Week in Edtech 1/22/2025: OpenAI’s O3 Sparks AGI Debate, $500B Stargate Project, TikTok Ban Drama, Biden Cancels $4.5B in Student Debt, U.S. Schools Add 121K Staff Despite Declining Enrollment, Leeds Equity Acquires Learnosity, and More!

This Week in EdTech, join Ben Kornell and special guest host Jomayra Herrera, Partner at Reach Capital, as they unpack the latest in edtech, AI, and education policy.

✨ Episode Highlights:

[00:03:16] 🤖 OpenAI’s new O3 "reasoning" model sparks AGI debate.
[00:07:14] 🏗️ OpenAI’s $500B Stargate Project aims to dominate AI infrastructure.
[00:16:49] 📱 TikTok shutdown and divest-or-ban law shake up digital learning.
[00:24:15] 🍎 U.S. schools add 121,000 staff in 2024 despite declining enrollment.
[00:31:12] 🎓 Biden cancels $4.5B in student debt and bans Ashford U CEO.
[00:38:00] 💰 Leeds Equity Partners acquires Learnosity, boosting AI-driven assessment.

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Transcript

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[00:00:00] Ben Kornell: We also had a really interesting story this week that kind of counters a broader multi year narrative around teacher shortages or staffing shortages. This is from the 74 where they quoted that 121, 000 employees were added in 2024 to schools nationwide. Even though there are 110, 000 fewer students, if you look at the total aggregate number percentage wise, it's not a huge amount, but basically the argument is that actually schools are adding many, many more staff positions. And that this shortage might be a myth.

[00:00:41] Alex Sarlin: Welcome to ed tech insiders, the top podcast covering the education technology industry, funding rounds to impact AI developments across early childhood, K 12, higher ed, and work, you'll find it all here at ed tech insiders. 

[00:00:56] Ben Kornell: Remember to subscribe to the pod, check out our newsletter and also our event calendar.

And to go deeper, check out ed tech insiders plus, where you can get premium content. Access to our WhatsApp channel, early access to events and back channel insights from Alex and Ben. Hope you enjoyed today's pod.

Hello EdTech Insider listeners. It's Ben back again with another special guest host, Jamyra Herrera. Partner at Reach Capital. Welcome to Myra. 

[00:01:31] Jomayra Herrera: Hey, Ben. Thanks for having me. I'm so excited to be on the other side of the table for this session. 

[00:01:37] Ben Kornell: So for those of you who are just tuning in, Alex had a baby, Anders Sarlin.

So welcome newest EdTech Insider. And so while he's out on paternity leave, we have an all star rotating co host group. And Jomaira is really a long, long time, basically before EdTech Insiders existed. Jomaira was a supporter for me and Alex, and tell us a little bit about what you do at Reach, and for those who aren't familiar with Reach Capital, a little bit about what y'all are about.

[00:02:06] Jomayra Herrera: Absolutely. So like you mentioned, I'm a partner at reach capital, really focused on investing in early stage companies, reach invest across three categories, learning healthcare and work. And we're really focused on the mission of investing in founders who elevate human potential and ignite purpose. And so I spend most of my time on the health and workforce categories, but as a fund, we're really focused on all three.

And it's just been an incredible experience so far. I've been on the team for about four years. The fund has been around for this year will be the 10th year. It will be our decade in business. Which is very exciting and honestly, it still feels like it's the beginning. We have a lot of room to grow over the next decade.

[00:02:50] Ben Kornell: Yeah, so exciting to have you here with us and we'll bring some of those insights across the different spaces in your new thesis here on the pod today. For those who are listening, just so you've got the update on ed tech insiders, we have a number of really great guests interviews coming up. We have Sarah Leone and Jeff sample from zip lines education.

We have our predictions part two coming out on January 27th with a bunch of ed tech leaders. Jeff Magian Calder from Coursera. The CEO is joining us and Tigran Sloyan of CodeSignal. One of the coolest workforce companies out there will be on, on February 10th. We also have V2 of our generative AI map coming out later this month, and we're really excited over 300 new companies that we've added to the map.

On the event side, we also have our EdTech Summit coming up in San Francisco on February 13th. By the time you listen to this, tickets are likely to be sold out, but we will be re-listing a new set of tickets here in a couple of days post recording. So please pay attention for this and all of your EdTech Insider events on the pod or at EdTech Insiders ai.

