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Entrepreneurial EdTech

Tap into the $9 billion market to save America’s schools.
Jennifer Chang

The first thing that stood out was how much older he looked, compared to the Pirate of Silicon Valley of our minds. Graying hair topped the familiar face that hid behind trademark wire glasses, and he wore a brown tweed jacket—a nice departure from the hoodies of today’s Zuckerbergs and Karps. Bill Gates stepped up to the lectern to a standing ovation at the education innovation conference SXSWedu, his swashbuckling days seemingly coming to a close to make way for something bigger.

Although Bill Gates is best known as the founder and chairman of Microsoft, programming has, in recent years, taken a backseat to philanthropic causes. In this new chapter of his life, the wealthiest man in the world pledges to give away 95 percent of his fortune as he champions the charity he founded with his wife, the Bill and Melinda Gates Foundation. One of the priorities of the Gates Foundation, in addition to eradicating Third World diseases such as polio and malaria, is education in the United States.

“Despite almost doubling of resources over a 20-year period, scores in math and literacy have stayed about the same,” Gates declared. “There are about 20 other countries—in the same period while devoting less resources—that have increased their scores.”

As the nation that birthed the lightbulb and sent a man to the moon, the United States has long credited its innovation and success to high- quality public education. In recent years, however, almost everyone, from bipartisan groups to industry experts, has lamented the state of that very system, especially in a competing global market. In an international assessment test of students in 34 countries, most of which were industrialized Western nations, the United States ranked a lackluster 14th place in reading. In science, our nation came in 20th place. And in math, the United States ranked 25th.

Education, as an industry, not only instructs our children and employs our teachers, but is the thread by which industries and societies are woven. When you tug at the thread, everything begins to unravel. Forty percent of our nation’s third-grade students are one or more grade levels behind in reading—an indicator tied closely to dropout rates and future success in school. Unsurprisingly, low-income children are fighting greater odds. By age 24, only 8 percent of low-income students have completed a bachelor’s degree. And if students drop out of high school between ages 16 and 24, they are an astounding 63 times more likely to be incarcerated, compared to college graduates. When comparing high school dropouts to high school graduates, one dropout will cost taxpayers an average of $292,000 over his or her lifetime, due to various factors including incarceration fees or how much less a high school dropout would pay in taxes.

More shocking still is how 75 percent of U.S. citizens between ages 17 and 24 from all socioeconomic backgrounds cannot pass military entrance exams because they either lack the critical thinking skills needed, have criminal records or are physically unfit. Even those who do graduate high school aren’t guaranteed the privilege of serving our country, as 30 percent of them lack the basic knowledge in math, science and English to pass the mandatory Armed Services Vocational Aptitude Battery.

But there is hope. The unacceptable reality of our education system is matched by the changing reality of technology in our everyday lives. Education technology, or EdTech, promises to not only help solve the ills of our schools, but also open up untold opportunities for entrepreneurs from many fields.

Bill Gates knows, perhaps more clearly than anyone, how technology can transform lives and revolutionize industries. “Innovation can change the world,” he said. “For our quality of education, technology comes along and plays a key role in boosting it.”

The innovative thinking spawned by our nation’s education system is exactly what is going to save it.

The Education of EdTech

Up until the last decade, our public schools have remained largely the same while many other industries—retail, entertainment, media—were becoming faster, cheaper and better for the consumer, often as a direct result of technology. (At SXSWedu, Gates joked, “The ‘technology’ in our classrooms has mostly gone from blackboards to whiteboards.”) Education technology has been a long time coming, but it’s exactly what can create the kind of deep, systemic changes our school system needs.

Many of us tend to think that EdTech simply means putting more computers in classrooms, but it’s a way to innovate everything in an outdated system, from learning and assessment to school infrastructure. There are three types of education technology: 1) instructional EdTech that the student sees, 2) testing and assessment that the teacher uses and 3) administrative or backend software that the teacher and school administrator use.

“The third bucket tends to be ignored a lot, but the third bucket is things like student information and data or portals for parents to look at grades,” explains longtime industry strategist and analyst Frank Catalano. “All three of those buckets are important, but when people think about technology in classrooms, they tend to think of stuff that generally faces the student, not the stuff that teachers use in lesson planning or that administrators use to run the school.”

Many education experts advocate a technology and teacher-led approach called blended instruction. In blended instruction, all types of EdTech are utilized, as teachers use data, feedback and personalized technology to supplement and shape their lesson plans (see “Teachers’ Pet Projects” for some examples). For middle school teachers with six classes of 25 students each, blended instruction makes a profound impact in personalizing the learning experience for each child, no matter how varied his or her level of understanding.

