Topics This Week:
Ben Kornell 0:05
Welcome to Season Two of edtech insiders, where we talk to the most interesting thought leaders, founders, entrepreneurs, educators and investors driving the future of education technology. I'm your host, Alex Sarlin, an edtech veteran with over 10 years of experience at top tech companies.
Hi, everybody, it is September 14, and this is the weekend ed tech. So glad to have you here. I've Ben Kornell and I'm here with my co host, Alex Sarlin. Lots of great headlines today, Alex, what's going on in the world of edtech? Insiders.
Alexander Sarlin 0:43
It's just an amazing time for edtech insiders, we just crossed 15,000 downloads of the podcast is really exciting. Our 75th episode, were in over 100 countries, which is totally amazing. So people are really finding us and tuning in. And you know, Ben, you and I are heading over to ed tech week in New York next week. And that's going to be a blast to connect with all sorts of people in this space. And we'll be podcasting from there. So it's just a cool time to be doing this kind of work and reporting. I've been really enjoying it. And thank you to everybody who's been listening for the last almost year.
Ben Kornell 1:26
Well, we're gonna kick things off with our top headline from the biggest education technology company in the world. Yes, you guys sit that's Google. Their YouTube team announced quote, unquote, the next chapter for learning on YouTube was a blog post by Jonathan Katz men who has a long storied history in edtech. And basically, there's three elements First is that they're going to be embracing a education portal, that is ad free. Number two, it allows people to create courses and sell or market those courses to schools or to learners. And third, it enables features like quizzes, that allows you to make the video interactive. The partners that were involved in announcement include Edie puzzle, and Purdue University. What you can see with Purdue is that there's a element of this that is higher ed and with EdPuzzle, probably an element that is k 12. To be honest, I think the post raises more questions than it really does, answers. But it is a major shock wave for anyone who's doing any kind of short form video streaming, or digital video content in the K 12 education space. And I'm often critical of Google for being an edtech player as a rounding error for their core business. But it actually seems like they're leaning into the learning use case here. Given that YouTube is the largest learning platform on the planet. What's your take on this? Alex,
Alexander Sarlin 3:02
I found it very exciting to read. I mean, I got some of the same takeaways, which is that YouTube by somewhat accident, just by being the biggest video platform in history, the biggest video platform and the Internet has also become pretty much the go to place to look up almost anything for learners of all ages, including K 12. And I think this announcement is a sort of response to a couple of different, probably common requests that they've gotten from a lot of teachers and schools over the last number of years. One is, of course, to have some way to avoid ads, you and I have talked about about how ads are considered a little less toxic and classroom than they once were. But that said, Any teacher who's using YouTube whose students are using YouTube, they know they're being completely enveloped by so many different ads and recommended content. So the idea of doing anything ad free in the education space is really great. The Creator side reminds me of what we've covered on this podcast from Facebook, that Facebook is has sort of created a creator portal for educators, Amazon has a section of their site for course creation now. And now Google is starting to play with this and YouTube. As we mentioned, with Facebook, you know, the idea of being able to put especially a paid course onto YouTube. And in my understanding the payment is really to remove ads. It's basically like the people can do a free course which will be ad supported from YouTube, but if they pay the Creator, they can pay to remove the ads is my understanding. So that's separate from the sort of K 12 ad free piece. That is huge, because huge distribution channel. As an instructional designer, the thing that gets me most excited is the quizzes section. And my guess is that's where the EdPuzzle partnership is really coming in, because that's really puzzles, bread and butter is sort of being able to integrate quizzes into YouTube videos. So it's a really clear match. I'm excited about that. It sounds like it's invaded sounds like it's coming through the Community tab. But those of us who pay a lot of attention to learning know that you learn a lot more By interacting and responding and sort of retrieving information from your head then from watching videos alone. So the idea of putting quizzes into YouTube videos as part of YouTube, not just for those who have access to EdPuzzle, that's a big deal for learning.
