engaging than MOOC-style courses.

We had to go through the phases of online learning and the MOOCs were an important step. But that is over. Although the business models were great, the learning and engagement was not. Humans love live instruction, it has energy. Doing that in large groups allows similar economics to work that the MOOCs had. Combining that with peer collaboration makes it personal. If I could end static recorded video-based instruction masquerading as authentic learning right now, I would. Getsetup is a great example of service (for seniors) where large class is combined with peer group effectively.

3. Free is a major disruptor in education. The idea that a student does not pay up front and take the risk themselves massively expands demand and creates far more equity.

Building something of significant value to the student, but shifting the risk away from the student to your company or the current or future employer is the way to build a very large education company. Prenda does this for parents in K12 by serving as a public charter school, Lambda does this for students by deferring tuition until they get a job.

4. ISA’s are immature.

Everyone is enamored with ISA’s. I would say we have more experience with them at Lambda than anyone else. I’m not convinced that they are the final solution. They are unregulated, which allows local regulators to impose their own rules on you. There are also not a lot of buyers for unregulated securities. I would suggest that companies think about shifting financing risk away from the student, more than ISA as the specific mechanism for achieving that.

5. Industries which already have employer pay for fresh hires or employ internships or apprenticeships already are significantly easier to fit with modern school models.

Paying for fresh hires, usually through recruiting fees, makes school models much easier. SV Academy, which trains and places Sales Development Reps (SDRs) has traditionally made most of their revenue through employer placement fees. Likewise, in areas like the construction trades where employers have employed apprenticeships, it’s far easier for schools to build financing models where they take training and hiring risk for employers in return for their fee.

If you enjoyed this first piece in the series, here is the next one.