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The Education Renaissance
If you bought a flatscreen TV in 2000, it would’ve cost you $5,000. If you go to Best Buy today to buy that same TV, you can get it for $75. That’s a 98.5% drop in price.
Yet a college graduate in 2000 paid $50K for her four-year degree at a public university; today, she has to shell out $100K (and $170K if she’s out-of-state).
Technology is making life more affordable, more accessible, and higher quality, but its impact is uneven. I’ve shared this chart before, but it’s worth sharing again:
The cost of education is growing 8x faster than real wages and Americans collectively hold $1.5 trillion in student debt.
As a $1.6 trillion market in the U.S. ($4.7 trillion globally) and the nation’s second-largest sector by employment (behind only healthcare), education is an attractive space for entrepreneurs. The sector is ripe for reinvention.
Historically, education has been a challenging sector for new company creation. The industry is highly regulated, and new products typically need to sell into schools, which have slow sales cycles and inconsistent decision makers: at one school, the principal may make the purchase decision; at another, the science teacher; at another, the district superintendent. On top of that, most schools and districts have thin budgets.
Uninspired (or nonexistent) federal leadership has exacerbated those problems. As the world and job market have rapidly globalized and digitized, America’s education system has largely stayed the same. Innovation is stagnant. Betsy DeVos, the Secretary of Education, has little to show for her four years. (Though never forget when she argued in her confirmation hearing that schools should allow guns in case of grizzly bear attacks.)
Covid-19 presents a rare opportunity for change in education. The pandemic is accelerating two major shifts: (1) Education is increasingly being delivered direct-to-learner, and (2) Learning is increasingly lifelong.
The Internet transforms distribution. Learners today can use technology to access education more quickly and more effectively.
Going direct-to-learner broadens the set of potential learners while obfuscating archaic, slow-moving, highly-regulated systems.
Historically, education spend has been concentrated in the first two decades of life. This was a fit for an industrial world in which skills could stay relevant and valuable throughout a worker’s career.
But this no longer works in a technology-centric world. Tech has dramatically accelerated the pace of innovation, forcing workers to refresh skills throughout a career.
In the future, learning will bifurcate. “Horizontal skills” will be taught early in life: these skills will form the foundation for lifelong learning, giving people the ability to reinvent themselves again and again. Later in life will come “vertical skills”, which will be job-specific.
Workers will have three, four, or five careers. Many of these careers haven’t been invented yet: 85% of today’s college students will have jobs in 11 years that don’t currently exist.
In this piece, I’ll look at five of the most interesting trends in education that cut across direct-to-learner and lifelong learning.
1️⃣ Tutoring Marketplaces
3️⃣ Business-in-a-Box Platforms
4️⃣ Reskilling Workers
5️⃣ Unbundling College
💡 Tutoring Marketplaces
Of the world’s five most-valuable education startups, four are tutoring businesses:
To be fair, each of these companies now offers additional learning products. But each has its roots in tutoring, and the scale of these businesses underscores the beauty of the tutor marketplace model. These businesses benefit from tipping loops, with network effects kicking in between tutors and learners. Each additional tutor and each additional learner makes the marketplace more valuable for everyone.
Tutoring marketplaces are largest in Asia, where families spend significantly more on supplemental education than their American counterparts. Urban Chinese spend 43% of household income, while Americans spend 2%.
I don’t expect America to reach East Asian levels of supplemental education spend, but I do expect that 2% to increase as workers turn to less traditional, more technology-driven forms of education delivery.
One compelling startup is Cambly, which offers a marketplace for English language tutoring. Cambly is unique in that its tutors and learners engage in unstructured conversations. Learners just want practice chatting in English.
As one Reddit post puts it:
The supply side of Cambly’s marketplace—the tutors—is huge, with any English speaker able to easily earn income. Barriers are low (similar to driving with Uber), and unstructured conversations have the added benefit of being low effort, with tutors able to earn income while running errands, cleaning the house, or commuting.
In a globalizing world, there’s massive demand for English language skills; Cambly has a scalable model that positions it to meet that demand.
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People like to be entertained, typically more than they like to learn. Some of the most innovative education startups are “edutainment”, combining elements of education and entertainment.