Ben Kornell 5:15
I'm pretty excited about it. Yeah. So all those angles, I think are really fascinating, important. And this idea that learning, especially user generated content is going to reach more learners in ways that are more appropriate to the learning process. All of that is really compelling. Another angle, I like to look at this stuff through those the business angle, which is one, are they doing this for a business or business model? Where is this yet another customer acquisition move, where the business is downstream around just acquiring users and monetizing through ads later? And number two, either way, what is the ramifications for the broader edtech sector. And the first ramification is that there are a bunch of startups that just got crushed by this announcement, because they were raising on some form of, we view education video in the classroom, and YouTube's ever going to do this, like we're raising money, like fund us. And now, you know, YouTube in a blog post, just like, you can hear the tiny screens of like, startup founders, but to maybe this is a new channel. And you know, I think your lead up to this is that, can you win as a platform? For video and online courses and education? I think that the answer is heading towards No, because the major platforms that are just ubiquitous platforms are now coming into the space. And it does make me you know, Coursera and others have also carved out a share, that's going to be hard to knock off. And so even if you were to get some share of this, is there any prize at the end of that? I don't think so from an investor and entrepreneur standpoint. So then it just the content, which is are there savvy content aggregators, creators, folks that can leverage omni channel platform plays, that can actually build businesses now, where they have a really quick channel to scale and spread? That will be interesting to watch, I will say like, YouTube 10 years ago, was like a place where you could start a business on YouTube, and you could really crush it, YouTube today. There's a glut of content, it's impossible to break through. So will this platform be pre populated with like, overwhelming amount of content? Or will it actually be sparse? In the early days, like these courses, for example? Is there a first mover advantage here for some companies and organizations to be on there? And then the last business pieces for our mid sized folks like amplifier curriculum associates, what do they do with this? Do they want to play on the YouTube channel? Many of them have YouTube links in their embedded curriculum. Many of them run YouTube channels, what our mid sized to large players in the tech space going to do? It's just like, in a blog posts, things change overnight, and then you hear that it's 2023 beta, and you know, Google's timeline and you're like, Okay, this might be a 2024 25 thing. I don't know. What do you make of all that? Yeah,
Alexander Sarlin 8:47
yeah, I mean, they say they're, they're doing 2023 beta for the Creator side in the US and South Korea only, which is very interesting. South Korea has a humongous tutoring marketplace. There's a lot of superstar online tutors the same way we saw Baidu become this mega superstar around the world as an online tutor, South Korea has a lot of real celebrity tutors, I'm sure that they're planning on bringing some of those folks into this world soon. So I think it's interesting that that's where they're choosing to go. My take on the business side of it is a little bit of a glass half full, which is that, I mean, think about a company like EdPuzzle, right? EdPuzzle is an ad tech company very much for that company, you know, saying, Hey, YouTube doesn't do a certain thing. It doesn't allow sort of interactivity on its videos. We know that interactivity on videos is great for learning. We know teachers want to use it. We know teachers want to create their own quizzes, let's do something with it. And then they get the attention of the big dog itself and get partnerships and become, you know, really invested. I mean, that's a dream scenario for
Ben Kornell 9:52
the work that makes you wonder that makes you wonder though, why didn't Google acquire that? And then on the same front end Google could crush them the moment that they wanted to crush them. So it is mean like you play with the big dog. That could be really bad. I think it's fascinating. And this is just also one thing about EdPuzzle. Talk about a product that said, What do our users need? What do educators need? Yeah, and let's, let's not stress too much about the who's going to pay or how it's going to pay. And they have viral adoption. Yeah, some of the which is because they are enabling people to get around the firewalls in the school district. So there's some technical hacks here to not just like product features. And things are working out well for them, like, do good for customer, good things happen to you. We have a lot of examples in education where this is not true. But it feels good that this one is happening.
Alexander Sarlin 10:53
And I think another lesson of this is find your customers where they are, right. I mean, we there's a report recently, the same 93% of YouTube viewers use YouTube to gather information, people are already using YouTube as a way to learn and teach themselves. So a company like EdPuzzle recognizes that and instead of making a walled garden of video content, like your, you know, some other startups, it says, We're going right into YouTube, we're gonna build right into that channel, every teacher does that all of their students use YouTube for learning, and that it's the biggest video library in the world XYZ. Why don't we build into that? So I think there's a lot of really interesting lessons here. And it is a couple of years out, I mean, we'll see where it goes. They're also, you know, improving the embedding player in Google Classroom. So you can see that, you know, Google always has these sort of big synergistic plays, where all the different pieces of their strategy can potentially come together. So this will also get into Google Classroom. Maybe this is naive. But Google is a company that was really formed on a sort of like, open up the world of information, philosophy, and it's made all its money through search all of these years, it never charged for maps, or mail, or any of the any of these add on products, I think that they still probably see education as a do good. Let's help the world. Maybe there's really naive, but I'm not sure there's they're going to be looking at Google classroom as a huge cash cow. And that this is at play in that. But maybe that's maybe I'm out of date with Google leadership. Well, I
Ben Kornell 12:20
know we have to hit our other topics. But I think it is important to note that Ben gums who led search was promoted to Chief Learning Officer, I believe that's the title over across all of their properties. So kind of at the alphabet level over YouTube, and Google and his team was really charged with what's the future of learning across all of our products. And, you know, I talked to him probably like six or seven months ago. And the statistics are mind blowing, like 175 million daily active learners on Google Classroom. But even more mind blowing was something like almost 2 billion learners daily on YouTube. So like, a quarter of the world's population is learning on YouTube every day, right? And, but they never really thought of it as learning product. So this does go to show that the org chart change, maybe has helped them connect the dots across some of their products. And then also, whether it's naive, or whether it's cynical, a very good friend of mine, also, formerly lead search at Google said, if it's free, you are the product, right? It's the famous so whatever we you know, and I will say YouTube's been one of the greatest acquisitions in history, yeah, and mince money on advertising, not search, per se. The more that the education side is connected with the YouTube side, the more the education plays, could be a driver towards Google Cloud contracts towards, you know, more Chromebook sales, you know, all of those things, which are now becoming pretty big businesses. So sorry for dominating the headlines here. Any last words before we go on to the next one? No, yeah,
Alexander Sarlin 14:11
no, I know. Let's move on. My last words were you mentioned some of these creators, there are already some incredible YouTube channels for education. And I hope that those are the people who have that first mover advantage. Maybe our listeners will know the Crash Course series from the John and Hank Green incredible videos on so many different topics all YouTube based. I love this guy Dustin, I don't know his last name, but Dustin who does Smarter Every Day is a rocket scientist in Alabama does incredible education videos. So I hope that this creator play starts to open up the floodgates to find these incredible teachers, educators, people all over the world, you know, who suddenly see an actual viable path in teaching through YouTube. That's I have to say that so let's talk about Roblox and from Google to Roblox bed right Roblox, on the other hand, is jumping into advertising. And there are over 50 million people in Roblox as user base and they're starting to move beyond their current business model, which is about Robux, you know, sort of virtual currency and entering the online ad market. The reason this is edtech is that Roblox is a company that sort of bridges the line between education and gaming. So in some ways, this decision maybe pushes it a little bit more towards the gaming world. Ben, what do you think about this announcement with Roblox?
