EdTech News Roundup - Week of 7/26
Get in loser, we're going shopping
Whoa, many new readers this week!
I feel fortunate to be in your inbox and will work hard to earn my keep. A few weeks ago, I posted the general framework I use when writing here. TLDR;
Keep it short, but dense
Be positive, but inquisitive
Have a little fun writing
It took a while to build the confidence to post publicly about this newsletter — thank you to everyone who has encouraged me along the way : )
On to the news!
Funding, M&A, and IPOs
Class raises $100M: In case you had forgotten, everything Tom Brady touches turns into gold. Including, apparently, his EdTech investments. More seriously, Class may turn into the canonical COVID-era EdTech case study. Founded in March 2020 and without a product (an education-specific Zoom add-on) until last summer, they have had 1 (one) enterprise sales cycle – traditionally ~Jan/Feb to June – on which to base their financial models. And yet, Class is seeing worldwide demand and gets to ride Zoom’s tailwinds for growth. We will see where it takes them!
Byju’s upgraded to Amex Black: Byju’s has spent over $2B on 6 acquisitions this year, including almost $1.5B in the past 2 weeks. I won’t spend a ton of time on them here because I’ve written about them the past two | weeks. I can’t keep up!
For the past four years, Walmart has had a “dollar-a-day” tuition assistance program with Guild.1 They’ve now expanded that program to make it 100% free (tuition and books) for 1.5M Walmart employees.
Walmart and Starbucks are the most recognized employers providing tuition assistance at scale. Walmart is setting the standard for magnitude of investment in programs like these and made this announcement in the midst of one of the most challenging hiring environments in recent history.
Four years since starting their TA program, Walmart has had 52,000 participants and 8,000 graduates from their program. In 2019, five years into their own effort, Starbucks had only 3,000 graduates, though they did set a goal of 25,000 graduates by year 10.
The Guild team deserves a lot of credit for the way they’ve grown the Walmart account over time. I’m excited to see who among Walmart’s peer set will consider similar programs!
The Tackling Transfer Policy Advisory Board, funded by some of the most important non-profits in education, has set its sights on improving students’ ability to transfer credits from one institution to another.
Today, over 40% of credits that US HED students attempt to transfer are lost. This is a critical topic and I was excited to dig into the report. Unfortunately, it doesn’t acknowledge that many institutions have their highest unit profits on the same classes that students attempt to transfer for credit. These courses are the 100+ seat “101” classes with 1 professor and an army of TAs.
No matter a university’s good intentions, accepting any and all transfer credits is at odds with their financial survival. I don’t blame universities for behaving this way. If you buy a ticket to San Francisco on United and then decide you want to take JetBlue, United is going to make your life difficult and JetBlue is going to make you pay full price.
Now, that doesn’t mean this problem shouldn’t be solved. Broader acceptance of transfer credits would make a difference for millions of students. But, until university finances are acknowledged as part of the problem, this challenge will persist.
The whole memo is insightful, but I want to focus on one specific thread the On Deck team wove so well:
The best credential is the one you don’t need to talk about: There are, literally, 1 million credentials documented in the wild today. We spend a stunning amount of time talking about them as an industry. The closest this memo comes to talking about an official On Deck credential is (paraphrasing), “people put On Deck on their Twitter profiles, isn’t that funny/cool!?”
And yet, there is widespread respect in the tech industry for folks who have gone through On Deck programs. The On Deck team recognized that good content and good students will lead to a meaningful credential, not the other way around.
Pearson launches an app: Pearson launched a consumer e-book reader app. Interviewed on the topic, Pearson’s CEO said, “I think many will buy it.” Also tucked into the announcement was a comparison to Cengage’s competitive app, which grew to 630K users over the past year
Handshake “reinvigorates” Duke career center: I love trying to interpret the subtext of PR/news articles, particularly ones with multiple organizations involved, like this one with Duke and Handshake
College sports continue to unravel: Texas and Oklahoma are planning to leave their conferences and join the SEC, the top college football conference in the country
Things I’m thinking about
I avoided the biggest news of the week in the Stories section - the crackdown on VIPKid and other online tutoring companies by the Chinese government. According to the Economist,
New regulations bar any company that teaches subjects on the school curriculum from listing abroad, having foreign investors or making profits. When it comes to teaching schoolchildren, no one should get rich.
At face level, this looks bad for the Chinese EdTech sector and, perhaps, good for EdTech investment in other markets. However, the reason I put this story in this section is that the Chinese market behaves much differently than the US market and many (most?) other international markets.
So, instead of opining, I am just watching and reading here. Techcrunch did a good write-up (paywalled, unfortunately) of how other VC firms reacted to the news. Victor Hu, who has been around the EdTech game longer than almost anyone in the industry, also shared some thoughts.
As this email list is growing, I’m going to start linking to my disclosure page at the bottom of each note. I work hard to stay neutral here, but it’s important to me that you all know my potential biases!
Tuition assistance (TA) = employers paying for continuing education for employees, typically leveraging a federal tax benefit to do so. That tax benefit goes up to $5,250 per calendar year, making this value something of a magic number in the TA industry.