By one estimate, online videos will make up 82% of all consumer internet traffic by 2022. YouTube is already a global destination for learning: a Pew study found that 51% of YouTube’s 2 billion monthly viewers are using the platform for education. TikTok is following suit in short-form video, testing a new “Learn” tab to show viewers content around making food, producing art, how scientific processes work, and so on.
In The Building Blocks of Tech, I wrote about how Roblox and Minecraft are teaching kids “low code / no code”, preparing them for a future building business apps in Airtable or Retool. Game creation platforms like Roblox cleverly and covertly package education within entertainment.
In a similar vein, many kid-focused tech and media companies are edutainment. In Building for the Barbells, I wrote about how Tappity (YC S20) is creating interactive science content and how Hellosaurus (also YC S20) is using “kidfluencers” for educational content. There are dozens of other education-adjacent startups targeting kids.
An example worth highlighting is Moonbug ($265M raised), which creates and cultivates media content brands for kids. Among other brands, Moonbug is behind Cocomelon, a YouTube channel founded in 2006 to provide kids with free education content. Today, Cocomelon is the 3rd-most-subscribed YouTube channel in the world with 97 million subscribers and 3 billion monthly views.
Edutainment isn’t only a kids phenomenon. Companies targeting older learners are increasingly borrowing elements from consumer internet, digital media, and gaming. A good example is Duolingo—the world’s 7th-most-valuable edtech startup at $1.5B—which gamifies language learning.
📦 Business-in-a-Box Platforms
The average teacher in the U.S. makes $60K a year, with starting salaries often under $40K. But with the Internet, teachers are able to quickly and cheaply apply their skills to learners around the world. This means that teachers can circumvent outdated systems, better earning income from a larger pool of learners. “Business-in-a-box” startups provide the infrastructure for this shift.
The business-in-a-box solution is being applied to different subsets of education:
Outschool (Series B; $55M raised) targets K-12 students for interest-driven learning. Built on Zoom, classes are often quirky: learn Spanish with Taylor Swift songs, learn astronomy with Harry Potter, learn critical thinking with Dungeons & Dragons. While teachers need to be approved by Outschool, barriers are low and nearly anyone can submit a lesson plan and be approved. Outschool demand is surging during the pandemic, and a key question will be whether parents will still pay for Outschool classes once kids are back in classrooms.
Virtually (Seed; ~$5M raised) takes a broader approach, providing a full set of tools for anyone to launch an online school. It removes complexity for aspiring solopreneurs.
Clark (Seed; $3.5M raised) is a business-in-a-box platform for tutoring, sharing some features with tutor marketplaces. Clark’s founder, Megan O’Connor, is the daughter of a middle school teacher and grew up watching her mom overworked and underpaid. Clark says it can double teacher’s incomes by helping them launch private tutoring businesses, operating in a $100B market growing to $178B by 2026.
Primer (Seed; ~$4M raised) is a business-in-a-box platform that helps parents easily set up and manage homeschools. While demand is surging during the pandemic, homeschooling has grown steadily over the past 30 years:
Mercedes Bent of Lightspeed, one of the sharpest education investors out there, points out that homeschooling can only thrive if there are robust social alternatives. She suggests that esports enthusiasts could be early adopters. This hints at a broader trend covered below: the decoupling of learning and socialization.
🔨 Reskilling Workers
There’s a consistent mismatch between skills taught in schools and skills demanded by the job marketplace.
In one survey, 60% of managers said new hires lacked critical thinking and problem-solving skills, 44% of managers said new hires lacked writing proficiency, and 39% of managers said new hires lacked public speaking skills. The World Economic Forum estimates that closing the skills gap could add $11.5 trillion to global GDP by 2028.
These companies can be life-changing:
When Raven Winchester lost her job as a janitor last year, she enrolled in Flockjay’s 10-week course. She was hired as a sales development representative at LaunchDarkly—one of the businesses where she used to scrub toilets. As she tells it:
“The first day I stepped into the office an official employee, I just looked around at all of the things that I used to have to f*cking clean. It was an emotional moment. I cried like a baby.”
Startups like Outlier (Series A; $16M raised), founded by a Masterclass co-founder, reskill by partnering with traditional universities. Startups like Guild (Series D; $229M raised), meanwhile, reskill by providing “education-as-a-benefit” to low-wage workers at companies like McDonald’s and Walmart.
WhiteHat (Series A; $20M raised), based in the U.K., helps workers avoid college altogether. Workers apprentice at a company and, if they do well, are hired.