But effective blended learning can only take place if there are game-changing EdTech innovations that schools can use as tools. Entrepreneur Sal Khan’s Khan Academy, a Gates Foundation investment that was featured earlier this year in SUCCESS, is a library of hundreds of short, instructional online videos paired with step-by-step examples and practice problems. To date, Khan Academy has helped more than 10,000 teachers supplement their lesson plans with interactive videos. Gates, who uses Khan Academy with his kids, has called its impact on education “incalculable.”

The promise of EdTech is made possible only by entrepreneurial and innovative thinking—the kind that produces those incalculable effects. When the automated teller machine was introduced, nearly all focus group participants bristled at the idea of giving their money to a machine, when they knew and trusted Susie across the counter. What people in this research couldn’t envision was the convenience factor of accessing money 24/7 from an industry infamous for its limited hours.

“ATMs transformed how we think about banking in ways that nobody could foresee at the time they were introduced. Technology could do the same thing for education with the right emphasis put in the right places,” Catalano explains.

The Maverick Teacherpreneur

Dan Carroll, co-founder and chief operating officer of Clever, is one such entrepreneur—a teacher-turned-entrepreneur, to be specific. After teaching eighth-grade science at West Denver Prep, a public charter school with 90 percent low-income students, Carroll became the director of technology for the entire charter network and soon found himself frustrated with the archaic data integration system that his schools used and that many schools still use today. Every year, when students graduate, enroll or transfer, some poor soul in the information technology department needs to update or create new data systems for that student, for everything from classes to educational applications. The process is fraught with more complications if the school has new instructional software being implemented for every child. “In the past, if a school wanted to buy new software, [the administrators] would be emailing the students’ information, or faxing it over, or even things like calling [the software companies] on the phone and asking them to manually type in every student’s information in the system,” Carroll says.

Carroll’s frustrations resonated with many teachers, and he channeled it into addressing a long-neglected weakness in the education system, where data integration is cited as the No. 1 reason schools can’t try new software. Simply put, Clever doesn’t require painstaking manual entry, and it improves security and usability for both its clients (the learning software and applications) and the schools themselves. “I started Clever because software has to just work in order to get used in schools,” Carroll writes on the Clever blog, “My experience at STRIVE Prep taught me that online learning tools that are not integrated with school data systems don’t work.” When data integration doesn’t work, the instructional software doesn’t work either.

In 2010, while toying with the idea of an education startup, Carroll met Paul Graham, founder of prestigious startup accelerator Y Combinator, at a conference and asked him for advice on whom to talk to when starting an EdTech company. Graham bluntly replied, “You shouldn’t talk to anybody, because you shouldn’t start an education technology company. [The education industry] is a broken market.”

Undeterred, and perhaps motivated by Graham’s advice, Carroll and a few of his college buddies founded Clever two years later and applied to Graham’s accelerator program. Graham’s people at Y Combinator—whose previous startups include wildly successful Dropbox, Reddit and Airbnb, to name a few—were impressed by how Clever founders pitched themselves and invited them to join their Spring 2012 class. “Throughout the program, we sort of felt like the flag bearer, being one of the first K-12 education-focused companies in Y Combinator, if not the first,” Carroll says.

Fast-forward just a year after graduating from Y Combinator, and Clever has earned funding from heavy-hitting investors such as Google Ventures and Ashton Kutcher; won a plethora of startup awards; and most important, is used in more than 4,000 schools to help thousands of teachers to teach and even more students to learn.

The League of Extraordinary Superhackers

Graham’s evaluation of the education sector is a common misperception. In reality, revenues of the EdTech market total about $9  billion a year. From 2010 to 2012, venture capital investment in education startups more than doubled, and indicators point toward it continuing to grow at a tremendous rate.

“The world has changed around us and the system hasn’t kept up,” explains Stacey Childress, the deputy director of education for the Gates Foundation. “More than 90 percent of the $9 billion [EdTech] market is for-profit. It’s a big, huge market, and it’s mostly commercial.”

So the misapprehension of educational entrepreneurship has nothing to do with risk or opportunities but rather stems from the disconnect between the needs of the classroom and the know-how of the entrepreneur or engineer—an initiative the Gates Foundation aims to bridge.

“Market dynamics that promote really paying attention to user needs is a great thing. It’s not always the case right now in EdTech,” Childress says. “One thing we want to see a lot more of is great engineers and developers who have a lot of enthusiasm and energy for education actually working with teachers and kids to understand what the real learning needs are so that they’re creating products that matter, that matter for learning.