Ben Kornell 15:32
I think the blend between learning and gaming, especially in the consumer education space has been happening for a long time. And the data around the efficacy of these learning games is all over the place. What we can say pretty definitively is the engagement levels are through the roof, yes, when gaming is applied, but does it really mimic or accelerate past the academic gains of tutoring or in school education. So far, the jury's really out and profits probably doubtful right now, just given how the games have been designed. So robots enters that space, with probably the biggest gaming platform for kids since Minecraft. And many thought when Microsoft acquired Minecraft, that that would be kind of a core education play is learning to code learning the bill, blah, blah, blah with Minecraft, it hasn't totally taken off. But it's Minecraft is now a staple in many classrooms. And so what Roblox does really does have a reverberation effect in education. And so part of why we want to highlight this headline is a direct contrast to YouTube, which was basically saying, we want to create ad free zones for kids, where the content is really involved in learning. And robots is saying, we want to lean into the ad model. It's also interesting from a business standpoint, because Netflix and all the streaming services are starting to experiment with ad sales, because the subscriber revenues aren't as good. Meanwhile, that economic pullback means that advertising revenues overall are just down, you know, and then, about a year ago, Apple basically ruined Facebook's ad business. So the ad space is a really important revenue driver, especially for consumer technology products and consumer learning products. What I'm really curious about is where are parents drawing the line today on ads, it seems that post pandemic consequences, there are no lines, but kids watch as many ads as you want. And I remember, like watching Saturday morning cartoons and getting all my sugary cereal ads, and then, you know, legislation was passed to say that can no longer happen. Are we in a pendulum swing? Where that it's glad ads Gone Wild for kids? Or our is YouTube really charting the future to say we need to create these ad free zones?
Alexander Sarlin 18:08
I mean, it's really interesting to see two large ed tech ish companies going in opposite directions on this. It's so interesting to think about, you know, what the future of this looks like, I do think we're in this post pandemic, low period where basically, parents are just happy if their kids are in school at all, if they're showing up if they're, you know, I think there's a little bit of a forgiveness period where anything goes right now. But my guess would be that in the long run, just knowing people, I don't know that over time, that I think removing ads, having cleaner, cleaner places for kids is probably the better bet. So I'm not a huge fan of this move from Roblox, I understand why they probably see an incredible value in it with 50 million plus active users, they there's a lot of money to be made in ads, by especially, you know, targeted ads to kids who are gamers and creative kids who are making their own coding. And I mean, you know, there's a lot there. That said, I hope that it doesn't, it doesn't create a new world in which everything's ad grade, I remember when I was at Coursera, some times new product, people would come on and say, Why are we gonna have run business? We have so many learners, isn't that just the obvious thing to do. And it was always this very awkward conversation inside there, because it was so it is so much anathema to the vision of the founders, but it was reasonable from a business perspective. I mean, so it you know, I think every company has to have those debates. But I hope that as a field, we don't sort of pendulum swing all the way towards ads.
Ben Kornell 19:38
It is fascinating. And the other thing is there may not be an answer. It may be that in the consumer space, ads still thrive and in the institutional space ads are no no. Speaking of institutions, financial institutions have been down on the head sector. There's no ifs and ands about it in the last year. The Only two things they've been more down on are crypto and specs. What is this back, it's a special purpose acquisition company. And basically, it's a way for someone to raise money on a stock exchange, and create a blank check company that then goes and searches for acquisitions. And this is an alternative to like a private equity firm, where they would go to private investors and then go look for acquisitions. In this case, they're able to publicly raise those funds around hypothesis. And usually they have like a CEO or leadership team. And what's also tricky about specs is they have a limited time window. Once they raise the money, then they've got to go make that acquisition. Specs jumped, it was probably 2019, when they were just super hot. And many companies also saw them as an alternative to IPO in which is very expensive. And for education companies in particular can really hurt your ability to market to your consumers. You know, imagine you're in a K 12, you know, curriculum company, your IPO and analysts are like your valuation is huge, and you're gonna raise all this money, and then you're trying to negotiate a contract. And the school is saying, I don't have the money, you're raising money on the stock market Come on. Well, with some interesting news from Wall Street Journal broke this week, that Spax in London, are actually on the rise. And they've created some good regulatory guardrails that kind of reduce sharpish behavior around these blank check companies. But it's also some of the data shows that education holdings and education companies have been one of the areas of benefit for the specs, and Ed Tech apps and their team, were actually one of the kind of most innovative groups in the SPAC space in 1718, and 19. And I think they've kind of trailblaze the path where people could IPO or get public funds as an education company through London. What are the implications of this? Well, for a long time, Silicon Valley has been the heartbeat of venture capital for every industry, including education. And we've been a really small player in the broader VCC. The shift to European ed tech, and that growth has been funded by some VCs in that space. But also this exit opportunity and Spax could further pull the kind of center of edtech innovation, especially for mid and large sized companies to London, where Pearson is one of the OGS of going public and building a global education empire. So you know, this is the dawn of the new British Empire in ed tech, Alex, or, you know, alongside the Queen, they're being celebrated now, but it is on the downward slope. What do you think