WhiteHat builds on a broader trend, as more companies are open-minded to new paths into the workforce. Ravi Kumar, the president of 250,000-employee Infosys, emphasizes this shift:
“We have started hiring many people with no degrees. If you know stuff and can demonstrate that you know stuff and have been upskilling yourself with online training to do the task that we need, you’re hired. We think this structural shift—from degrees to skills—could bridge the digital divide as the cost of undergraduate education has increased by 150% over the last 20 years.”
Work is changing, which means that education needs to change too. This gets back to the image from the beginning of this piece, with “horizontal education” early in life (age 0 through ~20) and “vertical education” thereafter. The role of K-12 teachers will be to ready young learners with the curiosity and critical thinking skills to be lifelong learners. One person may start as a barista, reinvent herself as a tech sales rep, and reinvent herself again as a cybersecurity technician.
In Internet Niches, I shared how I think through the future of work in three stages:
I expect that we’ll see #2 and #3 move “upstream” to learning. Labor marketplaces may train the workers that they aim to place in jobs: RigUp will train oilfield workers; Instawork will train hospitality workers; Trusted will train nurses. And on-the-job productivity tools will begin to offer “degrees”—picture being certified as a Figma designer or an Airtable app builder.
This leads to a deconstruction of traditional education, as skills replace degrees and traditional learning structures become moot.
🎓 Unbundling College
In America, college has never really been about learning. College is about “the college experience”—an opaque, but oft-quoted phrase somewhat related to “coming-of-age”. For many families—usually affluent ones—college is an experience that every adolescent deserves.
An excellent recent piece in The Atlantic put it best:
“Quietly, higher education was always an excuse to justify the college lifestyle. But the pandemic has revealed that university life is far more embedded in the American idea than anyone thought. America is deeply committed to the dream of attending college. It’s far less interested in the education for which students supposedly attend.
[Education] is just a small part of colleges’ purpose. In the United States, higher education offers a fantasy for how kids should grow up: by competing for admission to a rarefied place, which erects a safe cocoon that facilitates debauchery and self-discovery, out of which an adult emerges. The process—not just the result, a degree—offers access to opportunity, camaraderie, and even matrimony. Partying, drinking, sex, clubs, fraternities: These rites of passage became an American birthright.”
College isn’t going anywhere. If anything, the pandemic has reminded Americans of how much they value the “college experience.”
But we’ll see an uncoupling of learning and socialization over the next decade. The most privileged Americans will continue to go to college, but for many Americans, the cost of college will be untenable. These Americans will learn skills through online providers, while finding community through other mediums.
A worker may build skills through Flockjay or Coursera or Guild, but socialize through Roblox or Discord. Other workers will turn to labor-focused community platforms: Contra (pre-seed), for example, cultivates a community for the freelance economy, while Trade Hounds (Seed; $4.9M raised) runs community forums for tradespeople.
Final Thoughts: Learning vs. Education
The word “learning” better fits where the world is going than the word “education”. “Education” seems finite: you get your education, you get your degree, and you enter the workforce. “Learning” is ongoing: as a worker, you refresh and even reinvent your skills time and time again. “Learning” also better captures the idea of something delivered beyond school walls.
Of course, traditional education isn’t dead. Under a Biden Administration, there may be much-needed progress (maybe even innovation) in the public school system. There are still successful startups that sell into schools, though they typically need a unique approach. (Clever (Series B; $43M raised), for example, is a portal that gives schools access to various learning products. While it sells into schools, it offers its product for free. Instead, Clever charges the learning products for the ability to be on its platform.)
There are interesting startups emerging across the learning landscape, from K-12 through higher ed through workforce development. But the biggest and most enduring businesses will be direct-to-learner and lifelong.
The pandemic created a reset for learning, allowing startups to build from first principles and to be emboldened by once-in-a-generation changes in consumer behavior, spending, and employment. The next decade will see a complete rethinking of how and when we learn, with a long-overdue acceleration into the digital age.
Sources & Additional Reading
Check these out for further reading on this subject:
College Was Never About Education | The Atlantic
The Average Cost of College | Education Data
Accelerating Into a New World of EdTech | Mercedes Bent
The Question of Education | a16z
Education By the Numbers | USV
Professor Rob Urstein at Stanford GSB
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