Many start-ups are targeting the education market, as technology makes it easier and more cost effective to bring education to the poorer regions of the world. It’s one of the hot investment areas and where there is profit, there is progress. Education is key to economic wealth and as Horace Mann so aptly stated, “Education then, beyond all other devices of human origin, is the great equalizer of the conditions of men, the balance-wheel of the social machinery.”
But what about the richest countries whose education system haven’t changed in generations and are under budget pressures? The government has grant programs for those start-ups looking to improve the American education process and today, investors think favorably of government funding as it does not consume equity in a start-up. On the downside, investors don’t like the education system because it is notoriously cheap, has long sales cycles, and is risk averse. With such government emphasis on education improvements, the investors are sure there will be some start-up winners.
Last year, my local school district anticipated a budget shortfall and asked parents for suggestions. When I took a look at the school district’s budget, I saw their problem. They needed to cut millions from their operating budget, yet 85% of their expenses were labor. It simply wasn’t possible to reduce the budget in the non-labor areas by the amount needed.
Let’s step back for a moment and take a quick look at what happened with telecommunications. When telecom and networking were taking a great leap forward in the bubble, the developing countries skipped the landline infrastructure and went directly to wireless and cell technologies. Now landlines are in decline in the developed countries as wireless became more cost effective, capable and preferred by customers.
Education is likely to follow suit. We have been dabbling with distance and online learning for more than a decade. The technical capability is there, now it’s just a matter of adoption. The poorer and developing countries will lead the way and start with using technology to educate the masses more efficiently. Eventually this trend will transition into the US school system.
As a parent, elementary school children aren’t capable of being self-directed learners, they will always benefit from the constant daily attention of teachers. As children become older, they are more capable of being self-directed and by the time they get to college, students spend little time in the formal classroom setting.
So why isn’t this transition made sooner in the education system? Why can’t middle school and high school students spend 2 to 3 days per week, accessing online, distance learning programs and not being taught by costly teachers?
Automation in any process produces consistency. Now there are continual complaints about the disparity among the schools in the US, some districts score well on the standardized test and some don’t. Wouldn’t a system encompassing partial online learning produce more uniform results? It does in manufacturing plants.
In my experience, when you have a severe budget problem and labor is biggest component, there are usually two things that happen: automation replaces labor and/or a less expensive source of labor is found.
Education is poised to take a great leap forward, which means this is a great opportunity for start-ups. My daughter is being taught like I was taught, and I was taught the way my parents and grandparents were taught. Is it time we updated the way we educate our children? The immediate market opportunity is in the non-public schools and abroad in developing countries, and whoever gets the biggest market share in those segments will be ready to capitalize on the opportunity in the public school systems.