Alexander Sarlin 23:07
about the monarchy? Yeah, it's a good question. I mean, I remember I, you know, a year or two ago when it did feel like sort of you couldn't turn anywhere in the US if you had you keeping an eye on any kind of, you know, investment and IPO news without hearing about either SBAC that was already happening, or venture funds that were looking to help companies go public through a spec and as sort of everywhere, and then yeah, it sort of seems to have gone out of favor with the change in the investment landscape. All I can say is that I think it would probably be good for the space if there were more options than this sort of like winner take all Silicon Valley model where of small set of companies that reach world domination like the economy's are masterclasses, you know, get all the attention. And all of these hard working midsize companies that are doing really important things in schools don't have a clear exit or sort of a clear business path. So all I can say is I think that you know, spec is sort of like a dirty ish word I feels like right now. But if it's creating that kind of pathway and allowing midsize companies, there are so many amazing midsize education startups all throughout Europe and in South America. And you know, in other parts of the world, if this gives them a lifeline and a way to go public, you know, more power to it. It's just a it's a little scary to, to me to use a kind of sleight of hand tricky economic move as a lifeline for our industry. But you know, we'll see what happens.
Ben Kornell 24:43
Yeah. And what I will say too, is there was also another thing coming from EdWeek market brief, where they said a third of all education companies either took on VC money or did m&a In the last two years. And if you think about Our system with the investor dollars coming in as like a pressure system where the pressure gets amped up, you need a release valve. And if people are going to IPO at such low or discounted valuations, the pressure only builds and you know, the release is either a company selling or shutting down suspects provide another off ramp where you can get value for your equity, even if it's not at a VC multiple, or if it's not at like a PE level of return. So I think that it could be an interesting tool in the toolkit for financial engineering of startups. What's our next topic, Alex?
Alexander Sarlin 25:43
So speaking of the sort of tech VC landscape, I think one really interesting conversation that's starting to happen now in the space is this sort of a whole generation of edtech companies that were formed between about 2012 and 2014. And the reason that matters in VC land is that VCs tend to have these sort of 10 year funds. So that means that the people who invested in those companies are starting to get impatient and starting to look at, okay, it's our fun, our tenure fund is coming up soon. What's the strategy? What's going to happen to this company isn't gonna get IPO? Is it gonna get solved? And I think there was a moment in 2021, when a number of companies did IPO and companies in that generation, but now if that moment may have passed, which I think many of us think it has, and we've missed that opportunity, they missed the opportunity to sell that sort of the high valuation that heady days of 2021. What's next? And I mean, we're talking about companies like Udacity, new Zola, Skillshare, wonder school, apply board, labs chair skill jar, some of these companies have achieved certain levels of scale and success. They I mean, some of them are somewhat household names, especially for the listeners of this podcast. But there's a question they're sort of coming on their due date from a VC perspective, and nobody knows what's next, then I know, you have big thoughts on this, what do you think will happen with some of these companies? What are their options?
Ben Kornell 27:07
Well, it does connect with our spat conversation, which is like IPO as an exit is probably not the most attractive place to go. And so really, all eyes now on private equity firms, they have a lot of power, they have the ability to be patient, you know, private equity deals kind of come in two forms. One is, we're going to go for growth. And so we're going to double down, we're gonna infuse capital into your business, and we're going to grow, grow baby grow. The other is a rollout where we're going to combine some of these companies, I guess I'd say the third is, we're going to cut you to the bone and run you really efficiently. Generally, in education,
Alexander Sarlin 27:50
we already, you know, we
Ben Kornell 27:51
already do that to ourselves. So I think the real question is, how are these big P firms going to play. But your point about the vintage is something I think most listeners don't realize that the ticking clock for investors has to do with their return on capital. And it was really easy to hold when things were skyrocketing. But now that we're in a space where the next three years look pretty bleak or tough. And also, the businesses are experiencing real headwinds like the fiscal cliff from all of the kind of one time funds from Assar. And the federal government is going to make some really tricky navigation for most funds. Now, the good news for our VC friends, is that many of them have been, especially our ed tech VC friends, they've been early stage investors. And when you're in seed, or a, some of these companies that are mature and CDE rounds, they're going to make a solid solid return, maybe not as much as they could have in 2021. But very solid return, the people who are really going to be in in a hard spot are the people who invested in those middle rounds. So there will be a little bit of a push and pull on the cap table from the VCs who are at your eight 910. And some of the middle people which might be more growth investors blend a VC and PE, who will say, hey, let's pull through this downtime and get to the other side. And for founders, like how do you navigate that? Do you have more control? You know, downtimes are when all the scenarios of who has power and who has decision making authority. That's where that stuff really hits the road. So I do think there'll be an interesting time. I hope we can get some. It's hard to get people to talk transparently about all that stuff, but I hope we can get some guests who can shed some light on that in the coming weeks. Yeah,
Alexander Sarlin 29:55
