{"id":796,"date":"2013-10-08T10:00:53","date_gmt":"2013-10-08T17:00:53","guid":{"rendered":"https:\/\/www.tynker.com\/blog\/?p=796"},"modified":"2023-03-06T18:23:02","modified_gmt":"2023-03-07T02:23:02","slug":"tynker-in-the-news-kqed-can-startups-disrupt-the-slow-moving-education-market","status":"publish","type":"post","link":"https:\/\/www.tynker.com\/blog\/tynker-in-the-news-kqed-can-startups-disrupt-the-slow-moving-education-market\/","title":{"rendered":"Tynker in the News: KQED: Can Startups Disrupt the Slow-Moving Education Market?"},"content":{"rendered":"

KQED<\/span><\/a> <\/span><\/h2>\n

10\/08\/13<\/h4>\n

Every year, schools spend billions of dollars on supplies and instructional materials and staff. A lot of that money flows to a few textbook publishers that create content, test-prep, even the tests themselves. Now, entrepreneurs and venture capitalists in Silicon Valley are looking for ways to disrupt this market, revolutionize schools with technological innovation and make some money.<\/p>\n

\u201cEverybody\u2019s waiting for the Facebook of education to come along,\u201d said Trace Urdan, research analyst with Wells Fargo. He\u2019s been watching the education market for 15 years, working with institutional investors to predict the right bets.<\/p>\n

\u201cThe biggest mistake I see, and have seen for a while in this space, is investors and entrepreneurs thinking things will happen a lot more quickly than they do,\u201d Urdan said.<\/p>\n

Education is a tough industry to build a new business. It\u2019s bureaucratic, slow moving and political. The teachers using the technology don\u2019t have the power to make purchasing decisions for school districts. Meanwhile, administrators are under pressure<\/a> to spend tax dollars judiciously and can be wary of gambling limited resources on start-up businesses or products that don\u2019t have long track records.<\/p>\n

To get around the slow-moving system, a lot of ed-tech entrepreneurs are selling directly to teachers, parents and even kids.<\/p>\n

One company, Mountain View-based Tynker<\/a>, ran a summer camp to expose kids aged eight to 13, and their parents, to an online program designed to teach kids the computational thinking required in computer coding. The camp cost $600 per camper, not a lot in the big scheme of things for Tynker. But, the camp helps market the \u201cTynker at Home\u201d product to parents.<\/p>\n

 <\/p>\n

‘A Trillion-Dollar Industry’<\/strong><\/p>\n

Tynker CEO Krishna Vedati has already founded two successful commercial tech start-ups. He and his co-founders are trying their hand in the ed-tech world partly because they have kids now. But, also, there\u2019s money to be made.<\/p>\n

\u201cThis is a trillion-dollar education industry out there and parents are spending tons and tons of money on education,\u201d Vedati said, referencing his own willingness to send his kids to Stanford summer camps. \u201cYou just have to figure out \u2014 is your product valuable enough for them to pay for it?\u201d<\/p>\n

Vedati thinks parents will see the value in teaching kids how to code. After all, many of the well-paid and interesting jobs emerging now involve computer programming. He\u2019s betting that parents will want their kids to get an early start on a necessary skill set.<\/p>\n

\u201cNow that we\u2019ve become parents of kids ages eight and six, and my co-founders and my colleagues have kids, we all realized tech is changing so fast, but school is not,\u201d Vedati said.<\/p>\n

More than 3,000 teachers across the country are using Tynker’s online program in the classroom. The content is aligned to Common Core State Standards and includes lesson plans so the content can fit in with other class work.<\/p>\n

 <\/p>\n

Looking for the ‘Sweet Spot’ in the Marketplace<\/strong><\/p>\n

Tynker currently uses a \u201cfreemium model,\u201d common with ed-tech startups. The base product is free for schools, but if teachers want more advanced features like tougher curriculum or assessment tools, the school has to pay for it.<\/p>\n

\u201cI think there is an absolute market fit for what we are doing,\u201d Vedati said. \u201cThen comes the business model. We are kind of exploring what is the sweet spot that becomes a repeatable model.\u201d<\/p>\n

Vedati is dreaming big. He says Tynker can get 10 million users worldwide, and if 5 percent pay for enhanced features, then the revenue stream will be strong enough to offer the base product free to those who can\u2019t afford it. That\u2019s important to him.<\/p>\n

Individual entrepreneurs like Vedati aren’t the only ones taking a stab at the education market<\/a>. Sequoia Capital has done well for itself supporting companies like LinkedIn, PayPal and YouTube. The company is very selective, only investing in 12 companies a year. This year four of the 12 are in ed-tech, a pretty good indication that Sequoia sees promise in this industry.<\/p>\n

\u201cThere are clearly companies that are succeeding already,\u201d said Sequoia Capital<\/a> Partner Bryan Schreier. \u201cThere is not only revenue, but profit.\u201d<\/p>\n

By and large the companies Sequoia invests in are bypassing school districts and “selling” directly into classrooms. Schreier says if teacher practices change, whole schools will begin to follow suit, opening up opportunities.<\/p>\n

\n

\u201cEverybody\u2019s waiting for the Facebook of education to come along.\u201d<\/p>\n<\/div>\n

\u201cIf your product becomes absolutely core to that market and to how people are educated, the opportunities to monetize tend to present themselves,\u201d Schreier said. In other words, get teachers to love the free product and prove its effectiveness, then down the road, districts will pay for it.<\/p>\n

But does this model have the potential to shake up the old education market, as many predict?<\/p>\n

Trace Urdan from Wells Fargo is one of the few skeptical voices on this topic. He doesn\u2019t think the explosion of ed-tech companies and investment will hurt traditional textbook giants like Pearson and McGraw-Hill that still dominate the market.<\/p>\n

\u201cThe textbook publishers are absolutely paying very close attention to every little startup that gets funded, and every application that\u2019s out there that\u2019s going into the classroom,\u201d Urdan said. He thinks most startups will run out of funding and the big publishers will buy the best ones at bargain prices. And in his opinion, schools will be happy to buy from established vendors because it\u2019s less risky.<\/p>\n

\u201cI think at some level all of this investment will end up being productive in some way, even if the way it\u2019s productive is that at some point Pearson will buy them and bring them to market,\u201d Urdan said.<\/p>\n

No matter who ends up profiting, the new ideas could ultimately change the way kids learn. For many people working in ed-tech, that\u2019s always been at least part of the goal.<\/p>\n","protected":false},"excerpt":{"rendered":"

KQED  10\/08\/13 Every year, schools spend billions of dollars on supplies and instructional materials and staff. A lot of that money flows to a few textbook publishers that create content, test-prep, even the tests themselves. Now, entrepreneurs and venture capitalists in Silicon Valley are looking for ways to disrupt this market, revolutionize schools with technological innovation and make some money. 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