Alright, now let's jump in. And speaking of ai, let's start with around the world in ai Jamira. From the A. I. Headlines this week. What really caught your attention? 

[00:04:14] Jomayra Herrera: So I don't know if you saw Ben, but OpenAI has released some of the initial results of their new O3 reasoning model and it has caught the world by a storm.

I mean, you see a lot of different perspectives. You see some folks saying it's potentially close to AGI, artificial general intelligence. Some folks are saying that it is overblown and it isn't as far as advanced as it seems, but I think regardless of where you stand on the spectrum, we know that there has been a step function change in terms of the capabilities of opening eyes models.

And Most of the benchmarks that it's being compared against, it's just blown through all past historical performance. And so there's a lot to, I guess, dig into there. I don't want to say excited about because it really kind of falls across the spectrum. 

[00:05:12] Ben Kornell: Yeah, I think there was two camps. Like one was we're hitting the asymptotal value of AI.

You keep throwing more and more compute at things and it's not getting that much better and that camp thought, okay, we're basically building the latest edition of fill in the blank or spell check, but at a massive scale, it's not going to ever get to AGI. And the second camp is we're computer.

Superintelligence is on the horizon. It's going to change everything. And what they needed to prove was that they could do things in a different way and get a step change outcome. And I think this is a win in that camp. Now, is it AGI? Not that any average person would call it, but an interesting thing I'm seeing kind of behind the scenes.

I'm talking to a bunch of ed tech folks is. People have been selling their data for training models. So a lot of like math companies have been working with the AI companies, but now the data sets and training information that people want, it's like PhD level math that these companies are wanting. So there is a clear signal in the market that the computer systems are getting way more sophisticated on the reasoning.

And I think how this all happened was early AI was around. really speedy results, instantaneous AI results that were replicating human speech and so on. And it's this reasoning track where the AI takes some time to think and actually goes through a much more computationally intensive process to come up with the answer.

That's really where this breakthrough comes from. And so. I've been hearing from both camps, the camp that says AGI isn't realistic. They're like, okay, this bump is around mathematical reasoning and so on, but they're going to need two or three more leaps ahead to actually get to a sentient AGI given the amount of capital that is being thrown at though these days, you'd have to bet on the Sam Altman horse.

I don't know. What do you think? If you look in your crystal ball. 

[00:07:14] Jomayra Herrera: Look, by nature of being a venture capitalist, I am a techno optimist. And so there's a question of whether or not we should have AGI or I guess rather what is responsible AGI look like? That's one question, whether or not we will get there.

I don't like to bet against some of the most brilliant minds that are being put together to really build out this future of technology. I mean, Every single time we've seen some update, you hear a camp say, Oh, well, AI is not really good at math or AI is not really good at this, give it a couple of months.

And then that camp is always proven wrong again, whether or not it's right, whether or not that's what we should target is a different conversation, but. I wouldn't bet against a ton of capital and a ton of really, really smart people that are driving towards a particular goal. And it's not just open AI, right?

Like you have a ton of folks, really smart people, whether it's on Thropic or I know that there are many other smart folks that are starting to build out their own companies, some actually coming out of open AI. So it's a lot of really smart people targeting the same goal 

[00:08:24] Ben Kornell: for your existing portfolio, you know, not new investments, given that rate of change that every three to six months, there's these leap forwards.

What kind of advice do you give them? Because of course you have to build your product for your customers today, but you have to be looking towards the future. Like, how do you advise them on that? 

[00:08:43] Jomayra Herrera: Well, I think one is not being afraid of using the existing technologies and always being a step ahead. And the closer that you have a relationship with the existing underlying models, the better.

So at Reach, we spent a lot of time actually with the OpenAI teams. We're increasingly spending time with the Anthropic teams, trying to figure out how we can get early information, early access to features for our portfolio companies so that they are always a step ahead. I think the important thing is don't bet against these existing technologies, improving instead, try to work in partnership with them in collaboration with them so that you can think about how best to continue to improve your product while never losing sight of at the end of the day, you're focusing on your customer, building the best product for your customer and obviously leveraging the underlying and enabling technologies as much as possible.

But the one thing that you can't forget is it. The workflows and all the things that add to the stickiness, it doesn't have to do necessarily just with the enabling technologies. And so it's really doing both and working in partnership and collaboration with the enablers. 