I think it's a it's a really interesting time to talk to some in tech investors about this. The Boom, and the bust and weather and what they're saying next, they're all gonna say it's coming, the boom is coming. But, you know, maybe we can read between the lines and see when. So, you know, there were some interesting headlines in from the higher ed space this week. And I think we should keep this section a little short, because they're interesting, but they're not entirely new, basically, you know, coming off of the student debt relief decision in the US, people are starting to make sense of that. And there's been some really interesting headlines and findings about, okay, well, student debt, it has been a problem for many people, it seems like there's going to be some relief, you know, 10, to 20,000. But none of this really addressed the underlying cause. None of this really sort of got to the core of why there's so much debt, why it's more than, you know, credit cards, car loans, everything else. There was a really phenomenal editorial from Scott Galloway, who's a very controversial NYU business professor, and also an ed tech founder, talking about why College, why tuition has raised so fast and why it's created a situation where wealth is concentrated at the top schools, it's worth reading, and we'll definitely put it in the show notes. I found it really, really fascinating, especially for somebody who's sort of looking at from a business perspective, he's not from a professor Oriole perspective, too, as a as an instructor. He talks about the you know how much it costs his NYU business students to sit in his class even to sit there during zoom. It's an interesting take. We're also got a new report that student transfers declined enormously during the pandemic, which sort of makes sense, given that people were were hunkering down. But it does mean that the sort of college system where they're transfers are sort of by design, sort of cracked in some new ways. And then one really wacky headline that stood out and I you know, this risks being a little political, but it's super interesting is that Oberlin got sued basically by a local bakery that basically Oberlin supported some of its students who are accused of shoplifting at a bakery, it spiraled into this big accusation of racism. And the bakery, right across the street from the college, basically sued the university and said, You ruined our business by giving voice to the students and putting the university in parameter on this claim that we're racist. And they won. And the bakery got $36 million. from Oberlin, you know, Oberlin has an endowment of nearly a billion dollars, it's not going to completely bankrupt them. But at the same time, it's a little bit of a wake up call. And sure for a lot of university presidents and deans and provosts of thinking, oh, boy, you know, there may actually be financial consequences to some of these decisions about whether we stand behind our students in that political issue. So that I think just throws even more fuel on the fire of what is going on in college. And then there was one really interesting article out of Inside Higher Ed about the college campus and how coming out of the pandemic, campuses that have incredibly high real estate values, especially in New York, we have to start to think about what are they really doing with those assets? Because for some, some universities, it's their either real estate is their primary asset. Having a campus it's big, big amount of real estate in a really expensive area is a lot of the money that they have. And I think that raises some interesting questions about what universities might do, especially in this Metaverse world. So you can imagine some universities starting to sell off some of their real estate assets. And then instead, the sort of sub in Metaverse assets to expand the campus, is that a dystopian or utopian future? Nobody really knows. We're also seeing France, getting enormous international student growth, which is interesting. I think for the European sector, you're seeing over 400,000 international students in France, which is the highest we've seen in almost 20 years. So at post pandemic, people are starting to move around. But universities are starting to say, what are we going to be doing in the future to make sure that we stay solvent that we give the students what they need, that we run ourselves, as well as possible? You know, this is a little bit of a grab bag of headlines, but I think it paints a little bit of an interesting picture about where everyone is at in this sort of chaotic, higher ed landscape.
Ben Kornell 34:16
Yeah, just always love your take on all of this stuff. Alex, I think last week, we talked about LA Unified getting a cyber attack, right and really talked about it being the largest employer for a second largest employer in all of Los Angeles. I think the headlines here, one of the three lines here is we often talk about the learning element of higher ed. But when we actually look at the full stack, yeah, there's huge real estate assets. There's huge economic consequences of the town gown relationship. And the overland ones particularly fascinating because businesses thrive or die based on health of those you proceeds, or the kind of political persuasion and zeitgeist of those places. And even in the article about, you know, the cancer of our higher ed system is the spiraling costs. When those costs go down, the ability for universities to pay the town and create wealth in the town and, and tend to and manage their real estate goes down as well. And so we pragmatically think about our higher ed organizations as institutions of higher learning. And what really they are, is that and huge economic drivers for their local environment. If we do imagine a Metaverse future where we do imagine online learning, or hybrid future, we do imagine like some of that stack being displaced by education technology, it really has far flung consequences that we truly can't understand today. The headline that caught my attention the most was kind of the dueling headlines in the New York Times and in the Wall Street Journal around Jewish education, and specifically Hasidic Jewish schools that have a religious mandate, but receive federal funds. And this is another area where, what is the purpose of school? Is it about the learning? Or is it about community and culture? And it's gone all the way to the Supreme Court to talk about whether a school should be eligible for federal funds, if they denied LGBTQ students to organize student groups? Or if at the K 12? Level? Can they get state funds in New York, if they're not meeting the basic state standards, you know, only 1% of students in the acidic schools that they profiled, met those standards. By the way, we don't have time on the podcast today to talk about religious education. And I also think that there's a danger in lumping all religious schools in one bucket here. But I think we are questioning so many fundamentals of education, and what is the separation of church and state when it comes to education. And we've politically got folks in Florida, for example, that will fund any religious school with state dollars, no questions asked. And we've got other states like New York who are saying, no, no, no, if you don't follow our curriculum and comply with these standards, you can't access these funds. It is the battle grounds here in education are prophetic prefab. They really
