Monday, November 19, 2012

The Next Big Startup Incubators? Schools

In the past, education has been one of the slowest moving industries around. If you go into a classroom today, not only will it look very similar to the classrooms you sat in as kids, but it looks pretty much the same as the classrooms your parents sat in. But things are changing. Teachers, administrators, and students are adopting new technologies that allow students to learn just as much outside of the classroom. Students are feeling the competitive pressure for college acceptances and scholarships, so parents are paying for tutors,  academic camps, and learning apps more than ever. This is why education is the a huge growth area for tech startups.

Too many of these startups, though, don't really understand education. Just because you were a student, and your learned stuff, doesn't mean you know how students learn stuff. Teachers do. And too many of these tech startups and their investors are on a short timeline, forcing them to develop quick-fix educational apps that don't make a meaningful difference for students. You know who has patience for a long-term project? Teachers do. You know who is sits on a wealth of untapped startup potential? Teachers do.

A school is the perfect place to create education technology that will make a meaningful difference for students around the world and generate a tremendous revenue stream. I first had this thought I was developing Clickademics Essay Engine, our web app that helps students write essays at home. I wished that I were still teaching in the classroom, where I would have access to resources, students, and other teachers. 

Let me back up a moment. For those who don't know, a business incubator is a place that helps startups get off the ground. They provide cheap office space, legal advice, support services, IT, and even a small amount of capital (like an angel investor or venture capitalist). All of the things that medium-sized businesses have but startups do not. In exchange, the incubator often asks for a share of the company. Now, the staff at a school may not be able to give much business advice, but they have plenty that a startup needs to get going. Here are some advantages and disadvantages of a school partnering with a tech startup. The largest hurdle is that the people in that school need to stop thinking like a school and start thinking like a VC. 

Here are the advantages:
  • Schools are packed with education experts that understand their target market better than anyone. The average teacher has had hundreds of students come through her classroom so she understand the way students learn as well as the way their parents think. Oh, and many of them have masters' degrees. Teachers are the best source of ideas for new products. They regularly meet before or after school and even spend whole days on professional development, all of which are the perfect environment for brainstorming sessions.
  • Schools are packed with technology. Most schools have dozens of computers, have access to web servers, and staff their own IT departments. Much of the infrastructure is in place. There are no professional developers on campus, but most high schools have computer science classes with students who code and are looking for ways to earn a little spending money or add projects to their portfolios before applying to college. If a school were to develop an education tech product, it would need to hire professional developers, but students would be able to help supplement the work cheaply.
  • Schools are packed with beta-testers. Once teachers dream up an idea and a demo is built, the product can be constantly tested with their own students. It is easy to get their subjective feedback when they complain during homeroom, and the objective results of the product can be tracked through the student's class grades and standardized tests. The means of data collection and feedback are already in place and paid for.
  • Schools have access to capital. Sort of. Everyone says that schools have no money, but that means different things to different people. Does a school have money to hire five new teachers permanently? No, but many schools can hire a couple of developers for a short-term project. In addition, there are grants, both small and large, just for schools, often reserved for technology purposes. Many schools also have access to fund raising events, local businesses, and concerned parents who would be very interested in donating money for a project that could both improve learning for the current students and create a future revenue stream that will help students in the future. It's like building a football field that could be acquired by a competitor at a 10x ROI. 
  • Schools are good at spreading the word. Marketing a product developed in-part by a school would easy. It would get attention from the press, the parents would tell their friends, and the staff would be able to share the news at conferences, on blogs, and in teacher newsletters. Having a school behind the startup would give it instant credibility with other schools around the country.

Here are the disadvantages:
  • The school culture. School administrators are used to thinking within their budget constraints and are often skeptical of profit and risk. A project like this would require leadership that is forward thinking, entrepreneurial, and willing to work hard now for results several years down the road.
  • Non-profit status. All of this may not be possible in the average public school, though a small public school district hoping to distinguish itself may be interested in trying it. A private school with committed parents and donors would be the best bet, though private schools tend to have much smaller enrollment and budgets than their public school equivalents. The relationship between the non-profit school and the entrepreneurial venture would have to be set up carefully to avoid legal issues later, but I have heard from lawyer friends that it is entirely possible.
  • Work. Any teacher who is motivated enough to contribute to an education startup is already overworked. The very thing that makes these teachers qualified for a project like this is what has already lead them to volunteer to coach, attend conferences, write blogs, help students after school, and read education books in addition to lesson planning and grading. How can you enlist the busiest people to work more? Do the bulk of the work during summer vacation. Cancel summer school, send the students to the school across town, and convert the school computer lab to a tech startup. 

So if your kid’s school has extra office space and a couple thousand dollars to spare, propose that they spin off an education technology company. It would be a lot better than spending that money on a bunch of iPads.