[00:09:45] Ben Kornell: One, I think it's interesting.

Like you can find a market need that is unmet and build a startup there. The other way to build a startup is a new technology creates breakthrough opportunity, and we might have a little bit of both going on here in ed tech. And then you mentioned anthropic more and more. I hear that ed tech folks are really lining up with.

Anthropic because they're already built for a focus B2B enablement approach, but also the kind of trust and safety elements seem to be really strong. So that'll also be interesting is at whatever point. Will it be important which LLM company you're aligned with? Interestingly, just from the news headline, Google put in a billion into Anthropic, which also seems like a really interesting hedge on Gemini and okay.

So it's squaring up to be like. Open AI, Anthropic, Google, and then maybe Meta as the open source one. Who's going to win in that space? As you're looking at that horse race, do you think it's too close to call? Would you bet on anyone? What do you think the nuances are across those four? 

[00:10:57] Jomayra Herrera: Truthfully, I think it's too close to call, and if you look at most of the investors or the players in the space, they have multiple bets within the category, and that's because it is too close to call.

And the truth is, you know, that the end goal, the end pot is incredible. You don't want to put all your eggs in one basket. I think a lot of folks would say that it's probably too close to call. Many of the existing players have incredible backers, incredible teams, a ton of capital there at their disposal.

And so it's unclear to me which one wins at the end of this, but similar to our companies and similar to a lot of the players or the investors in the space, many of them are using. All of them, just figuring out how to best use which model at which time, given the use case, given the need, given the capital requirements.

And so I think the reality is that as of now, there's going to be a lot of leveraging, which one is the best depending on their use case, and then maybe over time we start to see significant performance differences. 

[00:12:04] Ben Kornell: Well, to that end, and I agree with you from an investor standpoint, also from an entrepreneur's standpoint, we're seeing people making multiple bets on different platforms and building that API infrastructure.

Open AI does seem to be getting a leg up with a new project called Stargate. It's actually a brand new company that they're creating that's independent. So for the lawyers out there who are tracking. Open AI nonprofit, open AI becomes for profit complexity there. Now they're operating a brand new company, which is investing 500 billion.

That's billion with a B over four years. So 125 billion a year, if you straight line it and it's deploying a hundred billion immediately. And the. Main funders are SoftBank, OpenAI, Oracle, and MGX, with SoftBank's Masayoshi San being the chairman. This is an incredible amount of capital. And involved in this are also NVIDIA, which, NVIDIA and Microsoft, you know, Microsoft obviously has a stake in OpenAI, but NVIDIA, which basically is the gatekeeper of compute capacity, and You're basically looking at the world's largest R and D project in history.

The idea around this is that it is moving towards AGI and it's bringing kind of an American centric lens. Like we want the U S to be a lead in this. What is your take on this 500 billion investment and how does that shape our space? 

[00:13:36] Jomayra Herrera: Yeah, I mean, look, anyone you talk to will say that there is a considerable amount of investment that has to happen in AI, particularly in the infrastructure side of things and from what everything I've read, the amount of information on Stargate is fairly limited as of now, but at least it seems that the initial 100 billion are really going to be to create data centers, which are very much needed.

Again, anyone you talk to will tell you that that is a massive investment. Constraint being able to accelerate the adoption and the progress of AI. And so from the perspective of whether or not this is a good thing, I think the answer is we know we need more infrastructure and this is a great investment towards it and look, I am very much a Patriot and so I do believe that it's incredibly important for the U S to stay ahead on AI.

If we do believe that this is the next big tectonic shift in technology, then it's critical that America is ahead on this and we should bet on ourselves, which means we have to make massive investments of capital in order to make that possible. And so overall, I think this is a good thing for the industry.

Now the devil is always in the details of which the details are very sparse. If you talk to Elon, he'll tell you that the capital is not even there or available, but that's also Elon and he says a lot of things. So it really just the devil's in the details on how this gets implemented, but investment in AI and a critical sector in the U S I think is a fantastic thing.

And. I also think that there are estimates that could create up to 100, 000 jobs over a set period of time in these data centers. So again, I think it could be overall positive. 

[00:15:20] Ben Kornell: I mean, this could end up being a major workforce learning story here around all the jobs that need to be created. It reminds me of around the World War Two era, where there were massive governmental investments in upskilling and jobs and infrastructure to make us a manufacturing leader around the world, and it feels like a.