Alexander Sarlin 37:44
are. And I think education and religion are two huge topics that overlap in some, I consider a little bit almost frightening ways. I mean, and and have throughout history. You have a really strange situation in the US right now, where I think across the political spectrum across religious spectrum, people are having that debate, you know, what they had for a long time, and it's a really loaded debate about should students get vouchers to be able to go to religious schools, should religious schools be exempt from laws, we they I mean, one of the headlines this week was about how Yeshiva University basically wanted to block an LGBTQ student club on religious reasons. And they were then ordered to recognize it. And the Supreme Court this case went all the way to the Supreme Court and the Supreme Court overturned it. So they basically allowed Yeshiva University to prioritize its religious beliefs over LGBTQ rights at the university. And I mean, these issues are so maniacally complicated, you know, I think where this sort of dovetails with Ed Tech, because it's like, this is sociology, but really at heart, you know, where it dovetails with Ed Tech is that all of us who work in the EdTech space and think about how you know what the future of education looks like, I think should recognize that there is this growing factionalism, sometimes on religious lines, sometimes on political lines, that is actually pulling a lot of students out of the sort of mainstream educational bucket. And that's creating opportunities in some ways. There are all these curriculum companies, for example, that cater directly to homeschool communities, and they can sort of inject them with any kind of belief or remove books that they know that they're, you know, the parents would not like and things like that. So there's sort of this all this alternative education going there. And then it changes the shape of the public schools as well. So it means that, you know, maybe some of the big textbook companies who sell the public schools might have to be less Cognizant or frightened to the sort of religious groups in the public schools because maybe many of them will have We call their kids out of school. It's a very strange situation. And I think both of these headlines were pretty disturbing. I mean, the idea that, you know, they gave this Talmudic Khadem II school in New York, literally had every student fail the standardized tests. And it just makes you think, Okay, what's going on? I mean, are they just reading the Talmud in all day in the school? If so, is that a school? Is that is that a US school? Or is that a religious Academy? And, you know, they're receiving millions of dollars to host schools like that, when you get to those sort of really extreme religious views? It's really hard to know how to satisfy that the families in terms of what they want from their education.
Ben Kornell 40:45
Right, and also, like, what is our obligation to the children that is independent of the wishes of their family? Right, like, and so I mean, I think that the Constitution is really clear that we are not going to regulate religion. But I think that it's hard for Educational Equity advocates, to reconcile and say, but based on religious beliefs, there are certain learners who are being deprived of their quote unquote, right to education. Right. And I think the Supreme Court has weighed in here, which is like the right to religion is supreme. Any there is no right to education in the Constitution? What does that mean for state funds and federal funds? That's where I think this will ultimately net out. And it might be very different state by state. So we've covered a lot of topics today. It's, it's been our normal five headlines. But man, there's so many important strands and strains. Why don't you do the funding side, and I'll do the m&a side, Alex, you know, we're still seeing really solid activity in both bus bases.
Alexander Sarlin 41:58
Yeah, number of funding rounds coming through this week, then you'd mentioned the sort of three and 10 education companies have secured VC or made acquisitions over the last year, that's a pretty sizable percent of the of the overall space. So we have Peruvian edtech company, you ducks, getting $2 million from GSV. To expand into Mexico. This is a sharing of educational resources cited little bit maybe like our Latin American Course Hero, you we have Hoan, raising $30 million for a corporate learning platform expansion, that's by three L capital. They just had a $16 million round in November, so less than a year later, raising a $30 million, Series B. So you will probably hear their name more in the corporate learning space, we have tracked, raising $7 million to empower kids to develop 21st century skills through content creation that's really about empowering kids to create videos that teach other kids. So interesting news in conjunction with the YouTube announcement this week. And that's co founded by Esther Wojcicki, who is very famous Silicon Valley educator, and parent of many CEOs, as well as her former student are a memoir. We have Dakwah at raising $44 million, that's out of Singapore. And that's a specialized q&a forum for doctors instead of community driven medical education. And Dhupia $14 million out of Vietnam for online classes and tutoring services at students outside of the cities. So some interesting you know, we're all over the world with this this week, next for university that have actually been on the tech insiders podcast in the past doing a really innovative model where they, you know, super, super low cost accredited bachelor's degrees for students around the world out of DC they raised $8 million and building on last year's traction where they're growing. And then code first girls is a coding bootcamp in London, focused on training women and non binary people for software development. And it just raised $4.5 million. So that's that's a pretty good set of funding rounds. I'm hoping that it's a there's a little bit of the bounce back after some quiet summer months.
