EdTech News Roundup - Week of 6/1
Guild raises and Chegg gets creative
Hi there,
Lots to cover this week, on to the news!
Funding / M&A
Guild raises $150M on $3.75B valuation: see “stories” below for more thoughts!
Advanced Welding School raises $25M: Shoutout to Alberto Arenza for finding this one! A reminder that both ISAs and bootcamps as learning modality are still in their early days and will (hopefully) have applications greater than software development. One note: I’m pretty sure this is financing for their ISAs, not traditional equity financing.1
The Vista < > Pluralsight acquisition machine starts revving up: Vista Equity, which acquired Pluralsight at the end of last year, frequently uses a “roll up” strategy with their investments. Powerschool, which recently filed to go public, is a recent example of this strategy - they’ve made ~10 acquisitions since Vista took them over in 2015. I expect a similar story with Pluralsight.
Stories
Guild grows their war chest (same link as above)
COVID was good to Guild. According to Techcrunch, revenues “more than doubled” since last March.2 I’m not surprised at their success, but the revenue growth felt unintuitive to me given their core audiences are employers and frontline workers, groups in notable conflict through most of the pandemic.
Perhaps as a hedge against exactly that problem, this funding round will be used to invest in their “Skills Marketplace”, which should be equally applicable to frontline workers as the 3M unemployed and 5.5M women and Baby Boomers Rachel Carlson, Guild’s CEO, cited who left the workforce during COVID.
I’m normally pretty down on any model not tied to degrees or specific credentials, but think Guild has a specific opportunity here. Amazon set the pace for large employers, investing $700M in frontline employee development opportunities. Guild, which works with some of Amazon’s biggest competitors, can pitch similar programs leveraging the Skills Marketplace on top of their core Tuition Assistance business.3
As a final note, I hope we get to see Guild in the public markets soon!
You can be a “creator” on Chegg now
Chegg built a marketplace for Higher Ed faculty to buy/sell lesson plans. Calling this a “Creator Economy” play gets an eye roll from me - a year ago this would have been equally important and called a course materials marketplace - but there are at least 3 different reasons this is an interesting strategic move from them.
Turning foe into friend: historically, Chegg was not exactly a professor’s best friend. The announcement reads like an attempt by Chegg to build stronger bridges between Higher Ed faculty and the company.
Not-a-publisher: This isn’t quite letting professors publish a textbook, but it is pretty darn close to courseware. To date, the publishers seem to at least have a truce with Chegg - Cengage even has a partnership with them. I’m curious if this starts souring those relationships.
Chegg as an education holdco: Chegg now has - takes a deep breath - Textbook Rental, Flashcards, Writing/Other Tutors, Video Explanations, Math Solver, Used Textbook Buy-back, Internships, Bootcamps (via Thinkful), some sort of Life Advice Vertical, and some sort of Financial Advice Vertical. All under one umbrella!
AI-only Proctoring not quite ready for prime time
ProctorU announced that they would no longer sell their standalone AI-evaluation of test takers.
It would be fun to rag on “AI” as a concept, but, unfortunately, there is important nuance beneath the headline! The reason ProctorU is making this change has nothing to do with their software.
Rather, they are making the change because faculty using this tool were auto-failing students rather than reviewing the potential cheating incidents that ProctorU’s systems had flagged. ProctorU will now conduct these reviews as part of their (more expensive) service before flagging cheating incidents.
I will spare y’all the re-hashing of why the best cure for cheating is better learning design (see UM Dearborn’s decisions to ditch remote proctoring). But! I do encourage you to think about this assessment of unintentional effects for any software you are involved with.
An ISA-backed bootcamp for Argentinian Dance4
In Ryan Craig’s latest post, the connection between Lambda school and ballroom dancing is…I mean, at least it wasn’t a Yale reference : )
There is a lot to break down in this piece, including some back-and-forth between Ryan and Lambda’s CEO, Austen Allred, over the data used. I’d like to focus on two higher-level takeaways:
Being a market leader puts a target on your back: Lambda | School | gets | a | lot | of | press. Seriously. This can be both a blessing and a curse. For CEOs and aspiring CEOs, I would watch closely how Austen handles both the good and the bad.
Building a school is hard: A concept I’ve been working on recently, are there any examples of online schools (traditional or bootcamps, but not platforms) scaling to 10,000 students in < 10 years? We’ve certainly seen institutions grow bigger than they ever could with butts-in-seats, but it seems like the growing pains of going from ~100 students/customers to 10,000 are more acute than perhaps any other industry.
Other Tabs
Laureate continues shedding assets - someone please write a story about this!!
Things I’d like to learn more about
The Great Online Game: I spend a lot of time thinking about the assumptions that go into building a career. The education, social interactions, and things you need to do in order to be successful, no matter your definition of success. The pace of change in this realm is hard to keep up with. Packy McCormick, a person who started writing, with no formal training, about business on the internet last year and now (likely) makes six figures+, takes a stab at some of the assumptions we should all be resetting.
This may only be interesting to me, but there is a weird trend of treating debt/securitization financing as if it were a venture round. Lionizing venture rounds has its own problems, but this trend makes me throw my hands in the air and sigh when trying to evaluate how the business is doing without access to their financials.
As much as I would like to speculate on the amount, I can only use heuristics like revenue multiples, which is too imprecise for my taste in this newsletter.
The Forbes article about Amazon’s program also happens to be written by one of Guild’s now employees, then investors, Allison Salisbury. Chess, checkers something something something…
I considered the subject line “An AI-Creator raises money for a new dance move”, but wasn’t sure the TAM for that joke was > 1