Investment of that sort, especially when this announcement really happened at the white house, adjacent to the Trump inauguration. And so one thing to watch is, you know, what will be the government's engagement there? And also, are there going to be educational benefits to additional capacity about a year and a half ago?

I wrote an article around the need for 1 percent of all compute to be donated for social impact purpose. You start thinking about these big investments. That would be possible if the government said, Hey, we need all of our social sector organizations to have access to this compute. Speaking of Trump, Segway, you know, TikTok ban on again, off again, went dark for a period of time as educators.

We all know our kids are on TikTok, but increasingly. Any learner of any age is leveraging TikTok as a vital source for ideas and micro upskilling. What's your take on the TikTok story, especially from an education or learning lens? 

[00:16:49] Jomayra Herrera: Yeah, I'll speak about it as a consumer first, and then I'll speak about it as someone that is supposed to be a leader in the education industry or the education technology investment industry as a consumer, I was devastated about the idea of Tiktok getting banned.

I leveraged Tiktok for travel planning, picking restaurants. For recipes and then also just generally for entertainment. And so I get a lot of value out of tick tock from a consumer that said, I do understand the national security concerns and look like my time in entertainment is not weighed more than national security issues.

If that's truly what is at stake here as someone that cares really deeply about Brain development of young people in adolescence. I don't want to blame this just on Tik TOK, because this is not just a Tik TOK thing. This is rather a, let's call it a phone or a screen related issue, but on average people are spending, and it's not just kids.

It's actually people of all ages up to 90 minutes a day on Tik TOK. It's a significant amount of time and that's, By nature of how it was created, right? The algorithm was made such that it is meant to keep you focused and keep you on the screen as much as possible, swiping and swiping and swiping videos.

And it does an incredible job at that. And so I don't think it's a great use of someone's Time from a first principles perspective, I think people of all ages, but especially young people in adolescence need to spend more time socially. They need to spend more time outside. They have to touch grass.

That's a whole nother issue, but on the tick tock piece in particular, I have no idea how this is going to result at the end of the day, because the primary issue here is whether or not by dance will divest out of tick tock in any significant way. Okay. And historically, it's been unwilling to, and then there's a question of if it is, does the algorithm come as part of the package, which is really the value of tick tock, which again, by Dan seems unwilling to.

And so I think without that, I don't. See how we end up in a place where TikTok does not continue to be banned. And we actually go through with it, but we'll see. I mean, we live in increasingly unprecedented times, so I may be surprised, but it is possible that it does end up getting banned in which case.

Something else will pop up to take its place, right? There've been reports that Instagram has invested tons of capital trying to get creators to come onto Instagram reels immediately as the TikTok ban was happening, offering 10, 000, 20, 000, up to 50, 000 to creators to come on Instagram reels and create content.

So. There will be someone right behind TikTok to try to take up that screen time. 

[00:19:52] Ben Kornell: Yeah, it does seem, gosh, there's no way this thing could go away, but who has the capital to buy it and will they get the algorithm? These are such big questions that it's hard for me to see. That coming together on this timeline.

So the question is, is the timeline going to get extended for another year while people work out a deal? Is this going to be one of those situations where we go back on the policy and change the policy because Republicans control all parts of government, that's possible, but it doesn't seem like this story is going to just resolve on its own.

There's still more twists and turns in this story. I will say from a school perspective, one of our big stories of the fall was people banning cell phones because kids were so addicted to tick tock that they're like watching it under the table. So there are folks in the space who are advocating for a plan that whoever buys it, that's us based, create some safeguarding for under thirteens and under 16 usage.

And, you know, you could imagine. That actually being a compelling reason to pick this bid versus another bid. If they maybe had the viral or addictive elements of it for the adults, but not for the kids and Instagram, I think anticipating that already launched about a month ago, new Instagram safeguards for kids that basically have linear scrolling and don't use kind of the loophole technology to allow you to kind of go deeper, deeper, deeper.

[00:21:31] Jomayra Herrera: Just really quickly on this. I think all these safeguards are important and absolutely should happen. I think the challenge right now for a lot of young people is that let's say you put safeguards on TikTok or you put safeguards on Instagram or put safeguards on all these different platforms. I think tools.

The truth is, they'll find the next thing. Young people are really, really smart. They make it their job to get around these safeguards and make it their job to get access to the immersive and engaging experiences that they want. Whether it's a video game, whether it's YouTube, whether it's tick tock, you name it, they're going to find it and they're going to look for it.