Ben Kornell 44:14
Yeah, so much going on, like $100 million of funding activity this last week. On the m&a side things are heating up. We had citizens Financial Group, which is a $226 billion fund buying college Raptor, which is a college planning platform think guidance counselor platform, and ultimately it does a lot around comparing different college choices and estimating for financial aid packages. Really fascinating. It was founded in 2012 Interesting, deceased citizens Financial Group that huge players stepping into this college transition space. I excel one of our ed tech darlings I excel learning acquire immersion. Excel is really becoming an incredible conglomerate of language learning products headlined by the Rosetta Stone. Immersion is an assessment platform that can basically test for speaking and writing across languages. And now I excel is really building the entire throughput for learners. And this is a direct competition to Duolingo and other kinds of language learning apps, where I Excel can really be the end to end, we have a Dutch, a tech company, look, Hi, I'm buying the German company V coach, they're trying to grow and kind of roll up markets. In the olden days, this is how people would grow in Europe is you just buy your way into market after market. What I would say is though, we're seeing a huge growth in upskilling. And this AI powered online coaching with V coach fits really well into the PIO work, which is training employees to develop both soft and hard skills. And then the last one is actually nonprofit mergers, which, you know, is actually heating up as well, or Brenda, which is a kind of school improvement company for profit is now merging with nonprofit thing together, which is one of the largest afterschool programs in the country, and I believe the largest in California, to create a mega nonprofit, I believe it's that the total revenue is 150 million in annual revenue, serving California kids. And what's fascinating about this one is they're really looking at after school programs as a lever for transforming schools. And so it's this school improvement organization and this after school program coming together, and they're providing incredible data about the learners that the schools don't even have access to, based on the additional assessments and workshopping and learning that they can do an after school. So as expected, we thought, okay, fall is coming. Funding rounds are going to heat up. m&a activity is imminent when things are getting tighter, and we're seeing that play out. Before we go to our conclusion. We have a great interview today. Alex, why don't you do a little bit of the intro?
Alexander Sarlin 47:16
Yeah, so we just mentioned next furred University is a Washington DC based university that offers affordable and relevant online degrees to students around the world. And our guest today is Autel. I'll tarzi the founder and CEO of next heard University fuddle Welcome to EdTech insiders. Thanks, Alex. Good to be here. It's so great to have you on you made the news this week with a $8 million funding round for next furred University. It is a huge step I imagine for the university, I can't wait to hear what your plans are for expansion. What are you thinking about next for next year,
Fadl Al Tarzi 47:57
our focus going forward or sort of plans in a post this round, as one might imagine growth, for us growth specifically, is in academic products. So definitely we're focused heavily on expanding our academic products, both in terms of being a degree programs and non degree programs. Second is going to be geographic expansion. So really increasing marketing and sort of bring up brand building across some new geographies. Those are our top two priorities. And then third would be technology investments. So there's definitely a large investment that's going to continue going into our technology development, which is really core to our ability to deliver high quality and affordable education.
Alexander Sarlin 48:38
Speaking of high quality and affordable education, you know, longtime listeners of this podcast will remember that we chatted in our ASU GSB postcard series. But for those listeners who don't know what nexor does, it is so interesting, can you just give the overview of what makes an expert so innovative and affordable,
Fadl Al Tarzi 48:55
we think of next week as an education to employment platform that's specifically designed to equip learners across the world with skills that will get them on the global grid. So you know, we are a university platform that's really focused on rendering one's location, gender race, no longer really sort of relevant to their ability to access career opportunities. And we're really big on the global grid. So really, we think that your talent is going to continue becoming more and more remote. And we want to equip people with the skills to get on that grid so they can access you know, careers, regardless of their location.
Alexander Sarlin 49:30
And tell us about the affordability piece, because I think that's one of the things that makes Nex for truly amazing.
Fadl Al Tarzi 49:37
I mean, that's really core, I mean, we wouldn't exist if there wasn't an opportunity to provide you a super affordable education. So on average, if you look at our current and undergraduate or graduate degrees depends on your geography, but you're looking at an average I'd save about $3,000 for an entire bachelor degree, or a bit over 3000 for the entire MBA program. For instance. So we're specifically designed to offer I would say comparable academic outcomes at a fraction of the cost of our competitors. And that's all it takes to the tech enabled infrastructure we're building
Alexander Sarlin 50:11
and a very small fraction of that. I mean, our listeners will know that a $3,000 bachelor's or a $3,000, MBA is a very small fraction of what those degrees usually cost. That is, it's so exciting to hear. So when you're talking about expanding geographies, what particular areas of the world do you have your eye on?
Fadl Al Tarzi 50:31
It really depends on the timeframe, I would say, for your coming six months, we're really focused on East Africa, South Africa, and to a lesser extent, Southeast Asia. And then as we go into 2023, second half of 23, definitely the US is going to be a priority for us.
Alexander Sarlin 50:52
When you mentioned the phrase getting on the global grid, I think that's such a great way to put it, what types of skills do you consider the ones that will get somebody from East Africa onto the global grid able to get, you know, lucrative and meaningful remote work,
Fadl Al Tarzi 51:09
there are what I call universal skills, things like communication skills, storytelling, critical thinking skills, even business analytics, sort of the ability to interpret data, those are typically going to be team collaboration skills is one of them as well, these are going to be universal across different careers or different verticals. And we see this time and time again, you talk about whether it's East or West Africa, you know, a candidate will be technically just as competent as another candidate in Texas, for instance. But you know, the guy in Texas say it's a software engineer in Texas is just able to communicate so much more effectively, and therefore are going to get the job over there, their peer in Kenya or Nigeria. So I think bridging things like communication gaps, and even cultural gaps are key. So those are universal across careers. But other than that, we're focused on specific tracks. So right now, we're focused more on like business related tracks. So we're equipping folks to get jobs in say marketing or business analytic analytics or sales enablement. Next is going to be areas like software engineering, and cybersecurity and data sites.