“Rather than finding the one great entrepreneur like Sal Khan [of Khan Academy] and really backing him heavily—although if we find others like him, we’ll back them, too—we’re trying to create more energy and momentum for teachers, for entrepreneurs, for engineers with great ideas, to focus on learning problems or challenges that aren’t getting enough innovation and create incentives for them to do it.”

One such way for creating incentives and momentum is with a set of literacy challenges, similar to grand challenges the Global Health side of the Gates Foundation runs. Grand challenges are great scientific challenges that need research and innovation, and the Gates Foundation puts funding and prize money on the table for teams to solve. Likewise, the literary challenges consist of thoroughly surveyed, researched and codified classroom needs from what hundreds of teachers have told Childress’s team is missing from their arsenal of reading and writing technology. On Feb. 4, 2013, the Gates Foundation announced its first Literacy Courseware Challenge, with an open invite for anyone to apply for funding to continue developing his idea.

A few months after announcing the literacy challenge, the Gates Foundation received 151 applications from individuals and companies who claimed to have a full or partial solution to the common core writing and reading challenges most students and teachers face. “151 separate applications,” Childress emphasizes. “We couldn’t have found 151 companies, entrepreneurs or products in three years, running around the country looking for them.”

Before joining the Gates Foundation, Childress attended and later joined the faculty at Harvard Business School, teaching and writing about education entrepreneurship. Prior to Harvard Business School, Childress was an entrepreneur herself, co-founding an enterprise software company. And at the very beginning of her journey, before entrepreneurship, before the Gates Foundation, and even before becoming a Harvard legend as the first female elected by her HBS classmates to deliver the graduation address, she taught public high school in Texas. While speaking with Childress, it’s clear that Bill Gates’ foundation isn’t just an eccentric billionaire’s pet project—there are real teachers, real entrepreneurs and real people who care, working on the ground level. Skeptics and teachers hesitant to change are some of the exact people Childress and her team attempt to help.

“Teachers who are so committed to their students and who are good, solid teachers can actually do their jobs twice as well as they do today with the same amount of effort and time,” Childress says. “I think it’s a disservice to teachers to say, ‘Well, if you would just work two or three hours more a day, if we just had a longer school day or year, and you agree for the same money to work a longer day and year, only then can we get [positive] results in kids.’ What if teachers, who care deeply for their kids and in the same amount of time as they’re spending now, are about two times more effective? I think teachers deserve that.”

Teachers deserve better tools, and among other things, they also deserve to have a hand in making those tools. In an interesting coalition of teachers and two tech magnates, Bill Gates’ foundation has teamed up with Facebook to do a series of “hackathons” on education. In these Facebook-Gates Foundation hackathons, called HackEd, about 100 to 200 people from all walks of life—teachers, students, entrepreneurs, developers and engineers—meet, form groups, spend the entire day hacking on a particular set of problems, and at the end of the day pitch their prototypes to a panel, with three teams winning a cash prize to fund their app or program. At the first HackEd in September 2012, 30 prizes totaling $2.5 million were awarded—not too shabby. Although it’s unlikely that a one- or two-day hackathon will solve any deep, systemic problems in education, the collaborative model it promotes and the visibility it brings highlight its potential.

“Getting more of that kind of dialogue going between product developers, engineers, entrepreneurs, and teachers and kids and learning scientists is a big goal of ours. The hackathon day—or three of those days—don’t totally solve it, but it creates momentum and enormous visibility for those goals, because of the ability of our two organizations to get attention,” Childress says.

This dialogue and participation across all industries, not just those in education, is one that EdTech analyst and strategist Catalano heavily endorses. “It’s important to talk to teachers and talk to students, but don’t let it completely constrict your thinking,” he warns.

“If the music industry knew exactly what it [needed] and music consumers really knew exactly what they wanted, they would’ve been the ones who created iTunes. And they didn’t. It took somebody from the outside, who didn’t come from the industry but knew enough about it and was informed by the people in it and the customers to do something transformative. To me, that kind of plays against the concept that only teachers or education administrators can come up with good ideas. That’s not true. They have important input. But sometimes to do transformative thinking, you need somebody from the outside who can sort of internalize the issues from a new perspective.”

Back at SXSWedu, Bill Gates charmed the standing-room only crowd with geeky humor—praising Luke Skywalker and Yoda as an ideal student-teacher relationship—but ended with a serious call to action. “[The results] are binary. Like in health care, you either reduce the deaths or you don’t. We either improve the graduation rates—improve math and literacy—or we don’t. We are counting on the creativity and commitment of this group.”

Education is changing, and technology is playing a major role. Check out some of the companies that are industry leaders.

Post date: 
Aug 11, 2013

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