I think the other thing we have to really think about is how do we make. Off screen time just as engaging and fun and exciting as on screen time. We focus so much on decreasing the access to on screen time that we forget about. Okay, well then what's the alternative? Where are the kids going to spend their time elsewhere?

We're closing down parks. We're closing down music classes and art classes. There's just, it's tough to be able to say, we're going to stop you from accessing this. But we're not going to make the other experiences that you have access to any better or any more fun or any more engaging or immersive. And so I think it's a matter of like, the conversation needs to include both of those pieces.

[00:22:53] Ben Kornell: Yeah, I am seeing a parent shift to off screen preference, but unfortunately, I'm finding that schools and institutions don't seem to be responding with that kind of engaging offering. And so people are forced to go elsewhere with it. Definitely a market opportunity, by the way, you know, as parents kind of come to the realization that YouTube and TikTok is taking over their kids lives.

The common sense study, I think, showed like three to four hours a day. for a large number of kids, which that's a lot of wasted potential learning or just personal engagement time. Speaking of schools, we also had a really interesting story this week that kind of counters a broader multi year narrative around teacher shortages or staffing shortages.

This is from the 74 where they quoted that 121, 000 employees were added in 2024 to schools nationwide. Even though there are 110, 000 fewer students. If you look at the total aggregate number, percentage wise it's not a huge amount, but basically the argument is that actually schools are adding many, many more staff positions, and that this shortage might be a myth.

I think there's some nuance here in the data, but Jamyra, as you thought about this and saw this article, what came up for you? 

[00:24:15] Jomayra Herrera: So I think this article is so interesting because I haven't seen the numbers, but anecdotally, I've been seeing a lot of data to support this, which is if you actually look at the underlying data, a lot of the biggest jumps in staff are actually staff members like paraprofessionals, for example, or student support services, not just Teachers as a whole.

And if you talk to a lot of district or school leaders, you'll notice that they'll often say that some of the biggest challenges they're seeing or facing are that their students need more support services. One, we know that the amount of students that have some form of special need or learning difference is increasing pretty significantly.

And when you have students that have additional needs, you're going to have to need. Additional support services across a range of areas. And so that increases the need for student staff. We continue to see increased need for guidance counselors school psychologists. And by the way, the ratios are still not where we want them to be or where they should be.

But the demand is higher than ever. And then when you look at teachers looking at the aggregate number, as you said, Ben is a little bit confusing because the truth is there are pockets of high need. So STEM teachers are increasingly hard to hire for, for example, teachers in certain geographies or areas where the cost of living is really high, are really hard to recruit and retain and attract.

And so there are certain pockets, both in terms of The specialty in the area, as well as the geographic focus where there is a high demand and high need. And so anecdotally, we've, I think we've been seeing this and we've made even investments related to this. So for example, we're investors in cartwheel, which helps provide behavioral health services to schools because most schools have higher than ever needs for behavioral health services, but they don't have enough school psychologists or therapists And so they end up having to route students to nonprofits or partners that have very long waiting lists as opposed to actually just partnering with a cartwheel where the student can be seen in seven days.

And so we know that there is increasing need, particularly outside of just instructional staff, but it's really interesting to actually see the data, 

[00:26:44] Ben Kornell: your perspective, especially around those healthcare roles, there's ways in which this is. Creating real strain on budget and certain ed tech companies are feeling like they're getting cut out.

There's like not as much budget available. In other ways it is actually creating the burning platform to try alternative staffing models where you might say instead of having a school nurse or instead of having like a robust program, I'm going to outsource this and leverage a third party service like you mentioned, like cartwheel.

So, You know, I think when with these trends, it's important to note that this isn't just a one year blip over the last five years, the enrollment has gone down by 1. 3 million and yet staffing has gone up and the driver of higher student to teacher ratio is these kind of specialized needs of students.

It may also be. Like a different orientation to how to solve problems in schools, which is let's throw more people at that challenge. Then let's throw more products or solutions. So I think for our ed tech audience, just figuring out how do you adapt to that scenario? And find your opportunity as a school board member, pair professionals are really hard to find and it's really hard to train them.

So they're also, you know, there's a whole industry of people that do teacher professional development. You can't really spend as much on pair professional, professional development in part because the turnover can be very high. There's also a large number of them from a delivery standpoint, they're hourly versus salaried.