Alexander Sarlin 52:16
Amazing. Yeah, super high demand Global Skills, both soft and hard or durable, however you want to put it. I want to hear more about the round itself. So you have such an interesting business here. It's an education business, it's obviously a social impact business. It's a global business, it's a training business, as you've gone over the last months, to different funders, how do you explain what next for it is what types of investors get most excited by your vision of the future of education and training?
Fadl Al Tarzi 52:45
So it tends to be impact driven venture capital? Definitely. And you know, we are a for profit, but you know, at our core, we're an impact or, you know, mission driven organization. So, it typically tends to be VCs that have an interest in impact, and, you know, obviously, value creation as well.
Alexander Sarlin 53:04
What did they see in the value creation? Is it because you're opening up this enormous market of people who would not be even thinking about this type of degree?
Fadl Al Tarzi 53:13
I mean, definitely, the supply demand mismatch across the world for higher ed is staggering. Africa alone is going to have a shortage of about 100 million University seats over the coming decade. There's just a massive mismatch in supply demand as a result of the massive growth in youth population not met by you know, proportionate growth and supply, you know, very different from from the US. So, yes, I mean, what excites investors, I think, is the size of the market opportunity and the growing market. Again, unlike the US to an extent, there's just so much more focus on the sidelines. So, you know, to grow, you know, having to take market share from others, you're essentially, you know, growing the size of the market, and addressing a severely underserved populations, in addition to the needs of employers across the world looking to upskill and rescale. Their teams, especially as they go into digital transformation, there's just massive amount of demand for retraining team members.
Alexander Sarlin 54:08
Yeah, that's really exciting. So you're located in Washington, DC, and I'm curious if any of your current or future plans relate to the US government, the seat of the federal government, has the you know, Department of State there anybody in that world caught on to what an expert is doing and giving you any attention yet? Or is that part of the plans?
Fadl Al Tarzi 54:29
You know, I don't think they've caught on to us yet. Unfortunately, they don't give us too much attention. But I mean, they have been busy with quite a few. So I wouldn't say that the US government we're doing business with the government is core to our focus over the coming years. So the only area where we benefit, I'd say from government who's really on data, sort of understanding of labor trends on both the Department of Education and the Department of Labor. But other than that, no, I wouldn't say no doing business with the government is high on our agenda. I had
Alexander Sarlin 54:59
to ask Ask just because of your where you're located. We're so excited here at edtech insiders to hear that you're getting so much traction. You know, the conversation we had at ASU GSB was really enlightening. And to be the headline of a $3,000 degree, you can't beat that. That is something that really is a game changer. And I'm so excited to see where you go. Next. I'd love to just ask you one final question, which is, how do you get your costs so low? You mentioned it's through technology. But how do you get to delivering high quality education? I'm sure our listeners are all scratching their head, all of our higher ed listeners, how do you get to a high quality online education that's worldwide for $3,000?
Fadl Al Tarzi 55:40
It's obviously, based on tons of research and r&d and product development and rethinking what a university means is the way to explain it in simple terms. So in building University, from the beginning, we had a few core principles in mind. The first was, we didn't want learners to have to choose between skills and credentials anymore. We said, you know, we want to be able to combine the two. Second is we started thinking about what does the university actually mean, and unbundling that into lots of different things. So, you know, when you go to this university, and you ask them, you know, tell me about your admissions to them admissions is one thing, admissions to us is actually many, many different things, because we look at things as a function of the time it takes to complete the task, and the skills required to actually complete the task as well. So when you start unbundling roles across the entire organization, you find that something like admissions can be broken down into, say, 50, different tasks. And many of those tasks can actually be automated, like you don't need a human, for instance, to look at the name on your passport and make sure that that name matches the name on your transcripts. If you think about that, at that level of granularity, you can start to sort of multiply that across all the different administrative tasks across the university 1000s of learners, you're talking about 10s of 1000s of tasks typically handled by humans, that don't really need to be handled by humans. So that's really how we deliver quality at an affordable price is by unbundling everything and rethinking what is the skill required to accomplish that kind of computer? Do it or does the human need to do it?
Alexander Sarlin 57:17
That is so so interesting. I love that you sort of deconstruct all of the different tasks that it takes to deliver a high quality education and then see what what can be delivered through technology and what needs a person. It's incredibly interesting approach. I hope that our listeners are hearing this and saying, Wow, that makes me want to think about that for my neck of the educational landscape. Final. Congratulations. Thanks so much. And thank you for being here with us on the weekend, Ed Tech, Fred and Ed Tech insiders.
Thanks for having me. Appreciate it, Alex.
Ben Kornell 57:49
Well, that does it. Thanks so much for the interview, funnel and burn expert University we're going to be cheering you on. And also thank you listeners for making our podcasts a success in over 100 countries and 75 episodes. It's just incredible to have you on this journey with us. Because if it happens in tech, you'll hear about it on this weekend in tech.
Alexander Sarlin 58:14
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