Is the next big thing in Ed Tech a business model?
The words ‘digital’ and ‘innovation’ are so often used together, but these days simply creating a product that is digital doesn’t mean you are being innovative. In education we often talk of innovations in learning, but less about innovations in the business models behind learning experiences.
To many, the education market looks like a no-brainer to target. There are around 8 million pupils attending 24,000 schools in England, with the Department for Education spending £50 billion per year. That looks like a huge market to address and many startups flock to the idea of creating a product they can sell to schools. They think of how much difference their product could have made to their own schooling and how huge a business opportunity that is when you multiply it by those 8 million pupils.
Unfortunately one of the strongest narratives from my last three years working with education startups is just how difficult it is to sell to schools. Even with interesting products with well conceived learning experiences, selling to schools is a challenging model to build you business on.
I’ve heard successful business owners, investors and mentors to startups stand on a stage and tell entire audiences: “don’t sell to schools”.
There are many reasons for this. Although the market may be huge, it has little in the way of liquidity. A huge proportion of a school’s budget is spent on staff salaries and the sector is understandably systemically resistant to replacing spend on people with spend on technology. It is also a huge challenge to market to schools. Most of their staff spend much of the day away from communication channels. Being largely outside of the commercial world, the language and techniques of sales and marketing often does not sit well.
These and other challenges should not be underestimated. Yet it does seem a huge loss that efforts to innovate with learning technology in a business context could end up quite deliberately avoiding schools.
Free trials, freemium models, direct selling subscriptions to schools or parents; there are many business models in action. It’s rare to see something with a truly different approach, but in the last week I’ve become fascinated with the approach of language learning service Duolingo.
As education blogger Donald Clark explains in detail, Duolingo is a very smart system for learning foreign languages with a well designed experience and content. With New Year fervour I started using it to learn some French quite successfully, but was amazed that such an accomplished system was completely free and with no adverts.
Duolingo’s business model works by having those learning languages translate real web pages rather than reams of content made up by a teacher. As this is valuable work that can generate revenue for the company they don’t need to charge the users. All of this happens with clever technology that distributes texts across many learners and aggregates their translations to ensure accuracy.
"Since people are creating value while they are learning they don’t have to pay with their money, they pay with their time."
Luis Von Ahm (Founder of Duolingo)
The system is undoubtedly innovative in technical execution. It also represents some much needed innovation in the business models for learning technology.
Some have questioned the ethics of commercially exploiting the time of learners, others would say that this is time they would have spent (and paid a lot for) anyway. Exploring such questions is necessary and important with any innovation. Discussions of ethics often reflecting the newness of an approach.
There are lots of people and organisations out there making compelling and effective learning technologies that could work well in schools. Often the problem is delivering them in a way that makes enough money to keep them going.
Could the next big innovation could be less about the learning experience and more about the business model that makes an existing approach sustainable and scalable?
Image credit: CC BY SA Ken Teegardin