So this is another area where, wow, there could be a breakthrough. Market opportunity here just caused by the shifts in staffing. 

[00:28:25] Jomayra Herrera: Yeah. And I think one nuance that's worth adding is we have to also remember that districts have a regulatory compliance requirement for a lot of their students for around staffing, right?

If an IEP calls for individualized education plan calls for a student having access to a paraprofessional or someone else, they have to actually be able to supply that. Otherwise they put themselves in a legal. Liability issue. And so that's the other factor that we have to consider. I think oftentimes we think we go quick to, well, are there ways that products or tools can help to ameliorate the cost?

And yes, I think that's true in a lot of situations and circumstances, but we can't forget that many of these districts are required by regulation to offer certain services. 

[00:29:13] Ben Kornell: Yeah. So like the kind of core questions are, is it compliant? Does it save money? What is the value proposition? It's often in that order rather than leading with your value prop.

I guess, you know, my question for you is, is it fair to say that there is a teacher shortage and yet we're hiring more roles? Do you think that that's actually the nuanced story here? 

[00:29:37] Jomayra Herrera: Yeah, I think the nuance here is there is a shortage, but it's in certain areas, geographic areas, and in certain specialties or certain areas of need.

And so that's where you have to become really nuanced and actually dig into the data to figure out exactly where the shortages exist. But there is a shortage. It's just a matter of figuring out where exactly it exists. The other thing, which we're not talking about, is There's also a quality issue as well, which there's one thing to put a warm body in a classroom.

Then there's another piece to retain them, grow them, develop them, and actually have a high quality educator and staff, which I think is the second order issue that oftentimes is forgotten. 

[00:30:25] Ben Kornell: Well, let's move to higher ed, you know, as the Biden administration transitions out, they canceled. 4. 5 billion in debt, and they had some specialized bans on for profit higher ed providers, including the Ashford University founder and CEO.

Given that the Biden administration kind of went out with a bang here on a theme where they've particularly emphasized reducing student debt and raised questions about for profit higher ed. Now you're back to Trump in office. You know, Trump famously had higher ed organizations that he was backing and behind.

What do you think the implications are of that transition from Biden over to Trump and how will the new administration shape higher ed going forward? 

[00:31:12] Jomayra Herrera: Yeah, so they haven't released details around the policy agenda related to higher ed, but one of the areas that Trump has talked about is changing, advancing, I don't know how you would describe it, modernizing accreditation, which I'm I think anyone you talk to, including people within higher ed, would agree that that needs to happen.

And then again, I use this phrase a lot, but the devil is in the details, which is, do we still uphold a focus on quality? And then who defines quality? What does quality mean? What I worry about, my concern is that we loosen regulations around accreditation. We increase access to federal funding. But we don't assign some form of accountability framework to it, and then we end up with a lot more Ashford's of the world that unfortunately pry on vulnerable populations more often than not, that have access to Pell Grants and federal dollars, and they take on debt of some sort in order to move forward.

Take part in these programs that never lead to results. I think for Ashford, it was something like 90 percent of students never even ended up graduating and the ones that they did ended up in jobs that were paying the same or less than what they had before. And it's unfortunate because for decades, we've been telling kids, go to college, go to college, that's the way to move up in the world.

And then they do, and they take on student debt. And many of them are left in outcomes where they can't even afford to pay back that debt. And it's unfortunate, and they have a rightful right to be upset about it. So my hope is that in modernizing accreditation, they do decide to take that very, very hefty task on that.

There is a focus on quality. There is a focus on accountability specifically around the metrics that. Students and young people care about, which is they want access to a job that will pay them enough in order to be able to live a normal thriving lifestyle. That's what people want. That is what really matters to them, not the vanity or the proxy metrics.

And so that's what I hope is what we target and what we focus on instead of just changing it or limiting regulation for limiting regulation sake. 

[00:33:34] Ben Kornell: Yeah, I think this tie between jobs and professional opportunities, economic mobility and education is a point of emphasis. As you said, devil are in the details, but I think there's been rightful criticism around the debt burden and the number of students that actually have skills that translate to real jobs with that payback period.

So you're actually. Looking at like, okay, are we increasing debt loads or are we decreasing them? Are we by opening the aperture on accreditation? Are we actually what's going on with our quality bar, but the end measuring stick is, can people get jobs and what kinds of jobs are they prepared for? I think that that is reflective of where.

The community is and we've seen this at the state level with a lot of the state schools So I think it's a great point that that's a trend that has almost bubbled up market wise to the federal level 

[00:34:30] Jomayra Herrera: And I think the other piece that is difficult that a lot of higher ed leaders will tell you is that it's unclear What to prepare students for because that also is changing really really quickly We call it actually chantal and the team when the term the entry level Catch 22, which is oftentimes people that are entering the workforce for these entry level jobs don't have the experience that's required for them, even though they're entry level.

And the reality is, it's just that requirement of what exactly people are looking for is in this moment in time, like quite literally today, changing. And so I couldn't tell you what the answer to that question is going to be a year from now or two years from now, definitely not five, 10 years from now.

[00:35:16] Ben Kornell: Right. And you need a more adaptive education system to change what it's teaching. If that entry level job rec is evolving so rapidly. Yeah. This is where I think kind of apprenticeship movement that, you know, has largely gained traction in Europe. There's got to be more of that in our higher ed today.

And this is where this like deregulation of credentialing or accreditation. Can you have work experiences that also count towards academic credit? I think everyone in our ed tech space loves that concept or idea, and it might be essential now for our kids. 

[00:35:53] Jomayra Herrera: Right. I totally agree. I think there's been arguments made in the past that it's difficult to replicate the apprenticeship system in the U.

S. because of the heterogeneity and our states, localities, also employers and a whole range of things, but we might have hit a moment in time where there is so much pressure on the labor market on both ends that it may require All right. Rethinking whether or not we can actually scale up a true apprenticeship like program.

[00:36:20] Ben Kornell: Well, our last topic is really coming to that EdTech VC side of things. A longtime friend, Gavin of the pod from the CEO of Learnocity. They announced a major new acquisition. Leeds Equity Partners has acquired them. Leed Equity, from what I can tell, is essentially a private equity firm. And the kind of learnocity journey has been for a decade.

They were the assessment, like, database or item bank for a number of EdTech companies. So they were often called, like, the largest EdTech company you've never heard of because they licensed question sets to a bunch of different EdTech platforms that were psychometrically calibrated to give really good assessment insights.

Where they really had their breakthrough was leveraging AI. That could essentially take this highly calibrated data set of questions and allow for personalization, customization, self creation and this at the same time continues a trend of P. E. firms really investing at the assessment and data layer we saw with the acquisition of power school that was private equity backs were seeing with canvas and there's a couple other assessment companies where there's some sort of thesis that is.

If you own the data, if you own the assessment in an AI world, you have power. First, like what are the trends in private equity? Is this something that has always been here? Or is this a new thing from your perspective? And then of course, for venture backed companies that see private equity as an exit path, how should they be planning ahead or, or reacting?

[00:38:00] Jomayra Herrera: Yeah. So I think historically we have always seen private equity play, particularly in K 12 at the called the system of record layer or the platform layer, and take the approach of we purchase a system record, then we bolt on a bunch of other smaller companies and point solutions to create a really big platform.

And that will create a very, very valuable asset. It's the playbook. And by the way, it works in many cases. It works. For K 12 in particular, you have the benefit of school districts, if they can purchase one tool that has a lot of add ons, that is beneficial, right? There are just fewer permissioning issues, fewer security issues to deal with, fewer training and professional development things to deal with.

And so there is value in that from a school district or school leader perspective. And so, Private equity has always played that game. I think what's different now, right, is that by owning that system of record or that data layer, there is an additional benefit that goes beyond just actually owning kind of the user interface that that user often plays with.

It's also actually owning the most important asset in an AI world. Which is the data itself. And so I think that there was a ton of value added value there than ever before. And that's why you're seeing these large PE players make their plays. And I will say they're active. They're hungry and trying to find solutions to add on to bolt on to their platforms in order to increase their value.

And we've seen that by the way, on the investor side, like we were obviously talking to PE folks all the time because. Our job is at the end of the day to make sure that we are making relationships with folks that our portfolio companies may at some point exit out to. And so I think like the appetite is a lot of hunger.

Everyone wants to make their play before it's too late. And my kind of hypothesis or my advice on the space has always been, if you're a VC backed company or you're an early stage company that's operating in the education space, maintain relationships with all the big PE players that have some form of platform play in the space that you're operating in.

I'm not saying that you have to meet with them every day. But have a touch point every few months, understand what their strategy is, understanding what they're investing in, what they're looking for. Because the last thing you want to do is be surprised by something that they're doing, but instead you want to know in advance to either inform your own roadmap.

Or potentially inform an exit pathway for your company. 

[00:40:42] Ben Kornell: Yeah, there's a really interesting change in private equity in that the majority of playbooks were, let's buy this channel partner, let's stack on a bunch of things and push it through, like you said. And that's also oriented with cost cutting and like shared overhead, right?

So instead of having three sales teams or four sales teams, you have one sales team. Right. Instead of having a bunch of product divisions, you have one. There's a way in which some of these growth equity rounds are actually around expanding the investment in that like tech background and expanding the growth of product features and services.

And I think that's what's really been exciting in the space, like the Bain acquisition of PowerSchool, you know, whatever you think about the data breach. It is positioned to really propel them from a scarcity mentality to abundance mentality, which I think has really positive reverberations for our space.

It also means that if you are a player and you're near adjacent and competing with them, you might actually have a big player kind of coming after your market. And so understanding like, Are we going to work with them? Are we going to get acquired by them? Are we going to work against them? Like, how do we, how do we leverage our nimble advantage versus these large players?

I think that's going to be a real story, especially given that IPOs, I just don't expect IPOs to be, there's no breakthrough on the horizon in terms of number of IPOs. So you're actually going to have to watch these PE players and how they're throwing their weight around here in the space. 

[00:42:11] Jomayra Herrera: Exactly. And you're also noticing that they're often making multiple bets within the space.

So Bain in particular, PowerSquad acquisition, and then also leads the magic school round, right? That is intentional. Like that's not a just coincidental thing. 

[00:42:26] Ben Kornell: And they own Meteor, which is the largest furniture provider in the space. So you've got tech, you've got advanced AI and you've got furniture.

There's a lot of money coming into the space exactly as you're, you're talking about making multiple bets. So as we wrap, you know, I'd say the first three months of January have been so crazy. And, you know, I wonder sometimes it's like, Oh, how long has this Lernocity deal been in the cooker with the inauguration with the kind of change in administration with some of these.

Trends. We've done a lot of our predictions for 2025. As you assess January, your colleague, Tony one actually said, Hey, this might be the year for a rebound. Has January made you feel more optimistic, more pessimistic? Or is it a mixed bag? I 

[00:43:18] Jomayra Herrera: think January has made me feel more optimistic again. I think by nature of my job, I tend to be optimistic.

And by the way, I genuinely feel like you will the future that you want. Yeah. And so it's almost like I am willing a optimistic point of view, wherever you land on the administration, the truth is that you can often find if you were a founder and entrepreneur and an investor that is squarely focused on driving impact in the areas that you care about, you can find pockets of opportunity.

And so I'm optimistic. I think that there's a lot of opportunity to come. I think, you know, when you get ships, you're going to get shipwrecks. And so the reality is, is that with all this new technology that's happening, we're going to have amazing things happen. And then we're also going to have major issues happen as well, but it is up to us to actually will the future that we want.

And I truly think that if I were to. Summarize my hope for this year is that we start to actually coalesce around what that future is that we want, because I actually don't feel like we have a good agreement across, call it the tech community. We're all like building and building and focusing on all of these different new advancements.

But the question is to what end, which is why, if you look at our thesis, not to like bring this all the way back back around. We added the thesis elevate human potential and ignite purpose because we have to do it to some end. It's not just investing in technologies or building tools for the sake of doing it.

[00:44:54] Ben Kornell: Well, that is such a great message to end on and willing the future and where there's ships, there's shipwrecks and creating a holistic vision. We are so excited to bring you back on the pod soon as that future comes to be. And thanks so much for co hosting today. For those of you who want to find out more about Reach Capital, what's the best place for them to go?

[00:45:19] Jomayra Herrera: You can follow us on LinkedIn and follow us on X and you can email any of us at our first names at reachcapital. com. 

[00:45:27] Ben Kornell: Wonderful. Thanks so much, Jamira, for joining us. Thank you listeners. Have a great week and we'll see you all next week for a new special guest. Bye bye. 

[00:45:36] Jomayra Herrera: Thanks 

[00:45:37] Alex Sarlin: for listening to this episode of Ed Tech Insiders.

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